TeleCommunication Systems Inc. will improve satellite services for U.S. government personnel in forward operating areas throughout Southwest Asia under a three-year contract valued at up to $7 million.

The award, from an undisclosed agency, calls for TCS to provide managed bandwidth services and terminal maintenance support for fixed satellite terminal sites including those in Afghanistan and Iraq, according to a company announcement today.

The fully operational network provides voice, video and data services in remote areas that lack terrestrial communication services.
Previously, TCS , of Annapolis, Md., has built networks to support government organizations in the Middle East, Africa and in South America, as well as the largest private Very Small Aperture Terminal network in the Asia Pacific region, the announcement said.

Source: washingtontechnology.com

Mumbai: During the last few quarters, Indian IT firms have been witnessing the impact of volatile currency movements on their top line. This quarter too, though there have been gradual currency movements, they are not volatile. Therefore, IT firms like Infosys Technologies are not expecting any major impact this quarter. S Gopalkrishnan, CEO and MD, Infosys, on the sidelines of the CII summit on ‘conscious capitalism’ in Mumbai, said, “A rapid movement in the currency within a quarter, which was like 15-20% in some quarters, is always a challenge for a firm. But now, since the currency is witnessing a slow and gradual change, we can manage and mitigate the impact.” The firm had earlier said 1% appreciation or depreciation in currency brings a 40 basis points change in margins.

IT firms like Infosys Technologies, Tata Consultancy Services and Wipro Technologies have been working on various levers, including cost cutting measures and re-looking at investments during this financial year. Gopalkrishnan added that the firm would continue to closely look at expenses. However, he added that Infosys had spent almost double on the training over the last year. “Since the overall utilisation levels were down by about 10%, it was the best time to invest in training so that we are ready when the revival happens,” he added. During the year IT firms had also cut down on hiring.

However, with the recovery in the banking financial services and insurance sector picking up, the industry is expected to hire. Infosys had earlier said that it has given campus offers to 18,000-19,000 freshers. The firm hasn’t yet come out with projections in terms of lateral hirings.

He added that the firm was witnessing revival in the manufacturing sector and that the pricing during the quarter has been stable. “The pricing power is expected to come back when the unemployment rate goes down and inflation starts moving up in the US and Europe,” he said.

Image source: ceoworld.biz

Source: www.financialexpress.com

India's Next Outsourcing Wave

By Sudhakar Ram

It’s understandable that many in the U.S. are angry that workers lose jobs to offshore programmers. Despite the unpopularity of outsourcing in the wake of the financial meltdown, I am convinced that “Third Wave” Indian IT players—those outsourcing specialists that U.S. companies can rely on as strategic partners for high-end work—can help prevent future disasters. IT companies around the world have a huge opportunity to collaborate and join forces in the next few years.

There is no doubt that legacy platforms need to be modernized. The best and perhaps only way for this to happen effectively and efficiently is through a strong combination of onsite U.S. and offshore Indian resources. The point is not whether these programs are executed by a U.S. company with an Indian development base, or vice-versa. Without access to a global pool of talent, these programs cannot be executed successfully.

There are three reasons global teams and global collaboration are necessary to meet the modernization needs of the U.S. financial sector.

Availability of talent

According to Celent estimates, financial services companies spent more than $350 billion globally on IT last year, including $120 billion in North America. About half was spent on software, internal head count, and external services. (Companies spent around $60 billion in North America alone.) More than 70% of this spending has gone to keep the lights on and other routine maintenance expenses. The investment required to replace and modernize applications that are well past their sunset date is estimated to be between $250 billion and $300 billion. Most of these applications will have to be rebuilt over the next five to seven years if these companies are to survive, innovate, and grow. The industry has been postponing the inevitable for a long time, through patchwork and workarounds—and the global financial meltdown indicates that this will no longer be a viable option.

If health-care reform passes in the U.S., Americans will need to spend an additional $150 billion to $200 billion to implement systems in 3,000 hospitals and 400,000 physician offices across the country.

Currently, there is not a sufficient IT talent supply base in North America to take on additional programs worth $400 billion to $500 billion over the next five to seven years. Without access to a global talent pool, these major programs will never be initiated. The issue, therefore, is not about onsite professionals losing out to programmers from India. The issue is that onsite and offshore professionals will benefit from a surge in new programs only if they collaborate successfully.

Complexity of the task

An overhaul of companies’ IT platforms is extremely complex and fraught with the risk of failure. Many large corporations have been burned badly by such major transformation programs in the past; no wonder they try to put them off as long as possible.

However, things are at a breaking point. The survival and growth of large institutions is contingent on the agility of their IT platforms to support innovation and business transformation. The systems that handle different product and service offerings need to be integrated to highlight and manage risks—risks that can sink the enterprise. This cannot happen when the structure is being held together by the technological equivalent of Band-Aids. Robust enterprise architecture is needed, along with a services-and-component view of the underlying applications.

Any large transformation needs teams with local experts, business analysts, application visionaries, and solution architects who engage closely with client teams in co-creating new IT platforms. Often, specialized consulting firms help the teams leverage their experience and insights. The planning is knowledge-intensive. It is also where mistakes take root and grow, especially in systems so old that the client has little or no internal expertise in its own systems. In such cases, requirements must be developed from scratch, almost as if it were a greenfield engagement.

Offshore resources can add speed and cost-effectiveness to the process. For example, companies can use offshore resources to reverse-engineer existing code to validate the requirements and capture the nuances and details of a legacy system. This is typically impossible—from a time and cost perspective—with only onsite teams. Increasingly, Third Wave offshore firms leverage their cost advantage to build intellectual property as well as intellectual capital for specific industry applications. In the case of Mastek, for example, we have end-to-end platforms, built around the latest architecture, for the insurance industry.

Cost Effectiveness

In the IT industry, we talk of the “Mythical Man Month,” the belief that programmer productivity is not a linear equation in the software world. When we increase team sizes, per-person productivity almost certainly drops. For example, if it takes 10 months to complete a 100-man-month project with 10 people, doubling the number of people does not cut in half the number of months to finish the job. Rather, with 20 people it may take more than 6 months to complete it. Offshore development helps to slow the inevitable decline in productivity by relying on mature and rigorous software engineering processes. For another, it absorbs those inevitable declines in productivity through lower offshore labor costs. Many Third Wave companies also have a strong base of reusable software assets to help hold down the costs.

In these times of economic uncertainty, there is much debate around the practice of outsourcing. However, the overwhelming need for IT overhaul in the U.S. cannot be easily accomplished with the current U.S. IT talent supply and overarching budget constraints. The best way to take advantage of the many opportunities for the IT industry is to embrace global collaboration. We need to work together.

Source: businessweek.com

percentage of graduating software engineers are actually industry ready? How can this number increase?

Fresh graduates today are bright and trainable. However, in most of the cases they are not industry ready. This pressurises the industry to provide enormous training and re-skilling facilities. As an industry which is people-dependent and global, we need to equip our students with the relevant subject matter expertise and soft skills. Students are expected to have some basic knowledge but in most of the cases this is not happening. In our education system, neither the content nor the delivery is adequate. Education must be made relevant at the outset. The government is trying to make several changes, the impact of which would be felt in some time. Till then, we need the ecosystem of training institutes, schools and additional intervention (besides the in-house training) to keep things rolling….

Source: http://www.financialexpress.com

American companies have been criticized for years for outsourcing work, particularly to China and India. Much manufacturing work actually went to other nations, such as Vietnam and Mexico, but China has been a convenient target of criticism.

The first jobs to go abroad to allow US firms to decrease costs were manufacturing ones. Japan and Korea could employ workers for less than American companies. American companies needed to compete more effectively with the Japanese and the Korean companies. The Americans opened up plants in Mexico to build cars and in Taiwan and Korea to build TVs. This outsourcing worked, except that it decimated the US labor force. Wal-Mart (WMT) sources more of its goods from China than anywhere else. It would not have made any financial sense to have the same items made at American factories, at least not until recently.

Manufacturing was just the first wave of jobs to move overseas. American companies such as IBM (IBM) and Microsoft (MSFT) found that the cost of well-educated R&D workers was less in Asia than at home. Credit card firms and direct response companies found that call centers in India and Ireland could be run for a fraction of the cost of those in the US.

Unemployment is at 10% in the US and is higher among workers at manufacturing companies. The layoffs at car companies alone would match the population of North Dakota or Idaho. Unfortunately, there is not work for them there either.

China has begun to suffer from the problem that there is too much demand for its manufactured goods. It does not matter whether that is due to the dumping of these goods into other economies or an actual demand at market prices. The New York Times reports that there is a major shortage of workers for factories in the People’s Republic. Some people who might have labored at manufacturers have decided to get degrees from college and graduate schools. China’s population is also aging in a way that makes young workers scarce.

The US may want to set up an industrial free trade zone where China can make the goods it needs by utilizing US factories and US workers. The raw materials for the work would have to come into the US without tax and tariff. The finished goods would have to leave without encumbrances of federal or state levies. The trade zone would extend China’s manufacturing capacity located in America. They could be located anywhere that China would reasonably want them, and it would want them close to large pools of unemployed US factory workers and unused or under-utilized American plants. That would include areas like Michigan and Ohio.

It will never work, which is a shame. A sort of reverse manufacturing outsource program is just what the US and China need.

Source: 247wallst.com

Indian IT companies have over-leveraged their traditional advantages of offering cost-arbitrage and skilled labour. Local IT companies need to get a global makeover to bid for the government and civilian outsourcing contracts in other countries, senior associate dean at Harvard Business School Professor David B Yoffie said in an interview with ET

Excerpts:

How do Indian IT companies fare in the global scene?

Some of the big US and European companies have come to India and have capitalised on the traditional advantage that India offers — namely high-quality talent available at low-cost. IBM has 75,000 people here, Accenture has 100,000 employees, while HP has 50,000 people here. The traditional advantages that India offered have already been tapped.

What kind of strategies do Indian IT firms need to have?

All Indian IT companies need to be more creative and create newer services and go beyond their labour arbitrage strategy, which has served them well for 15 years. Many IT companies are beginning to realise that offering simple BPO or outsourcing jobs is not going to be profitable as in the past.

What kind of impact will this make on outsourcing to India?

I don’t think there is an imminent threat and will not destroy the IT industry in India. But the long-term challenge will be to develop newer services and find other areas in the value chain to operate. For example, cloud computing is a challenging area Indian IT firms can tap.

When companies such as IBM, HP, Google and Microsoft start hosting all their IT activities for a larger number of companies, then the traditional role of outsourcing will begin to change dramatically.

What are the challenges?

Making a transition to a new model is hard and this includes a lot of investment. Cloud computing will put a lot of pressure on existing businesses. However, the traditional model of outsourcing is not going to change overnight because IT firms such as Wipro, TCS and Infosys have deep ties with their existing customers.

What are the newer businesses that can be tapped by Indian companies through outsourcing?

Indian IT firms need to get a global makeover so that they can compete in markets that have a larger role in the IT economy. For example, the healthcare segment needs to be more IT intensive and efficient.

And, if Indian and global companies are not doing it, they are limiting their long-term goals. Most of the healthcare in the US is private and is run by health maintenance organisations. This offers a lucrative opportunity.

Do you think Indian IT companies can tap business contracts offered by the US government?

It depends on the US government. They have to take a call on what they want to outsource to Indian companies. IT also depends on how sensitive the information is.

Source: http://economictimes.indiatimes.com

In a surprising move, Microsoft Inc. has inked a contract with a legal outsourcing provider to outsource to India. The provider CPA Global will employ lawyers in India to get the legal work done.

News of the agreement comes on the heels of a budget cut that will reduce Microsoft’s legal budget by 15% in the next two years. This translates into a 5% decrease in headcount as well. Before the cuts, Microsoft’s legal wing functioned with an annual budget of $900 million and included more than a thousand staff and 450 attorneys.

Software giant, Microsoft has outsourced intellectual property and patent renewal work to CPA for about five years. This operation was carried out with 70 CPA staff. However, the arrangement laid out in the new deal is expected to run separately.

Anand Sharma, CFO for CPA India was quoted as saying by LegalWeek, “The arrangement principally involves legal research work with a flexible shared service team varying according to transactions handling matters for the company.” Meanwhile, Marty Shively, Microsoft’s associate general counsel and director or worldwide IP operations, was a crucial figure in putting the deal together, say reports.

CPA has also said it will unveil and outsourcing site in the U.K. in order to undertake low-level legal work. This site will complement CPA’s onshore outsourcing in U.S. Initially, the center will open with 10-20 attorneys and paralegal and then the number is expected to move up to several hundred employees. The company is considering a site north of England as the venue for its center.

Neil Mirchandani, Lovells financial services litigation associate said in a comment, Onshoring has proved popular in the US and will doubtless appeal to clients who do not want certain information leaving the jurisdiction,” legalweek.com.

Source: http://www.bloggernews.net

Read more.

Source: www.vccircle.com

Industry created 442,164 jobs as of end-2009

MANILA, Philippines–THE BUSINESS PROCESS OUTSOURCING
Sector continues to be the country’s sunshine industry, generating more than $7.2 billion in revenues last year, a 19-percent increase from $6.1 billion in 2008.

In a presentation at the opening of the 10th e-Services Global Sourcing Conference and Exhibition Monday, Business Processing Association of the Philippines executive director for information and research Gillian Joyce Virata said the sector also generated 70,000 new jobs last year, bringing the industry total to 442,164 employees.

“We had a very difficult last quarter of 2008 and early 2009, but recovery started to kick in in the second half [of 2009]. We expect fast build-up within the first semester [of 2010],” she said.

Voice BPO, or the regular contact center operations, contributed the bulk of 2009 revenues at $5 billion, a 22-percent rise from year-ago figures. Coming in at second place was the back-office or non-voice BPO sector, which chalked up over $1.1 billion in earnings, representing a 35-percent rise from the previous year.

In terms of employment, the call center sector also provided the most jobs last year at 280,000 people, followed by the back-office sector at 86,000, and information technology outsourcing at 35,300.

For this year, Virata said the industry expected a rapid build-up within the first half as well as a greater diversity of service offerings. In terms of challenges, the BPO sector would have to contend with the negative perception issue that the country suffered abroad and the need to refocus government support for the industry.

She said the priority programs for 2010 would include the creation of a virtual BPO university, the rollout of the National Assessment Competency Program to an initial 10,000 students, the provision of P350 million worth of scholarships under the Pangulong Gloria Scholarship fund, the launch of a local and international campaign on the Filipino knowledge worker, and the conduct of the 2nd International Outsourcing Summit.

Laws that the industry hoped would be passed this year include the data privacy bill and the bill creating a department of information and communication technology, both of which failed to pass in the 14th Congress.

She said the IT-BPO industry was expected to continue treading the growth path this year, with revenues seen hitting $12 billion.

Source: Inquirer.com

“Time is running out with the current Congress coming to a close,” said Roxas-Chua. “There are only five session days left to get these bills passed and they have to compete with many other bills. It’s going to be an uphill battle. But we are not giving up yet. Unfortunately, if we’re not able get these bills passed in the current Congress, they will have to start from scratch in the next one.”

The CICT has also been pushing for the Cybercrime Bill, which was submitted for approval two years ago.

The Philippines is one of the only countries in Asia which does not have a fully fledged department of IT. The delay to upgrade the CICT to the DICT has frustrated many government stakeholders, who see the DICT as a necessary step towards the Philippines becoming a world-class IT hub.

If the bill is passed, the DICT will focus on four key areas: supporting the ICT sector, pushing for e-governance, developing ICT skills and promoting universal access to ICT, Roxas-Chua explained. “Regardless of whether the bill is passed, the CICT will continue to focus on these areas and get as much done as we can before the term ends in June.”

The CICT Chairman added that the upcoming elections, which – if all goes according to plan – will be the first automated vote in the archipelago, has not helped the passage of the DICT bill.

“The elections are playing a big role in diverting people’s attention from the passage of these important bills,” he said. “We were hoping to get these bills passed last year before election fever started, but this is the situation we are in and we just have to make the most of it.”

However, Roxas-Chua is more bullish that the Cybercrime Bill will be made law. It is similar in framework to the Convention on Cybercrime of the Council of Europe, “so we are confident it measures up to international standards,” he said. “It will give our law enforcement agencies the much needed legal framework to apprehend and convict cyber criminals.”

Gloria Arroyo, the President of the Philippines, made a personal appeal to lawmakers to pass the DICT bill in the summer. It was the first time the President mentioned ICT in her address.

Source: http://www.futuregov.net

————————
About The Author
———————–
Robin Hicks
Editor of Future Gov
Tel: (+65) 6324 7620
Email: robin.hicks@alphabet-media.com

John Price, Shanghai

When President Hu Jintao toured Latin American capitals in November 2004, he predicted that trade and investment flows between China and Latin America would both surpass $100 billion within a decade. His forecasts turned out to be too conservative on trade but naively ambitious regarding the flow of Chinese investment to Latin America. Two-way trade topped $140 billion in 2008 but, according to Shanghai’s SinoLatin Capital Analysis, accumulated Chinese investment in the region at the end of 2008 stood at a meager $12 billion, considerably less than the foreign direct investment into Latin America from the U.S. state of Michigan.

What the booming trade figures underscore is the growing dependency between China and resource-rich Latin America and the compelling logic of partnership. The disappointing investment flow levels, on the other hand, reflect the many challenges in bringing together two utterly different cultural, political, business and legal systems, in spite of the economic imperative to do so. The missing actor, whose absence has prevented the marriage of the Latin American suitor and the Chinese bride, is the proverbial marriage broker — the bi-cultural professional class of bankers, lawyers, and consultants that can construct and maintain cross-border investments.

It takes time to develop effective marriage brokers in global business, but progress is being made. As his company’s name would suggest, Erik Bethel, principal of private equity firm Sino-Latin Capital in Shanghai, is one such cross-border broker. Bethel recognizes the potential of Latin America to Chinese investors and is gambling his professional career on that promise. Born in Miami to Cuban parents, educated in the Ivy League of U.S. colleges, Bethel honed his investment banking skills in Latin America, then decided to pursue the China dream and moved to Shanghai seven years ago. At that time, Shanghai was still a would-be financial center, littered with cranes and covered in construction dust.

Since then Shanghai as boomed as a financial hub and Bethel has learned Mandarin. More importantly, after searching high and low, Bethel has identified some of the elusive cast of dealmakers among China’s state-owned enterprises (SOEs), whom he must woo into investing in Latin America. “Unlike the traditional global financial centers of Wall Street or the City of London where big investors walk with the swagger of pseudo-celebrities,” Bethel explains, “the guy writing the check in China is likely to be a humble bureaucrat working diligently behind a non-descript desk. He doesn’t frequent fancy clubs or high profile conferences. Finding him is half the battle.”

Bethel and other pioneers like him may be the key to China making good on Hu Jintao’s investment forecast. “My job,” says Bethel, “is to find that SOE investor, who by and large has a rudimentary, if not distorted, perception of Latin America, educate him on the opportunities and realities of doing business in the region, and hopefully convince him to get on a plane and go kick the tires on the great potential that exists for Chinese companies. I realize that this is both a frightening and exciting prospect for someone, who may never have left China other than to go to Hong Kong, and who speaks only a smattering of English and no Spanish or Portuguese, but the opportunities are just too great to ignore. Not to put too fine a point on it, but without someone like us undertaking this great effort, how on earth is Chinese money ever going to find its way to Latin America?”

Indeed, the challenge of bringing together Chinese capital and Latin American resources requires many more foot soldiers like Bethel in China. From the Chinese investor’s perspective, Latin America still seems more distant and exotic than the many investment opportunities at home or within China’s continental sphere. Nothing less than a full-press educational and public relations effort is needed inside China by all those with an interest in attracting Chinese capital to Latin America, be they diplomats, multi-latinas or the professional service firms bent on catching the wave of investment.

China, the new source of global investment capital

While many Chinese investors have yet to discover Latin America, no one now doubts the tectonic shift of capital flow coming out of China. For the last 15 years, ImageChina has absorbed more direct investment than it exported as the global Fortune 1000 bet their futures on the Middle Kingdom. When the year-end numbers are in, however, 2009 is expected to mark the first year of positive net outflow of investment capital for China, with over $100 billion in the form of direct foreign investment overseas.

China’s sudden emergence as the new FDI source on the world stage is explained in large part by its export-driven economic growth model. In order to maintain an undervalued currency and, with it, full employment — a political imperative — China must export $250 billion of capital each year to balance its excess trade and tourism surpluses. For several years now, the easy solution was for the Central Bank of China to buy U.S. Treasury bills, thus helping to stoke the engine of U.S. consumerism (and Chinese exports) with record low U.S. interest rates. That formula looks less attractive thanks to undisciplined U.S. monetary and fiscal management which represses U.S. interest rates and weakens the dollar, as the prospect of much higher U.S. inflation looms ahead.

The one-trick pony model of exporting to the over-indebted U.S. middle class is now passé. China must look to other markets for its exports and simultaneously speed the rise of its internal consumer base. Middle income emerging markets like most of Latin America, South and North Africa, SouthEast Asia and Central Asia are in many ways more natural markets than the U.S. for China’s portfolio of mass-produced consumer goods. Building bridges both politically and commercially in those markets requires outbound Chinese direct foreign investment.

Garrigues, Spain’s largest commercial law firm, whose transactional practice follows closely the global flows of capital, set up an office in China in 2005, when Spanish firms had caught the China bug and were pouring in capital. Francisco Soler Caballero, head of the Shanghai office, explains, however, that the firm’s business, like the international capital flows, has reversed course. “We came to China to help Spanish companies enter the Chinese market,” says Soler. “We continue to help Spanish companies expand in China but the economic crisis in Spain has curbed the appetite of Spanish companies for costly Chinese acquisitions. Today, we find more cross-border opportunities with Chinese companies who want to expand abroad. Having helped countless Spanish companies enter Latin America, we are now doing the same for Chinese SOEs. It is a welcome but unpredicted turn of events for our China practice.”

Internally, China has all it needs to develop its economy save one important element, natural resources. There is a growing sense of concern among Chinese economic planners that medium-term growth is threatened by an uncertain supply of raw materials, which presently China must import from foreign controlled firms. When Japan and South Korea reached a similar impasse during their rise to developed-nation status, they chose to negotiate long-term supply contracts with oil, gas and mineral producers, carefully selecting downturn years to lock in attractive pricing over 10-30 years. With their strengthening currencies and relatively low commodity prices, such a strategy made sense for Japan and Korea in the late 80s and 90s. Given China’s obsession with maintaining its cheap currency, its resulting excess liquidity and the likelihood of continued elevated pricing with commodities, it makes far more sense for China to venture out and buy operational control of its raw material supply.

In 2008, China had 19.6 billion barrels of proven oil reserves and 2.3 trillion cubic meters of proven natural gas reserves (14th and 16th largest reserves in the world, respectively). But given China’s vast energy demands, China still had to import 55% of its crude oil consumption in 2008, according to the China National Information Center.

By 2020, Chinese natural gas production is expected to fall short of consumption by 50-100 billion cubic meters, which explains why PetroChina went on a recent shopping trip to Australia in search of gas production assets.

Even more dramatic are China’s shortages of metals and minerals. According to the U.S. Geological Survey, Chinese reserves of copper, manganese, and nickel are 5.4%, 8%, and 2.5% of the world’s total, while China accounts for 27%, 48% and 22% of the world’s total consumption of these metals.

Even in the politically sensitive terrain of food supply where China spends billions subsidizing its agricultural base, the country cannot avoid a reliance on imports. Soybean is a good example. China currently imports over 60% of its annual 50 million tons of consumption. In terms of forestry, China is one of the largest importers of wood pulp and industrial round wood (7.4 million tons and 38.6 million tons in 2007, respectively) not only to satisfy the domestic market but also the export-driven demand of its paper and furniture industries.

Risk adverse

Latin America has the good fortune of having many of the top producers of the resources that China so badly needs. And there is clearly no shortage of capital in China.

New suburban homes in the Pudong district of Shanghai are sold before they are built, at a cost of $3-$5 million for a 3,000 square foot, two-floor home in a gated community. China’s own economic stimulus package includes vast, and some say, opulent infrastructure projects. The 30 kilometers of high speed rail track from central Pudong to Shanghai’s airport carries its passengers up to 430 km/hr for a total of 8 minutes at a construction cost of almost $2 billion. If Chinese money can find its way into such questionable investments, why can’t Latin America attract more Yuan to its compelling array of resource companies and infrastructure opportunities?

The small and nascent talent pool of service professionals that can bridge the regions may be the most important reason for the disconnect thus far, but equally important are Latin America’s lingering perception problems.

Predictability, which the Chinese value above all else, is not a traditional Latin American virtue. Chinese investors are disheartened by Latin America’s history of volatility. Rather than seeing currency fluctuation as an opportunity like many savvy Latin American investors do, the Chinese loath the uncertainty that it adds to their forecasts. Many Latin American economies have made tremendous strides to curb currency volatility and build international reserves through floating currency regimes and fiscal discipline. Chinese investors need to be enlightened about this change and to become better versed in the science of currency hedging. They also need to learn how to navigate and mitigate the legal and political risks of doing business in Latin America.

At home, large Chinese SOEs can rely on the rule of law or their own political power to manipulate the rule of law to ensure legal and regulatory certainty. When the same companies look abroad, they tend to prefer one of three models; a sound legal environment, like Australia, Canada, the U.S. or Europe, where their investments are defendable through the courts; or small, undemocratic economies like the Sudan and Burma, where they can exercise political influence to their liking; or satellite economies like Hong Kong, Macao, and Taiwan where they enjoy political sway and legal protections.

The perception in China of Latin America is that the region offers neither the protections of a transparent legal system nor the ability to exercise unperturbed political influence. Some of the largest mergers and acquisitions to date in the region have been via the purchase of foreign-listed companies, such as Corriente Resources (copper mining) and EnCana (oil and gas), both Canadian companies with significant investments in Latin America. In this respect, it is the legal community that must lead the effort to illustrate the defendable legal rights of foreign investors in Latin America’s more advanced economies and differentiate those from the list of countries in the region where legal risk remains a serious obstacle.

Related to legal risk is the acute Chinese sensibility to political risk. Latin America’s political dynamic is frankly too fluid and complex for most Chinese investors to grasp. The need to campaign from the left and govern from the right, which is Latin America’s political hallmark, can prove both alarming and confounding to Chinese investors. The relatively decentralized governance of most Latin American countries adds another source of anxiety to Chinese investors, who must get used to idea that in Latin America they are as vulnerable to the vagaries of local politics and local political players like labor unions, NGOs, and indigenous advocates, as they are to the whims of the executive branches or national legislatures. China learned this lesson when Chinese copper giant Zijin faced violent labor conflict with its Rio Blanco mine investment in Peru.

When it comes to political risk, the Chinese need to alter their thinking, not just to deal with Latin America, but with most countries in which they wish to invest. China’s lack of understanding of political risk cost them dearly in the U.S. when in 2005 the China National Offshore Oil Company (CNOOC) was denied by the U.S. government in its bid to purchase Unocal, subsequently gobbled up by Chevron. China miscalculated again when telecom equipment maker Huawei was turned down in its quest of 3Com.

Perhaps Latin America’s most difficult image problem is that of physical insecurity. In a country like China where physical violence toward the business class is unheard of, where guns cannot be owned by its citizens, Latin America is the wild west by comparison.

It is one thing for a company to visit Latin America to sell goods or buy raw materials. In either case, the risk of physical violence intruding on the negotiations is minimal. But in the case of Chinese foreign investment, which typically relies on securing Chinese managerial control through the transfer of dozens, if not hundreds of employees from China to the foreign operation, the risk is considerably greater. The internationally readied managerial labor pool in China is very thin, such that sending people to an “unsafe” environment is not an easy internal sell for many Chinese firms. Overcoming the security hurdle requires a dual effort. Latin Americans need to more openly address their security shortcomings when presenting their countries, regions and companies as investment destinations. Meanwhile, Chinese investors need to embrace security risk by better understanding it and learning how to mitigate such risks through preventive measures and insurance products.

In November 2008, the economic imperative of Chinese natural resource investment in Latin America received a boost from China’s Ministry of Foreign Affairs when it published in its Latin American regional policy paper a centerpiece mandate titled “Go Outward” (走出去). In China, government directives still matter because it is the government controlled SOEs (typically 70% government, 30% private ownership) that naturally lead the charge of outbound foreign direct investment. These vast oligarchy-like enterprises have the capital (or privileged access to it) and the need to invest in their supply base.

High-level policy embracement of a “Buy Latin America” strategy was slow in developing in part because China always considered it an untouchable zone of influence of the U.S. That fear has evidently subsided or been usurped by the sheer economic imperative of securing natural resource supplies. The recent push by the government has prompted a new sense of urgency to invest in Latin American resource companies and resource related infrastructure projects.

The onus now lies upon vested interests to build the bridges that will bind this vital, though still awkward, partnership. Latin Americans, with the help of service professionals, especially investment bankers, private equity funds, law firms, risk consultants and insurance firms, must step up their efforts to educate their future Chinese partners on how to evaluate, navigate the opportunities and mitigate the risks of investing in Latin America.

The author: John Price (jwprice@kroll.com) is a Managing Director of Business Intelligence in Latin America and a leading case manager on political risk investigations throughout Latin America.

Source: tendencias.infoamericas.com

According to sources close to the development, the estimated $600 million company, which employs around 40,000 people, has been valued at around $1.6 billion. It is learnt to be talking to at least three merchant bankers for handling the issue. The IPO will be a fresh issue of shares and the Ruias will not offload any stake.

The Rs 65,000-crore Essar group is not only interested in unlocking value through the Aegis IPO, it also plans to use this ‘‘as a currency” for future mergers and acquisitions that it is said to be looking at, a source, who did not wish to be identified, told TOI.

Once listed, Aegis would join a handful of pure play listed BPOs such as Genpact, Firstsource, EXL and WNS Global Services. Other than Firstsource, all are listed outside India. While an Indian listing is the most likely option for Aegis, a probable London listing is also not ruled out. When contacted by TOI, an Essar spokesman refused to comment.

Commenting on the proposed listing of Aegis, Avinash Vasistha, CEO of Tholons, a Bangalore-based outsourcing advisory firm, said that its presence in a customer service centre in the Philippines and the traction they have shown in the domestic market will stand them in good stead when they justify the premium. ‘‘The potential growth in the BPO sector is tremendous and significantly higher than IT. Aegis is much more than a pure call centre company,” he said.

However, to justify premium the Essar group has to show their growth in the non-voice BPO business and sell that story, he added.

Aegis has been working in the field of customer lifecycle management (CLM) for the last 20 years. It has a successful history of 14 acquisitions and integrations in the last four years.

When the Essar group acquired Aegis four years ago, it was a loss-making company. However today, it has 135 clients and operations across 38 delivery locations around the world.

Aegis counts its global footprint and global delivery model as its strong points. It has a presence in United States, the Philippines, India, Costa Rica, Australia, South Africa, Kenya and Sri Lanka and is now said to be looking at a presence in Europe and Latin America. It services some of the leading companies in the banking, insurance, telecom, health, and travel and hospitality sectors across the world.

Source: http://timesofindia.indiatimes.com

Competition from countries that have a greater cultural affinity with the US is fast upstaging India in outsourced voice services, compelling call centres to diversify into non-voice areas and give up their efforts to change the accents of Indians. Some centres have started moving up to higher-end voice based services that requires technical knowledge and problem-solving capabilities (a space where India still has an advantage), while some others are moving to service domestic call requirements.

In voice, many customers prefer the Philippines, a country that has been a US naval base and is hence culturally far closer to the US than India has been. India has already lost tens of thousands of jobs to this Pacific Ocean nation.

India had over 3 lakh call agents in 2007 when the Philippines had just half of that. Today, India and the Philippines have an equal strength of 3.5 lakh people in voice BPO.

Raman Roy, regarded as the father of India’s BPO business, says that as a percentage, the outsourced voice services to India is on the decline while that to the Philippines is accelerating. “Quality suffers because of the lack of proper educational and training platforms in tier 2 and tier 3 towns. And productivity comes down when agents are given thin incentives for making successful sales calls,” he says.

Deepak Patel, CEO of BPO company Aditya Birla Minacs, says just about one sales or loan recovery call out of 100 made from India would be successful, while it would be 4 to 6 in the Philippines. “South Africa, the Caribbean, South America, Australia and Ireland are other major voice destinations for US companies now,” he says, adding, “Indians are often not able to handle irate foreign customers. We will certainly not be there to service premium markets, but we may be still there to service areas of high immigrant populations.”

Omega Healthcare management Services CEO Gopi Natarajan says telemarketing services for insurance and credit cards are clearly on a decline in India. However, he sees voice still growing in niche areas like accounts receivables, analytics, follow up and claim denial management in healthcare.

Gaurav Gupta, country head of outsourcing research firm Everest Group, also says “it’s not a complete dead end for voice”.

In certain areas like technical calls and problem solving calls, “where customers don’t bother so much about your accent, India still had a great opportunity because of our technical and engineering skills,” he adds.

Source: http://timesofindia.indiatimes.com

After overtaking Infosys in profits for the first time a few quarters ago, TCS has now upped its rival by posting a higher, 11% sequential rise in net profit to Rs 1,824 crore.

The growth was aided by tighter cost-control measures implemented in the tougher quarters and lower forex exposure but, as TCS CFO S Mahalingam says, this quarter was a business story.

Cut to TCS CEO N Chandrasekaran. The 46-year-old is easy in his manner but like nifty piece of software which has miles of code behind it, his words are measured. At its third quarter results announcement, Mr Chandrasekaran was emphatic about the nature of growth that the company delivered. And in an exclusive interview with ET, he made that point again.

“I am happy with the nature of growth. We saw very good growth volumes including in the troubled sectors of manufacturing, hi-tech and retail. I was expecting de-growth or flat growth… They didn’t grow significantly but they grew,” Mr Chandrasekaran said. This is where the country’s largest and second largest exporter differ. While Infosys’ growth was led by financial services, TCS saw all-round growth.

This will also set the stage for the next phase of growth as Mr Chandrasekaran and his team start focussing on bringing in more volume of business from other sectors to over 5% sequential growth.

“Volume growth is above 5% only in couple of verticals (sectors). I want to see that growth comes in at least three or four verticals. It doesn’t matter which ones but we need to have a portfolio of verticals which are growing at good volumes. Currently verticals such as BFSI (banking financial services, insurance) and retail are in high single digits, others are in low single digits,” he said.

The next boost for TCS, and probably for the IT industry, could be discretionary IT spends opening up. During the recession, IT spends have been restricted to keeping existing systems running, while spending on new projects or discretionary spending has either dried up or shrunk. There have been early indicators of that in higher orders for the consulting and enterprise solutions business for TCS.

“Both consulting and enterprise solutions business showed increase. Basically these projects are from discretionary spends. That is a good sign,” he added. In addition, to signalling discretionary spends are beginning to happen, consulting projects also mean downstream revenue in new application development projects for service providers.

But Mr Chandrasekaran says it’s too early to bring out the trumpets. “If consulting and enterprise solutions pick up it’s usually a lead indicator that discretionary spend will come in for ADM (application development and maintenance) work as well. But we can’t just go by one quarter, we need to wait and watch.”

The current growth has largely been driven by the move towards offshoring rather than an increase in IT spends by clients.

Source: http://economictimes.indiatimes.com

According to Capgemini, 19 per cent of outsourcing undertaken by Australian companies was sent offshore, compared with 14 per cent by their international cohorts.

“When technology outsourcing happens in Australia, the chance of it having an offshore element is much higher than overseas organisations,” Capgemini Australia business managing director Deepak Nangia said.

Australias geographic and time-zone proximity to relatively low-cost offshore bases was key to the adoption of offshoring.

Mr Nangia said there were fewer barriers to reaching out to mainland Asia as an offshore centre compared with European countries or the US.

Offshoring was especially evident in the financial services sector, in which outfits such as Tata Consultancy Services, Mahindra Satyam, HCL, Wipro and Infosys had a large presence.

Commonwealth Bank, Westpac, ANZ Bank and National Australia Bank relied on Indian outsourcers for technology services and Mr Nangia said the tendency to outsource and offshore would increase because most local firms still had large internal IT departments.

Source: http://www.offshoringtimes.com

iYogi provides online technical support for personal computers to small business and individuals across the world. The company was founded in 2005 by current CEO Uday Challu and Vishal Dhar, who is president of marketing. The rapidly growing company had revenues of $7.1 million ( Rs 33 crore) in 2008-2009 which are expected to grow to $21 million (Rs 97 crore) this year. iYogi is expecting 300% revenue growth for 2010-2011 at $61 million.

The company has established a presence in the North America, the United Kingdom, Australia and Canada. It has doubled its employee base to 1,200which it expects will increase to 3,000 by next year.

iYogi offers a number of services like PC recovery, anti-virus/spyware, data back-up and PC optimization. Its annual unlimited tech support plan starts at $139.99. Right now it records 2,000 sessions everyday and has 100,000 annual subscribers, said Uday Challu in an interview to VCCircle. “We are already cash-flow positive and need the money to grow at a substantive space,” he said.

“This is not a commodity business which it may seem at a higher level. They have created a significant barriers to entry not only around technology but also around the brand,” said Mohanjit Jolly, executive director at DFJ who will join the board of iYogi. DFJ had earlier backed a similar company in US called Everdream, which was acquired by Dell in 2007. The deal is one of DFJ’s largest investment in India along with travel portal Cleartrip and electrical car maker Reva.

iYogi is now looking at various channels to reach out to its target customers, who Challu says are typically people who have embraced technology late and need it to for functions like banking, travelling, etc. To tap this audience it has partnered with retailers like Amazon and Walmart. It is also planning to tie-up with 2-3 original equipment manufacturers. iYogi will also tie-up with software companies, which will have its numbers as their support line. “It’s a multi-pronged strategy to reach out to the same consumer base as we are going to all the gateways of technology adoption,” said Challu.

In order to expand its services and presence, iYogi last year acquired US-based Clean Machine Inc, a personal computer security and performance management service provider. That deal helped the firm get new product offerings and Clean Machine’s founder Larry Gordan, who has been senior executive at firms like Cognizant, Capgemini and Kanbay. Gordan is now president of Global Channel Sales for iYogi. It also boosted its senior management recently with appointment of Joy Basu, former Rediff.com CFO.

The area of personal offshoring is starting to gain traction in India. While outsourcing from the enterprises and corporates around the world continues to be a big market for Indian IT/ITES companies, outsourcing services for individual and small businesses is still growing. Another segment in this area that caught investor attention is e-learning with companies like Tutorvista and Learningmate raising several rounds of funding. Other areas where personal offshoring is present are remote executive assistant (websites like GetFriday), personal income taxes and website designing.

Source: http://www.iyogi.net

The top 15 vendors analysed by research firm Forrester in a recent report provided remote and onsite services for about 16.7 million desktops, 1.7 million servers and 23.4 million users globally. These vendors, including IBM, HP-EDS, CSC and some Indian tech firms including HCL delivered $83.9 billion worth of infrastructure services last year.

By outsourcing the management of their desktops, computer servers, storage and communication infrastructure, customers such as Nokia, Xerox and Citigroup plan to have leaner balance sheets, reduce their operational expenses by upto 40% and focus better on their core business.

At least three outsourcing consultants involved with helping customers outsource infrastructure management said nearly $30 billion of such contracts are up for renewal in 2010, and almost quarter of these contracts will go to new suppliers, with the rest to be renewed with incumbents IBM and HP-EDS. “In last two years we have demonstrated our capability to take over from incumbent providers,” said Anant Gupta, president of HCL’s infrastructure services division. “Despite remote infrastructure becoming popular, there were doubts about whether we can provide global support — our recent wins have proved that we can,” he added.

Among large outsourcing contracts for infrastructure management, HCL signed $350 million seven year deal with Readers Digest earlier this year, apart from similar deals with Nokia and Xerox. On its part, domestic rival Wipro acquired Citi Technology Services for around $127 million in December last year, which came with Citigroup’s commitment to outsource all future infrastructure management contracts to Wipro, potentially worth almost $1 billion over six years.

Large multinational rivals such as IBM and HP have traditionally been strong in delivering multi-year management contracts because these companies are able to bundle services with their hardware products and even offer lucrative finance and credit options to customers.

“There’s no way we would ever get into financing such deals, but we are aligning with hardware divisions of some of our competitors for offering newer delivery models such as pay-per-use,” said a senior executive at one of the top Indian tech firms. He requested anonymity because his company is in a financial silent period before announcement of financial results.

“Some clients clearly will require the scope only an IBM or HP can deliver, but many don’t,” said Dr Paul Roehrig, principal analyst at Forrester Research. “All of the India-centric firms included in the study — Cognizant, HCL Technologies, Infosys, TCS, and Wipro — have excellent forward-looking strategies for the infrastructure business,” he added.

Experts such as Diptarup Chakraborti, principal research analyst at Gartner say that Indian tech firms have already become multinationals by hiring more local workers, which will help them gain large contracts.

“With large domestic deals in Infrastructure management, Indian IT companies have already proved that they possess the relevant skill sets. Wipro’s deal with Uninor for about $500 million (about Rs 2500 crore), this year is comparable to any large international deal,” said Mr Chakraborti.

Source: Indiatimes.com

A spokesman for Vodafone Hutchison Australia, who earlier flagged a total of 380 job cuts, said the company would transfer an unspecified number of positions to a call centre in Mumbai and about 100 jobs to Kingston, Tasmania.

Service Stream, the company that was running Vodafone contract confirmed the telecom operators plans to end the contract employing 450 in customer service and support roles starting in October to February, in a move that will shift the positions to Vodafone offices in India and Tasmania.

Service Stream acting managing director Michael Doery said the company would try to find new roles for the affected employees, but was unlikely to accommodate them.

We are trying to do the right thing for our staff but not give them false expectations, he was quoted as saying in The Age.

Call centre people are unlikely to suit the other sort of work we do, which is technically-based or based on outdoor civil activities, however, if a company were providing services to makes a decision to in-source call centre jobs to Tasmania and India, thats not our decision, Doery said.

Meanwhile, speaking of the changes, Vodafone Hutchison Australia chief Nigel Dews said, The opportunity to use our combined scale to enhance our customer service capabilities is an important outcome for the Vodafone Hutchison Australia merger.

Source: http://www.offshoringtimes.com

BEIJING (Reuters) – A Chinese IT outsourcing company and an optical components maker are aiming to select investment banks in the next two weeks with the goal of making U.S. initial public offerings by as soon as the first half of 2010, one of their investors said on Monday.

HiSoft, an IT outsourcing company in the cities of Beijing and Dalian, and NeoPhotonics, an optical components maker in the city of Shenzhen, were both close to selecting investment banks, Nikunj Jinsi, chief investment officer of International Finance Corp, told Reuters.

“They’re a week away from selecting their bankers,” he said on the sidelines of a conference in Beijing. “They’re looking at a timeframe of the second or third quarter of next year.”

Both companies were looking at relatively modest fundraising plans, most likely in the $75-125 million range, he added.

A third IFC-invested company, China Digital Video (Beijing) Ltd, a maker of digital television technology known locally as Newauto, was also looking for investment banks for a U.S. public offering, Jinsi said, adding that it was not as far along in the process as the other two companies.

He did not specify where in the United States the companies intended to go public, but such smaller growth companies typically list on the Nasdaq.

They join a stream of about 10 Chinese companies that have gone to the Nasdaq this year to raise money since IPO activity has picked up with the ebbing of the global financial crisis. Two of those have been online game companies Changyou.com (CYOU.O) and Shanda Games (GAME.O).

Such companies have gone to the Nasdaq to take advantage of its strong liquidity and relatively high valuations.

They previously were also largely locked out of listing in the China market by stricter rules favoring large former state-owned companies. But that could change in coming years following China’s launch of a Nasdaq-style enterprise board, known as ChiNext, in October in the southern city of Shenzhen.

One Nasdaq-listed Chinese company, ChinaEdu (CEDU.O), was considering spinning off one of its units for a listing on the ChiNext board, Julia Huang, chief executive of the company specializing in online education services, told Reuters at the event.

But she added that plans were still at a very preliminary stage, and declined to give details.

“The first reason we’re considering this is that P/E ratios are relatively high,” she said. “The second is that most of our business is in China, so our reputation is much bigger here.”

(Reporting by Doug Young; Editing by Chris Lewis)

Source: Reuters.com

People here are also worried about the future. They fret that Bangalore, and India more broadly, will remain a low-cost satellite office of the West for the foreseeable future — more Scranton, Pa., in the American television series “The Office,” than Silicon Valley.

Even as the rest of the world has come to admire, envy and fear India’s outsourcing business and its technological prowess, many Indians are disappointed that the country has not quickly moved up to more ambitious and lucrative work from answering phones or writing software. Why, they worry, hasn’t India produced a Google or an Apple?

Innovation is hard to measure, but academics who study it say India has the potential to create trend-setting products but is not yet doing so. Indians are granted about half as many American patents for inventions as people and firms in Israel and China. The country’s corporate and government spending on research and development significantly lags behind that of other nations. And venture capitalists finance far fewer companies here than they do elsewhere.

“The same idea, if it’s born in Silicon Valley it goes the distance,” said Nadathur S. Raghavan, a investor in start-ups and a founder of Infosys, one of India’s most successful technology companies. “If it’s born in India it does not go the distance.”

Mr. Raghavan and others say India is held back by a financial system that is reluctant to invest in unproven ideas, an education system that emphasizes rote learning over problem solving, and a culture that looks down on failure and unconventional career choices.

Sujai Karampuri is an Indian entrepreneur who has struggled against many of these constraints.

His Bangalore-based company, Sloka Telecom, has developed award-winning radio systems that are more flexible, smaller and less expensive than equipment used by phone companies today. Mobile phone companies and larger telecommunications equipment suppliers are buying and testing his products, but he has not been able to interest Indian venture capitalists. For the last five years he has run his firm on $1 million he raised from acquaintances.

“I can only afford to trial with one customer at a time and that takes three months to materialize,” said Mr. Karampuri, who has considered moving the company to the United States to be closer to venture capitalists who specialize in telecommunications. “You are always worried about paying next month’s salary to people. Should you keep the money for this trial or next month’s salary?”

Companies like Sloka Telecom are important, analysts say, because they are more likely to create the next wave of jobs than large, established Indian technology companies, many of which are experiencing slower growth. These companies could also help offset some of the outsourcing jobs the country will likely lose because of greater automation and competition from countries where costs are even lower.

There are historical reasons that starting a business in India is difficult. During British rule, imperial interests dictated economic activity; after independence in 1947, central planning stifled entrepreneurship through burdensome licensing and direct state ownership of companies and banks.

Businesses found that currying favor with policy makers was more important than innovating. And import restrictions made it hard to acquire machinery, parts or technology. Inventors came up with ingenious ways to overcome obstacles and scarcity — a talent Indians used the Hindi word “jugaad” (pronounced jewgard) to describe. But the products that resulted from such improvisation were often inferior to those available outside India.

“We were in an economy where, forget innovation, expansion was discouraged, creating wealth was frowned upon, there was no competition to speak of,” said Anand G. Mahindra, who heads the Mahindra & Mahindra business group and has spoken about the need for more innovation.

Indian leaders began embracing the free market in the 1980s and stepped up the pace of change in 1991 when the country faced a financial crisis. Those changes increased economic growth and made possible the rise of technology companies like Infosys and Wipro, which focused on providing services for American and European corporations.

Yet, the government still exerts significant control, especially in manufacturing, said Rishikesha T. Krishnan, a professor at the Indian Institute of Management in Bangalore.

“To start a services company it really takes you just two or three days to get going,” said Mr. Krishnan, whose book, “From Jugaad to Systematic Innovation: The Challenge for India,” is to be published next year. “The moment you are looking at manufacturing, there are hundreds of inspectors and regulations.”

Raising money is one of the biggest challenges entrepreneurs face. Venture capital funds have flocked to India in recent years, but they are more likely to invest in established businesses than young firms.

Source: http://www.nytimes.com

Beijing-based IT solutions provider Digital China Holdings (0861.HK) has signed an agreement with Canada’s Research In Motion (RIM) (Nasdaq:RIMM) to distribute BlackBerry handsets in China, TechWeb.com reported December 7.

Previous rumors said that RIM and China Telecom (NYSE:CHA, 0728.HK) were expected to conclude talks over their Blackberry cooperation by the end of the year. RIM has already teamed up with China Mobile (NYSE:CHL, 0941.HK) to offer BlackBerry handsets and mobile email service in China.

Digital China is an integrated IT service provider in China with approximately 9,300 employees as of September 30.

Source: www.jlmpacificepoch.com

CEBU, Philippines – American outsourcing firm JP Morgan Chase & Co. (JPMC) will open a 420-seat call center facility in Cebu at the Asiatown IT Park.

This would provide an additional employment of 2,520 people in a two-shift cycle. Currently, the locators at the 24-hectare Asiatown IT Park employ close to 13 thousand people.

JPMC recently signed a five-year lease contract to occupy four and a half floors or a total of 12,404 square meters of office space at the newly completed eBloc Tower, for their Philippine Customer Care Center facility.

JP Morgan Chase is one of the largest banks in the United States and one of the oldest financial firms in the world. It offers a well-balanced mix of mergers and acquisition advice, financial advisory and capital raising solutions.

For over 40 years, JP Morgan has built a strong presence in Asia and has large network of offices in South Asia including Vietnam, Thailand, Malaysia, Singapore and the Philippines.

JPMorgan Securities Philippines Inc., conducts equities business which includes sales, research, and trading. JP Morgan Chase Bank, N.A.-Philippine Customer Care currently handles inbound and outbound call for the firm’s US based retail businesses—retail loans and card services.

Cebu Property Ventures and Development Corporation (CPVDC) the developer of Asia Town IT Park announced that by March of next year, JP Morgan will start its operations in Cebu.

CPVDC president Francis O. Monera said that the positive turn-out of investors’ interest to locate at the eBloc Tower, prompted CPVDC to start building a sequel of eBloc Tower or the second eBloc Tower in the next few months.

Cebu Investments and Promotions Center (CIPC) managing director Joel Mari S. Yu said in a separate interview that the existence of big names in the BPO sector in Cebu, would further strengthen the Province’s name as the preferred BPO destination in the world.

Yu reported that investors’ inquiries for BPO voice and non-voice have started to pick up. In fact, in the last few weeks CIPC had hosted several potential investors making ocular inspections in Cebu.

Yu hopes that this time, Cebu will be able to benefit from its number one “Emerging BPO destination” in the world position for two consecutive years (2008 and 2009), as the province was not able to fully enjoy it last year, because of the global recession.

While US is still the largest market for BPO investments, Yu said Cebu also is hoping to attract outsourcing companies from other continents like Europe.

The recent report by Tholons, declaring Cebu once again as number one “Emerging BPO destination” in the world for 2009, would re-enforce Cebu’s popularity as preferred BPO investment hub.

Source:http://www.philstar.com/

Source: JLM Pacific Epoch

STOCKHOLM—Huawei Technologies Co.’s challenge to European rivals has largely focused on its pricing advantage. But industry watchers say the Chinese network-equipment vendor, which last week won a contract from Belgian telecommunications provider Belgacom SA, now has another key selling point: the quality of its technology.

As the telecom industry emerges from the global economic slump, European telecommunication-gear companies—global market leader Telefon AB L.M. Ericsson; Nokia Siemens Networks, a joint venture between Finland’s Nokia Corp. and Germany’s Siemens AG; and Paris-based Alcatel-Lucent SA—are likely to face increased pressure from world No. 2 Huawei in their own backyard.

Huawei, which like smaller peer ZTE Corp. is based in the southern Chinese city of Shenzhen, was founded 1988, and revenue and earnings have risen steadily.

Its sales increased to $18.33 billion last year, the latest figure available, from $5.98 billion in 2005, while profit rose to $1.15 billion from $681 million.

While European vendors have, to some extent, been able to keep these low-cost Chinese rivals at bay through superior equipment, Huawei is growing quickly both because it offers lower prices than most rivals and because the quality of its equipment is getting better, said analyst Scott Siegler at research firm Dell’Oro, based in Redwood, Calif. “When we talk to service providers that use Huawei’s equipment, we have been told that it is excellent technology, he said.”

Huawei’s share of the global infrastructure market almost doubled in revenue terms to 20.1% from 10.9% in the third quarter from a year earlier, leaving behind Nokia Siemens and Alcatel-Lucent, according to Dell’Oro.

In the same period, Ericsson’s market share remained largely flat at 31.6%. Nokia Siemens’s share of the market fell to 19.4% from 23.7%, and Alcatel-Lucent’s, to 13.1% from 14.3%. ZTE remained the fifth-largest vendor, but its market share rose to 6.8% from 4.2%.

It is in Europe where the battle is really heating up. Norway’s largest telecom operator, Telenor ASA, this month selected Huawei to supply its new Norwegian wireless network, replacing gear supplied by Ericsson and Nokia Siemens.

The six-year contract, which includes services and maintenance, was handed to Huawei on the basis of several criteria, including price and technical specifications, Telenor Norway Chief Executive Ragnar Karhus said.

The quality of Huawei’s equipment has improved and the company is now “completely in line” with the European vendors in terms of technology and services, Mr. Karhus said.

Last week, Huawei won another European deal, to upgrade Belgacom’s radio-access networks under a long-term agreement. Belgacom is Belgium’s largest telecommunications operator.

Telecom operators typically sign contracts with equipment vendors running for several quarters or even years, and this could slow the entry of new vendors to some extent.

Still, operators across Europe are expected from next year onward to gradually introduce equipment based around a fourth-generation standard known as Long Term Evolution. This should give the Chinese vendors another opportunity.

“We expect the transition to 4G will allow Huawei to gain momentum in Europe,” Goldman Sachs said in a recent note to investors. “Clearly there are rising competitive risks in Western Europe.”

That risk was spelled out clearly by Nokia Chief Financial Officer Rick Simonson, who said recently there is increasing price competition “primarily from the Chinese competitors ZTE and Huawei.”

Telenor’s Mr. Karhus said Huawei supplies particularly effective multibase stations, which support several transmission frequencies and technical standards in the same box, increasing operators’ flexibility.

Nokia Siemens in October posted a 21% drop in third-quarter revenue from a year earlier and said it will lose more market share this year than expected, even as it gave a more positive outlook for the overall market.

As Nokia Siemens is consolidated in Nokia’s balance sheet, it has a significant impact on the handset maker’s financial performance. Nokia reported a worse-than-expected third-quarter loss after it booked a €908 million ($1.36 billion) goodwill impairment on the joint venture because of “challenging competitive factors and market conditions” in the network-infrastructure business.

Huawei has so far had much less success in overseas regions outside Europe, including in the big U.S. and Japanese markets. Last year, the Americas contributed only 12% of the company’s contract sales, compared with 47% from Asia Pacific and 41% from Europe, Middle East and Africa, according to Huawei spokesman Ross Gan.

Due in part to political sensitivity, it has been difficult for Huawei to gain a foothold in North America and Japan, the world’s third-largest telecom-equipment market, after the U.S. and China, said analyst Tina Tian at research firm Gartner Inc.

The U.S. government last year blocked Huawei from buying U.S.-based networking-equipment company 3Com Corp. because it had government contracts to provide security software.

Still, Huawei’s Mr. Gan said the company expects business momentum to continue in North America and Japan, adding that its main competitive strength is still to provide services at a lower total cost of ownership.

In the U.S., it provides telecom equipment and services to Cox Communications Corp. and Clearwire Corp.

Robert Fox, chief branding officer of Huawei’s branding division, said in a recent interview that next year it hopes to add 600 employees to its 900 existing staff in North America. Globally, it has more than 87,500 workers.

Despite its rapid growth, it will still take some time before Huawei approaches the position of market leader Ericsson, which has expanded its presence in North America through the acquisition of Nortel Networks Corp. assets and has won a number of large service contracts with operators including U.S.-based Sprint Nextel Corp.

Ericsson and Alcatel-Lucent earlier this year also won a major contract to supply Verizon Wireless with its fourth-generation wireless network. Vodafone Group PLC has a minority stake in Verizon Wireless, which is majority owned by Verizon Communications Inc.

Source: http://online.wsj.com

By Deborah Gage

So says the Bay Area Council, which is talking up a 3,000-page report documenting the ever shifting relationship between India and the San Francisco Bay Area — home to the second-largest population of Indians in the U.S. after New Jersey-New York.

Indian technologists who came to work in Silicon Valley in the 1980s would often stay on and sometimes start companies. Vinod Khosla, for example, not only co-founded Sun Microsystems in 1982 but also became one of Silicon Valley’s top venture capitalists. By 1999, nearly a quarter of Silicon Valley’s engineers were Indian, according to AnnaLee Saxenian at U.C. Berkeley. and around 6% of valley companies had Indian CEOs.

Things changed after 9/11, when the tech bubble collapsed and restrictions on visas tightened, and Indians who came to work in Silicon Valley more often returned home.

Now, despite the very close ties between the two regions — Stanford is advising the Indian government on telecommunications reform, for example, while San Francisco firms are designing the Chennai airport and housing for slum dwellers in Mumbai — there are more and more opportunities for skilled Indians in India as Indian wages rise and the Indian tech and biotech industries get more sophisticated.

“For now…innovation in India focuses more on business processes and models,” the report says. “(But) America’s turn to India and other countries for engineering talent is largely the result of the U.S. failure to generate an adequate number of home-grown scientists, engineers and technicians.”

Predictably, the Council calls for better public schools in California and immigration reform so the U.S. can retain talented foreigners.

But it also calls on the Indian government to remove trade barriers with the U.S. and make government more efficient and on Indian IT firms to hire more “non-Indian nationals” if they truly want to become global companies.

For a U.S. group to be calling on Indian companies to create more jobs for U.S. workers is a big change.

Full Report Here

Source: http://www.pehub.com

By Jacob Cherian

According to a report by the Bay Area Council Economic Institue, a new study reveals a significant amount of growth between businesses in the San Francisco Bay Area and India. Though there is a lot of success and promise to go with that, there is also some challenges ahead.

The report was released by the Bay Area Council Economic Institute and sponsored by TiE Silicon Valley, a South Asian business group. The report said tht skilled Indians came to the Bay Area in the early 1980’s and these skilled workers included engineers and programmers. Those who came to the Silicon Valley area from India include major figures who played critical roles in the formation of Brocade, Cerent, Sun Microsystems and Hotmail.

The report also gives numerous examples as to how the relationship between the Indians and the Bay Area got closer as the tech economy went global. Some examples include the following:

· India – Oracle’s fourth biggest market worldwide
· India is home to Symantec’s biggest engineering site, excluding the U.S. Indian employees work on over 80 percent of the company’s products
· 33% of Adobe’s engineering workforce worlwide is in India.
· More than 50% of developers in India work on Sun platforms
· The largest firm in India’s IT market is Hewlett Packard.
· Levi Strauss is spread out across 80 cities in India with 450 outlets
· Cisco’s 2nd biggest headquarters is located in Bangalore
· In 780 Indian cities, eBay has 2 million users; eBay also has 10,000 dealers across India
· Draper International based in San Francisco unveiled the first India-dedicated venture fund
· 40 Bay Area venture companies either have activities in India or are under Indian leadership.

Sean Randolph, CEO of the Economic Institute said in a comment, “The notion of India as an offshore labor source and low wages is outdated,” adding , “India’s growing capacity for high-end services, research and product development is transforming it into a global technology hub.”

He added,. “India and its companies are becoming more deeply embedded in Bay Area companies’ global strategies,” reports ABClocal.

Jacob Cherian is a staff writer for OffhsoreAdvisore, which developes tools for businesses interested in offshoring to Asian countries like India.

Source: http://www.groundreport.com

AS/COA Online: You just got back from Singapore where the APEC summit took place. On the sidelines of APEC, a number of Latin American countries took steps to initiate or move along bilateral trade agreements with Asian countries. Could you talk about what this web of bilateral ties mean for Asian-Latin American relation and for a broader trans-Pacific trade deals?

Farnsworth: On one hand, it’s very positive because it shows Asian and Latin American economies recognize the benefit of enhancing trade and investment relations. I think it’s recognition of an emerging economic reality in the trans-Pacific region and it’s very positive for those Latin American countries that, to this point, haven’t really had a lot of access to Asia. This gives broader and preferential access and I think that’s all to the good. On the other hand, it’s not so good because a proliferation of individual trade agreements, while perhaps good for bilateral relations between the parties to the actual agreement, can actually complicate international trade through matters ranging from trade and investment diversion to supply chain management to just simply knowing what tariff rates are for which economies.

Ideally what you would have in the trans-Pacific region would be one agreement that would cover all the regional economies and greatly simplify trading and investment relations in the Pacific region. That is what has been intended through the idea of a Free Trade Area of the Asia Pacific (the FTAAP), which has been an APEC goal for some time but, given the politics of the region, is not going to happen anytime soon.

One of the most promising and, in my view, the most promising step that can be taken is the conclusion of the Trans-Pacific Partnership. The idea that has come out of several Asia-Pacific countries is to try to create a high-standard trade agreement with economies that have trade deals with the United States. So you’ve got Chile, Singapore, New Zealand, Australia, Vietnam, Peru, and Brunei. To the extent that this really becomes operational—and that’s a big “if””—it could provide a way forward to a broader pan-Pacific trade agreement, which I think is ultimately where we should be going.

AS/COA Online: So this would come out of the P4? Can you explain what the P4 is?

Farnsworth: The P4 is the original agreement initiated by Chile, New Zealand, Singapore, and Brunei about two years ago now. At the time it was not so significant given the context of the economic size and the number of countries included. The reason why it’s become interesting is because, before the election, the United States declared its desire to participate in the P4 discussions. And as soon as the United States came on board, then you had some very significant interest from other economies.

After the election, all trade policy was put on hold. And, until the president gave a speech in Japan on November 14 where he included a line about reengaging on these issues, not much was thought to come of this agreement. So where we are now is there’s some desire to explore it to see where it can take us.

AS/COA Online: While in Asia, President Obama suggested that Washington would potentially move forward on a bilateral trade deal with South Korea. What does that mean for pending deals with Panama and Colombia?

Farnsworth: At one level it’s unrelated because this will be a bilateral issue and the issues will be dealt with based on the political obstacles inherent in that agreement, particularly on beef and autos. But at another level it’s directly related because there’s only so much traffic that Washington can bare on trade, particularly in an economy that has not yet recovered and when unemployment rates continue to rise. So, with more attention and political capital spent trying to move forward on Korea, one could suggest that there will be less political capital to move forward on Colombia and Panama, simply because of the amount of time and attention that will be given to pending trade agreements. You can also make the case that building momentum on South Korea could potentially build momentum for other pending trade agreements, i.e. Colombia and Panama.

I tend to come down on the side of seeing the two as unrelated. I think that all three countries have specific issues before they’ll move forward to the U.S. Congress and that as long as healthcare and Afghanistan and other issues remain on the plate, those will continue to take top priority.

AS/COA Online: In recent years, China and Latin America’s relationships have deepened. What role do you see China playing in Latin America’s economic recovery?

Farnsworth: I think it’s playing a huge role, because China’s growth this year and next year is predicted to be 8, 9, or 10 percentage points, which is amazing when you consider where we are in the context of global economic recovery. At the same time, even the most optimistic projections would suggest that the United States is only going to recover at anywhere from 1 to 3 percent next year and for the foreseeable future. What that means is that a country in Latin America that has the ability to export commodities to China clearly has an advantage. So I see China as being a real engine of South American economic restoration—and I say South American instead of Latin American because of the commodities trade. But even that breaks down even further. A country like Brazil or Peru or Chile will do pretty well whereas South American countries that don’t have the direct links to China may not be able to benefit in the same way. The short answer is that China plays a very large role and it will play an increasingly large role.

Now, that’s a separate issue from Chinese investment into Latin America and how that’s going to play out. Even today, Chinese investment in Latin Americas is simply dwarfed by U.S. and European investment in Latin America. So, yes, they’re the new guys on the block, but they still have a long way to go before they even begin to approach U.S. investment in the region. Having said that, their ways of doing business are different. Their priorities are different and it is changing both the political and economic dynamic in South America. I don’t think we’ve seen the final picture in terms of what all the implications are on that.

AS/COA Online: Is there a danger in the relationship with China being largely based on commodities rather than other types of products?

Farnsworth: The commodities trade is rather cyclical and so that means that there are busts as well as booms. For the foreseeable future, the forecast is that China is going to continue to grow pretty aggressively. That would indicate to some that there’s been a secular shift in the global commodities trade because China’s economy will always demand commodities and therefore the cycle of boom and bust has been broken substantially. I don’t subscribe to that necessarily. I think that maybe there have been some changes, but if you’re fundamentally dependent on one product category and you’re less diversified, then I think you’re always going to be more vulnerable to downdrafts in the global economy. And that’s exactly what we’ve seen over the last 18 months.

Now, fortunately for Latin American economies, they’re coming out of it quickly and for all the right reasons. But that’s not to say that the same thing couldn’t happen again. The countries that are more diversified are going to stand a better chance of weathering severe global economic downturns because they’re going to be able to not just export commodities but also add value to the products that they sell while developing their own domestic markets to boost domestic consumption and, therefore, GDP figures. You would hope that at least some of the countries would use this crisis to take steps to diversify their economies.

I think the one other point I’d make is that Hu Jintao, the premier of China, has gone through South America a couple times and promised all this investment. The reality is it hasn’t materialized. There’s some cynicism setting in in parts of Latin America about the Chinese in terms of what they promise and what they deliver. I think, again, that remains to be played out fully.

AS/COA Online: Mexico is the top location for manufacturing products that are sent to the United States. Do you see China outsourcing to Mexico for manufacturing goods for the U.S. market? What could that mean for the Mexican economy?

Farnsworth: I think that’s a real possibility, although that was the specific reason in the NAFTA [North American Free Trade Agreement] negotiations for drawing strict rules of origin. At the time—15 years ago—it wasn’t done because of China, it was done because of Japan. The fear was that the Japanese would produce in Mexico, and use NAFTA provisions to export from Mexico to the United States.

It’s ironic now that people are concerned about China. The fact is, yeah sure, it’s a possibility and there’s a lot of Asian investment in the maquila sector Mexico. It’s not just Japanese. A lot of it is South Korean, some of it’s Taiwanese, and it’s increasingly Chinese. The maquila sector is, by definition, there to serve the U.S. market. Clearly, people want to be close to the U.S. market and the Chinese are no different. Even with China’s explosive growth over the last generation, the U.S. economy still dwarfs even the Chinese economy.

AS/COA Online: Occasionally media reports suggest China could some day replace the United States in terms of influence in Latin America. How do you see that in the long-term?

Farnsworth: If you talk to the Chinese, they swear up and down that their interest is economic and financial. They don’t seek a political role in the region. Their own participation in Latin American issues might be growing, but it still remains pretty limited and they pose nothing but a benign commercial presence on the region. Anytime the Chinese have been brought into a political discussion, it’s generally at the instigation of a Latin American party, specifically Venezuela. But you don’t get the Chinese at APEC talking big about how they’re going to take over Latin America to supplant the United States. In fact, I don’t think that they will. I don’t think that’s their intent.

But that’s not to say that a new, emerging presence isn’t changing things and that, at some point, it may have some implications for the United States. At the basic level, in terms of contracts and energy explorations and trading relationships, it’s certainly possible that Chinese trade and investment could supplant at least a portion of Washington’s. At another level, I think that a reduction of U.S. influence in the region has more to do with other factors than an increase in Chinese influence, not the least of which is Brazil’s own emergence. There are a lot of factors at play here. The bottom-line with China is that it’s an issue of importance and it bears watching, but we can’t say just yet what the ultimate outlines are going to look like because we’re still in pretty early days.

Source: http://www.as-coa.org

Eric Farnsworth, Vice President Council of the Americas

To speak with this expert, call 212-277-8384 or email communications@as-coa.org

India’s second largest IT company by revenues, Infosys Technologies, says it has agreed to pay upto $58 million for Atlanta-based McCamish systems, adding some 300 U.S. staffers to its payroll, and increasing its presence in what is commonly known as back-office operations, or business process outsourcing.

The deal, which includes $38 million in cash, and another $20 million if the privately held, unprofitable McCamish is able to achieve pre-set targets in the next three years, is an acknowledgement that Infosys needs to ramp up its game in the BPO business, which currently contributes less than 1% to its revenues.

Infosys executives have said in the past that they hope to have that contribution reach as much as a fourth of the $5 billion outsourcing giants revenues.

But business process outsourcing requires a different skill set than the nearly 100,000 engineers that Infosys has, who spend most of their days developing software that allows companies in the U.S. to run their billing, inventory and manage systems like data from cell phone networks.

McCamish, for instance, handles some operations for U.S. insurance companies like the Nolan Financial Group and Heritage Union. Infosys will retain the employees at McCamish, but one can expect to see a lot of work-sharing between U.S. and Indian workers at Infosys.

Interestingly, even though Infosys has consistently said it is looking for acquisitions overseas, this is the first move it has made in the past two years to buy anything, despite the fact that it is sitting on around $2 billion of cash, all thrown off by the highly profitable tech service work it does for western clients.

When I met with Infosys executives in June, they had already been thinking about ways to diversify their revenues. Most of its customers had cut back on discretionary spending in 2008, during the recession, and the slowdown in its revenue growth – much of which is from short-term, piecemeal projects – had reminded Infosys leaders that it must step up its hunt for what the industry calls mega-deals, which are signed for 5 or ten year operations and measure in the hundreds of millions of dependable revenue, recession or not.

The BPO world in India is actually pretty scattered, compared to the tech industry, where the majority of work is shared between the three top players – Tata Consultancy, Infosys and Wipro – and a handful of smaller players like HCL. The BPO industry in India has few clear leaders, and none with the size and pull of the IT leaders. So for IT companies, already seeped in the culture of outsourcing technical work, it makes sense to grab a bit of BPO business, especially since foreign companies like CapGemini have done a great job of cornering the high-value deals in back-office work that flows to India.

Perhaps more importantly for Infosys, this acquisition helps show Americans that it is serious about investing in the U.S. and creating jobs there, considering the amount of flak that outsourcing companies have drawn in the past two years as U.S. employment numbers started to plunge.

Source: Businessweek.com

Amazon.com is extending the global footprint of its cloud-computing business. The company said it will launch web services in the Asia-Pacific region, starting with Singapore in the first half of 2010 and expanding to other “availability zones” in the region in the second half of the year. Amazon didn’t specify the other countries, or the pricing of web services in Asia, yet. The company recently slashed prices for its core Elastic Compute Cloud (EC2) service in the U.S. and Europe.

Amazon will launch in Asia with EC2 and its Simple Storage Service (S3), along with Amazon SimpleDB, Amazon Relational Database Service (Amazon RDS), Amazon Simple Queue Service (Amazon SQS), Amazon Elastic MapReduce, and Amazon CloudFront. Amazon hasn’t revealed much about the size of its cloud-computing business, though Asia would certainly be a growth opportunity.

Amazon reportedly has internet data centers in Hong Kong and Tokyo, so presumably it has a technology backbone to support web services in parts of Asia (the company has Chinese and Japanese ecommerce websites). Amazon also software development centers in Bangalore and Chennai, India.

Source: Techflash.com

BEIJING — China offered African governments a multibillion-dollar package of financial and technical assistance on Sunday, stepping up a courtship that already has gained Beijing wide access to oil and minerals across perhaps the most resource-rich continent in the world.

Prime Minister Wen Jiabao pledged to grant African countries $10 billion in low-interest development loans over the next three years, to establish a $1 billion loan program for small and medium-size businesses, and to forgive the remaining debt on certain interest-free loans that China previously granted less-developed African nations.

Mr. Wen made the pledge in an address to the Forum on China-Africa Cooperation, held in the Egyptian city of Sharm el Sheik. The $10 billion in new loans is double the amount China pledged at the last meeting in 2006. The debt forgiveness continues a series of annual loan cancellations that extends to 2006.

Mr. Wen told officials of the 49 African nations in attendance that this year’s session “represents a new stage of development in relations with Africa.”

Besides the financial assistance, Mr. Wen also promised to form a partnership to address climate change in Africa, including the building of 100 clean-energy projects across the continent. Beijing will also remove tariffs on most exports to China from the least-developed African nations that do not have diplomatic relations with Taiwan, and sponsor an array of other programs in health, education, culture and agriculture.

The gestures are likely to further cement China’s good relations with many African nations, and may help address rising concern in some quarters that China is merely replacing Europe as a colonial power.

China’s focus on extracting oil and minerals from Africa has drawn some criticism from African scholars, and labor and safety conditions at some Chinese-run mines and smelters have set off outcries by African workers. Some critics say that the flood of low-cost Chinese goods into African cities has displaced products once made by local workers.

China has long offered low-interest loans to African nations, usually on the condition that governments spend the money on Chinese-made goods or on projects built by Chinese companies. African governments have eagerly accepted the loans, in part because they are free of conditions that international and Western lenders often attach to loans, like improvements in governance.

One result is that China has become a major builder of Africa’s infrastructure, including railroads, highways and canals.

The loans and other overtures have turned China into one of Africa’s largest trading partners. Trade has soared to $106.8 billion last year from about $10 billion in 2000; Chinese direct investment in Africa leaped 81 percent in the first six months of this year, to $552 million, according to the Commerce Ministry.

Source: NYTimes.com