AT&T (NYSE: T) has put its sale of its domestic Japanese outsourcing services operations to Internet Initiative Japan Inc. (IIJI) (Nasdaq: IIJI) to bed.

The deal, which was originally announced in June, calls for AT&T to transfer about 1,600 domestic Japanese business customers and about 245 customer support employees to IIJI.

Regardless of the sale, AT&T plans to maintain a strong presence in Japan. The service provider already maintains its own domestic Japanese AT&T Global Network infrastructure, which includes four global network service nodes, remote access infrastructure for corporate clients, an Internet Data Centre and significant international subsea cable capacity. Over this infrastructure, AT&T will continue to offer multinational corporations (MNCs) its portfolio of wireline managed connectivity such as Ethernet, mobile, cloud and unified communications applications.

“Japan is an important market for AT&T, and we are focused on providing a world-class level of service to our multinational customers with a presence there,” said Bernard Yee, vice president AT&T Asia Pacific in a release

While AT&T is selling off its Japan outsourcing operations to IIJ, AT&T will continue sell IIJI products to the MNCs it serves that have Japanese operations. In turn, IIJ will buy global connectivity services from AT&T to support its Japan-based customers’.

Selling off IIJ is just one of two major divestitures AT&T has recently completed in an effort to focus its attention on its core telecom business. In addition to IIJ, AT&T reached a deal to sell its Sterling Commerce business to IBM (NYSE: IBM) in May.

Source: http://www.fiercetelecom.com

By Kathrin Hille in Beijing

Published: August 31 2010 09:25 | Last updated: September 1 2010 00:19

NEC has agreed to set up a joint venture with Neusoft, China’s largest IT outsourcing provider, to offer cloud computing services in the country, the Japanese electronics company’s first move to offer such services outside its home market.

The venture reflects high hopes among outsourcing services vendors that China will become a large market for them.

NEC said it expected the nascent cloud computing market in China to grow to $2.3bn by 2012, expanding at an average pace of 30 per cent each year. The Chinese IT services market had revenues of $10.6bn last year and is forecast to grow to $20.6bn in 2014, according to IDC.

In cloud computing, information is housed remotely by centralised providers rather than on users’ computers.

The Chinese IT services market had revenues of $10.6bn last year and is forecast to grow to $20.6bn in 2014, according to IDC.

Last year, IBM topped the ranks of IT service providers in China with a 6.1 per cent market share. The top five were rounded out by HP; Digital China, a company affiliated with Lenovo; Huawei, China’s largest network equipment vendor; and Accenture, the global services firm. Neusoft ranked 7th.

Neusoft is the largest vendor in the offshore IT services segment, in which a growing number of Chinese companies are competing. They have been making inroads against their much larger Indian competitors, especially with South Korean and Japanese companies to which they are closer geographically and culturally than Indian firms.

China’s position as the global manufacturing base for most electronics products has also aided Chinese outsourcing providers.

Spurred by the massive employment generated in India and in the Philippines, the Chinese government is offering tax and other incentives to help develop the industry.

Foreign vendors have also started piling into the market. Ning Wright, a partner in charge of KPMG’s China outsourcing advisory service, points to the growing number of research and development centres of multinational groups in China as one indicator.

However, industry experts said the market would only fulfil its promise if large state-owned enterprises start embracing the idea of outsourcing. So far, state-owned banks and telecoms operators – some of the biggest potential customers – remain reluctant to share information, said the China head of a Western outsourcing company.

“SOEs are certainly a core customer target group,” said Masaki Kidowaki, NEC China president, though he noted that privacy and security concerns were paramount for these enterprises.

NEC has been trying to reduce its reliance on hardware manufacturing and reposition itself as a broad-based IT services group. Last year, for instance, it spun off its mobile phone handset business in a joint venture with competitors Casio and Hitachi.

Japan’s sprawling electronics companies have all come under pressure to focus on a few core businesses, in the face of lower-priced competition from South Korea and China and disciplined rich-country rivals such as Apple of the US.

Amid the gradual consolidation, NEC, Hitachi and Fujitsu in particular have targeted the global IT market. Fujitsu is also moving into China with a new data centre near Guangzhou, which it expects to open next year.

Wang Yongfeng, Neusoft president, said the cloud computing joint venture would target manufacturers with global export business in addition to Chinese small- and medium-sized enterprises who could save in IT expenses.

The two companies said their joint venture, in which NEC will hold a 70 per cent stake and which will be based with Neusoft in Dalian, would start in October with 70 employees. The headcount is expected to increase to 200 within three years.

Additional reporting by Jonathan Soble in Tokyo

Copyright The Financial Times Limited 2010. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web.

Source: http://www.ft.com

By AMIT ROY CHOUDHURY

INDIAN IT services company HCL Technologies is looking to build on its recent US$110 million outsourcing and services contract win with Singapore Exchange to enhance its presence in the city-state and the region.

Singapore is HCL’s regional headquarters and caters to markets stretching from Japan all the way up to the Middle East and Africa – a region which HCL designates as Rest of World (RoW).

HCL’s Virendra Aggarwal told BizIT in an interview that the company, which has 700 people here working out of two locations, is looking to build on the SGX win, which is its biggest single contract win in the Asia-Pacific region.

In value terms, HCL’s deal with SGX is also the biggest single contract bagged by any Indian IT company in Singapore.

HCL is invested in building up a high-end Solutions Architect team here and this team has been instrumental in increasing customer wins across the region.

‘Typically the team offers a slew of IT service capabilities which are hard to find and difficult to retain. Having them based out of Singapore and travelling regularly to meet clients across the region is much more cost effective and helps us significantly,’ he said.

The Republic’s IT market has been leading the upturn in spending, Mr Aggarwal, who is HCL’s executive VP for the RoW region, said.

‘The government here is savvy about leveraging on IT as a strong enabler of its objectives.

‘Apart from the recent agreement with SGX we see that the financial services sector is also on the upswing, both local as well as foreign banks with a strong Singapore presence.’

He added that from a solution perspective Business Intelligence and analytics are also showing strong growth. ‘This is an indicator of the maturity the market is attaining in terms of creating business value from IT rather than using IT for automation.’

The HCL official added that the strategic location, excellent IT infrastructure as well as ease of access to the region makes Singapore a logical choice for regional headquarters. ‘We simply cannot fathom operating out of another city.’

In the fiscal year ended June 30, HCL’s global revenues increased by 24.1 per cent to US$2.7 billion. During the fourth quarter which also ended on the same date, HCL posted strong growth with revenues increasing by 21.5 per cent year-on-year to US$738 million.

Mr Aggarwal noted that in the full year results the RoW geography contributed 13 per cent to global revenues.

‘During the financial year 2010, our RoW business has posted an encouraging annual growth of 30.4 per cent on a year-on-year basis.’

The efficiencies we derive from Singapore are significantly more than for supporting regional operations, he said, adding: ‘Hence a decision has also been taken to further expand on our Singapore Development Centre.’

In line with the government’s focus on attracting banks and financial institutions to set up shared services centres for their global operations out of Singapore, several of HCL’s Global Large Banking clients have been partnering the company to further increase the volume of business originating from Singapore, he said.

Mr Aggarwal noted that Middle East-Africa is a market which has not been explored well by most companies. ‘The assurance of the focus the Singapore government has been putting in building up these markets has also provided the management team here with substantial insights to leverage the momentum already built up.’

He added that at a time when Singapore is positioning itself increasingly as a global city ‘we see increasing opportunities within the country itself’.

Mr Aggarwal observed that in Singapore, financial services, government and telecom are leading the IT spend.

‘The Telecom sector has a lot of advanced analytics focus, given the dynamic nature of the telecom market and need for quick adaptation and business decisions. The financial sector is the highest in terms of IT intensity.’

He said government spending is purely driven by its approach of using IT as an enabler for better functioning and making the life of its citizen simpler.

‘In fact the Singapore government’s approach to IT is something which every other government should consider emulating.’

The HCL executive noted that, apart from Singapore, the key growth markets in the region are Australia and New Zealand, specifically for the financial services, energy and utilities and retail sectors.

‘South-east Asia has a substantial amount of discrete IT spending apart from large spending from government and financial services. Middle East IT spending will be predominantly in Enterprise Applications space,’ he said.

As to what technologies his customers were looking for, Mr Aggarwal noted that the current momentum favours cloud computing.

‘It would appear that in all the markets in APAC, the Singapore government is by far the most proactive in addressing policy level issues such as data storage and security, to name two examples.

‘Also the move towards setting up infrastructure for the cloud across the ecosystem was anticipated by IDA (Infocomm Development Authority of Singapore) fairly early, which has laid the roadmap for Singapore being the global cloud hub.’

Source: http://www.businesstimes.com.sg

By James Lamont

India’s information technology outsourcing companies have established global footprints that stretch from Saudi Arabia to San Diego in the US. Yet they have struggled to develop one of the most promising markets, just over the Himalaya mountains in neighbouring China.

So difficult a frontier is the Chinese market for India’s pioneering outsourcing groups that their leaders would sooner talk about the potential of Latin America than the world’s fastest growing large economy.

Yet some are still trying to make inroads, recognising the risks of shunning the lucrative opportunity presented by large, fast-growing Chinese companies. Tata Consultancy Services, India’s largest IT outsourcing group, said on Tuesday that it planned to double its 1,100-strong workforce in China in the coming year.

China and Japan are widely acknowledged by India’s software leaders to be the hardest outsourcing markets to crack. Japan gets its rating on account of a perceived resistance to change among its country’s businesses and a lack of urgency to innovate, while China’s difficulty is ascribed to cultural differences. Both markets pose linguistic challenges for an Indian sector that has prospered using English as its medium.

“China, while it has significant potential, takes time to learn. It’s not easy,” says N. Chandrasekaran, the chief executive of Mumbai-based TCS, which employs about 160,000 people worldwide.

“We want to grow. We want to grow faster but it takes time to learn the market, attract people and retain people. Attrition levels are higher in China than they are in India and that makes it difficult.”

Most Indian outsourcing companies have established operations in China. They recognise the potential of servicing big, fast-growing Chinese companies with large customer bases and sizeable workforces, and developing expertise to service other parts of Asia.

Wipro Technologies, the Bangalore-based IT services company, has opened a global delivery centre in Chengdu, in addition to a facility in Shanghai. Its Chengdu centre offers services for manufacturing, banking, financial services and insurance industries. It has expertise in English, Chinese and Japanese.

Genpact, India’s largest business processing company, operates BPO service centres in the Chinese cities of Changchun, Dalian and Shanghai.

Suresh Vaswani, joint chief executive of Wipro, puts the challenges of building scale down to more granular market-related issues. He says India’s nimble private sector often finds it difficult to come to terms with China’s more state-driven enterprises.

He identifies strong possibilities working with multinationals in China and large domestic companies. But he recommends that any business strategy take into account the “state-influenced” nature of the market, and the need to create local jobs.

Pramod Bhasin, the chief executive of Genpact, agrees that India’s entrepreneurial style of doing business does not easily gel with China’s more deliberate business culture.

One of the keys to success, he says, is knowing how to navigate China’s corporate power structure, and the complicated personal networks that lead to business opportunities. Another is learning from the example of successful US companies such as McKinsey, IBM and Accenture that establishing a Chinese identity, and hiring a Chinese workforce, are essential. “In China, we are Chinese,” he says simply.

In spite of the obstacles, there is an increasing willingness among large Chinese companies including state-owned enterprises to outsource certain services to create a growing onshore market in China.

Beijing is taking steps to encourage the outsourcing industry, whose revenues grew to about $26bn last year, according to Deloitte, the auditing firm. This month, the Ministry of Finance announced that outsourcing service providers in 21 cities would be freed from business tax on offshore contracts until 2014.

Industry executives in China say Indian companies struggle to get the best out of their Chinese operations. “It is much easier for Chinese companies to manage large-scale operations in China with Chinese staff,” says Seth Pinegar, vice-president at iSoftStone, a leading Chinese outsourcing services provider.

The difficulties encountered by India’s outsourcers have caught the eye of New Delhi. Earlier this year, Anand Sharma, India’s commerce minister, extracted a personal commitment from Wen Jiabao, the Chinese premier, to rebalance a booming bilateral trading relationship skewed overwhelmingly in China’s favour.

Alongside Bollywood films and basmati rice, IT was singled out for “corrective steps” to bring harmony between the world’s fastest growing, yet starkly different, large economies.

Source: http://www.ft.com

Bangalore: TCS will take its revolutionary cloud services for small and medium businesses (SMBs) through top channel partners and solution providers. The firm has been tapping a segment known as ‘value-added resellers’ who may be allowed to keep 10% commission for every sale made, sources said.

Cloud services, which are expected to lower cost of IT ownership by 35-40% compared to the traditional licensing model by converting investments into an opex model, will be launched in mid-September. The partner ecosystem readied now includes the top 20 channel firms in the country. This includes Allied Digital, Monarch IT, Tandem, Netlink, Frontier, Openview Technologies, SK International, Benelec, Ashtech, Wystech, Galaxy, Omnitech, Orient, Pentagon, Team Computers and Lauren among others. TCS would eventually be adding more partners but believes that the top 20 should be able to address 60% of the SMB market.

The firm has also assembled a crack to team to manage the ecosystem of partners. The development work at TCS started in August 2008 and since then, Venguswamy Ramaswamy, global head of small and medium business at TCS, had been busy looking for right talent, sources said. Less than a month back, Anil Pant, former head of channel sales at Sify, joined TCS. He would take the offering to other countries. Anil Sethi joined the firm from Microsoft as Man Friday to manage channel partners. Asim Raina, a former editor and sales head at trade publication DQ Channels, joined as marketing head.

Source: Financialexpress.com

Exports up 38% but imports hurt by slowdown in investment

(BEIJING) China’s trade surplus surged unexpectedly in July to an 18-month high of US$28.7 billion as exports beat forecasts, but a government-induced slowdown in investment took a toll on imports.

Beijing is steering its super-loose monetary and fiscal policies back to normal after a record surge in credit last year to combat the global crisis. It has reined in lending to local authorities and mounted a drive against property speculation.

Annual import growth moderated to 22.7 per cent from 34.1 per cent in June, well below forecasts of a 30 per cent rise, providing clear evidence that the measures are biting.

‘We have carried out a proactive adjustment of economic growth. With economic growth slowing down, import growth is also easing,’ Huang Guohua, an official at the General Administration of Customs, which released the data, told state television yesterday.

The disappointing figures, which partly reflected a 4.5 per cent fall in import prices in July, sent the main Shanghai stock index tumbling 2.3 per cent and weighed on shares in Hong Kong, underlining investors’ fears that the global economic recovery is losing momentum.

‘We expect import growth to slow further for the rest of the year as the domestic economy is coming off the boil,’ said Nie Wen, an analyst at Fortune Trust Co in Shanghai.

Exports, by contrast, held up well in July, rising 38.1 per cent from a year earlier to a record high of US$145.5 billion.

Growth was down from June’s 43.9 per cent pace but exceeded projections of a 35.5 per cent rise, partly because exporters rushed to beat the July 15 removal of tax rebates on an array of steel and other products.

The resulting trade surplus of US$28.7 billion, the highest since January 2009, dwarfed forecasts of US$19 billion as well as June’s US$20 billion total.

Brian Jackson, a strategist at Royal Bank of Canada in Hong Kong, noted that figures due out later this week were likely to show a US trade deficit of more than US$40 billion.

‘This contrast in the trade positions of the two most important economies in the world will likely increase the pressure from Washington for Beijing to allow further currency appreciation, particularly in the lead-up to mid-term elections in November,’ he said in a note to clients.

The yuan has risen just 0.8 per cent against the US dollar since Beijing scrapped a 23-month peg to the greenback on June 19 and reinstated a managed float.

The trade outlook for the rest of the year is cloudy.

Yu Song and Helen Qiao, economists at Goldman Sachs, detected signs that Chinese policy had started to loosen, which they said should lend more support to domestic demand and import growth.

But most analysts do not expect the government to relax yet a series of curbs imposed on the property market in April.

Fearing that prices were feeding on themselves and putting the cost of a flat beyond the reach of ordinary people, Beijing increased downpayments and mortgage rates, made it tougher to buy multiple homes and tightened financing for developers.

Figures yesterday showed the restrictions appeared to be working, albeit slowly.

House prices in 70 cities across China rose 10.3 per cent in the year to July, down from 11.4 per cent in the 12 months to June and a peak in April of 12.8 per cent, the National Bureau of Statistics said.

But prices on the month were unchanged in July, following a 0.1 per cent drop in June.

Jinsong Du, an analyst at Credit Suisse in Hong Kong, saw no need for fresh curbs but said prices in major cities had scope to fall another 20 per cent by the end of the year.

‘The government should be pleased that prices are not rising on a monthly basis,’ he said. ‘In the near term, they will continue to strictly implement the measures they’ve already announced.’

As for exports, China’s strong performance mirrored resilience in July figures released by South Korea and Taiwan, indicating that global demand remains strong for now despite worries about the eurozone’s debt mess.

But with the outlook for the United States darkening, some economists expect year-on-year export growth to start to fade, especially as the 2009 base of comparison becomes more demanding. — Reuters

Source: www.businesstimes.com.sg

Related News:

China Software Industry to See ‘Huge’ Growth, Pansoft CFO Says – Business Week

Aditya Birla Minacs, the business process outsourcing (BPO) arm of the  USD 28 billion Aditya Birla Group, expanded its operations in Eastern India with the inauguration of its 31st and 32rd delivery centers in Kolkata and Ranchi respectively.Both the facilities were inaugurated by Navanit Narayan, chief service delivery officer, Idea Cellular Ltd, said a press release.

Speaking at the launch, Navanit Narayan said, Yet another step in our growing partnership and engagement with Minacs, the launch of these two centers will help us address the customer and business requirements of Idea in Eastern India. The talent available in both Kolkata and Ranchi along with Minacs robust Connect India model will further augment our customer service in the region.

Milind Godbole, president – APAC, Aditya Birla Minacs said the launch of these two centers aligns with the companys strategic effort toward creating business solutions that meet their clients needs.

Emerging as customer acquisition hubs, Kolkata and Ranchi are strategic locations for Minacs pioneering Connect India model in eastern India. These new state-of-the-art centers will provide our clients a competitive business advantage in the region, he said.

Connect India is an outsourced customer relationship management (CRM) services delivery model providing access to the economically vibrant Indian hinterland, said the company.

It currently has operating centers in Bangalore, Mumbai, Chennai, Vadodara and Aurangabad.

Commenting on the hiring plans for the new centers, Milind Godbole said, We plan to grow the employee base at the Kolkata facility to more than 600 by early next year from the current 425 associates. In the Ranchi facility too, we will have close to 600 employees by mid-next year from the current 115.

The US is the largest market for the company and contributes nearly 65% to its revenue. It has already identified three probable locations where the proposed facility can come up. Aditya Birla Minacs expects to soon freeze its South American plans. The way to do business in the US has changed significantly than what it was even 2 to 3 years ago, said Aditya Birla Minacs president (Asia Pacific) Milind Godbole.

Minacs currently serves several Fortune 500 telecom clients globally – including a leading US wireless technology provider, a large global telecom company, and a global broadband service provider, said the company.

Godbole also said it was keen on establishing a facility in Latin America with an eye on catering to the clients in the United States, which contributes about 65 per cent of the companys total revenues.

Every US company is focusing more on the customer experience and South America understands North America very well, he said.

The company intends to either set up a greenfield facility or look at acquisitions for this unit, which will primarily cater to the US market.

Source: http://www.offshoringtimes.com

AFP – Daybreak is happy hour in a world turned upside down at a trendy bar in the Philippines’ financial district, the clientele young and loud and with a vague California accent.

Vodka cruisers and beer fly by the bucketful as good friends Cici, Pau and Jels go off duty along with the rest of the night shift in the nation’s half-million strong business process outsourcing (BPO) workforce.

Even the hors d’oeuvres are edgy — “drunken” shrimp and green mango soaked in pale pilsen — reflecting the punishing lifestyles of the partygoers.

“I used to drink eight bottles of Red Horse at a time and still find my way home,” said 28-year-old Cici, discussing a local brew known for its high alcohol content and often called “The Devil’s Own Juice.”

The group of young women really let their hair down on Saturdays, hitting bars, beaches or shopping malls all day so they can socialise with friends outside the industry and sleep at least for one night like a normal person.

Life in many ways is a blast for the young, single and educated in the outsourcing industry.

Entry-level jobs bring salaries of 300 dollars a month with the promise of triple that after a few years’ experience — good wages in a country where a third of the population live on a dollar a day.

Jobs are plentiful and can come with generous perks such as 13th and 14th-month pay, performance bonuses and free medical insurance.

And the outsourcing industry — which has soaked up millions of call centre, accounting and other back-office jobs from the developed world — is becoming an increasingly vital part of the nation’s economy.

Its 500,000 Filipino employees are the world’s second biggest outsourcing workforce behind India.

Its revenues, which already account for 5.0 percent of the country’s gross domestic product, are growing at double digit rates annually, according to the industry group Business Processing Association Philippines.

On a more micro-level, entire 24/7 service industries — including convenience stores, bars and fast-food restaurants — have sprung up around the new office towers to serve the needs of the booming sector.

However there are concerns about the way the industry is reshaping young adult society, as well as the pressures the workers face as they remotely help customers and clients on the other side of the world.

The odd hours, irate clients, tedious workloads and performance demands often drive staff — particularly call centre workers — to early burnout.

Cici, Pau and Jels — who spoke to AFP on condition their surnames were not used — are castaways from earlier call centre jobs.

“Sometimes you would be handling 300 calls at once and 150 others would be on hold. You don’t have a moment’s rest,” said Pau, 32, who graduated to a higher-paying job handling office equipment procurement for US companies.

She said call centre staff typically got only two 15-minute cigarette breaks either side of a 30-minute meal break every eight-hour shift.

Cici said one of the hardest parts of call centre work was simply dealing with customers angry at having to speak with someone on the other side of the world.

“One customer said: ‘I don’t wanna talk to you. I want to talk to an American’… I cried,” Cici said.

And while Filipino BPO workers earn 53 percent more than same-age workers in other industries, one in three quit every year, according to an International Labour Organisation study released last month.

The turnover rate is four times the national average.

“Five years in one job is a long time in this industry,” Cici said.

The arrival of the BPO industry a decade ago also brought about changes in values, diets, and sexual practices, according to Josefina Natividad, a professor with the University of the Philippines’ Population Institute.

“What shocked us most was that for both call-centre and non call-centre workers the level of premarital sex was very high,” she said, citing a health and lifestyle survey on young Filipinos completed by her team this year.

Heavy drinking and smoking, rising childbirths out of wedlock, and high consumption of junk food also stood out.

“The world is different now, and the single thing driving this I’m sure is technology,” Natividad said.

Both Cici and Pau said they had heard similar stories in the call centre office they used to work at, which have beds in rest areas for exhausted staff.

“Our sleeping quarters were for both sexes. Some of my friends told me that there were certain things that happened there,” Cici said.

The trend has worrying implications on public health, said Teresita Marie Bagasao, the country official for the United Nations Joint UN Programme on HIV/AIDS.

Most new HIV infections now occur among young Filipinos, compared with the 1990s when the country’s large overseas-based work force including sailors were the main risk group, she said.

Despite the stresses and risks, those in the industry see few other options in a country where the only way they would earn that kind of money would be to join the exodus of Filipinos working abroad.

Jels said she had earned enough in five years in the industry to pay a deposit on a condominium unit, and said her priority now was to hopefully start a family.

“I want a boyfriend. And I want a family and a baby in two or three years’ time,” the 29-year-old-said.

Source: http://www.france24.com

Delhi-based information technology (IT) company HCL Technologies expects to sign around four deals in the retail and consumer packaged goods (CPG) space across geographies this year. The deals are likely to be signed in the Middle East, Australia, South Africa and South America.

“In retail and CPG, we are seeing growth in emerging economies and 3-4 deals will be closed this year in the vertical. These could be in areas of food and beverages, alcohol and tobacco,” said a company official familiar to the development.

Analysts peg the deals at around $4-5 million (Rs 19-23 crore) each which will be ramped up in future and the nature of the services range from vendor management, planning, supply chain activities to store and multi-channel offerings.

Retail and CPG grew 19.6 per cent quarter-on-quarter for the fourth quarter ended 30 June, 2010 and contributed 8.2 per cent to the company’s revenues up from 7.5 per cent in the trailing quarter and 6.6 per cent in the corresponding quarter a year ago.

“In these emerging areas, only small deals can happen and the scope of these deals goes beyond multi-brand retail chains to retail banks as retail is still behind the curve when it comes to technology. In fact, retail is one of the sectors that gets maximum productivity from technology,” said Alok Shende, principal analyst, Ascentius Consulting.

Last year, HCL Technologies bagged a five-year deal from US-based flavoured beverage producer Dr Pepper Snapple Group to provide it with application support and maintenance, infrastructure operations, end-user computing, integrated service desk and network management. It had also added headcount at its new facility in North Carolina for it.

HCL Technologies’ CEO Vineet Nayar too said that retail is one of the new blue oceans for the company and that it is leading the growth.

Shende further added that starting with small deals is a strategic move as it lets the company establish reputational capital in the country and helps to get bigger clients then. “HCL Tech has been offering services locally in the US as of now but to offshoring them is such new markets is a new trend especially in the Gulf region where they are growing fast,” he added.

Source: business-standard.com

In an open letter to customers, which was obtained by ChinaBio, Dr. Ge Li, Chairman and CEO of WuXi AppTec (NYSE: WX), said “short-term financial concerns” were the reason its merger with Charles River Labs (NYSE: CRL) was not completed. Dr. Li expressed regret that the failure of the merger would slow WuXi’s evolution into a company with a broader set of CRO capabilities.

At the same time, Dr. Li promised customers that WuXi would continue its efforts to provide the highest level of CRO services.

Charles River Labs announced that it would not ask shareholders to vote on the merger, after the company became convinced from a poll of major stock owners that the proposal would be voted down (see story).

The following is the text of Dr. Li’s open letter:

Message from Dr. Ge Li, Chairman and CEO of WuXi AppTec

Dear Valued Customers,

As you may know, on July 29 we announced that our company and Charles River Laboratories had agreed to terminate the combination agreement due to opposition from certain Charles River shareholders motivated by short-term financial interests, despite the transaction’s compelling strategic rationale. I am disappointed that the transaction was terminated, because we could have provided you a more completed and in-depth fully integrated service sooner. I am grateful to you and our shareholders for your trust and supports of our management team’s vision to build the fully integrated service platform. WuXi as a stand alone company is well position to serve your R&D outsourcing needs.

WuXi’s goal as a company has never changed. It is to provide you, our dear customers with a broad, integrated R&D service platform to help you improve the success of research and shorten the time of development of new products. While we could have achieved that goal more quickly in combination with Charles River, we are more than capable of achieving it on our own.

Now WuXi will continue as an independent company! WuXi has always been intensely customer-focused company, committed to providing you with better services. This goes well with our service slogan “we are determined to serve you better”.

Our track record shows our commitment and demonstrates our ability to successfully add new capabilities and capacity to meet your evolving outsourcing needs. We will continue to invest in our business to provide you with the services you need to advance your products in a cost effective and timely manner.

I also want to ensure you that we have had no interruption to our business as a result of this effort to combine with Charles River. We want to thank you for your consideration and for allowing us to serve you and thank you for your trust and supports. As always, we are committed to providing you with the highest level of service-We are determined to serve you better®

Sincerely,

Ge Li

Chairman & CEO

WuXi AppTec

Source: http://seekingalpha.com

By Audrey B.

TCS (NSE:TCS) CEO N. Chandrasekaran sounded optimistic when he said during an interview that TCS had not seen an impact from the Europe debt crisis among its clients. Particularly since the company’s multi-million dollar UK outsourcing contract with PADA appears to have been in jeopardy for quite some time.

On the second of July, N. Chandrasekaran was quoted saying that, “Overall, from an economy overview, we have not seen any impact of the current European situation on any of our clients.” A report late last week from Ovum however, indicated that budget cuts by the current UK government will likely see a number of IT outsourcing contracts renegotiated, including the 600 million pound contract for pension administration between TCS and the Pensions Administration and Delivery Agency (PADA). This is after the UK government made a move to cancel the 750 million pound e-borders contract with a consortium led by Raytheon (NYSE:RTN) and included companies Serco (LON:SRP), Accenture (NYSE:ACN), Detica, QinetiQ, Capgemini (EURONEXT:CAP) and Groupe Steria (EPA:RIA).

If you’ll recall in a previous article, the contract, which had been announced March of this year, is for the low-cost pension scheme, NEST or the National Employees Savings Trust, administration services. Under the terms, the contract is divided into two stages for ten years with the possibility of an extension, and covers services like employer participation, member enrollment, collection and reconciliation, cash management, accessing pension savings and administration of accounts.

The contract had already received criticism before as the deal had been signed just before the UK general elections, and even after the previous government had promised that no long term contracts would be signed before the next administration comes into office. Following the general elections, there had also been some talk of some government contracts that would potentially face scrutiny over the coming months, which had included the TCS-PADA deal.

Since then, there has not been an official word from the UK government yet on the fate of the deal but odds are, considering the $235 billion budget deficit that the government faces, many large contracts will be evaluated to determine where the government can scrimp on the dollars.

This news comes after the company had reported stellar results a little over a week ago, in a better than expected quarterly results report. The company posted that its net income gained 21 percent to $394 million, in the quarter, beating analysts’ estimates and rival Infosys (NASDAQ:INFY), becoming the top Indian software service exporter. The company had only recently stated that they are expecting business from Europe to account for 30-35 percent of its revenue in the next 3-5 years. From the results, the company increased business in Europe by 2 almost percent.

Ultimately, it may be a daunting task for TCS to accomplish the PADA deal as it had been meant to. It’s likely that, if the government does not outright cancel the contract to look for a cheaper alternative, then they may try to renegotiate the deal to save cost. At least TCS can find comfort in the fact that, while the fate of the deal remains uncertain, they still managed to beat rival Infosys and for that they can be optimistic.

Source: http://www.blog.infinit-o.com

BANGKOK — In October 2008, when the world was reeling from the collapse of Lehman Brothers and job markets were freezing up everywhere, Akane Natori waltzed into a new position she liked. “Things went so smoothly after applying online, and before I knew it, I had the job,” said Ms. Natori, who was then a 26-year-old sales assistant at an import-export company in Tokyo.

There was just one catch, one that speaks volumes about the Japanese economy and the challenges younger Japanese face in a country where college graduates used to count on lifetime employment with the company they joined right out of school. Ms. Natori’s new job — working in a call center answering queries from customers in Japan — was in Bangkok.

Under fierce pressure to cut costs, large Japanese companies are increasingly outsourcing and sending white-collar operations to China and Southeast Asia, where doing business costs less than in Japan. But while many American companies have been content to transfer work to, say, an Indian outsourcing company staffed with English-speaking Indians, Japanese companies are taking a different tack. Japanese outsourcers are hiring Japanese workers to do the jobs overseas — and paying them considerably less than if they were working in Japan.

Japanese outsourcers like Transcosmos and Masterpiece have set up call centers, data-entry offices and technical support operations staffed by Japanese workers in cities like Bangkok, Beijing, Hong Kong and Taipei.

Such outposts cater to Japanese employers who say they cannot do without Japanese workers for reasons of language and culture. Even foreign citizens with a good command of the Japanese language, they say, may not be equipped with a sufficiently nuanced understanding of the manners and politesse that Japanese customers often demand.

“If you used Japanese-speaking Chinese, for example, the service quality does not match up with the expectations of the end customers,” said Tatsuhito Muramatsu, managing director at Ms. Natori’s employer, Transcosmos Thailand, a unit of Transcosmos, which is based in Tokyo.

Statistics on exactly how many Japanese have taken jobs outside the country at lower wages are hard to come by. But according to the Japanese Ministry of Internal Affairs and Communications, there was a net outflow of 100,000 Japanese in the year that ended in September 2008, the most recent for which statistics were available. It was the highest number in the past 20 years.

While the number of workers sent overseas by Japanese companies on traditional expatriate packages fell 0.32 percent in the same period, the number of “independent businesspeople” and freelance contractors like Ms. Natori rose 5.69 percent, according to data from the Japanese Foreign Ministry. Many of those workers were headed to cities like Shanghai and Bangkok, where net increases of Japanese residents have been recorded in the past several years, according to the ministry.

Many large Asian cities — including Bangkok, Hong Kong, Jakarta, New Delhi, Shanghai and Singapore — have three to four Japanese job placement agencies each. Four Japanese outsourcing companies run call centers in Bangkok, which is a particularly attractive city for such operations because it has low costs but good amenities, offering a living standard that young Japanese enjoy.

Transcosmos runs the largest Japanese call center in Bangkok, having nearly tripled its staff from 60 workers in late 2008 to 170 now. “We see ourselves growing to as large as 500 workers here,” Mr. Muramatsu said.

Transcosmos pays a call center operator in Thailand a starting salary of about 30,000 baht, or $930, a month — less than half of the ¥220,000, or $2,500, the same employee would get in Tokyo. That means a saving of 30 percent to 40 percent for customers, Transcosmos said.

Masterpiece, another Japanese outsourcer, has operations in Bangkok, Beijing and Dalian, China. Its workers handle jobs like mail-order service requests, processing of time sheets and other salary paperwork, and following up on e-mail inquiries. The company has Japanese and Chinese employees, and according to its Web site it is hiring people to establish another call center, in the Philippines.

Japan lost 240,000 jobs in May, government statistics showed, bringing the seasonally adjusted number of people with work to a two-decade low. The unemployment rate rose to 5.2 percent. Although exports have picked up since the end of 2009, economic growth remains slow. Gross domestic product expanded 1.2 percent in the first three months of 2010 from the level in previous quarter.

“Overcapacity and excessive competition haunt domestic Japanese industries that are battling for a shrinking economic pie,” said Takumi Fujinami, senior economist at the Japan Research Institute, a research organization affiliated with Sumitomo Mitsui Bank. “That exerts perennial pressures to reduce costs. Japanese companies can’t cut off existing employees on the lifetime roster, so they are squeezing the younger workers ever more tightly.”

Some overseas Japanese workers, like Ms. Natori, are not unhappy with their jobs, despite the low salaries. They say their lives abroad have given them a new sense of liberty.

Ms. Natori, who was recently promoted from call operator to a supervisory position, said she saved more money in Thailand than she would in Japan.

“If you are willing to live off local Thai restaurants, you spend only 30 baht for rice with eggs, vegetables and meat,” she said. “My rent currently is only 6,000 baht, and utilities are at most an additional 500.” She lives in a roomy studio in a condominium in central Bangkok with security and a swimming pool that is open 24 hours. Life is better in Thailand, she said, because she is free from some of the social and workplace pressures that ate into her private life in Japan. “The moment you step outside, you are in a foreign country here,” she said. “That allows me to have separate workplace and private lives. I am actually able to concentrate on work better because of the clear separation.”

Ms. Natori said her parents and friends often visited her in Bangkok, so she did not miss Japan too much, nor did she have a definite timetable to return home.

Misuzu Yara, 34, realized in early 2008 that job opportunities in Japan, especially in her native Okinawa, far from the Japanese main island, were diminishing. So when an acquaintance at Tempstaff invited her to join the new division in Jakarta as a local hire, she agreed.

“The salary as a local hire in Indonesia wasn’t very different from what you’d get in Okinawa, actually,” she said. “Considering how important Asia is going to be for Japan, I figured it would be a good opportunity.”

Now, she helps find jobs for Japanese workers in Indonesia. Japanese companies in Indonesia generally offer Japanese local hires minimum take-home pay of $1,500 a month, plus a vehicle and sometimes housing.

“The number of inquiries grew markedly during 2008-2009 from young Japanese workers who had difficulty finding jobs in Japan,” she said.

But local hires do not have the same sense of job security as workers in Japan do, Ms. Yara said. “There is a sense that each and every moment at your job determines your chances of keeping it.”

While Transcosmos executives recognize that some Japanese have sought work in Thailand because they could not find employment at home, they say that the job performance of their Thai-based operators is superior to that of counterparts in Japan.

“It is possible that workers in Thailand are able to perform well because they have fewer things to worry about in life,” said Hiroyuki Uchimura, general manager of business process outsourcing services at Transcosmos in Tokyo.

With the Japanese population aging and shrinking and more Japanese companies seeking avenues of growth overseas, job opportunities for Japanese abroad are likely to grow, said Kazuyuki Ichikawa, chief operating officer of Pasona Global, which helps its clients find Japanese workers overseas.

While Japanese companies could save even more if they hired only locals overseas — some experts say locals could be hired at half the cost — the preference for Japanese nationals is likely to endure, Mr. Ichikawa said.

“You say one thing and Japanese employees will understand three things,” he said. “In Western cultures, you might be straightforward with what you want your staff to know, but a Japanese manager would want you to understand it without having to say it.”

Source: http://www.nytimes.com

Mahindra Satyam has been the main IT services provider for FIFA 2010

by AFP

MUMBAI: Nearly 18 months ago, India’s Satyam was rocked by a false-accounting scandal that threatened its very existence. But bosses believe the firm’s image has been restored — thanks to the World Cup.

The software outsourcing giant, rebranded as Mahindra Satyam, has been the main IT services provider for the tournament in South Africa, ensuring the logistics were in place for the mega-event to pass off without a hitch.

The firm’s logo has been on pitch-side advertising hoardings at every match, while around 150 staff have been working behind the scenes to ensure fans, organisers, volunteers and the media are in the right place at the right time.

“Our main goal was to show to the world that despite our problems we have been able to successfully deliver cutting-edge solutions at the highest, and most visible, level,” said the firm’s head of sports business, Dilbagh Gill.

“We wanted to demonstrate to our customers, and give them confidence, that Mahindra Satyam, in spite of its resizing and its issues, is still a very strong technology player,” he said in emailed comments from South Africa.

“We think this is coming across very well now in terms of us being able to deliver the solutions that continue to enable this World Cup to run successfully.”

Gill’s optimism is a far cry from early January 2009, when the founder and former chairman of Satyam Computer Services Ltd, B Ramalinga Raju, admitted overstating profits and inflating the balance sheet by billions of dollars.

The scandal at the Hyderabad-based firm — dubbed at the time “India’s Enron” after the US energy firm that collapsed in 2001 in the wake of false-accounting revelations — was the country’s largest-ever corporate fraud.

It led to a rash of lawsuits at home and abroad. Raju and several former senior executives are currently awaiting trial.

Tech Mahindra, a unit of Indian vehicle and farm equipment manufacturer Mahindra and Mahindra, bought the company, allaying fears about its survival and whether it could fulfill the World Cup contract it signed in 2007.

Source: timesofindia.indiatimes.com

BANGALORE: The Indian IT industry’s 20-year relationship with General Electric—its oldest and perhaps its only billion-dollar customer—has been a love-hate affair. The amount of work the company gives out makes it hard for Indian IT companies to ignore it. But the terms it demands and the way it works make them wish they could.

A few weeks ago, a group of GE’s empanelled IT vendors logged on to an hour-long conference call with the company. At the end of it, they found out that all the fuss by the American company was to invite bids for a one-person project for a subsidiary in India. “GE is buying IT services like airline tickets—it’s now about the cheapest supplier,” says a senior executive with a large tech firm that is exploring new business from GE. “Your margins from GE will be half of what you would make from other top customers.”

For such reasons, most large Indian IT firms are uncomfortable doing business with GE. In 1995, Infosys even annulled its contract with GE, citing unacceptable conditions, in spite of earning 38% of its revenues from the company at the time.

And now, in a move that adds another layer of complexity to this needy relationship, the American company is looking to significantly cut the percentage of IT work it sends to India. Said a GE India spokeswoman: “While India continues to be the main delivery location, there is an increased focus on multi-location/country delivery centres, both from a business continuity and an in-country support perspective.”

According to experts tracking the sector and officials at vendors serving GE, India’s share in the company’s offshoring pie could fall from around 70% currently to about 50% over the next few years.

GE’s decision to diversify geographically seems to be dictated as much by business considerations as by realpolitik. “For GE, the priority is about markets and countries where it can sell more. And above all, it’s about creating jobs in the US,” says a US-based outsourcing expert who had advised GE on offshoring to newer locations around a year ago.

The world’s largest manufacturer of aircraft engines, lighting and other appliances is looking to shed its image of an American firm shipping the maximum number of jobs to India. As a result, it is taking a hard look at its India-centric offshoring model and developing alternate offshoring hubs. GE has already started working with new IT firms in Brazil, Mexico, Morocco and China. It is piloting projects with Brazil-based CPM Braxis, and is the top customer for Chinese IT vendor HiSoft.

Source: economictimes.indiatimes.com

BEIJING: Wipro is in the process of establishing a multi-product manufacturing unit in China while Infosys plans to use it as a base for handling a range of informational technology projects in this country. These are among the several Indian companies that see great potential in business collaboration in Chinese industry.

“In the infrastructure engineering area where we are a leader in hydraulic cylinders, we have taken a decision to set up a multi-product manufacturing unit in China during this year,” Wipro chairman Azim Premji has written in “India China ties: 60 years, 60 thoughts”, a volume brought out by the Indian embassy in Beijing to mark the 60th anniversary of diplomatic relationship between the two countries.

Ratan Tata, chairman of Tata Sons does not mince words about the challenges that lie ahead when he wrote in the volume, “Going forward, India and China will increasingly be global competitors for resources and markets”. He expressed the hope that the two countries can find ways to become complementary economic powers which “synergize the strengths of each other” in addressing global markets.

This sentiment was echoed by most representatives of Indian industry who contributed to the volume containing thoughts by 60 prominent Indians.

N R Narayan Murthy, founder chairman of Infosys Technologies, said, “The high quality of Chinese talent, the sound work ethic, high learnability, and customer orientation, make China an ideal location for our IT projects to be completed”.

“They (India and China) need to look at each other from a fresh prospective,” Gautam Thapar, chairman of Avantha Group and Aspen Institute India said. The relationship must not to be colored with the jaundiced eyes of past failures, he warned.

S Jaishankar, Indian ambassador in Beijing, said “Yet, ‘near’ history can sometimes obscure deeper bonds and shared heritage developed over centuries”.

Subramaniam Ramadorai, vice chairman of Tata Consultancy Services, said both countries faced a similar set of challenges of sustainability, health and education. Joint research may lead to innovative solutions for addressing them and making the two countries leading centers of technological innovation.

Source: timesofindia.indiatimes.com

The reason behind Wipro’s success, he says, is an unceasing quest for excellence.

Premji, the third richest Indian, transformed a company that sold vegetable oil into one of the world’s most recognised software companies.

One of the brightest stars in the world of information technology, Premji is known for his modesty and frugality.

He drives a Toyota Corolla and flies economy class, stays in company guest houses rather than in luxury hotels.

Read More

Source: http://business.rediff.com

ILOILO CITY — Ayala Land, Inc. is spending some P1 billion for its business processes outsourcing (BPO) facility here. Antonino T. Aquino, Ayala Land president, said his firm wants to make a strong presence in Iloilo by putting up the Iloilo-Ayala Land TechnoHub on a two-hectare lot located at Riverside Boardwalk in Barangay San Rafael at Mandurriao district.

“Iloilo is one of the major growth centers with its rich pool of manpower. Ayala Land would like to have a strong presence here by putting up the technohub which will address the lack of BPO spaces in Iloilo City,” Mr. Aquino said during the groundbreaking ceremonies for the project last Friday.

Mr. Aquino said the project will replicate the company’s existing environment-friendly developments such as the UP-Ayala Land TechnoHub in Quezon City and One Evotech at the Nuvali project, Sta. Rosa, Laguna.

The technohub will be constructed in three phases. The first building, with an initial cost of P305 million, is a four-storey structure with approximately 9,500 square meters of area for lease. It is expected to be finished by the first quarter of 2011. The construction of the next two buildings will cost Ayala Land approximately P600 million, Mr. Aquino added.

Mr. Aquino said the technohub will offer amenities needed by BPO locators such as a convenience store, backup generators, and a water reservoir.

The project straddles the Riverside Boardwalk Leisure Park and Smallville Business and Leisure Complex in Mandurriao district. “It will be sitting in a nice location with hotels, malls, restaurants and other infrastructure attractive to BPO locators. This is the best place for the technohub,” Mr. Aquino said.

Mr. Aquino also cited Iloilo’s “rich manpower potential which is the number one item that BPO locators are looking for.”

As regards the locators, Mr. Aquino said many outsourcing firms want to move to Iloilo City “but there are not enough office space for them.”

“Very often, the locators said they want to move in next month but it takes nine months to create a building like this. Hopefully by the end of the first quarter next year, the building will be complete, and if the prospects continue to be positive, we’ll follow it through with the next building,” he added.

Mr. Aquino said BPO clients such as Convergys in Metro Manila have approached the company and expressed plans to expand to areas like Iloilo.

Ayala Land is seeking accreditation with the Philippine Economic Zone Authority for the technohub to become a special economic zone for IT, which means tax and other incentives.

“The application for accreditation has been endorsed by the local government and with that strong support, we can get the accreditation by the time the first building is finished,” Mr. Aquino said.

Iloilo City Mayor-elect Jed Patrick E. Mabilog said Ayala Land is just one of many investors interested in putting up BPO facilities in the city. He said the city government is also eyeing to lease some government-owned lands to investors.

“We have lots of idle properties that are in strategic locations and suitable to the needs of the BPO sector. We can either lease these properties on a long-term basis or opt to enter into a build-operate-transfer scheme with the investors,” Mr. Mabilog said. — Francis Allan L. Angelo

Source: http://www.bworldonline.com

Shiv Nadar, Chairman and Chief Strategy Officer of HCL Technologies, is a man of many colours. Having founded HCL in the mid-1970s, he has transformed the IT hardware company into a superior IT Enterprise by constantly reinventing his company’s focus. In 2008, Nadar was awarded Padma Bhushan for his efforts in IT industry. ET NOW catches up with Shiv ‘Magnus’ Nadar on the emerging trends and upcoming business plans of the tech major. Excerpts:

If you look at the Indian IT industry, it does seem to be at the crossroads in some sense, whether it is from the environment point of view, the changes that are happening or the organisations themselves as a generational change that’s happening or Infosys, Mr. Murthy and Mr. Nilekani have stepped out. At HCL, of course, you are taking a backseat now. At TCS, Mr. Ramadorai has retired. So what are the challenges that the Indian IT industry is going to face, the new generation is going to face going ahead?

The new generation has been faced in over a long period of time, if you have seen the strong highly professionalized structures. So there is not anyone just new who is likely to just pop up in any of these places. it is also true of Cognizant, which is another large company and all these names, which you have seen, either TCS or Infosys or Wipro or HCL or Cognizant, all these names you would have heard over a period of time. So the baton changing has been pretty well planned and smooth.

But if you look at the change that’s happening, it is also significant because of what is happening outside in terms of the environment in which the IT industry is operating, it is very clear that it is not possible for these companies to keep growing at 40% like they did for the best part of 1990s and even well into 2000. NASSCOM itself says growth will be above 13% this year. This is going to be a tougher environment than possibly what the first generation faced?

It is typical of any product lifecycle chain. You see a product lifecycle. If you have seen the BCG Matrix, it goes through a question mark stage, then it goes through a star stage, then it goes to the cash-cow stage, then it goes through a dog stage, then it reinvents itself and goes through the cycles. This industry in India has gone through one cycle and it is complete and you see each of the characteristics, high margins, easier cash flows, environment supporting it, then mid margins but profit levels are very good and it just knows that every analyst will say that the margins are going to go southwards because it is offshore. How much more can it get out of efficiency increases? Then inkjet technologies have becomes a question mark again.

Can we say that the golden era for the Indian IT industry is possibly over?

No, golden era, the way we were doing, it is over. It was given a great start like all Japanese companies got a great start. Taiwanese companies had a great start, so we had a great start. Now we have to convert into global companies like Citi or a GE and then use capabilities that exist globally. Like what we are trying to do, if you have seen acquisition of Axon, we just jumped the stage, went to architecting and consulting and in which we use totally global workforce because there is not very much in India that exists.

What are the emerging technology trends, which will drive the growth of Indian IT industry, cloud computing for example?

Cloud computing is definitely one but it is just one such mega trends, which would be there but India has to adapt the Indian companies, the five companies that you named, will have to adapt to global M&As. You can see that the global M&A in the next 10 years will be a big trend. Another very big trend is world will shift out of the yesterday’s powers, which is US and Western Europe. China will be a big factor. India will be a big factor plus India will be a big market. Five years ago not even 1% of the market for any of these companies was India but worldwide if it is going to be 10%, it should be 10%, Brazil, Russia, Indonesia, they all will be bigger markets. There will be market shifts. There is a technology shift, which will take place every five years, five, may be seven, it is going to take place.

How is this M&A going to affect the landscape of the Indian IT industry?

All the Indian companies may have consumed some or be part of a larger one. We have to be completely open about this. When I started HCL in 1976, the thought that there is going to be a global company holding shares in a company somehow would not get into my head.

I remember Dr. Seshagiri when HP took shares in our company, 26% shares in 1991, he called me and said ‘Nadar, what are you going to do with this money? You can’t wear two shirts at the same time.’ Of course we did not do it for wearing two shirts. We did that because that is what was required at that time.

So when the landscape itself is changing, so what are the new geographies that the Indian IT companies need to chase? You talked about how the global economic weight is going to shift out of developed countries into emerging markets, so do they have to start looking more inwardly or do they still have big opportunities waiting to be tapped in Europe, US and Japan?

We have not addressed Japan. We have not addressed Germany. We have not addressed China. If you really look at as have the Indian companies addressed them, realistically no, though the stock market is getting very excited about the Euro falling, there is not much of market place that we are truly getting out of these European countries.

We survived the American recession pretty well. Of course companies laid off people, growth shrank but how is this European crisis going to play out as far as the Indian IT is concerned?

There are no issues about the demand there. Demand will continue to be there, the way of serving the demand will have to be different.

In what sense?

We will have to serve it from there.

HCL Technologies has a large exposure to the European markets, about 26% of revenues come from Europe, so how much of an impact is that going to make if for example the Euro depreciates and the economy weakens there? How much is that going to hit someone like you?

We already have execution done. When you talk about Europe, you normally cover UK as well as Europe. The entire Axon execution, virtually 100% of it gets done in the respective countries, so you have to take a big percentage and say that this is completely un-impacted. There is a good deal of what we work in UK itself and Germany is being served by officers and executives who come from those countries. We have 4000 people in England alone, English nationals.

HCL Technologies signed a large, $500 million deal with Merck recently, so are there more such deals in the pipeline, do you see them on the horizon for HCL Tech?

We say this is a business, which is in the pipeline. This is a business, which is in contention and this is a business, which we’ve been in. Our most worrisome point when the recession took place was pipeline was getting very thin, so if it is not there, your percentage the one that you have to get becomes extremely high, then you lose on the margins.

The pipeline was getting thinner and Vineet used to mention ‘I meet only in case the deal size is beyond a certain thing and I am not finding so many of them’ but that time is conclusively behind us whether it is US or whether it is Europe or whether it is Japan, the pipelines are healthy, as healthy as we have ever seen.

You mentioned Axon. Now every Indian company, at least the top rung companies have tried to build their own consulting practice but they have not been too successful, so why do you think that HCL is going to do well where others have tried and not done so well?

We are doing well in that. We acquired that. When we do something like this, it contains risk. Sometimes risk do not work. The more if it does not work, the better prepared that we have to be and we knew one big differential step that we had to take. We had to leave the management to people belonging the locations, some changes may take place but people who have managed that consulting existed only in those countries. They did not exist within our company or within any of the companies emanating out of India, so that’s a big risk. You do not know whether we will cross-culturally manage another team.

Source: http://economictimes.indiatimes.com

Essar Group will pay 245 rupees ($5.30) a share for the 59.13 percent stake in AGC Networks, from U.S. network equipment maker Avaya Inc [AVXX.UL], and will offer to buy an additional 20 percent stake in AGC as required by Indian regulations.

The offer price is 12 percent lower than AGC’s Friday closing price of 278.45 rupees in the Mumbai market.

Essar said the open offer for the additional 20 percent stake would cost 780 million rupees. Company officials on a conference call said the open offer would be announced in about three weeks.

“This transaction allows us to offer a wider range of services,” Aparup Sengupta, global CEO of Essar Group’s outsourcing venture Aegis Ltd, told journalists on Sunday.

AGC Networks is focused on the India and Australia markets and had annual revenue of about $100 million, Sengupta said. The company employs about 500 people.

Source: http://www.ideationcloud.com

NEW DELHI: Having successfully serviced American and European clients from India for almost a decade, BPOs are now strengthening their ‘onshore’ presence in these countries to tap new opportunities.

Offshore outsourcing is the practice of hiring an external firm to perform some business functions in another country at lower costs. When the work is done in the same country, it is referred to as ‘onshore’ outsourcing.

BPOs have traditionally delivered solutions out of locations like India, the Philippines and Vietnam to offer clients low-cost, but high-quality services.

But now, business process outsourcing (BPO) firms are also strengthening their onshore presence to tap new opportunities in the healthcare and financial services space.

“The BPO industry earlier was almost everything offshore unlike the IT sector, which always maintained a strong onshore presence. For BPOs, offshore will continue to play a critical part because of the cost and quality advantage,” Patni senior vice-president and global head BPO Sanjiv Kapur said.

“But from a BPO perspective, it is changing from a 95-97 per cent offshore model to a 70-75 per cent offshore model, with 25 per cent of the work being done onshore,” he added.

A strong footprint in the home country will also help the BPOs, as certain types of jobs have to be carried out onshore, like underwriting or acturian valuation.

“As you get into more mature relationships, certain parts of the work have to be done onshore. Certain sectors like healthcare and insurance might also require a certain part of the work to be carried out in the same country,” Genpact chief operating officer N V Tyagarajan said.

Patni’s recent contract win from Universal American saw the BPO major acquiring CHCS Services (a subsidiary of Universal American), giving it access to a 200-person facility in Pensacola, Florida. Recently, it had also acquired another such facility in El Paso, Texas.

Genpact’s contract with Walgreens, earlier this year, saw Walgreens shifting its accounting processes and jobs to Genpact, while the BPO major acquired the Danville facility of the drugstore chain.

Customers are not just looking for cost savings, but also how the service provider can grow and change to suit the customer’s future needs and demands, industry experts say.

While margins might be lower compared to an offshore setup, the strategy pays off in the long-term in terms of more contracts.

“The success of this onshore strategy is evident in some of the customer wins that we are getting. Rather, during the slowdown, this has helped us get business and kept us in deals that otherwise would not have been possible to win,” a spokesperson of Firstsource said.

Source: http://economictimes.indiatimes.com

May 18 (Bloomberg) — Tata Consultancy Services Ltd., India’s largest software services provider, fell as much as 2.6 percent in Mumbai trading after a newspaper reported the U.K government may review an $850 million outsourcing agreement signed with the company.

U.K may split large outsourcing orders into smaller deals to reduce government spending, the Economic Times said, without saying where it got the information.

Tata Consultancy Spokesman Ashish Babu couldn’t immediately be reached at his office telephone for a comment on the report.

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net
To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net

Source: bloomberg.net

MANILA, Philippines—Property giant Ayala Land Inc. plans to build more business process outsourcing (BPO) hubs this year, boosting prospects for recurring office rental earnings that complement its shopping mall and residential businesses.

“Because of the recovery that we’re seeing, we have revived our plans for BPO expansion and we’re going to be launching this year another 120,000-130,000 square meters of new BPO space mostly in provincial locations,” ALI investor relations officer Alfie Reyes said in a briefing on Friday.

So far this year, ALI has launched BPO hubs in Iloilo and Baguio, offering 18,000 sq.m. in combined additional BPO space. With the recent pick-up in demand from BPO firms, however, the office property segment has been revitalized.

In the pipeline this year are new hubs in five more provincial locations and a couple more in Metro Manila, Reyes said.

In the first three months of this year, ALI’s office business segment posted a 3-percent rise in revenue to P466 million, with the expansion of the BPO office portfolio to a total of 258,001 sq.m. in gross leasable space as of end-March.

First-quarter office revenue was also boosted by higher average BPO lease rates, which rose by 11 percent to an average of P584 per square meter a month and improved occupancy levels of 66 percent against 50 percent a year ago.

The strategy on BPO is in line with the Ayala group’s expansion in all other property segments, particularly the residential business.

For this year, 15 to 20 new residential property projects are expected to be launched, Reyes said.

Because of the strong demand for residential property, ALI expects to be able to raise its selling prices this year by an average of 10-15 percent.

Reyes said ALI was upbeat on business prospects for this year. “Based on what we see, this year should be better than last year,” he said.

ALI posted a 32-percent profit growth in the first quarter to P1.2 billion from year-ago level.

Consolidated revenue for the first quarter reached P9.22 billion, up by 24 percent over a year ago. This was due to higher real estate revenue.

Source: business.inquirer.net

By Pankaj Mishra,ET Bureau

BANGALORE: Sales honchos at India’s top tech firms Tata Consultancy Services (TCS), Infosys and Wipro are busy chasing multi-billion contracts this summer from potential customers, including China Mobile, Verizon US and Bharti Airtel, against multinational rivals.

Outsourcing experts from research firms such as Ovum said around 500 contracts worth nearly $37.5 billion are set to expire by September this year, ranging anywhere between $1 million and $1 billion each. “It’s a long, tough summer,” said a senior official at one of the Indian tech firms exploring opportunities at telecom majors such as China Mobile and Verizon. “Coming out of recession, we are facing perhaps the toughest sales challenge ever — the deals are smaller, competition is breathing down our necks and there is this huge expectation that we are back to normal,” he added, requesting anonymity.

Larger offshore vendors, which now include the likes of HP, IBM and Accenture, are likely to bid for a number of contractual opportunities, said Jens Butler, principal analyst at Ovum. “Cost-cutting is not the only theme, it is a component of client requirements,” added Mr Butler, who is based in Sydney, Australia.

While China Mobile plans to adopt a total outsourcing model by giving away computer hardware and application development activities to a set of vendors, Verizon is looking to lower its operational costs by sending out some work overseas. Bharti Airtel, which currently has an outsourcing contract with IBM, is also set to renegotiate. Rival Wipro, which has already managed services worth over $600 million for Bharti, is the telco’s second-largest vendor and is likely to increase its share of the opportunity, people familiar with the contract told ET on condition of anonymity.

When contacted by ET, officials at Verizon US declined comment. “It’s a classic battle between us and IBM, Accenture, HP-EDS, even they are pitching with high offshoring proposition for lower costs,” said another executive currently in discussions with a telecom customer where IBM and HP are incumbents.

The biggest outsourcing battle is for high value and multi-year computer infrastructure management contracts. Large multinational rivals such as IBM and HP have traditionally been strong in delivering multi-year management contracts because they are able to bundle services with their hardware products and even offer lucrative finance and credit options to customers.

For instance, the top 15 vendors analysed by research firm Forrester 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 such as 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 up to 40% and focus better on their core business.

On their part, Indian firms, including HCL, have started winning larger deals. HCL had on Tuesday announced that it had bagged a $500-million contract from US-based Merck Sharp and Dohme. Mid-sized rival Patni also won a five-year $250-million contract from health insurer Universal American last month.

Source: www.economictimes.com

Indian cos are confident about naming clients as they have grown bigger and are present in several countries

Bangalore: As Indian software exporters see business return to normal with Western firms stepping up outsourcing, they are also witnessing a growing openness among clients willing to be identified.

For several years now, many Western firms have been reluctant to admit they worked with Indian information technology (IT) firms while cutting jobs back home, fearing a political backlash.

That’s changing now. In April alone, India’s third largest software firm Wipro Ltd has named customers such as US electronics retailer Best Buy Co. Inc. and insurer Main Street America Group; it’s bigger rival Infosys Technologies Ltd announced a three year $150 million (Rs666 crore) contract from Microsoft Corp. to manage internal IT systems; and HCL Technologies Ltd has named seven clients, including US publishing group Advanstar Inc. and French glass maker Saint Gobain.

“They (customers) are communicating that to their own shareholders…that they are taking efforts to restructure their own cost structure,” said Suresh Senapaty, chief financial officer at Wipro. “(But) not everybody is doing that; it is still a minority.”

HCL did not comment.

Infosys, India’s second largest IT vendor, said while it makes exceptions it has a policy of not naming customers.

“There are various reasons for that,” T.V. Mohandas Pai, director for human resources and training at Infosys, said without elaborating. Still, Infosys has already identified two clients so far this year.

A decade ago, at the beginning of India’s IT growth story, Infosys and Wipro hadn’t been reluctant to name customers, but the practice stopped soon after the tech meltdown of 2000-02, when it found overseas customers unwilling to be named because of growing agitation back home at losing jobs to Indian companies.

The companies also didn’t want to tip off smaller local rivals, which had begun playing the price card to woo customers.

During the recent downturn, the worst in decades, many Western companies were forced to slash technology budgets and jobs just to remain afloat. Now, as they start making new investments in a recovering economy, they want to continue keeping costs low to be competitive, say analysts.

“By outsourcing to Indian vendors, customers are telling their investors that they are lowering operating costs to be competitive,” said Arup Roy, senior analyst at technology researcher Gartner Inc.

“These guys (Indian vendors) are price competitive compared to other multinationals. MNCs have a substantial global delivery presence, including (in) India, yet they still have to go some more to really match the prices,” he said.

IBM Corp., Accenture Ltd and Hewlett-Packard Co. (HP) have a large workforce in India, the bulk of which has been hired in the past few years. IBM has more than 73,000 people in India; HP employs at least one-fifth of its global workforce here; and Accenture has 47,000 people in the country.

Another analyst said Indian IT firms are more confident about naming customers now because they have grown bigger and are present in several nations, employing locals in the US and other Western countries.

Also, most of the pricing is transparent to customers and the differentiator is the value each vendor brings.

“We are no more talking about $500 million companies. These are huge $4-5 billion companies. They have scale, can execute larger contracts and (have) built their brand over years,” said Siddharth A. Pai, partner and managing director at the India office of TPI Inc., an outsourcing advisory.

Source:  www.livemint.com

Explaining BRIC, Chindia and Indian "Miracle"

India’s rapid economic growth has brought it enormous positive attention of the world media, billions of dollars in foreign investments, and new-found status on the international diplomatic scene. Goldman Sachs has promoted it by coining the term “BRIC” which groups India with other major emerging markets like Brazil, China and Russia as an investment destination. Inclusion in G20 has put the Indian leaders alongside the world’s richest G7 nations. Indian business leaders in partnership with India’s planning commission have mounted unprecedented “India Everywhere” branding campaign at the World Economic Forum held in Davos, Switzerland each year. Indian writers have been promoting “Chindia” which seeks to put India on an equal footing with China.

Goldman Sachs has clearly contributed to the euphoria about India, by projecting that its economy could be 50 times its 2006 size by 2050, which would make it the world’s third largest, after China and the United States. However, Goldman’s Jim O’Neill has also said that when he ranked countries by the potential risks to their growth — everything from inflation to corruption — India ranked 97th in the world, behind Brazil and the Philippines. London-based Maplecroft terror risk index based on 2009 data ranks Iraq first, Afghanistan second, with Pakistan and Somalia third and fourth respectively. They are rated at extreme risk along with Lebanon 5, India 6, Algeria 7, Colombia 8 and Thailand 9, according to Reuters.

The UK-based risk advisory group’s index tracks the risks of an attack, the intensity of violence as measured by casualties per incident, a country’s history of extremist violence and threats made against it by groups such as al Qaeda.

“Media coverage can often skew public perceptions of terrorism risk in a country by publicising mass casualty attacks,” said Maplecroft political risk analyst Eva Molyneux.

Having been subjected to a barrage of Indian marketing messages in the last decade, I have been trying to assess how much of it is real, and what part is just pure hype by the western and Indian media. A recent interview given by Dr. Jayati Ghosh has helped me put it in perspective. Dr. Jayati Ghosh is Professor of Economics and currently also Chairperson at the Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi.

Comparing China and India:

Here are the key points Dr. Ghosh makes:

1. Talk of Chinindia is nonsense. China and India are two very different countries with different histories. India has never done the hard work of basic reforms that China did decades ago. Unlike India, early reforms combined with greater state control on the economy have helped China achieve rapid and massive reduction in poverty.

2. Unlike China, India does not run any trade surplus or current account surplus to fund its growth. In fact, India has been running significant twin deficits. India depends much more on foreign investments for its growth than China.

3. Although large number of Indians estimated at 110 million have been the main beneficiaries of India’s rapid economic expansion, their numbers are only about 10% of India’s 1.1 billion people. The growth has excluded the rest of the 90% of the population, leaving them in abject poverty.

4. Instead of fighting against economic injustice, people are being divided along ethnic, religious and caste lines. There is an increase in all kinds of unpleasant social and political forces in India, where people are turning against each other, against linguistic, caste and faith groups, because they can’t hit at the system—it’s too big. So they pick on somebody their own size, or preferably smaller.

Comparing India and Pakistan:

There are some arrogant Indians in cyberspace as well as the physical world who contemptuously dismiss any comparison of India and Pakistan. However, the responsible Indian and UNICEF officials concur that Indians are much worse off than Pakistanis and Bangladeshis in terms of basic nutrition and sanitation.

India is worse than Bangladesh and Pakistan when it comes to nourishment and is showing little improvement in the area despite big money being spent on it, said India’s Planning Commission member Syeda Hameed.

“There has been an enormous infusion of funds. But the National Family Health Survey gives a different story on malnourishment in the country. We don’t know, something is just not clicking,” Hameed said.

Speaking at a conference on “Malnutrition an emergency: what it costs the nation”, she said even Prime Minister Manmohan Singh during interactions with the Planning Commission has described malnourishment as the “blackest mark”.

“I should not compare. But countries like Bangladesh, Pakistan and Sri Lanka are better,” she said. The conference was organized in 2008 by the Confederation of Indian Industry and the Ministry of Development of Northeastern Region.

According to India’s National Family Health Survey, almost 46 percent of children under the age of three are undernourished – an improvement of just one percent in the since 2001.

India might be considered an emerging economic power, but it is way behind Pakistan, Bangladesh and even Afghanistan in providing basic sanitation facilities, a key reason behind the death of 2.1 million children under five in the country. Lizette Burgers, chief water and environment sanitation of the UNICEF, has said India is making progress in providing sanitation but it lags behind most of the other countries in South Asia.

While a mere 14 percent of people in rural areas of India – that account for 65 percent of its 1.1 billion population – had access to toilets in 1990, the number had gone up to 28 percent in 2006. In comparison, 33 percent rural Pakistanis had access to toilets in 1990 and it went up to an impressive 58 percent in 2006.

Similarly in Bangladesh, 36 percent of rural people have access to proper sanitation. The corresponding figures for Afghanistan and Sri Lanka were 30 percent and 86 percent respectively.

“This is a huge problem. India has made some progress but there is a lot to be desired. The speed in which we are (India) increasing the toilet usage will not help much,” Burgers told IANS, a day before an international sanitation campaign in Delhi.

She, however, said that the huge population in India is a major challenge. Burgers said that between 1990 and 2006, rural areas of the country has witnessed a growth of 181 million people of which 39 million people did not have access to toilets.

According to the international health and sanitation watchdog, there are at least 2.5 billion people across the globe who do not have access to toilets and 50 percent of them are in the south Asian region.
Pakistan’s water quality is not good, but it is significantly better than in India.

On page 288 of his book “Water management in India”  the author P. C. Bansil quotes a UN study that says India ranks a poor 120 on a list of 122 countries in water quality.

India’s neighbors Bangladesh, Nepal, Sri Lanka and Pakistan rank much better at 40, 64, 78 and 80 respectively.

Growing Poverty in India:

Part of the problem fueling anger and insurgencies is the growing number of the poor in India. Here’s a recent Reuters report:

“India now has 100 million more people living below the poverty line than in 2004, according to official estimates released Sunday.

The poverty rate has risen to 37.2 percent of the population from 27.5 percent in 2004, a change that will require the Congress-ruled government to spend more money on the poor.

The new estimate comes weeks after Sonia Gandhi, head of the Congress party, asked the government to revise a Food Security Bill to include more women, children and destitutes.

“The Planning Commission has accepted the report on poverty figures,” Abhijit Sen, a member of the Planning Commission told Reuters, referring to the new poverty estimate report submitted by a government panel last December.

India now has 410 million people living below the U.N. estimated poverty line of $1.25 a day, 100 million more than was estimated earlier, officials said.

India calculates how much of its population is living below the poverty line by checking whether families can afford one square meal a day that meets minimum nutrition needs.

It was not immediately clear how much more the federal government would have to spend on the poor, as that would depend on the Food Security Bill when it is presented to the government after the necessary changes, officials say.

India’s Planning Commission will meet the food and expenditure secretaries next week to estimate the cost aspects of the bill, government officials said.

A third of the world’s poor are believed to be in India, living on less than $2 per day, worse than in many parts of sub-Saharan Africa, experts say”.

Here is the entire transcript of Dr. Ghosh’s interview:

PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I’m Paul Jay. Joining us again from Amherst, Massachusetts, from the PERI institute, is Jayati Ghosh. She’s a professor of economics at the Center for Economic Studies and Planning at the School of Social Sciences at JNU in India. Her recent book is After Crisis. Thanks for joining us again, Jayati.

JAYATI GHOSH: Hello.

JAY: So there’s a lot of talk about the growth and expansion in India and China, and especially India these days. We’re hearing again about the Indian miracle. Whose miracle is it, anyway? And is it such?

GHOSH: No, it’s not actually a miracle. In fact, I think—first of all, let me clarify. India and China are very, very different. We really can’t compare them. And all this talk about Chindia and so on, it’s nonsense, because China is a fundamentally different country. It’s not just that it has had much more rapid growth for a longer period and been more successful in poverty reduction, but it’s a whole different institutional system. It still has much more substantial state control, especially over finance. It is still able to manipulate the nature of the growth of the economy more directly through the central state than India is. And because it had a revolution and because it had land reform and egalitarian income distribution it was operating on a much more equal asset base, which then allowed economic policies to have different effects. India is different. In India we never did the hard work in terms of the major transformations, like asset redistribution, land reform, and so on. We still have a very unequal society, of course, income distribution as a distribution.

JAY: Well, before we go to India, let’s just back up to China for a second, because we’d been hearing that a lot of that income distribution, land reform, and a lot of that’s been undone over the last 10, 15 years, and this kind of rise of state-managed capitalism in China is going back the other way. Is that not the case?

GHOSH: To some extent. But remember that the base on which it was operating was still fundamentally more egalitarian. And that’s important because, you know, the major episodes of poverty reduction in China, if you look at it, are the early 1980s and the mid-1990s, and these were periods when agriculture prices rose and benefited the farmers. Now, that helped poverty reduction and income distribution, because there was egalitarian land distribution—it was the peasant households that benefited and became less poor and all of that kind of thing. So poverty reduction had been closely related to that feature of China, which is very different from India. But you’re right that the pattern of growth from the early 1990s has been in equalizing, has been one which has, you know, focused on this export-led growth paradigm in the coastal region, neglected the west and the central regions, you know, brought in migrant workers, often in terrible conditions, by suppressing growth in the countryside. All of that did happen. Again, I think the difference is that from about 2002 you find that the Chinese state is more aware of this, so there’s a shift in terms of public investment towards the central and the western regions. The latest stimulus package disproportionately they’re spending in the west and the central regions of the country. There was an attempt to give more rights to migrant workers who are normally denied all the rights that are available to urban workers. There is now the attempt to revamp the health system and make it once again something which is affordable for all Chinese citizens. So there has been a shift in the recent past in China.

JAY: So in India you’re saying there never was major reforms and it’s getting worse.

GHOSH: Absolutely. If you look at the pattern of Indian growth, it’s really more like a Latin American story. We are now this big success story of globalization, but it’s a peculiar success story, because it’s really one which has been dependent on foreign—you know, we don’t run trade surpluses. We don’t even run current account surpluses, even though a lot of our workers go abroad to Saudi Arabia and the Gulf, to California, as IT workers. We still don’t really run current account surpluses. So we’ve been getting capital inflow because we are discovered as this hot destination. You know, we are on Euromoney covers. We are seen as this place to go. Some of our top businessmen are the richest men in the world. They hit the Fortune top-ten index. All of that kind of thing. This capital inflow comes in, it makes our stock market rise, it allows for new urban services to develop, and it generates this feel-good segment of the Indian economy. Banks have been lending more to this upper group, the top 10 percent of the population, let’s say. It’s a small part of the population, but it’s a lot of people, it’s about 110 million people, which is a pretty large market for most places. So that has fuelled this growth, because otherwise you cannot explain how we’ve had 8 to 10 percent growth now for a decade. Real wages are falling, nutrition indicators are down there with sub-Saharan Africa, a whole range of basic human development is still abysmal, and per capita incomes in the countryside are not growing at all.

JAY: So I guess part of that’s part of the secret of what’s happening in India is that the middle, upper-middle class, in proportion to the population of India, is relatively small, but it’s still so big compared to most other countries—you were saying 100, 150 million people living in this, benefiting from the expansion. And it’s a lot bigger. It’s like—what is it? Ten, fifteen Canadas. So it’s a very vibrant market. But you’re saying most of the people in India aren’t seeing the benefits.

GHOSH: Well, in fact it’s worse than that. It’s not just that they’re not seeing the benefits. It’s not that they’re excluded from this. They are part of this process. They are integrated into the process. And, in fact, this is a growth process that relies on keeping their incomes lower, in fact, in terms of extracting more surplus from them. Let me just give you a few examples. You know, everybody talks about the software industry and how competitive we are. And it’s true. It’s this shiny, modern sector, you know, a bit like California in the middle of sub-Saharan Africa. But when you look at it, it’s not just that our software engineers achieve, it’s that the entire supporting establishment is very cheap. The whole system which allows them to be more competitive is one where you are relying on very low-paid assistants, drivers, cooks, cleaners. You know, the whole support establishment is below subsistence wage, practically, and it’s that which effectively subsidizes this very modern industry.

JAY: What’s happening politically? Do you see a reflection of resistance as a result of all this, coming from the impoverished people?

GHOSH: Well, you know, unfortunately, I think that there is a tendency now in India for these very major income distribution shifts and this very significant increase in exploitation and destitution not to have a political voice. It’s surprising to me. Food prices have been going up by 20 percent now for two years. When this was happening in the ’70s, you had food riots all over the country. You had major social instability. You don’t have that today. You don’t have that same outcry. We’ve had a big crisis where lots of workers lost their jobs, people’s money wages are falling. You don’t find the outcry. What you do find is the increase in all kinds of unpleasant social and political forces, where people turn against other linguistic groups, they turn against other caste groups, they turn against other religions, you know, because you can’t hit at the system—it’s too big. So you pick on somebody your own size, or preferably smaller than you so you can actually bash them up.

JAY: But why is that in a country like India, which is one of the few countries that has had a kind of left political tradition that has more or less remained intact?

GHOSH: Well, I wish I could say it’s intact. I think the left also, in India, it’s still, I think, a very vibrant and very important political force, but it is under attack and it’s under attack from both the right and left. It’s under attack from imperialist forces who want to suppress a genuine left movement in India. And it’s been queried by a lot of confusion by all kinds of conflicting, you know, political groups that are based on caste or on religion or on other kinds of identity politics. I do believe, though, that the future of the left is integral to the future of India as we know it, which is to say a secular democracy. So it’s absolutely critical to keep that left voice not just alive but expanding in India.

Source: open.salon.com

Hinduja Global Solutions has 23 delivery centers in countries such as India, United States, Canada, Mauritius and the Philippines with about 14,500 employees.

Antonio dela Cruz, senior vice president for finance and corporate services and Pushka Misra, president and chief executive officer for Philippine operations of Hinduja Global Solutions met with local officials to discuss the investment plans.

The Hinduja Global Solutions call center will be the 10th in Iloilo. The nine others already employ more than 6,000 workers.

The call centers include Teletech, ePLDT Ventus, Callbox Customer Contact Center, Global Mega Communications Inc., Techno Call Corp., Interactive Voice Call Center, Medlink Trans Services, Eversun Software Philippines Corp. and Savant Technologies.

The Business Processing Association of the Philippines (BPAP) recently ranked Iloilo third among the top 10 “next wave” cities in the Philippines for business process outsourcing and information technology because of the low cost of doing business and the availability of talent.

It follows Metro Laguna and Metro Cavite and is followed by Davao. Bacolod City is ranked fifth followed by Bulacan East, Bulacan West, Cagayan de Oro, Lipa City and Pampanga Central.

Last year, BusinessWeek magazine said Iloilo and Davao were among the 31 cities that were being eyed by BPO investors due to economic and political pressures to outsource work to lower-cost cities.

Source: goodnewspilipinas.com

A deal has not been finalised, but a sale price could be about $250 million, said two of the sources. None of the sources wished to be named as they were not authorised to speak to the media. Firstsource has a market value of $300 million. The three sources characterised KKR as the frontrunner for Firstsource. Another source familiar with the matter said KKR was in talks for Firstsource but did not agree that the buyout firm is the frontrunner and declined to elaborate.

Rival U.S. private-equity firm Carlyle Group [CYL.UL] was also eyeing the stake, but was not a strong contender in the process, two of the sources said. Carlyle declined to comment. It could not be determined whether there were other bidders pursuing Firstsource. “ICICI Bank has stated consistently that its investment in Firstsource is a financial investment and the bank would look at reducing its holding over a period of time.

The bank evaluates all opportunities on an ongoing basis,” ICICI said in a statement e-mailed to Reuters. Firstsource and KKR declined to comment. Temasek declined to comment and Metavante could not be reached for comment.

Source: www.pehub.com

The booming economy is attracting Western workers.

Historically, India has been a society with a surplus of labor, accustomed to exporting skilled as well as unskilled workers abroad. Indian governments have therefore traditionally favored liberal migration rules and paid only limited attention to regulating immigration–outside the context of specific concerns over terrorism and cross-border flows from Bangladesh.

However, recent events suggest that the role of foreign labor in India is changing:

–In May 2009 violence broke out between villagers and a group of 600 Chinese workers at a steel plant in Jharkand state. Enquiries revealed that there were up to 30,000 Chinese employed on 14 separate power projects across India, mostly without appropriate visas.

–The government reacted with moves to tighten visa requirements. Yet this in turn brought widespread protests from Indian companies, which were concerned to protect their freedom to employ skilled expatriates.

The controversy highlighted both Indian companies’ growing interest in hiring high-level talent from abroad–particularly from Western countries–and the government’s sluggish appreciation of this trend.

Demand for talent. Hospitality, tourism and aviation have a long history of hiring expatriate professionals for key posts in India. More recently, firms in other sectors–including information technology (IT), banking, pharmaceuticals, electronics, health care, aerospace, nuclear energy and education–have looked to do the same:

–A recent study estimated that there are 40,000 expatriate workers registered as employed within Indian firms, 15% of whom occupy leadership roles.

–Expatriate managers are seen as more willing to take risks, to innovate and to promote transparency and accountability.

–Foreign recruits and Indian employees learn from each other, helping make business culture more global.

Outsourcer strategies. Indian firms providing outsourcing services have their own reasons for turning to high-level expatriate professionals. They tend to struggle to win complex and high-end consulting jobs. One way to compete is to bring in expatriate expertise that helps build the close-to-client presence required by advanced IT consulting. Although hiring foreign workers reduces the cost advantages India has traditionally enjoyed, firms increasingly see it as necessary if they wish to be global players. Their hiring practices complement these trends.

Destination India. Equally strong influences are drawing Western professionals, both at younger and more senior levels, to opportunities in India:

–For new graduates, Indian internships offer valuable exposure to an Asian business environment.

– For young professionals, international exposure and a global skill set can be vital components of an effective résumé.

–For more senior professionals, many firms now offer pay packages that are competitive with those in the United States, which buy an elite lifestyle in the Indian setting.

Challenges. The employment of expatriates presents a range of significant challenges in the Indian environment. Not the least of these is Indian bureaucracy and political interference in the labor market:

–Following the controversy over Chinese workers, the government in October announced a crackdown on foreign workers, limiting these to technical experts and senior managers, with a stipulation that foreign nationals could comprise no more than 1% of a firm’s workforce.

–December saw a further amendment of the rules to create a new type of “P” visa for expatriates working on specified projects, with a maximum of 40 per project.

It is clear that the government recognizes the value of expatriate workers, but has to balance this against the political penalties of being seen, however theoretically, to be giving “Indian” jobs to foreigners.

Outlook.India’s small but significant move toward the employment of skilled expatriate workers is a reversal of the long-standing “brain drain” of Indian talent to the United States and Europe. It represents the growing maturity of India’s globalization. So far, Indian firms and cities have been able to accommodate these new affluent professionals, although political interference and bureaucratic changes will remain a problem.

Source: forbes.com

By Pankaj Mishra,ET Bureau

BANGALORE: UK’s tax authority, HM Revenue & Customs, is beginning an offshore outsourcing pilot in India with technology vendor Capgemini to reduce operational costs and explore ways to do more with its over $1 billion annual IT budget.

The 18-months to two year long pilot, being launched with European vendor Capgemini in India, is part of HMRC’s five year $84 million outsourcing contract for tracking the agency’s imports and exports. HMRC plans to save around $7.5 million through this pilot alone, and will take a decision on further offshoring only after studying the initial program.

“No taxpayer data will be leaving the UK. There will be no job losses in the UK as a result of this pilot, as this is new work,” Andrew Bennett, an HMRC spokesman told ET on Monday. “No decisions about any further offshoring will be made until the pilot is completed and the results rigorously evaluated,” he added.

HMRC awarded its Customs Handling of Import and Export Freight applications (chief) contract for five years to Capgemini in February this year, replacing the incumbent vendor British Telecom. The work involves processing around 30 million electronic declarations every year apart from supporting nearly four million lines of code written in one of the oldest computer programming languages-Cobol.

Availability of software engineers familiar with Cobol ready to work for less than half of what it would cost in the UK, is driving more work from traditional government customers.

Despite anti-offshoring sentiments being raised in the US, Indian tech vendors were hoping that they will be able to participate in bigger transformational contracts being considered by UK’s public sector departments. Government IT spending in the UK is estimated to be over $36 billion every year, according to research firm TowerGroup.

Indeed, a review of the UK’s public sector IT spending by the country’s treasury department last year identified the potential of around $10.6 billion in annual savings.

“Back-office operations and IT, led by Martin Read, recommends better management information, benchmarking and review of costs, and better governance of IT-enabled change programmes to achieve $5.9 billion of savings a year on back office operations, and $4.7 billion of savings a year on IT spending,” HM Treasury said in its study titled Operational Efficiency Program.

If this offshoring pilot is successful, HMRC and Capgemini could increase outsourcing to India. While a bigger offshoring program will help HMRC bring down IT costs by up to 50%, increased delivery of services from India will also help Capgemini improve its profitability from around 6-7% to double digits over next few years.

Source: Economictimes.indiatimes.com

Under the background of world financial crisis, undertaking and implementing the service outsourcing business from overseas has quietly become the fastest industry in development and expanding

Under the background of world financial crisis, undertaking and implementing the service outsourcing business from overseas has quietly become the fastest industry in development and expanding.

Authorities revealed to the reporter yesterday: at present, the offshore service outsourcing business that Shenzhen enterprises undertake has exceeded 5 billion U.S. dollars for the first time; the contract value has amounted to a record of 5.08 billion U.S. dollars, which ranks No.1 in the country. A number of domestic and foreign outsourcing service companies take Shenzhen as an international business base to accelerate the expansion of business and staff.

According to reports, in addition to the big enterprises such as Huawei, ZTE, and Tencent that rely heavily on the provision of “services” to develop rapidly and make money, there are a lot of other services outsourcing enterprises such as IBM, Evans, Da Zhan, Peng Kai, Freeborders, and CS&S are accelerating the expansion of business in Shenzhen.

In recent years, information services, especially software and service outsourcing, keep rapid growth in the context of globalization. There are forecasts that the current global “outsourcing” scale has surpassed 100 billion U.S. dollars. The development of software outsourcing has been regarded as the shortcuts of India, Ireland and China’s software industry development.

Source: http://www.globalservicesmedia.com