'BFSI is the next big thing in domestic outsourcing' - IBM India

BANGALORE: TEN years ago, the world’s biggest IT company then, IBM, did the unthinkable: it struck a deal with a company in India (Cadbury ) to take care of its IT needs. It was one of the country’s first domestic IT outsourcing deals. The rest, as they say, is history. More than a dozen such deals later — including the game-changing contract with Bharti Airtel — IBM is the king of the hill in domestic IT outsourcing. Recently,ET NOW’s R Sridharan caught up with Shanker Annaswamy, regional general manager of IBM India & South Asia, to talk about Big Blue’s journey so far and the road ahead. Excerpts from the exclusive interview:

Shanker, it’s been 10 years since IBM bagged its first outsourcing contract in India . It’s been a long journey. How do you look back on it?

1999 was indeed when we signed the first contract, but 2004 marked the biggest turning point for us — the outsourcing deal with Bharti. It was $750-million contract, and 2006 followed with Idea cellular and Vodafone. I think, we’ve done wonderfully well.

If you look at the last year and a half, every Indian IT vendor has been hit by the global downturn, especially in the financial services market. How has IBM in India coped with the downturn?

Given the global market conditions and the fact that large deals were not happening, we were looking at our successes here, and asking ourselves how we can replicate the successes beyond the telecom industry. I am very happy to share with you that we looked at customers beyond telecom, to customers like Amul and media companies like Sun TV.

You have a lot of Indian vendors now competing for domestic outsourcing deals. Wipro, for example, recently bagged the Aircel deal, which IBM was pitching for as well. How do you see the competition from India vendors?

It took some time for other competitors to look at, understand the model and then go and win one or two accounts. But if you look at the real strategy behind it, it’s not simple IT consolidation. It is your capability to bring in tools and asset-based services than labourbased services, and bring research to play.

You also have HP and Dell, which were traditionally hardware firms, getting into services. Are they a bigger threat?

Industry domain knowledge and capabilities are not built overnight. The differentiator for us is very clearly our integration: consulting and system and technology business like the mainframes and big computers, then the software business, which is an integrating business, then we have services end-to-end . Our ability to take a certain portion of the customer business and turn it into a profitable proposition for them is very big and it will take competition time to catch up.

But what are the other sectors apart from telecom and manufacturing that will open up to outsourcing within India?

BFSI area would be a potential opportunity for us to look at. Public sector will take time. Healthcare could be a huge opportunity, but it may take some time as well.

IBM doesn’t disclose its India headcount, but as I understand it’s 90,000 or even one lakh. How does this number split up?

Actually, we are 73,000-plus employees and we are growing. The large proportion of the employee population is in global delivery missions , including the global delivery and then the IBM Daksh BPO outsourcing processes. The rest of the business will be then the domestic business, research labs, software labs and other groups.

At what point would IBM want to de-risk its India strategy or do you think that’s not a concern?

There is no timeline by which we go. This base of 73,000 was built not on a certain number to be achieved or cut off, it depends on our customers, our clients, their projects, and their core competence and domain expertise that comes in. So, India continues to be a key component of this and I would expect it to grow.

Finally, before the global economy slipped into recession, there was a lot of talk about how India had become an expensive place for IT outsourcing. Is India still competitive?

I think so. We will continue to be so. Because India has a unique advantage of being a pioneer here and also it has a large skill base, and the track record. But we have to be careful not to sit on these successes but continue to train and skill our future workforce.

The next biggest worry for Mahindra Satyam is staff exodus

BANGALORE | HYDERABAD: O R N Suresh, the 33-year-old manager working on a British Petroleum (BP) project at Mahindra Satyam, the decision not to take up job offers from rival Indian firms has not really been a smart move. It was quite risky, to say the least, to continue working in a company which was witnessing a few contracts move to rival IT companies. Infact, after BP decided to shift projects from his company to TCS and Wipro earlier this year, things were not the same at Mahindra Satyam.

“We never had any issues with the delivery of projects, and even though I had an offer to serve at Wipro for another oil firm some eight months ago, I thought Satyam offered better job satisfaction,” says Suresh.

As Mahindra Satyam tries its best to regain the faith of customers, employees and investors, the company faces a daunting task. While the global recession ensured that voluntary attrition remained abysmally low, the improving business environment will soon witness rivals wooing the talent which is available. And they are sure to poach in on the highly skilled hands who are willing to jump the fence at Mahindra Satyam.

Some 400 professionals who are at present working for BP at Satyam will soon become redundant after BP completely shifts the projects to rival TCS and Wipro over the next few months.

Apart from customer attrition, many Satyam employees are also realising that the new management’s relentless focus on pruning the costs means far less job security than nine months ago.

“The Rajus were extremely good at dealing with people, whereas the Mahindras have created a lot of discomfiture in the organisation by driving away our senior leadership and imposing their decisions on us. This makes us feel like outsiders. But for the fraud, an average Satyamite will still prefer Raju to the Mahindras as an employer,” said a senior employee who is currently working for banking and financial services customers at Mahindra Satyam.
The Satyam scam doesn’t seem to have dented the image of B Ramalinga Raju, especially among the employees, who still repose a lot of faith in him and the previous management.

A worsening global economic crisis ensured that there were no jobs available for those seeking better options in the market. For hundreds of Satyam employees who were on the bench, the new cost-cutting strategies and tactics were not really very employee-friendly.

“You cannot really blame the new management - even Wipro was forced to lay off many of it employees during the recession,” said another employee who is currently working at the company’s back office division. However, many of the employees feel that the new management is not able to show empathy to the present employees the way the old Satyam management used to.

Perhaps it is this disconnect between the employees and the management which will work in favour of other IT companies who are eagerly waiting to recruit skilled hands willing to jump the boat. “We always thought Satyam was an over democratic company. It was a friendly company where even those on the bench was treated royally. Tech Mahindra has adopted a hire-and-fire policy and the employee satisfaction levels are very low,” said an associate with the Citigroup project.

Meanwhile, one of the biggest worries which Mahindra Satyam has to face is its fading popularity as an employer. And, whenever business picks up, the company may lose out to rival companies in acquiring new talent given the image it has conjured up in the market.

“I will never recommend anybody to join Satyam. Firstly, from a $2 billion company, it has been reduced to a mid-sized IT player. Secondly, the new management is yet to visualise and comprehend the scale of Satyam’s operations, employee and customer expectations. It’s like a cafe owner buying Taj Krishna. Moreover, with no big projects on the cards, I do not think anybody should risk their career by taking up a job there,” said a Merrill Lynch project head.

Large multinational technology firms such as Accenture and IBM, apart from domestic rivals have already started their recruiting campaigns. “The management’s toughest challenge now is to retain the workforce they have. With Accenture and IBM conducting walk-in interviews every Saturday, more than a quarter of Satyam’s associates’ resumes are circulating in these offices,” said a Mahindra Satyam employee working for an insurance customer.

IBM Launches Cloud Computing Lab

IBM said Thursday that it opened a research lab in Hong Kong dedicated to developing products and services for the cloud computing market. At the outset, the lab will dedicate resources to supporting IBM's online LotusLive offering.

IBM currently counts more than 18 million users of LotusLive, which offers Web-based access to e-mail, instant messaging, calendaring, and other collaboration tools. The service starts at $3.00 per month, per user.

IBM said the Hong Kong center will research and develop best practices around various issues related to cloud computing, including security, privacy, and reliability. The lab is co-located with IBM's existing China Development Laboratory, which employs more than 5,000 developers.

"As the first cloud computing laboratory in Hong Kong to serve as a global resource for cloud-based collaboration services, the laboratory marks a milestone for IBM and for the information technology industry in Hong Kong," said Dominic Tong, IBM's general manager for Hong Kong/China, in a statement.

"The opening of the laboratory demonstrates Hong Kong's advantage as a global hub for world-class information technology and online services and we are delighted that it aligns with the government's agenda of developing Hong Kong into a center of excellence in innovation and technology," said Tong.

Attendees at an event marking the lab's opening included Hong Kong Financial Secretary John Tsang, Commerce and Economic Development Secretary Duncan Warren Prescod, and IT Legislative Councilor Samson Tam.

IBM estimates the market for cloud, or hosted, computing products is growing 28% annually, and will increase from $47 billion in 2008 to $126 billion in 2012.

Mindtree Meets With Corporate Information Systems

Started in 1999, Mindtree is a global IT solutions company, with just under 8,000 employees in 20 countries. As a practice, the company gathers its best minds every year in Bangalore to participate in the company's annual planning exercise. With the slowdown, that seemed like a luxury.

Highlights

-- The corporate information systems (CIS) team included video, IM, and presentation sharing capabilities.

-- The initiative, which cost Rs 14.25 lakh (US$30,360) saved the company just under a crore.

"The unprecedented turmoil required MindTree to scrutinize every expenditure item," recalls Sudhir K. Reddy, CIO, MindTree. "One day, I received a call from our chief strategy officer asking me if there was anyway to minimize travel for the annual plan meeting using technology."

Reddy examined telepresence-on-rent and HD video conferencing. But given the size of the meeting - 120 people from up to 14 cities around the world - and the duration of the meeting - six full days - Reddy and his team quickly zeroed in on video collaboration.

The solution Reddy and the corporate information systems (CIS) team deployed included video, IM, and presentation sharing capabilities. An audio bridge was kept as back up.

Reddy's team then evaluated the voice and video quality over different conditions. An optimal configuration was demonstrated to two top management representatives and when they got the go-ahead, the team asked for the meeting's timetable. The list of participants was broken down into those from the local MindTree campus and those from elsewhere. Cameras were shipped to all participants at remote locations. Test conferences were scheduled by CIS teams in all time-zones.

"We had carefully reserved about 384 kbps per external participant and all conference rooms (about 15Mbps in total) to ensure that the video did not freeze or break-up," says Reddy.

But the solution wasn't all technology. The senior management team, which was not used to conducting such important meetings over video conferencing let alone desktop video conferencing, needed convincing. To ensure the technology did not let them down, 10 CIS members babysat the meetings. "If we had to attribute our success to one factor, it would be the meticulous planning and orchestration of the event by the CIS team," says Reddy.

The initiative, which cost Rs 14.25 lakh saved the company just under a crore.

Infosys to make China biggest development centre outside India

LOOKING EAST.

Mr Kris Gopalakrishnan

K. Giriprakash

Swetha Kannan

Bangalore, Dec. 11

In a far-reaching move, IT bellwether Infosys Technologies has decided to make China its biggest development centre outside India.

“China will be our biggest development centre outside India while the US will be the largest market in terms of revenues and India will remain the largest in terms of physical presence,” the Infosys Technologies Chief Executive Officer and Managing Director, Mr Kris Gopalakrishnan, told Business Line.

For the quarter ended September 30, 2009, 9.7 per cent of Infosys' revenue was generated from the rest of the world which includes all regions except North America, Europe and India. North America contributed to 65.9 per cent, Europe 23.2 per cent, and India 1.2 per cent. Infosys does not give country-wise break up of revenues.

As Infosys takes a big leap forward into the next decade, it wants to deepen its geographical presence, said Mr Gopalakrishnan. One of the major reasons for developing the China centre was because of the huge potential it sees there and also the quality of talent pool available there.

Currently, Infosys has two development centres in China: Shanghai and Hangzhou, with a total of 1,258 people working there. The centre delivers BPO and IT services to clients in the US, Europe and Asia. Mr Gopalakrishnan said that the company is also working closely with the Chinese Government to tap and subsequently nurture the IT talent pool there.

“Our China Development Centre has grown in the last one year... We have been expanding our delivery capability in horizontal services such as enterprise solutions, independent validation services, and product engineering as well as investing in contextualising our banking solution product, Finacle, for the Chinese market,” he said.

He added, Infosys will also continue to invest and expand in markets other than China such as Poland and other European countries and Mexico, the Philippines and Brazil, because of the advantage they offer in terms of round-the-clock support to local language support.

Global consultancy firm, KPMG's Executive Director and Head of IT advisory, Mr Kumar Parakala, told Business Linethat Infosys' move showed its visionary strategy for its company. "By 2020, it is expected that China will have the largest English-speaking population in the whole world. Hence, China will have the talent pool needed to support the IT sector," he said.

He said more and more IT multinationals are using the global delivery model for their businesses with presence in all the right places including China. "Therefore, Indian MNCs can get significantly disadvantaged if they do not have a presence in China," he pointed out. He said if Indian companies start setting up their centres in China, firms in China will do the same leading to both the countries leveraging each other's strengths.

Wipro, Microsoft, Intel, Infosys get maximum H-1B visas in 2009

By Moira Herbst
Even as job losses in the US mount, employers have stepped up the hiring of skilled workers from abroad, according to data from the US Citizenship & Immigration Services. The acceleration in recent weeks has put companies close to exhausting the 65,000 visas allotted each year for foreign hires under what's known as the H-1B program. Some 61,500 visas had been used as of Dec. 8, and the last visas are likely to be claimed within weeks. Once that happens, companies won't be able to use the program to bring in additional workers until October, the start of the government's fiscal year.

"The numbers are surprising, considering the state of the economy," says Ron Hira, associate professor of public policy at Rochester Institute of Technology. "With 15.4 million people unemployed in the U.S., employers should be able to find qualified workers here." The H-1B program allows employers to sponsor skilled workers from overseas for up to three years, with the possibility of extending for additional years.

DECLINING NUMBERS

The mix of companies receiving work visas is changing in ways that could dull at least some criticism of the program. In past years outsourcing companies, including many based in India, have received a substantial chunk of the visas. That's led opponents to charge that the program was being used to send American jobs abroad, since many H-1B employees train at client sites in the U.S. and then rotate back to their home countries to handle similar tasks. But the number of visas received by many non-U.S. outsourcers is declining. Of the top 200 recipients of H-1B visas in fiscal 2009, ended in September, offshore outsourcers got about 22%, or 5,663, down from 38% in fiscal 2008.


Non-U.S. outsourcers still claimed 6 of the top 10 places in fiscal 2009, although the numbers were off for the largest operators. India's Infosys Technologies (INFY) topped the list in fiscal 2008, with 4,559 visas, but last year got only 440. Wipro (WIT) was the largest visa recipient in 2009, with 1,964, down from 2,678 in 2008. Sridhar Ramasubbu, Wipro's chief financial officer for international operations, says the drop is the result of lower demand caused by the recession and changes in the company's workforce. "We're now operating in 58 countries," he says.

U.S. companies have become more active in the program. Of the top 200 recipients in 2009, American businesses accounted for 49% of the visas, up from 43% in 2008. Microsoft (MSFT) was No. 2 on the list with 1,318 approvals, while Intel (INTC) ranked No. 3 with 723. The chip giant says it's using the visas to recruit for high-skill posts in software and component design. "We only use visas for job categories with a [domestic] skills shortage," says spokeswoman Lisa Malloy.

With the Obama Administration struggling to create jobs, politicians are debating whether the visa program needs fundamental change. On Nov. 19, Senators Bernie Sanders (I-Vt.) and Charles Grassley (R-Iowa) introduced a bill to bar major companies that lay off U.S. workers from hiring foreign labor through H-1B and other programs. The legislation, which faces significant hurdles, would apply to companies that have cut 50 or more employees within the past year. "We have a responsibility to ensure that companies do not use the temporary guest-worker program to replace American workers with cheaper labor from overseas," says Sanders.

Herbst is a reporter for BusinessWeek.

Infosys likely to offer 13,000 jobs on campuses

BANGALORE: Infosys Technologies, the country’s second largest IT services exporter, is likely to make 13,000 campus offers to fresh engineering graduates who are expected to join during the course of fiscal 2011.

Interacting with mediapersons here on Wednesday, Nandita Gurjar, senior VP, Infosys said that they have already started going to campuses in about 700 engineering colleges. Infosys had made 20,000 offers to engineering graduates for the 2009 fiscal, though only around 75-80 % of the students actually join the company.

The Indian IT services industry has discontinued the earlier practice of selecting the students a year before they complete their graduation and is now visiting colleges in the final semester itself. According to the Infosys official, they would be closing the 2009 fiscal with around 18,000 freshers and 3,500 experienced hires and it is expected that the same hiring numbers is likely for the coming fiscal.

The compensation package for the students coming into Infosys from the next fiscal will be same as last year.
The campus offers for the Indian IT industry had run into certain rough weather during the FY09 with certain companies delaying the entry of these students and in some cases putting them on a different stream of work.

Vineet Nayyar is Satyam’s chief

HYDERABAD: Mahindra Satyam has announced the appointment of Vineet Nayyar as the company’s chairman. Nayyar was so far heading the company as vice-chairman.

Announcing this after the company’s board meeting, a Mahindra Satyam statement also said that the company had appointed former Sebi chairman M Damodaran and Gautam Kaji as additional directors with immediate effect, expanding its board to eight members.

Meanwhile, the company said it had appointed Deloitte Haskins & Sells as the company’s statutory auditor for fiscal year ended March 31, 2009 as well as fiscal year ended March 31, 2010. Deloitte Haskins & Sells, one of the two audit firms roped in by the postscam Satyam Board to restate accounts, will vet the accounts of Mahindra group company for the 2008-09 and 2009-10 fiscals as statutory auditor.

The company, which was acquired by Tech Mahindra in April, has secured time until June 2010 from the Company Law Board to file financials, including quarterly results.

Satyam employees fooled to work on fake projects

Hyderabad: Satyam ex-chairman Ramalinga Raju's fraud game did not spare even its employees. While it inflated revenue through fake invoices, the company created teams to work on the fake projects. The employees working on these 'projects' were made to believe there were clients waiting for these products to be delivered.

According to the finds of the Central Bureau of Investigations (CBI), the employees were also regularly sent emails about the product and project progress as if they were all coming from the clients abroad. But the emails were fake and were used only to keep the employees engaged, reports DNA.

The fraudulent chairman along with the finance in-charges and the core team created at least seven projects, showing that clients were waiting for these products to be delivered. There was regular exchange of mails from the management to the employees to give an impression of the keen interest of management in execution of these projects.

The investigation also found the invoices do not match with the ledgers of banks with which Satyam had transacted in the U.S. "However, the ledgers maintained by Satyam were dishonestly and fraudulently forged pertaining to these seven customers to incorporate the collections pertaining to all the 63 invoices," the CBI said in its latest chargesheet.

What has caught the investigators by surprise is the way the emails to employees for monitoring the progress of the fake projects were generated. The CBI found that they were all generated from Hyderabad. "Detailed analysis of the emails revealed that the internet protocol addresses from which the emails were sent at the relevant time and date were all from within Hyderabad itself, which clearly shows that such emails have never emanated from these seven foreign customers. Further, it was also established that these emails were relayed by the Rediffmail server which has got a paid service facility called Domain Services, which facilitates its clients to create email IDs at their own domain names.

In this case, it was found that the payments for the said services were made through Bank of Baroda Visa credit card which belongs to D Venkatapathy Raju (one of the accused)," the chargesheet said. These email IDs were freely used by the core team working on fabricating the accounts to give sanctity to the fake projects. "For the purpose of executing the projects, which were never delivered to the customers, the accused have wasted thousands of man hours of the associates of Satyam there by incurring a wasteful expenditure to the tune of Rs65.88 crore towards the salaries of the associates and other overheads," the CBI said.

HCL Tech bags 5-year order from News Corp's UK arm

Our Bureau

New Delhi, Dec 8

HCL Technologies on Tuesday announced it has bagged a multi-million pound, five-year infrastructure management and transformation order from News International - a U.K. subsidiary of News Corporation.

The company produces some of the U.K.'s most widely read newspapers including The Times, The Sun and The Sunday Times. HCL Technologies will manage News International's data centre and network environment. Initially, it will involve transformation projects such as migrating operating systems to lower-cost industry standard solutions, business continuity improvements and virtualisation, consolidation and standardisation of storage and servers.

The Indian company is already working with other News Corporation companies for their technology infrastructure management requirements, a statement said.

“We see the benefit of working with the same global partners across News Corp,” said Mr Andrew Hickey, CIO of News International and a member of News Corp's CIO Council.

HCL Technologies clientele includes over 40 media and entertainment companies globally.The company had recently announced wins from Reader's Digest Association and Viacom Inc.