IT Clients Look Beyond India

BANGALORE: IT buyers are expanding their global sourcing networks as part of an effort to reduce their dependence on a few large locations such as India, says a new report by Everest Research Institute.

Recent events impacting offshore locations, such as terror attacks and typhoons, and suppliers (such as bankruptcies , frauds) have underscored the need for holistic risk management in global sourcing, the report says.

“Traditionally, global sourcing risk management approaches remained largely focused on engagement-level performance management. However, a more sophisticated approach to risk management compels buyers to understand risk from the entire sourcing ecosystem spanning each individual supplier and delivery location as well as the collective portfolio of suppliers and locations,’’ says the report.

The institute also says that another new global sourcing paradigm is emerging and generating additional push for creating a global delivery network.

“This new paradigm is associated with a more robust and complex demand profile that mandates a global delivery network and is creating further impetus for expanding the delivery footprint beyond the traditionally favoured offshore destination, India,” Everest says. A combination of these two factors is creating a demand for global locations that support technology and business process delivery. Clients now have a number of credible offshore destinations to choose from.

The report identifies these areas as Brazil, Central and Eastern Europe, Israel, Mexico, the Philippines and South Africa. These markets represent a blend of locations that are either superior skill markets or large talent markets that global sourcing buyers can’t ignore.

“The supplier landscape in these emerging markets includes a mix of global majors, India-centric suppliers expanding their delivery footprint, and domestic/regional suppliers that have roots in the emerging market. A handful of suppliers in this new category have acquired meaningful operating scale and, through investments in delivery capabilities and adopting industry best practices, successfully serve Global 1000 corporations,” the report says.

Infosys:Clients' Budgets Likely Flat or Slightly Down

By DEEPALI GUPTA and ANKUR RELIA

MUMBAI -- Infosys Technologies Ltd. expects its clients' information technology budgets in 2010 to be unchanged or marginally lower, its chief operating officer said Tuesday.

"Past patterns suggest that when budgets are under pressure, clients do all kinds of things to get more with less, like outsourcing and offshoring," S.D. Shibulal told reporters on the sidelines of an industry conference.

India's software exporters have been hurt in the past few quarters because of the global economic slowdown, which led their customers to scrap or delay projects and seek lower rates for products and services.

Mr. Shibulal said the company's clients are saying the global economic recovery might be protracted, indicating that they would continue to be cautious on their spending.

However, he said clients have begun making decisions on their IT spending, underscoring optimism that the worst from the global economic crisis was over for the software outsourcing industry.

Mr. Shibulal expects Infosys--India's second-largest software exporter by revenue--to sustain margins in a narrow range, despite the investment it is planning.

"We are not looking to expand them (margins) significantly," Mr. Shibulal said.

In the July-September quarter, the Mumbai and Nasdaq-listed company's operating margin grew to 34.6% from 34.1%, helped by operational efficiencies and a fall in the value of the dollar against European currencies.

Master technology first; be a manager later, says Infosys

Infosys Technologies has decided that its staffers must have at least six years of having worked on technology responsibilities before being asked to head a project.

BSE | NSE Price

This is the latest move in a process that began 18 months earlier, after clients had complained that its project heads didn’t seem to have enough of technological skills. That, in turn, was because of the industry’s high growth and also the pace of attrition (employees quitting) in the sector.

So, many employees were being given managerial responsibilities within three to four years of joining. However, from last month, all freshers joining the company will have to compulsorily stay focused on technology for the first six years of their career. After this, they will have to choose to either grow vertically as a techie or take up managerial responsibilities.

Infosys says this new strategy, termed 'iRace', aims to re-map the technology skills of its software professionals and offer them roles based on their current level of experience and technological know-how.

It appears to have already had some adverse effect, for a section of employees in the junior and middle levels are understood to have resigned.

"Because of the high growth in the industry, people were being given managerial responsibilities within three to four years, making clients return to us and complain about the lack of their technology skills. We have now re-mapped the efficiency of our employees, as a result of which some high performers have been mapped upwards, while others have stayed in their previous positions,” says Nandita Gurjar, Group Head for Human Resources.

By doing so, we will be able to meet the clients' requirements in a much better manner, she adds.

To make the task smoother, Infosys has created 25 career streams. An employee who does not wish to take up managerial roles but stay focused on technology has to identify positions like technical architect and technical lead till he goes up the ladder to become the Unit Technology Manager (UTO), a position the company has created now. Henceforth, all 13 business units of the company will have UTOs, who will directly report to the chief technology officer (CTO) of the company.

Infosys started the exercise almost 18 months earlier, following an internal assessment by consulting agency, Mercer. Based on the results, the company decided to implement what Gurjar terms a 'role structuring'.

Industry insiders concur that when the IT sector was booming and demand was high, people with very little experience were being given roles of project managers or technical leads, as it was difficult for the company to get experienced people. However, with the greater supply of trained resources, especially in the wake of the economic recession, most Indian IT companies are busy redefining the roles.

"We have seen people becoming project managers with less than six years of experience, whereas in most global companies, especially product companies, project manager is a big role. A person who manages projects in those companies should have at least 14-15 years of experience, which helps him handle multiple projects and customers at a time.

Besides, when a person becomes a project manager in six years, this ends his chance to learn on technology platforms," says a person who works as a project manager in an Indian IT services company.

At the end of the second quarter in the present financial year, Infosys' headcount was 105,453, including 97,594 software professionals.

Mahindra Satyam says added 35 clients since April

Indian IT services firm Mahindra Satyam has added 35 new clients since April 13 and lost just a small handful, said the firm's chief executive officer, who added that the worst was behind the company.

Mahindra Satyam was earlier known as Satyam Computer Services. Satyam was acquired by India's Tech Mahindra in an auction in April after the firm was hit by India's biggest corporate fraud, which came to light in January.

"I do believe that we are now stable from a customer, or a delivery perspective," CEO C.P. Gurnani told Reuters TV on Sunday.

"I am very, very clear that the bottom is behind us and we are back on a path to recovery," he added during the interview on the sidelines of a World Economic Forum event in New Delhi.

He said the company, which lost 25 to 30 percent of its customers between January and Tech Mahindra's agreement to take over the firm on April 13, had since then added 35 new customers and, to his knowledge, lost just three.

The firm had about 380 customers when Tech Mahindra won an auction to take it over, he said.

Gurnani also said the restatement of company results for the past several years would be made on or before June 30, 2010.