TCS, Infy, Wipro losing contracts to Emerging rivals

BANGALORE: Emerging nearshore rivals, including Ness Technologies of Israel, CPM Braxis of Brazil and Mexico-headquartered Softtek are increasingly becoming attractive for top outsourcing customers such as GE, Citibank and several others seeking to work with local, specialised vendors instead of sending all projects to offshore locations like India.

At a time when India’s top tech firms Tata Consultancy Services (TCS), Infosys and Wipro are redefining their positioning as global services providers by growing their presence in the emerging markets of Latin America, Eastern Europe and Asia, they face stiff competition from these newer rivals.

“For many customers who already have significant presence in offshore locations like India, it’s a risk diversification,” said Jimit Arora, research director of outsourcing advisory firm Everest Group. “Some customers having 70-80 per cent of their offshore resources in India are realising that they need to look at the third category of suppliers that are local and niche,” he added.

Over the past two years, companies such as CPM Braxis, EPAM Systems, Ness Technologies, Softtek, Merchants and Spi Global have emerged as stronger rivals for Indian tech firms, especially while bidding for an outsourcing contract being fleshed out by a ‘first-time outsourcer’.

“When it comes to new business from the first-time outsourcers, these local suppliers may be gaining at the expense of multinational and offshore rivals,” added Amneet Singh, vice-president, global sourcing at the Everest Group. Mr Singh, along with Mr Arora, researched the six emerging suppliers and found that they have been growing at an average compounded growth of around 25% annually during the past few years.

Brazilian firm CPM Braxis, for instance, which counts GE, ABN Amro and Whirlpool as clients, reported revenues of around $567 million in 2008. One of the top four Brazilian banks, Bradesco, is also among the biggest customers for the company.

“Some customers, including Bradesco, would rather work with a local supplier, there’s nothing wrong. For large MNC customers, offshoring continues to be a priority,” said a senior executive at one of the top Indian tech firms. He requested anonymity because his company is currently in a financial silent period.

While these emerging outsourcing rivals are not yet in the big league of mega, multi-year contracts, they are still able to gain business because of their niche and local market expertise. On an average, these companies are able to win contracts worth $2-5 million in annual contract value.

Meanwhile, for Indian tech firms seeking to grow their base outside their home country, these emerging companies also offer potential M&A opportunities.

“Many emerging companies we spoke with believe they can become $1-billion company on their own. However, some admitted that they would be open to inorganic opportunities too,” said Mr Arora.

Indeed, emerging service providers in countries of Brazil, Argentina and Mexico such as Globant, which counts Adidas, Linked IN and Citi among its top customer and has around $100 million in revenues, are increasingly being approached by some Indian tech firms, officials told ET on condition of anonymity.

“We have had discussions with both Softtek and Globant, but I cannot comment any further,” said a senior executive at one of the tech firms exploring inorganic growth route for expansion in the emerging markets. Experts believe such fast-growing firms always make a good acquisition target.

“Given where these companies are in terms of their size and capabilities, they do make good acquisition targets for Indian companies,” agreed Mr Singh.

What makes these firms really attractive is their strong presence in some of the fastest-growing markets for software services. For instance, Ness generates about a third, or $170 million, of its revenues from Eastern European markets of Czech Republic, Slovakia, Hungary and Romania.

“One of the more interesting prospects in this region relates to government initiatives, particularly as it relates to a ‘digitisation’ grant for the EU worth more than 10 billion euro, with ‘must use’ clauses by 2013,” observed James Friedman, analyst at the financial broking firm Susquehanna International Group (SIG).

“Ness is competing actively for this work in a number of regions, and expects Eastern Europe may improve by H2 of 2010, still targeting $300 million from this region by 2012,” he added.

JP Morgan Asset Management Extends Outsourced Services Contract With HCL

To provide continuity and certainty around life and pensions administration for Save & Prosper
HCL IBS, part of HCL Technologies (HCL), has extended its contract with JP Morgan Asset Management to deliver life and pension administration services for Save & Prosper, the global asset management arm of JP Morgan Chase & Co.
JP Morgan has claimed that the contract extension will reduce cost and deliver service enhancements to improve the policyholder experience. HCL will continue to provide an end-to-end service solution to enhance policy administration, finance, actuarial and call center services. The new contract services 185,000 policies and provides additional costs savings to JP Morgan Asset Management over the contract's lifetime in the order of GBP 8.5mn.
Peter Ball, CEO of Save & Prosper, said: "JP Morgan Asset Management has long enjoyed a strong relationship with HCL and we are happy that our partnership has been extended. I am confident that HCL will continue to provide great service and value to our policyholders."
Stephen White, COO of HCL IBS said: "We are delighted that JP Morgan Asset Management has reconfirmed the value it places in our partnership through this contract extension. We look forward to adding further value through the introduction of wider HCL service capabilities to help the company achieve its business needs. HCL's governance model means that strategic needs are given as much focus as operational delivery. Our platform has the capability to deliver cost certainty and provide those benefits on long term contracts.
"We have developed a growing onshore/offshore business model, which will enable further capability developments and efficiency improvements. We are keen to grow our Life and Pensions business, in both the open and closed book space, and this announcement demonstrates we provide a compelling and competitive proposition in this market."
David Mitchell, SVP of IT research at analyst firm Ovum, said: "Outsourcing of specific business functions or business areas is most effective when the outsourcing provider has domain specific capabilities. The recent life and pensions administration contract with HCL for Save & Prosper with JP Morgan is based on the HCL industry specific expertise in this sector, offering JP Morgan an enhanced service for their customers and staff while still being very cost effective."
HCL Technologies offers integrated portfolio of services including software-led IT solutions, remote infrastructure management, engineering and R&D services and BPO.

Infosys Opens Development Centre in Brazil

Infosys Technologies has opened its wholly owned Brazilian subsidiary - Infosys Tecnologia Do Brasil Ltda. The first development centre of this subsidiary is in Belo Horizonte, the third largest metropolitan area in Brazil after Rio de Janeiro and Sao Paulo, with a mature Information Technology (IT) services and Business Process Outsourcing (BPO) ecosystem and an established talent pipeline.

This new centre will offer Infosys' complete suite of services to Infosys' Brazilian clients and Brazilian subsidiaries of global customers.
Infosys has been present in the Latin American market since the creation of the company's Mexican subsidiary - Infosys Technologies S. De R.L. De CV, in 2007. The center in Belo Horizonte is Infosys' third development center in Latin America following the recent opening of Infosys' second center in Monterrey, Mexico.

The company has been investing and strengthening its position in Latin America to expand its footprint in the region and also to leverage the near shore advantage of similar time zones for global clients. The two development centers in Mexico service 32 clients and employ 357 professionals.

CEO and MD of Infosys, S Gopalakrishnan said, "Brazil is the largest IT and BPO services market in Latin America, with the eighth highest IT and BPO services spend in the world. The growth forecasts for the IT-BPO sector in Brazil have remained high despite the global economic crisis. Along with our centres in Mexico, our presence here will strengthen our ability to address both Spanish and Portuguese speaking markets in Latin America, driving our business growth in the region."

Infosys has appointed Puneet Gill as the head of this development centre. Gill has been with Infosys since 2003 and headed BPO operations in Mexico earlier.

Dheeshjith V G, head of new markets and services, Infosys said, "We are fully committed to Brazil and will be leveraging our presence there to offer our full range of IT Consulting, IT services and BPO for our global and Brazilian clients across all industries including banking, financial services, insurance, manufacturing, retail, distribution, telecom, energy, resources and other industries."

'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.

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.

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.

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.

Renault Outsources To Capgemini

Renault will outsource application management to Capgemini under a three-year deal that sees Capgemini become one of the French automaker's preferred outsourcing vendors.

Capgemini, of Paris, will work to manage and optimize one quarter of Renault Group's application portfolio, the outsourcer said.

More than 180 Capgemini professionals will be tasked with the effort, which includes technical and functional updates, technical support, and applications development for Renault's procurement, quality, and sales units.

Renault officials said Capgemini's familiarity with the automotive industry factored into their decision to hire the company. Additionally, Capgemini's Sogeti subsidiary has worked previously with Renault.

"To meet the constantly evolving needs of users, a good knowledge of their industry is essential," said Renault deputy CIO Francois Gitton, in a statement.

"This enables good alignment between the service provided, current projects and priorities. Capgemini has the functional and industry capabilities required, as well as a great capacity for innovation drawn from its experience with other car manufacturers," said Gitton.

"These factors create favorable conditions to meet the needs of Renault," he said.

For their part, Capgemini officials said the deal is a chance to forge deeper ties with France's largest automaker.

"This contract is a great opportunity to build a strong partnership with Renault. Our commitment can be seen in both the length of the project and in our ambition to assist the group in its future challenges," said Alain Donzeaud, a member of the Capgemini Group's executive committee.

Capgemini shares were up .10% in Monday trading on the Euronext Paris exchange.

Infosys, Cognizant and UST Global amongst those shortlisted by Wal-mart

MUMBAI, Dec 4 (Reuters) - Wal-Mart Stores Inc (WMT.N), the world's largest retailer, has picked three IT vendors including India's Infosys Technologies (INFY.BO) for multi-year contracts worth over $600 million, the Business Standard said.

The other vendors are Cognizant Solutions (CTSH.O) and UST Global, the newspaper said, citing an unidentified source close to the development.

Initially the three vendors are expected to earn 2.5 billion to 3 billion rupees ($54 million-$65 million) each annually, which will rise as Wal-Mart increases outsourcing more work.

Infosys and Cognizant, which will provide application development and support, are expected to get a larger share of the contract, the paper said.

UST will be responsible for testing these applications, it said.

"What is more important is that these three vendors have now got a ticket to be in the club of Wal-Mart's list of preferred vendors which will help them in growing this account in the long run," the paper quoted the source as saying.

"We do not comment on market speculation," a spokeswoman for Infosys told Reuters.

Wal-Mart's media relations director, John Simley, said in am emailed reply to the paper: "We have a large and growing business and productive relationship with many Indian companies. We do not comment on speculations about the nature of any business relationship."

Mahindra Satyam won a outsourcing contract from Airbus

BANGALORE: Mahindra Satyam has won a Rs 100-crore ($20 million) outsourcing contract from the world's largest maker of commerical aircraft,Airbus, to manage its internal quality and processes.

Sources said the three-year contract involving technology maintenance, will put Satyam at a vantage point as they can now have an overview of the projects and technology which controls the organisation.

"The work outsourced mainly includes quality management of work flow and tells how you need to do your work" said a person familiar with the matter.

An email query to Mahindra Satyam and Airbus remained unanswered at the time of this report going to press. This is the second important contract Mahindra Satyam has bagged in the last few months. It had won an IT outsourcing contract last month from Swedish defence and aerospace firm, Saab, to develop its operations for the global defence and security market in India in a deal valued at around $300 million.


The five-year contract, includes providing tech support for engineering services and maintenance. This will enable both the companies jointly address the Battlefield Management System (BMS) for the Indian Army.

Mahindra Satyam said it has initiated the task of setting up a centre of excellence for network centric warfare (CoE NCW). The centre will be used for mission critical applications such as command, control, communications, computers, intelligence solutions and homeland security.

Experts like Chethan Kambi, senior research analyst for aerospace and defence practices at Frost & Sullivan, says that projects like the one outsourced by Airbus includes a gamut of IT operations ranging from human resources management, exchange of work to even sending emails.

"Aircraft makers have to exchange information across their multiple offices across the world through highly-effective IT networks", he said.

Experts said such kind of work also deals with testing and development of software, which ultimately goes on the aircraft. "This kind of work outsourced to Indian IT companies brings 15-18% efficiency", an expert said.

Mahindra Satyam counts Cisco, Nissan, GE, Citigroup and GlaxoSmithKline, as its top five clients. Over the last four months, the company gained 32 new customers.

Top offshorers seek on-demand apps

BANGALORE: Top outsourcing customers, such as Nokia Siemens Networks, Royal Philips Electronics and ABB are askin g service providers, including Wipro, Infosys and IBM, to deliver complex business applications as an on-demand service in order to bring down their capital expenditure on information technology by up to 40%.

By asking vendors to manage, host and deliver a software application, such as enterprise resource planning (ERP), these customers are able to avoid large, complex outsourcing contracts and instead pay suppliers on the basis of number of transactions.

Popular business application packages, including customer relationship management (CRM) and ERP, are increasingly being adopted under software-as-a-service (SaaS) model by the customers. According to research firm Gartner, SaaS-based CRM was worth $1.8 billion in revenues, almost 18% of $9.4-billion global market for CRM software.

For Indian IT firms, such as TCS, Infosys, Wipro and HCL, this offers a new opportunity to enhance proximity with the customers and also move away from traditional model of outsourcing, wherein they had dedicated offshore development centres for each customer.

“By offering services under our Flex model, we are able to bring down costs by up to 30%,” said Sangita Singh, senior vice-president and head of Wipro’s enterprise application services business. Wipro’s FlexDelivery model offers ERP software from SAP to customers such as Nokia Siemens.

At least two outsourcing consultants told ET on conditions of anonymity that around 10-12 ERP and CRM outsourcing contracts, each worth $50-100 million, are being discussed by customers, including steel maker ArcelorMittal, Philips and ABB.

“We, currently, have around 15% of application revenues coming from the Flex model, it can surely contribute around half of our total enterprise applications business,” she added. Wipro is moving some of its top customers who already have dedicated offshore centres to this model. Mr Singh declined to name the customers currently exploring this model.

Indeed, as more customers seek to reduce cost and move away from traditional time and material-based pricing models, Indian vendors will have to prepare for more such engagements. Delivering traditional application maintenance and services in its current form will not really take Indian tech firms too far, experts say.

India’s second-biggest software exporter Infosys is not far behind. The company is already offering Oracle’s PeopleSoft HR management software to two of its customers. “By saving software and hardware costs and with our reusable components, the total cost of ownership can be brought down by 25-30%,” said Ravi Kumar S, Infosys’ vice-president and delivery head for Oracle services.

The country’s biggest software exporter TCS currently offers enterprise services under SaaS model to around 60 small and medium business customers.

“This downturn will force vendors and customers to explore newer models, going forward, we will look at many applications to be delivered under SaaS model,” Maarten J de Vries, IT and supply management, member group management committee, Royal Philips Electronics told ET in a recent interview.

For instance, European service providers, such as T-Systems, with capabilities to bundle enterprise business applications from SAP are already winning more business. Wipro, along with EDS and T-Systems is among SAP services providers currently authorised to deliver such services as part of the Run SAP program.

“During the downturn, this model offers a quick and easy way to save costs, and having noticed that customers were moving towards platform-based services, we realised Run SAP could be a good way to help customers standardise their processes using SAP applications,” said Anja-Christina Bruehling, head of partner management — Active Global Support , SAP. “Apart from selecting a partner, customers are also free to operate RunSAP inhouse,” she added.

Philips will announce a new outsourcing contract with T-Systems, a European service provider, this week, Mr Vries said. “We will also announce SAP as a service as part of this contract,” he added.

HCL Tech says wins $200 mn outsourcing order

NEW DELHI: Software services firm HCL Technologies on Monday said it has won a contract worth $200 million from British insurer Equitable Life
Assurance Society.

The contract begins in March 2011, HCL said in a statement.

Accenture wants to learn Indian growth trick

Mumbai: Nandan Sengupta, a bubbly 20-something software developer in his second year at Accenture India, can't hide his exuberance that he may get a chance to meet the company's chairman and chief executive officer Bill Green.

"We have been asked by our human resource department to send innovative ideas on how Accenture can accelerate its business in India. If my idea is selected then I would be sent to Delhi to discuss it with our chairman Bill Green who will be in India on the 13th of this month," Sengupta said.

Accenture is hosting its flagship annual event called Global Convergence Forum (GCF) involving clients, stakeholders and others for the first time in 20 years outside the US in Delhi this month, indicating the importance of India for the global consultancy firm.

"With Accenture's recognition of India as a strategic growth market, comes a big 'ask': how will we stretch ourselves to grow our India business, strengthen relationships with key government and industry stakeholders, and improve our delivery for international clients," read a mail sent to Accenture employees in India.

Meanwhile, in India to participate in the GCF, Accenture chairman Bill Green said the company will continue to focus on India, especially in the area of analytics. Green said that in the next two months the firm will hire another 8,000 in India taking the workforce strength in the country to 50,000 and globally to over 180,000.

"In India, besides many big firms, we have consulted firms which were yet to earn any revenue. We handhold them from their business conceptualisation stage to go-to-market," said an Accenture executive at the sidelines of a conference in Mumbai.

Accenture aims to bag IT and consulting projects from the current high-growth sectors in India such as utilities and pharmaceuticals. Top local IT firms and Accenture rivals such as Tata Consultancy Services (TCS), Infosys Technologies, HCL Technologies and Wipro Technologies, too, have started focusing on the domestic demand for IT.

TCS and Wipro already earn over $1 billion from their respective India businesses.
Accenture earned annual revenue of $21.58 billion for fiscal 2009 that ended August 31, 2009.

Telstra workers fear redundancies

UNIONISED Telstra workers fear contractors from Indian outsourcer Wipro have been moved in to muscle them out.

The workers have been involved in an industrial struggle to secure better wages and conditions.

Since early this year 22 Wipro contractors have been brought in to undertake low-level maintenance work within the telco's Next Generation Operations. The division is responsible for maintenance of servers and services of financial institutions including National Australia and Commonwealth banks.

The division has been the focal point of a Communications Electrical Plumbing Union industrial campaign to secure a company-wide agreement for Telstra workers stuck on the Howard government's individual contracts.

Union action earlier this yearresulted in poor network performance for big-ticket customers such as the Commonwealth Bank.

In late August, Telstra management flagged its intention to make 37 workers within the NGO division redundant. It planned to make the redundancies without consultation with workers or union officials, which prompted the union to bring up the issue directly with Telstra management.Now the union says its members in the NGO are being unfairly targeted for their participation in industrial action.

"Regarding the Wipro company performing Telstra employees' work, we are now hearing that management is about to implement a SWAG to make large numbers of employees in that area redundant," CEPU divisional president Len Cooper wrote to Telstra human resources manager Frank Gerdtz in September.

"If this is an accurate assessment, where does this leave the good faith bargaining and the supposed principles being applied by the 'new' Telstra."

After increased pressure from the union, Telstra backed away from its initial redundancy plan and instead offered staff in the NGO the option of voluntary redundancy. Three weeks ago 11 NGO staff had taken up the offer.

"The roles affected were high-level IT workers ... . They were also significant players in the industrial actions ... " Mr Cooper said.

Sources in Telstra management indicated that the telco planned a second wave of redundancies aimed at hitting the original 37 figure.

The concern among NGO staff is that the Wipro workers are being used as cheap replacements. They are typically paid about $50,000 a year, compared with Telstra NGO workers' pay of $80,000 to $90,000 a year.

Telstra says the Wipro staff were only brought in to carry out low-level work in NGO, but sources indicate the Wipro staff are being trained to undertake the higher-level IT work performed by full-time Telstra staff.

Telstra denies the contracting out and redundancies in the NGO division are linked to the industrial action over stalled pay negotiations. "Using Wipro has had no effect whatsoever on our staffing levels. We have engaged Wipro for a short, fixed-term contract which we expect will be completed in June 2010," a Telstra spokesman said.

Capgemini, Logica, AT&T, BT now eye local IT services

BANGALORE: The domestic information technology (IT) services market is no more a lowprofit option and entry of global players in this segment is a testimony to its growing maturity and lucrativeness.

Earlier, the domestic IT market was characterised as ‘where you would pay for the hardware but get the services for free’. This has changed over the last few years with the profit margins in some segments comparable to the developed markets.

Says Seepij Gupta, analyst, software and services research, IDC India: “In some segments of the domestic IT services markets — application management and managed services, for example — the profit margins range between 25-30 % and 16-32 %, respectively. This kind of profitability makes the India market almost at par with the developed economies.”

Rising profits also reveal the growing maturity of the local market where corporates and governments are willing to spend a larger amount on technology. Sudip Saha, analyst, services research, Springboard Research, says the maturity curve is getting sharper in the domestic market reflected in the larger size of IT outsourcing deals as well as longer-term contracts. “Corporates are realising that having internal IT departments is expensive and it better to outsource,” he added.

European IT services majors like Capgemini, Logica, Groupe Steria and Atos Origin have already planned their local market moves. Segment-specific players like AT&T and BT too have made their foray into the telecom technology services market in India.

Anand Sankaran, chief executive, Wipro Infotech, said domestic IT services market is reasonably attractive and has steadily seen more vendors getting in: while the market was dominated by the likes of IBM, TCS, Wipro, Hewlett-Packard and HCL Infosystems, it is now seeing aggressive pitches by Infosys Technologies and Accenture.

Springboard Research says the domestic IT services market size was $5.7 billion in 2008 and is expected to touch $6.6 billion this calendar. According to Mr Saha, there are sectors in India like utilities and infrastructure which are actively looking at outsourcing their IT requirements and in the process expanding the market.

The domestic IT services market has already set certain global benchmarks which are either being very closely studied or even getting emulated. A classic example of this is the Bharti-IBM IT Outsourcing deal, which set a benchmark for the global telecom industry.

Accenture to hire 8,000 in India by end of next year

NEW DELHI: Global technology and consultancy giant Accenture on Monday said it is going to add around 8,000 people in India by the end of next year taking its total employee base in the country to 50,000.

"We are 42,000 right now and we imagine we will be about 50,000 by the end of 2010," Accenture Chairman and Chief Executive Officer William D Green told PTI on the sidelines of the India Economic Summit.

Indicating a recovery from the global downturn, Green said the company will continue to focus in India, specially in the areas of analytics.

Accenture's focus in India is going to be the analytics space, which will help the clients convert information into insights for better yields.

Green added, "We believe that analytics is going to be an important trend that our customers are going to demand from us. We think India is going to be a great place for us. we have some core centres of excellence in the analytics space in the country."

Accenture, which has annual revenue of $21.58 billion for fiscal 2009, will strengthen its focus on clients in pharmaceutical, telecommunications and energy in the country.