No US bank failures for a week; 1st time in over 3 mths

New York, Oct 11 (PTI) For the first time in more than three months, a week has passed without any US bank failure. Ravaged by the financial meltdown, the count of bank collapses were on the rise, with an average of nearly ten banks going out of business every month in 2009.

Spurring hopes that signs of stabilisation are on the horizon, no bank failures were reported for the week ended October 9 as per data available with the Federal Deposit Insurance Corporation (FDIC). The Federal agency, which insures deposits of over 8,000 American banks, is also often appointed as the caretaker of failed entities.

Since June 19 this year, at least one bank has gone belly up every week and so far this year, a staggering 98 entities have been shut down. The total collapses this year is about four times that of 2008, when just 25 banks bite the dust.

A whopping 61 banks have gone out of business since June 19 and out of them, seven entities each were shut down on July 2 and 24. Five banks each were closed down for the weeks ended September 4, August 14 and July 31.

IT competitiveness: The top 10 nations

India ranks 44th in the world in the IT industry competitiveness index 2009, moving 4 notches up from its 2008 ranking of 48th. India has an overall score of 34.1 on the IT competitiveness index, according to a study by the Economist Intelligence Unit.

The study compares the information technology (IT) industry environments of 66 economies, to determine the extent to which they enable IT sector competitiveness.

"India will not only continue to be an IT power but will become a global leader of IT innovation, products and services. India's true potential in near future will rest on its ability to indigenously innovate on cutting edge technology, increase domestic investment in R&D activities, promote the value of intellectual property and drive down menace of counterfeiting and piracy," Keshav S Dhakad, Chair of the BSA India Committee.

"We are pleased to see that in this year's index, India has shown strong improvement in its overall IT competitiveness ranking which is a very positive indicator of progress for one of the country's most dynamic industries," he said.

Conversely, the slow march of broadband in emerging markets, including those with large IT sectors such as India, Brazil and Russia, could impede their IT firms' growth, the study states.

"India has maintained its ability to develop strong talent and maintain a conducive business environment, which is reflective in the six drivers of competitiveness. This year's ranking is indicative of the progressive initiatives taken by the government & the industry on human capital and support for IT development."

Although India continues to perform well in enabling an open, transparent business environment and providing support for the IT industry, development of a sound IT infrastructure and enhancement of the R&D environment in the country still remain areas which need improvement.

India has shown some improvement in its R&D environment, moving from a score of 0.6, last year to 22.0 this year. It has also shown strong performance in the business environment and encouraging improvements in the legal environment. India still continues to have the advantage of human capital. However, fluctuating performance in IT infrastructure needs improvement.

In fast growing markets like India, large pools of skilled IT employees remain a significant advantage, but uneven progress in other areas -- such as IT infrastructure -- remains a drag on sector competitiveness. As the Internet becomes all pervasive, slow uptake in broadband and PC penetration has had a significant impact on the IT infrastructure in India.

Robust IP protection remains essential to IT sector competitiveness. As innovation gradually becomes more important than low-cost labour to IT firms in India, improvements in IP enforcement and the overall legal environment would make the country more competitive in the IT landscape.

Within Asia Pacific, India ranks amongst the top ten countries, with the top three positions held by Australia, Singapore and Japan. Coordinated efforts among governments, universities and IT firms in the region are needed to improve the quality of technology training. As in India, robust IP protection and broadband penetration are some of the key concerns in the Asia Pacific region.

1. United States -- Score: 78.9

2. Finland -- Score: 73.6

3. Sweden -- Score: 71.5

4. Canada -- Score: 71.3

5. The Netherlands -- Score: 70.7

6. United Kingdom -- Score: 70.2

7. Australia -- Score: 68.7

8. Denmark -- Score: 68.6

9. Singapore -- Score: 68.2

10. Norway -- Score: 67.1

Satyam to recruit again, even seniors

For the first time in almost six months after it was acquired by Tech Mahindra, Satyam Computer Services (now rebranded as Mahindra Satyam) will hire 130 people from outside the company.


In June this year, Satyam had initiated a ‘virtual pool programme’ (VPP) for close to 10,000 surplus employees, that allowed ‘excess’ talent pool in India to be retained, albeit at a reduced pay for a defined period of four to six months. Some of these employees were later “called back to work” with full wages.

“We got an approval for external hiring on October 4. These are speciality skills, which are not there in the virtual pool and are not trainable internally. These junior- and middle-level hirings will largely be from India. Besides, we will be hiring one or two senior level people from the market for select areas,” the company’s chief people and marketing officer, Hari Thalapalli, told Business Standard.

He, however, did not disclose the roles to be assigned to these seniors it plans to hire. The company currently has around 34,000 staffers globally, and is working towards shaking off the bad image its disgraced founder, Ramalinga Raju, had left it with.

Thalapalli said the company, in mid-September, had conducted a first-ever customer forum in Europe, wherein 50 of its key customers participated. “We have done whatever is required to regain our customer confidence and now there are no more customer losses happening. Besides, the five-year SAP contract with global pharmaceutical major GlaxoSmithKline and the recent three-year extension of contract by General Electric, we recently got three to four more customers whom we had lost earlier. All these are $30-40 million per year contracts in the manufacturing space, which were extended for three more years,” he said.

Mahindra Satyam lost 200-250 client companies after the confession by founder Ramalinga Raju that he had cooked the company’s books for several years. Today, the company has 400 customers globally.

“We have so far won 30 new logos, most of them single-digit million dollar contracts, and 15 new orders in Oracle implementation in 15 weeks. There is a complete strategy that has been laid out to regain lost contracts and we are working towards it,” Thalapalli said.

On the cultural side and people-related issues, he said the company had recently initiated employee connect programmes, including one in which the chief executive officer, C P Gurnani, walks across different floors and talks to people and listens to their issues.

“We recently did something called ‘Shadow Board’, typically for associates (staffers) who have 2-6 years of work experience. We have selected 8-10 people who act as board members, who will identify problems and bring forth unconventional ways of resolving the problems – including how to procure new business and rebuild brand. Clearly, now there is a greater amount of connect between the leadership and associates than earlier,” he added.

2 Americans, 1 Israeli win Nobel chemistry prize

AFP image

Two Americans and an Israeli scientist won the 2009 Nobel Prize in chemistry on Wednesday for atom-by-atom mapping of the protein-making factories within cells - a feat that has spurred the development of antibiotics. The Royal Swedish Academy of Sciences said Venkatraman Ramakrishnan, Thomas Steitz and Israeli Ada Yonath's work on ribosomes has been fundamental to the scientific understanding of life. They will split the 10 million ($1.4 million award). Yonath, 70, is the fourth woman to win the Nobel chemistry prize and the first since 1964, when Dorothy Crowfoot Hodgkin of Britain received the award. "I'm really, really happy," Yonath said. "I thought it was wonderful when the discovery came. It was a series of discoveries ... We still don't know every, everything, but we progressed a lot." Ribosomes are crucial to life because they produce the proteins that control the chemistry of plants, animals and humans. Working separately, the three laureates used a method called X-ray crystallography to pinpoint the positions of the hundreds of thousands of atoms that make up the ribosome. Their three-dimensional models show how different antibiotics bind to ribosomes - an understanding that has helped other researchers develop new drugs to fight bacterial infections. "These models are now used by scientists in order to develop new antibiotics, directly assisting the saving of lives and decreasing humanity's suffering," the academy said in its announcement. Many of today's antibiotics cure diseases by blocking the function of bacterial ribosomes, the citation said. "Without functional ribosomes, bacteria cannot survive. This is why ribosomes are such an important target for new antibiotics." The work was published in 2000. While many Nobel winners are honored for joint work, this year's chemistry winners were competing with each other, award committee member Mans Ehrenberg said. Their work builds on Charles Darwin's theory of evolution and, more directly, on the work done by James Watson, Francis Crick and Maurice Wilkins, who won the 1962 Nobel Prize in medicine for mapping DNA's double helix, the citation said. In 2006, Roger D Kornberg won the Nobel Prize in chemistry for X-ray structures that showed how information is copied to messenger RNA molecules, which carry information from DNA to the ribosomes. "Now, one of the last pieces of the puzzles has been added - understanding how proteins are made," said Professor Gunnar von Heijne of the Swedish Academy of Sciences, the chairman of the Nobel Committee for Chemistry." Thomas Lane, president of the American Chemical Society, said the award was an example of how chemistry can improve people's lives. "For me it's another example where chemistry is the central science for addressing some of these very big issues," he said. "You hear words like 'ribosome' and 'bacteria,' and you tend to think biology when in fact it's chemistry at work." Indian-born Ramakrishnan, 57, is the senior scientist and group leader at the Structural Studies Division of the MRC Laboratory of Molecular Biology in Cambridge, England. Ramakrishnan said that he wasn't convinced when he got the morning phone call from the academy. "Well, you know, I thought it was an elaborate joke. I have friends who play practical jokes," Ramakrishnan told The Associated Press by telephone from his lab in Cambridge. "I complimented him on his Swedish accent." Ramakrishnan described his work on ribosomes as an attempt to understand "this large molecular machine that takes information from genes and uses it to stitch together protein." He said he and others had been using X-ray crystallography to build an "atomic picture of this enormous machine." "Now we can start figure out how it does this complicated process," he said. Steitz, a 69-year-old born in Milwaukee, is a professor of molecular biophysics and biochemistry at Yale University and attached to the Howard Hughes Medical Institute, both in New Haven, Connecticut. Yonath is a professor of structural biology at the Weizmann Institute of Science in Rehovot, Israel, and the ninth Israeli to win a Nobel prize. She told Israel Radio she didn't think her gender played a role in the decision. "It's true that a woman hasn't won since 1964. But I don't know what that means - does it mean that I'm the best woman since then? I don't think that gender played a role here," she said. She had to end the interview abruptly because Israeli President Shimon Peres, a Nobel Peace prize laureate, was on the other line. About Nobel Prizes Alfred Nobel, a Swedish industrialist who invented dynamite, established the Nobel Prizes in his will in 1895. The first awards were handed out six years later. Each prize comes with a 10 million kronor ($1.4 million) purse, a diploma, a gold medal and an invitation to the prize ceremony in Stockholm on December 10. The Peace Prize is handed out in Oslo. On Monday, three American scientists shared the Nobel Prize in medicine for discovering a key mechanism in the genetic operations of cells, an insight that has inspired new lines of research into cancer. The physics prize on Tuesday was split between a Hong Kong-based scientist who helped develop fiber-optic cable and two Canadian and American researchers who invented the "eye" in digital cameras - technology that has revolutionized communications and science. The literature and peace prize winners will be announced later this week and the economics announcement is set for Monday.

Renault, Mahindra venture faces hurdles - report

Enlarge Photo Logan cars get ready to roll out from Mahindra & Mahindra's plant in Nashik, Mumbai...

Wed, Oct 7 11:15 AM

French car maker Renault is looking to replace its Indian partner Mahindra & Mahindra in their struggling Logan joint venture, the Economic Times said on Wednesday, a report refuted by the French firm.

"Renault very strongly denies the rumour/speculation that there is any move to ask anyone, Bajaj Auto or otherwise, to take over the M&M stake in Mahindra Renault," the French car maker said in a statement.

"Renault's commitment to the Indian market remains undiluted and we are continuing to work together with M&M to determine the appropriate product portfolio and the way forward for Mahindra Renault," it said.

The Economic Times, citing a source with direct knowledge of the matter, said the joint venture, in which M&M owns 51 percent, was struggling to sustain volumes due to uncompetitive pricing.

Mahindra is unhappy with the venture and is seeking greater control on product re-engineering, the newspaper said.

Data from the Society of Indian Automobile Manufacturers showed that Logan sales in the first five months of 2009/10 fell 68 percent from a year ago and production dropped 63 percent.

The newspaper said Mahindra Renault had failed to price the Logan competitively because of a 20-percent excise duty on the car that is more than 4 metres in length.

Duty on cars measuring up to 4 metres is 8 percent and Mahindra's demand to reduce the car's length was turned down by Renault, the paper said.

"I totally deny the way it has been reported. We are working at the moment on the way forward," Mahindra Renault's chief executive officer, Nalin Mehta, told Reuters.

"There are no plans to end the venture ... at least nothing that I am aware of."

(Reporting by Janaki Krishnan; Editing by Ranjit Gangadharan and Valerie Lee)

TCS, Infosys set to gain from RBS' technology splurge

BANGALORE: Indian tech vendors are set to gain from around $9.5 billion technology spend planned by the Royal Bank of Scotland (RBS) over the next five years, as up to $2-billion worth of back office and application development, maintenance projects could be outsourced to the Indian offshore suppliers including Infosys and TCS apart from the bank’s own IT captives in India. RBS, which is owned 70% by the British government, aims to save around $4 billion in operational costs by 2011 by outsourcing non-core IT activities, integrating different technology banking systems and ensuring better focus on marketing initiatives. In a presentation made to Bank of America-Merrill Lynch investors last week, RBS chief executive Stephen Hester said that the bank has actually underspent on technology during past few years. “Both in absolute ratio terms relative to our competitors, we have underspent on technology and we have also spent more of it of running the bank — dealing with lots of different systems inherited from past acquisitions — than changing the bank,” Mr Hester said. When compared to other rival banks, RBS has indeed spent less on technology. Between 2005 and 2007, IT spend accounted for 7.2% of RBS’ revenues, when compared with 8.7% of technology spend by its regional peers. According to the European Banking IT Cost Benchmarking study published last year, IT spend accounted for 12.8% of RBS’ total expenses during 2005-07 , lower than the 16.4% allocated by its peers. Indian tech like Infosys and TCS see newer opportunities of integration projects, system maintenance and back office outsourcing emerge as RBS takes a hard look at its existing processes for efficiency gains. RBS also works with CSC and Sapient, and may retain them for onsite projects, experts told ET on conditions of anonymity. An RBS spokeswoman did not reply to an email query sent by ET on Tuesday. Indian technology vendors would not offer any comments as they are maintaining a silent period before announcing their financial results later this month. “We do see more dialogues happening there, compared to few months ago when there was uncertainty around RBS’ technology spend,” said a senior official at one of the Indian tech firms exploring these opportunities. “However, the discussion seem to a lot more focused on onsite job creation because of the current economic downturn,” he added. One of the biggest challenges facing RBS is over a dozen different technology systems inherited through acquisitions over past many years.Making them work together, and even standardising some processes under a common platform will help the bank become more efficient and competitive. As part ofthe IT spend, RBS plans to consolidate its existing data centres, replace the current claims system in its insurance business, and even deploy newer retail banking solutions. For RBS, India is an important part of the bank’s restructuring and integration with ABN Amro. In February this year, Mr Hester said India will play a significant role in serving the bank’s operations across the globe. “India is a very important technology and administration centre for us, serving the rest of the world. I expect that to continue and in fact expand in its operations,” he said while announcing the annual financial results. Experts such as Sabyasachi S Satyaprasad, partner at offshore advisory firm Tholons say RBS is expected to move more mainframe based support and maintenance work to India. The bank already outsources a major chunk of its IT work to its captive centres in Gurgaon and Chennai. “RBS is planning to consolidate its processes across retail and wholesale banking, an initiative that was long pending, so this spend is not really surprising,” Satyaprasad said. Despite concerns around whether the state-owned banks can pursue outsourcing of services amid rising unemployment in their home markets, “the UKFI has repeatedly clarified that it will not interfere in the banks’ internal efficiency measures,” said a UK based expert. He requested anonymity because he is not authorised to comment on UK government’s policies. UK Financial Investments (UKFI) manages government stakes in ‘bailed out’ banks such as RBS.

Wipro Technologies Partners with Knowledge@Wharton to Launch Global Innovation Tournament

NEW YORK--(BUSINESS WIRE)--Knowledge@Wharton announced today that it has partnered with Wipro Technologies, the global IT services business of Wipro Ltd.(NYSE:WIT),to create a global innovation tournament. The objective of this tournament is to select the best and the most innovative technology-based tools that have the ability to help companies gain a competitive advantage by increasing revenues, cutting costs and improving the customer experience. Participants will be asked to submit entries to the competition by November 6, 2009. The winners will be recognized at an award ceremony, which will be held in early 2010 on the campus of The Wharton School of the University of Pennsylvania.

The tournament is inspired by the recently published book, Innovation Tournaments: Creating and Selecting Exceptional Opportunities, by Wharton professors Karl Ulrich and Christian Terwiesch. One of the book’s themes is the way in which competition helps to jumpstart innovation. “We refer to it as a ‘brainsourcing’ competition because we are ‘crowdsourcing’ from the very best minds in both the academic and business worlds,” said Terwiesch. “It will be like the TV show, American Idol. You start with many aspiring contestants. They will participate in multiple elimination rounds. At the end, depending on whether the judges like their ‘act’, you will have some remarkably talented people remaining. That's a powerful metaphor for the Innovation Tournament.”

The Wipro-Knowledge@Wharton Innovation Tournament is designed to identify managerial “tools” that organizations can use to increase efficiencies, cut costs, streamline operations and/or improve customer experience. A “tool” is defined as a method, approach, template, process or software that meets these organizational criteria. The tournament is open to individuals and teams worldwide.

The competition will take place in three phases. Phase I involves the actual submission of the tools. Phase II will consist of a live, on-line webinar event hosted by Wipro Technologies and Knowledge@Wharton, during which 25 individuals or teams will be chosen to present information on their tools. Ten of these Phase II semi-finalists will be selected through a voting system and will have the unique opportunity to be mentored by Wharton alumni/business owners, faculty and other Wharton colleagues.

Finally, Phase III will require each finalist to make a presentation at a live event at Wharton, where the winners will be selected by a panel of judges. The judges will include members from the Wipro Council for Industry Research and faculty from Wharton. Knowledge@Wharton will record podcasts with the winners, which will be featured on both the Knowledge@Wharton and Wipro websites.

According to Ulrich, “Everyone uses tournaments in everyday life. They are used in society. They are used in organizations. Now Wipro and Knowledge@Wharton have collaborated to create a tournament from which new ideas will emerge that can help businesses during the recession and beyond. This free competition promises excitement and original ideas.”

Jessie Paul Chief Marketing Officer, Wipro Technologies, added that “Through the ‘brainsourcing’ competition concept, we are challenging the best minds to develop innovative models and tools that can help address our customers’ pain points. We are delighted to partner with Knowledge@Wharton, an acknowledged thought leader and innovation lighthouse, for this tournament.”

The deadline for the tournament is November 6, 2009. To register, please go to: http://knowledge.wharton.upenn.edu/events/innovationtournament2009/

Alternately, you can visit any of the Knowledge@Wharton network websites and click on the ad that says “Innovation Tournament.” There is no entrance fee.

About the Wharton School and Knowledge@Wharton

The Wharton School of the University of Pennsylvania -- founded in 1881 as the first collegiate business school -- is recognized globally for intellectual leadership and ongoing innovation across every major discipline of business education. The most comprehensive source of business knowledge in the world, Wharton bridges research and practice through its broad engagement with the global business community. The school has more than 4,700 undergraduate, MBA, executive MBA, and doctoral students; more than 12,000 annual participants in executive education programs; and an alumni network of 85,000 graduates.

Knowledge@Wharton is a free biweekly online resource that captures knowledge generated at the Wharton School and beyond through such channels as research papers, conferences, speakers, books, and interviews with faculty and other business experts on current business topics. The Knowledge@Wharton network -- which includes Chinese, Spanish, Portuguese and Indian editions -- has more than 1.3 million subscribers worldwide.

About Wipro Technologies

Wipro Technologies, a division of Wipro Limited (NYSE:WIT), is the first PCMM Level 5 and SEI CMM Level 5 certified global IT services organization. Wipro Technologies was recently assessed at Level 5 for CMMI V 1.2 across offshore and onsite development centers. Wipro is one of the largest product engineering and support service providers worldwide. Wipro provides comprehensive research and development services, IT solutions and services, including systems integration, information systems outsourcing, package implementation, software application development, and maintenance services to corporations globally.

In the Indian market, Wipro is a leader in providing IT solutions and services for the corporate segment in India, offering system integration, network integration, software solutions and IT services.

Wipro also has a profitable presence in niche market segments of consumer products and lighting. In the Asia-Pacific and Middle East markets, Wipro provides IT solutions and services for global corporations. Wipro's ADRs are listed on the New York Stock Exchange, and its equity shares are listed in India on the Stock Exchange - Mumbai, and the National Stock Exchange. For more information, please visit our websites at www.wipro.com and www.wiprocorporate.com.

TechM wins $50-m Saudi Telecom deal

MUMBAI: Close on the heels of clinching an IT outsourcing deal with Etisalat DB, the Indian arm of Emirates Telecom, Tech Mahindra is learnt to have won another deal for a greenfield IT implementation for a telecom major in the Middle East. The IT firm has won a deal with Saudi Telecom, which is rolling out GSM services in Bahrain, said a person familiar with the development.

Saudi Telecom competes with Etisalat and the Zain consortium in its home market. The largest telecom operator in West Asia, Saudi Telecom also has a presence in Indonesia, Malaysia, Turkey, South Africa, Lebanon, Jordan, and Kuwait. In India, it has a presence through a 25% stake in Maxis Telecom, the Malaysian operator that is the majority stakeholder in Aircel. Earlier this year, it bagged the licence for the third-mobile operator in Bahrain.

“The deal with Tech Mahindra includes IT implementation and managed services. It is one of the largest deals for Tech Mahindra in the region,” said the person quoted earlier. He said the deal size could be between $40 million and $50 million. Multinational firms Hewlett Packard and Cisco, which provide server and networking hardware, have also won different parts of the deal. Tech Mahindra shares fell marginally on Monday to Rs 937.75 on BSE.

A Tech Mahindra spokesperson responded to an e-mail from ET saying, “As a corporate policy, Tech Mahindra does not comment on any market speculative stories.” Tech Mahindra, which is focused on exclusively on outsourcing services to the telecom sector, is facing growth challenges from its number one customer and shareholder, British Telecom. In the recent past, it has clinched several deals in emerging markets, such as India, Middle East and Africa, where the telecom market is still witnessing a rapid growth. Saudi Telecom, for instance, has announced investments of around $3 billion in the telecom markets of India, Malaysia and Indonesia.

Tech Mahindra is also the largest stakeholder in the scam-hit Satyam Computer Services. The Tech Mahindra management has publicly stated that it intends to eventually merge both companies giving it a presence in all sectors.

Want to settle abroad? Canada's the best bet, says UNDP

Toronto: Canada has been lauded as a role model for the rest of the world for accepting new immigrants. A new report by the United Nations Development Programme (UNDP) praises Canada for its liberal and fair immigration policies.

Canada accepts more immigrants per capita than any other nation on earth in proportion to its population. With a population of about 34 million, Canada accepts more than 250,000 immigrants each year. They come from more than 150 countries, with India and China topping as the two main sources for immigration.

More than 30,000 Indians enter Canada as new immigrant each year, though it may take them up to six years to get their applications processed in New Delhi.

The UNDP report, which rates Canada as the fourth best country to live in, says immigration has benefited Canada and other wealthy countries as their populations age.

"All Canadians can be proud of what the report says about Canada,'' David Morrison, UNDP executive secretary, said in Toronto on Monday.

He said, "There are one billion people on the move and that number is going to grow as we look to the future. So the report argues that migration is a process to be managed rather than problem to be solved.

"The report really singles out Canada as a model as a receiving country.''

The UNDP official said, "Canada is historically a very open country. It is a country based on immigration to a very great extent. Today, Canada is one of the most open countries to migration in the world and accepts a large number of migrants each year, both on a permanent basis and as temporary workers.

It also accepts a large number, per capita given Canada's population size, of asylum seekers."

Citing how many other countries make it difficult for new immigrants to enter, the 217-page report says the cost of moving from Vietnam to Japan is six times the annual income per capita in that country.

"In one in 10 countries, the costs of a passport are about 10 per cent of the money you could expect to make on an annual basis,'' the UNDP executive secretary said.

"So just preparing to become a legal migrant can be burdensome, which is why we have so many people migrating through illegal channels,'' he added.

Nordic fin firms look to move tech jobs to India

BANGALORE: Nordea, a leading financial services group in the Nordic and Baltic region, along with peers Svenska Handelsbanken and SEB, are among a new set of customers planning to offshore technology work to India. These players aim to bring down operational costs by up to 30% and cope with the slump more effectively.

Indian tech vendors like TCS, HCL, L&T Infotech, Wipro, Infosys and Cognizant are in discussion with Nordic customers for outsourcing contracts potentially worth around $100 million each over the next few years.

Outsourcing advisory firm EquaTerra recently analysed around 370 outsourcing contracts signed by over 200 Nordic customers, and concluded that Indian service providers scored better than European vendors such as TietoEnator and Capgemini, when it came to customer satisfaction. EquaTerra analysed almost $4.3 billion worth of outsourcing contracts signed by these customers.

“Many Nordic firms are looking at some of the successful offshoring case studies in their region such as Ericsson and Ikea, and are now beginning to explore similar opportunities,” said Sridhar Vedala, managing director of offshoring advisory firm Quantam Step.

Most Nordic countries, especially Sweden, have high cost structures. This is putting pressure on local customers to seek low-cost resources in locations like India, which will help them tighten belts by up to 30-40%. For instance, when Handelsbanken was seeking suppliers for a new outsourcing contract, it shortlisted six vendors, including Logica, TietoEnator, TCS, L&T Infotech, HCL Technologies and Hexaware. However, despite the presence of European outsourcers, the firm finally decided to go ahead with pure offshore vendors such as HCL and L&T Infotech.

“India remains the dominant offshore destination for Nordic firms. 61% of the respondents are using India to fulfil at least some of their global sourcing needs,” EquaTerra said in a recent report. When contacted by ET, Indian tech vendors declined to comment on any potential outsourcing contract being pursued by them.

TCS, India’s biggest software outsourcing firm, said Nordic customers are indeed beginning to explore more outsourcing options. “While the overall Nordic IT market is expected to remain flat in 2009, the demand for services outsourcing continues to be firm and we are seeing continued growth,” said AS Lakhminarayanan, vice-president & head-Europe, TCS. “Norway in particular is expected to demonstrate one of the highest IT market growth rates in Europe in 2009, estimated at between 1-2% annually, while most other markets have remained flat or even declined,” he added.

Customers such as Handelsbanken have been exploring offshoring of IT work for almost a year, and a worsening economic crisis forced them to look at offshoring more seriously. The bank is now seeking suppliers for maintaining its legacy mainframe systems, and also make them work with newer business software applications.

Nordic customers prefer to start an outsourcing engagement with smaller, $10-20 million contracts, but are expected to ramp up after experiencing the promised benefits. “Belgium, which is another big market for outsourcing had a similar evolution-now the customers are signing contracts worth $30-40 million and more,” added Mr Vedala.

Unlike other European markets such as Germany where labour laws make it difficult for an offshoring contract, countries in the Nordic region are more flexible. However, they still prefer to exercise caution during early relationships without succumbing to doling out multi-year, mega outsourcing contracts.

“If you look at the last 100 deals signed over the past six to eight months, you would find that they range from e500,000 to e150 million, which is a broad range. The most significant deal size segment, in terms of frequency would lie in the range of e8-20 million,” agreed Mr Lakhminarayanan.