TCS to step up hiring as info-tech spending takes off

As demand picks up, pricing power will return. TCS has been winning deals.

---

— Mr N. Chandrasekaran, CEO of TCS

Adith Charlie

Mumbai, Dec. 30

In what could be a firm indicator of turnaround times for the IT industry, the CEO of India's largest IT services company said fiscal 2010-11 is likely to see his company step up the pace of hiring, give wage hikes, as well as increase capital expenditure.

“We are likely to hire more people next year ( vis-à-vis the current fiscal) and we have also increased the quantum of work done offshore. This means we have to create more facilities going forward,” Mr N Chandrasekaran, Chief Executive Officer and Managing Director of Tata Consultancy Services, said in an interview to Business Line.

Next year's capex for the $6-billion company is likely to be higher than the Rs 1,300 crore earmarked for the current year, a figure disclosed by the group chairman, Mr Ratan Tata, at the company's annual general meeting last year.

However, Mr Chandrasekaran would not provide concrete numbers as the company is still in the process of firming up its plans for the next fiscal, ahead of its third quarterly results that are to be announced on January 15.

This revival in IT spend is propelling TCS to firm up hiring plans for next year and it is being led by companies in the banking, financial services space across geographies.

Positive indicators

Though companies in sectors such as manufacturing, hi-tech, telecom and manufacturing are still ‘not out of the woods', there are enough indications of things revving up next year, said Mr. Chandrasekaran. “I believe that during the course of the year these sectors will turn positive and deliver growth. The good news is the decline (in these sectors) has stopped,” he said.

TCS expects 2010 to be a better year for the company and the IT industry as a whole. And the growth is largely going to be volume-driven.

“Short term, there may not be a pricing uptake; but I do not expect a (pricing) decline either. As demand picks up, pricing power will return,” said Mr Chandrasekaran.

The good news is that discretionary or optional technology spending among corporations also seems to be making a comeback, especially in the BFSI (banking, financial services and insurance) space. TCS Bancs (its financial products suite), which is “positioned against discretionary budgets”, has been winning deals across geographies, securing engagements even in geographies such as continental Europe that are yet to see an uptake, he said.

Better clarity

“Fundamentally, there is lot more clarity and there is a systematic way of approaching business from the customers' end vis-à-vis last year. We just hope that Europe as a geography also starts showing signs of recovery,” he said.

Starting January, TCS will approach campuses for recruitment for 2010-11. It may be noted that for the current fiscal the company has already given 24,888 offer letters for campus recruits, a good percentage of whom are expected to join, in a staggered manner through the fiscal.

Earlier, TCS had indicated that it had nearly frozen lateral hiring for the current fiscal. That too seems to be changing and the company has increased the pace of hiring laterals or experienced professionals.

TCS, which had clamped down on salary hikes this year, is likely to be more lenient next year. The company is internally huddled in discussions to see how much wage hikes can be implemented next year, said Mr Chandrasekaran.

For the quarter ended September 2009, TCS had reported a 29 per cent rise in net profit at Rs 1,642 crore against Rs 1,271 crore in the corresponding year ago period

Has Microsoft Turned Into The New IBM?

Surfing the web today, I came across a very interesting interview on SeattlePi with Don Dodge, who was Microsoft’s Director of Business Development for the Emerging Business Team until getting laid off last month. During the interview, he revealed his opinions on Microsoft, their current situation and where they’re heading. He also revealed that he thinks “Microsoft is a lot like IBM was in 1985”, going on to say that “after 20 years they are losing the innovation edge.” This got me thinking; has Microsoft lost the ability to innovate after being the most dominative force in computing since the late 1980’s? And if so, why?

I think a key to the solution is the sheer amount of things Microsoft does. When you think of the number of markets Microsoft compete in, you can understand that it’s extremely difficult, maybe impossible, to dominate every market. Not only do Microsoft develop and maintain the Windows OS, they also compete in the market for smart phones with Windows Mobile; the gaming market with the Xbox 360 and internet search with Bing.

Microsoft only dominate one of these markets with Windows – even with competition from Mac OS X and Linux, 88.5% of the world’s population uses Windows on their PC’s, which is beyond monopolisation… Despite this, 62.2% of computer users are using Windows XP, which completely supports Dodge’s accusations that Microsoft aren’t innovating as much as they were before. Rightly or wrongly, Vista was never a favourite of consumers as it had a lot of bad press on and off the web. In my opinion,
Windows 7 is a solid operating system, and when I’m using Windows, I use Windows 7.

When comparing the progress of Windows to its nearest competitor, how has it advanced since Windows XP was released in 2001? When Windows XP was introduced to the world, Apple had just released Mac OS X 10.1, and compared to Microsoft’s monopoly, Apple wasn’t in a good position with many criticising 10.1 for its bad performance. The next time we saw a consumer OS from Microsoft, however, was in January 2007, and the results weren’t worth the 6 year wait for many…

In the same time, Apple had released Mac OS X 10.2, 10.3 and 10.4, with Leopard coming 6 months later. So what were Microsoft doing in those 6 years? To the average user, there wasn’t much reason to upgrade from XP to Vista, because people were all too familiar with XP – why switch to have software incompatibilities and an unfamiliar interface?

On the mobile front, having used all three main players in the smartphone market right now (Windows Mobile 6.5, iPhone OS and Android), I’d only consider using iPhone OS or Android. Microsoft’s got a lot of catching up to do, and has fallen behind Apple and Google in terms of innovation and ease of use.

Navigating around a Windows Mobile device often feels far too long winded, with menus and menus of choices it’s simply not as user friendly as the iPhone or Android, even with HTC’s custom interface. Add this to the numerous delays of Windows Mobile 7, there’s no way I’d buy a Windows smartphone right now.

Having gone from the innovator to the company playing catch up with every other major player, Microsoft needs a new direction to wow people again. They’re very much in the gaming market with the Xbox 360, and hopefully we’ll see some pushes towards a better search with Bing in 2010 – how about a consumer friendly surface-like device? Competition for Apple’s tablet anyone?

PricewaterhouseCoopers Executive Director Resigns

NEW DELHI --Auditing company PricewaterhouseCoopers, or PwC, Tuesday said Executive Director Dinesh Kanabar and some tax executive directors have resigned.

"We have appointed Ketan Dalal and Shyamal Mukherjee as the new joint leaders for PwC's tax and regulatory practice," PwC said in an emailed statement.

PwC didn't give a specific reason for the resignations or the dates of the same. It didn't divulge the names of the tax executive directors who had stepped down, nor mention how many.

Price Waterhouse, the Indian affiliate of PwC, has been under the scanner because of its previous links with Satyam Computer Services Ltd., whose founder and then chairman, B. Ramalinga Raju, revealed a massive fraud at the Hyderabad-based company earlier in January.

Price Waterhouse audited Satyam Computer's financial statements from the quarter ended June 30, 2000, through to the quarter ended Sept. 30, 2008. The audit house subsequently said its accounts shouldn't be relied upon.

Two of the auditors--S. Gopalakrishnan and Srinivas Taluri--were arrested in January in connection with the Satyam Computer case.

PwC has said that since then it has been making "a significant investment in training and taking other steps to further enhance audit quality" in India.

Earlier this month, PwC named Gautam Banerjee as the chairman for its India auditing business after Ramesh Rajan stepped down from the post.

Millions in Britain face pay freezes, salary cuts in 2010

LONDON: The new year is going to be a cold one for the salaried class in Britain as millions of people are likely to see their spending power slashed again in 2010 due to salary cuts and pay freezes, a media report says.

"Millions of people face a second year of pay freezes or salary cuts next year dashing hopes that the end of the recession will ease the squeeze on family budgets," the Sunday Times said.

Up to two-thirds of companies in the private sector are planning to freeze or cut pay next year -- a substantial increase compared with this year, the newspaper said.

Quoting a poll by the British Chambers of Commerce (BCC), the daily said 58 per cent of company directors were planning wage freezes during 2010 and another 5 per cent planned to cut pay next year.

This grim forecast has, however, enraged union leaders and brought a series of strike-threats for slashing workers' spending power for the second year running.


Unions said the state of the economy should not be used as an "excuse" to impose pay freezes by companies continuing to make profits.

Derek Simpson, Joint General Secretary of Unite, the biggest trade union in Britain with two million members told the Sunday Times, "Our members have been prepared to share the pain and take pay freezes this year. But we will challenge any attempt to freeze pay in companies that are making profits next year."

British Airways, Hewlett-Packard, Fujitsu, Swinton insurance and Ladbrokes have already announced plans to freeze pay next year.

Citing BCC Director General David Frost the daily said, "we face a tough year ahead -- it will be a really long haul. The stark reality is that business finances are still under incredible pressure and they are doing everything they can to keep hold of cash."

Despite signs of economic growth, millions of consumers face a bleak 2010.

Value added tax (VAT) is set to rise to 17.5 per cent this week, unemployment is expected to increase further and City forecasters predict interest rates to rise later in the year. Personal tax allowances will be frozen in April when the new 50 per cent income tax rate also comes in, the report added.

Britain is predicted to have moved out of recession during the final quarter of this year, the last of the leading European economies to do so.

Infosys set to get K'taka contract on T&D losses

The Rs 380-crore tender is part of the Accelerated Power Development and Reform Programme of the central govt.

Infosys Technologies, India’s second largest software services company, is close to winning a Rs 380-crore contract from the Karnataka government’s electricity supply companies, aimed at stemming transmission and distribution losses.

The contract is being awarded as part of the Accelerated Power Development and Reform Programme (APDRP) initiated by the central government.

Industry sources indicate that Infosys has emerged as the lowest from among 11 bidders, including Wipro, TCS and KLG Systems. A company spokesperson declined to comment.

Indian software service vendors are all vying for a piece of the Rs 10,000-crore of contracts under the APDRP, more so as this is a programme which could be expanded later. TCS and HCL, Infosys' big rivals, have won similar contracts on addressing T&D losses in other states.

Infosys has been stepping up its India presence during the past 18 months, setting up a separate India business unit. It has so far bagged three major projects in the government sector. Earlier, the company had won a project to set up and manage a central processing centre for the income tax department and one from the ministry of commerce to develop an eBiz portal to help provide one-stop services to industry.

The company has also bagged a pilot project to roll out an Integrated Coach Management System for the Indian Railways. Though the initial (pilot) project cost is small, its success will determine the schedule on when the railways will go for floating the final tender for the project, estimated to be Rs 210 crore.

Cognizant picks up 700 Anna varsity students

Time to celebrate: Jubilant Anna University students celebrate their getting job offersfrom Cognizant Technology Solutions, in the presence of Dr P. Mannar Jawahar (right),Vice-Chancellor, Anna University, and Mr R. Ramkumar (second from left), Vice-President, Corporate Communications, Cognizant, at the university premises onTuesday.- Bijoy Ghosh

Hindu

Chennai, Dec. 22

The US-based Cognizant Technology Solutions offered jobs to over seven hundred students of Anna University on Tuesday. Though this was less than the 1,000 offers that Cognizant made last year, Dr P. Mannar Jawahar, Vice Chancellor, Anna University, is happy.“The numbers may be less from Cognizant, but we are still happy considering the downturn in the software industry,” he told Business Line.Cognizant was the first large recruiter this year in the university that includes the College of Engineering, Guindy, Madras Institute of Technology, Chrompet and Alagappa College of Technology.While Tata Consultancy Services, which is also a large recruiter, is visiting the campus on Wednesday, over 55 more companies across various sectors plan to visit in the next few days, he said.

The starting salary offered by Cognizant remained unchanged from last year, at Rs 3 lakh a year. Around 1,640 students took the test, of whom 1,345 were shortlisted and 700 were offered jobs, Dr Jawahar said.Before Cognizant, ‘core and dream' companies such as Caterpillar and Larsen & Toubro that offer a starting salary of over Rs 4 lakh have given job offers to around 300 students, he said.

MindTree: Looking for Buys in $50 Million-$100 Million Size

BANGALORE -- MindTree Ltd. is looking for acquisitions valued at $50 million-$100 million to help in its bid to post $1 billion in revenue by 2014, the Indian software exporter's chief executive said.

"I would think, maybe 20% of our revenue would come from acquisitions as part of this $1 billion vision," Krishnakumar Natarajan, who is also the managing director of the company, told Dow Jones Newswires in a recent interview.

The company had reported $269.1 million in revenue in the last fiscal year ended March 31.

The company is looking for acquisitions to expand its infrastructure management and package application businesses, Mr. Natarajan said. MindTree's last major acquisition was in 2008, when it bought product-related testing services firm Aztecsoft for $90 million.

Bangalore-based MindTree specializes in providing services to the manufacturing, banking and financial services sectors. Like its peers, it is slowly recovering from the effects of the global economic slowdown as technology spending makes a modest return in developed nations.

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.

Satyam, slowdowns make 2009 hard for software industry

PTI

NEW DELHI: The Satyam Computer accounting scam, slowdown and resultant hiring freeze by many made 2009 a forgettable year for the Indian Information Technology industry.

There was never a dull moment for bad news during the year, given the fact that Satyam's founder B Ramalinga Raju came out of the closet with an accounting fraud on January 7. The scam tarnished the credibility of India's IT story, requiring others to do a lot of convincing to retain clients.

As dramatic it was, the World Bank, within a week of the Satyam scam coming to light, announced it had banned, besides Satyam, Wipro and Megasoft from working for it for allegedly "providing improper benefits to the Bank staff" during the course of their projects with it. While the cases dated back to mid-2007, the timing of the disclosures only helped compound the woes of the IT industry.

To give the government its due credit, it acted swiftly by superseding the Satyam Board, which brought in new auditors to restate accounts, and ascertained employee count and within months found a new owner in Tech Mahindra. Satyam has since been renamed Mahindra Satyam.

Multiple agencies probed the scam, whose size was initially estimated at Rs 7,800 crore, and Raju, once a celebrated IT icon, is in custody awaiting trial.

GlaxoSmithKline and HCL in IT outsourcing deal

Healthcare company GlaxoSmithKline (GSK) has signed a five-year outsourcing agreement with HCL Technology division HCL Axon.

Under the agreement, Indian based outsourcer, HCL will provide GSK with systems integration, SAP implementation and IT consulting services for the international company.

The appointment comes a year after Indian-based HCL Technologies’ acquisition of UK based Axon.

“This is an important win for us, it keeps our objective of becoming the largest global SAP-based business transformation provider on track and confirms the rationale behind the merger with HCL technology.” said Mr Steve Cardell, President, HCL Axon