News and views about the Outsourcing sector in India

Satyam Computer Services has bagged some big deals with Ciba this week. In a separate report, Satyam reported a 28% increase in net revenues. HCL, one of the major IT firms in the BPO arena is bumping up its headcount in its Ireland center which is good news for Ireland but bad news for India. During the BangaloreIT seminar last week, the IT industry was urged to tap markets other than the US in order to hedge their risks. This comes with news that some US firms are opting to open up centers in smaller towns in the United States rather than seek offshore centers like India for their projects in order to cut costs.

- Chillibreeze Business Research Team

CII hosts meet on IT outsourcing

Process-based outcomes are being sought while outsourcing, according to experts at the meet on IT Infrastructure Outsourcing hosted by Confederation of Indian Industry Karnataka in the city. A host of issues associated with outsourcing, including the technology and business challenges, knowledge management during the outsourcing process and SLAs (service level agreements) were discussed. In addition to cost benefits, the customers were looking for process-based outcomes, s aid Mr. Bhaskar Ghosh, Executive Director Global Lead, Infrastructure Outsourcing, Delivery Centre, Accenture, at the meet.

29 October 2007
Source: Business Line

Satyam bags Ciba Specialty Chem. deal

IT services provider Satyam Computer Services Ltd has announced that the Basel, Switzerland-based Ciba Specialty Chemicals has chosen it to implement and operate a single, global SAP system to support its business worldwide. During the five-year engagement, Satyam will help Ciba establish a cost-efficient platform to service its businesses and facilitate future IT and process enhancements.

It will help Ciba achieve a scalable and flexible allocation of IT resources. The Senior Vice President and Head of European Operations, Satyam, Dr Keshab Panda, said the company expects to apply its SAP expertise and capabilities in the chemical industry to support CIBA’s integrated global business.

29 October 2007
Source: Business Line

IT industry urged to tap non-US markets

The tenth edition of BangaloreIT.in 2007 took off on Monday amid disappointing industry response. Participation by IT firms both domestic and multinationals and foreign delegations was at an all-time low.

Currency impact : The rupee appreciation against dollar by over 12 per cent since January this year had impacted the exports and the BPO sector in particular. IT firms could look at addressing the currency impact by developing innovative strategies and by tapping the non-US markets such as Europe and Japan, he said.

Alternate hubs : The Karnataka Governor, Mr. Rameshwar Thakur, said the IT industry in the State provides direct employment to about half-a-million people. The tier II and tier III cities in the State such as Mysore, Mangalore, Hubli-Dharwad and Belgaum are becoming alternative hubs for IT operations, and have the necessary educated work-force, which can be tapped by the BPO and IT sectors, he said.

The State Government has decided to set up five integrated townships around Bangalore and the first such township coming up at Bidadi would be dedicated to knowledge sector, he said.

29 October 2007
Source: Business Line

Indian IT major spreads cheer in Northern Ireland

Indian BPO major HCL, which has reposed faith in trouble-torn Northern Ireland since 2001 when western companies were chary of investing there, has spread more cheer by employing its 2000th employee in the region.
Many view HCL investing in Northern Ireland as one of the foremost landmarks of India-Britain relations during Tony Blair's tenure as prime minister. Since 2001, other Indian companies such as Firstsource, Pix Transmission and Tech Mahindra have followed HCL into the region.

HCL has so far invested 16 million pounds in three expansions in Northern Ireland in the last seven years - the most recent led to the development of a second BPO/contact centre in Armagh.

From its centers in Northern Ireland, HCL provides a range of high value BPO, contact centre (including multi-lingual) and online services to a range of clients from sectors as diverse as telecoms, retail, banking, media, publishing, utilities and technology.

According to a company executive, it's a model that is still relatively unique in the industry. But it is one that others will have to try to replicate sooner than later if they are to make the most of the global opportunities that now exist in offshore business process outsourcing.

28 October 2007
Source: Hindustan Times

Outsource to India, FM tells Norwegian IT firms

Terming apprehensions about job losses due to IT outsourcing to India as unfounded, Finance Minister P Chidambaram has asked Norwegian IT companies to take advantage of offshoring. India has been Norway's first source of skilled professionals for the past one year, he said.

During the seminar, acquisition of Bangalore-based IT company SPAN by Norway's largest IT company EDB Business Partners ASA, was announced. This is the largest ever IT acquisition by Norwegian IT company in Asia involving over 500 IT professionals working with SPAN, according to an official release in New Delhi on Friday.

26 October 2007
Source: Financial Express

IT exports to touch $80 billion by 2011: Government

The government on Wednesday said it expects IT exports to touch 80 billion dollars by 2011, growing at an average rate of 30 per cent annum.

"Our IT exports were a few million dollars in the early 90s and now it is around 37 billion dollars... We expect the IT exports turnover to touch 80 billion dollars by 2011, growing at an annual rate of 30 pc per annum," IT Minister A Raja said at a function.

"We are confident that our exports will boom despite the perceived odds against outsourcing and increasing competition," he said.

24 October 2007
Source: Financial Express

Banks' outsourcing norms under review

The Reserve Bank of India (RBI) is in the process of reviewing the guidelines issued on the code of conduct for outsourcing of financial services by banks.
 
According to sources close to the development, the review comes in the wake of recent discrepancies reported in the operations of loan recovery agents appointed by banks, which fall under the activities outsourced by them. The guidelines were issued in November 2006.
 
According to the sources, outsourcing of any financial services does not in any way diminish the obligations of a bank and those of its board and senior management, which have the ultimate responsibility for the outsourced activity. Sources added that the review might ask the banks to lay down a code of conduct for sensitive operations such as loan recovery and sensitize recovery agents accordingly.
 
24 October 2007
Source: Business Standard

Satyam Q2 net up 28 pct at Rs 409 crore

Riding on the back of growing outsourcing contracts from the US, Europe and an expansion into non-US regions saw India’s fourth largest software exporter Satyam Computer Services post revenues of Rs 2,031.7 crore, a 26.8 per cent increase over the same quarter a year ago.

The company’s second quarter net profits stood at Rs 409 crore, a 28 per cent increase year-on-year, while earnings per share (EPS) increased by 25 per cent, at Rs 6.12.

Satyam also announced a $5.5 million acquisition of Nitor, a UK-based consulting company that manages PCs and networks for companies in the telecom, banking, pharmaceutical and media sectors. Nitor, founded in 2002, had revenues of $3 million. Shares of Satyam closed at Rs. 461.75, a 2.97 per cent increase over yesterday’s close. 

The company also announced a tie up with Fujitsu Services, the European arm of Japanese major Fujitsu, for an outsourcing contract from Reuters, that will be executed over ten years. During the quarter, the company announced another $100-million deal with a European oil and gas company.

“We are looking at 20 deals in excess of $50 million in the next few quarters,” Srinivas Vadlamani, CFO, Satyam told Hindustan Times. Vadlamani said that the company remained upbeat about getting outsourcing orders despite a looming recession in the US.

23 October 2007
Source: Hindustan Times

Some firms replace offshoring with onshoring

Small U.S. towns can match India in cost. Northrop Grumman plans up to 50 sites for tech support. Dell opens a center in Idaho.

Gary Richardson left this boomtown-gone-bust in 1996 for a computer job in Dallas, the big city 60 miles north. "I didn't think I would ever come back," Richardson recalled recently, "because there were no jobs like mine here."
Not until this year, when Northrop Grumman Corp. opened an information technology center in town and began recruiting IT specialists and software engineers. In a twist on offshoring that Northrop has dubbed onshoring, the global defense and technology corporation has been shipping computer work to small-town America, shunning India's Bangalore and Mumbai.

Century City-based Northrop picked Corsicana and six other small cities, including Lebanon, Va., and Helena, Mont., as locations for employees who develop software and troubleshoot technical problems for clients hundreds or thousands of miles away.

It costs Northrop about 40% less to have the work done in Corsicana than in Los Angeles -- savings similar to what would be achieved by sending jobs overseas.

A survey of more than 500 large U.S. companies last year by consulting firm Booz Allen Hamilton found that 60% had shipped some work to other countries. Another firm, Forrester Research, predicted that about 3 million high-tech jobs would head overseas by 2015.

Northrop would rather stay home, in part because so many of its government contracts are for national security projects. The company hires 5,000 software engineers every year, and putting some of them in its new small-town centers could save at least $15 million annually in payroll costs. The plan is to have 50 such centers around the country.

23 October 2007
Source: LA Times