India is warming up to fair trade. But the concept remains a niche market as companies are hesitant about taking it to the masses.
Indian farmers have been selling their fair trade produce to developed markets for years by getting certified by the Fairtrade Labelling Organizations International (FLO). Now the FLO wants to invert that model. It will introduce a fair trade label for the Indian market next year. The Spice Board of India is looking to follow suit with a fair trade label for the domestic spice market.
First, let’s understand what fair trade is. Fair trade is an organised movement that helps producers in developing countries get a premium for their products if they follow better social, labour and environmental standards.
More than $4 billion worth of fair trade products were sold internationally in 2008, up 22 percent since the previous year. While sales of products like fair trade tea, coffee, flowers, wine and beer have grown in double digits for the last several years, cultivation has outpaced demand, according to reports.
If the fair trade movement is implemented in India, it could open up a huge new market for fair trade farmers, giving them stability against foreign exchange fluctuation.
For the movement to be successful, however, it requires the customers to be sensitive about this. “The size of the market is very small because Indians are not really concerned about this,” says Arvind Singhal, chief executive of retail consulting company KSA Technopak. “Companies are trying to create fair trade brands for their own reasons but if the customer is not sensitive then this will have only a limited impact.”
The Indian market and other domestic markets in producing countries are increasingly important for the fair trade movement because they could each be larger than the European market, which is the largest market for fair trade products. For instance, take Chetna Organic Farmers Association, which works with 9,000 cotton farmers in the Vidarbha region of Maharashtra, Telangana in Andhra Pradesh, and Koraput, Bolangir and Kalahandi region of Orissa. It sells most of its cotton in Europe at a premium of Rs. 320 a quintal. But even now it is able to sell only half the produce; the rest gets sold in India without any premium.
It is no wonder then that Seth Petchers, chief executive of Shop for Change, a marketing and labelling organisation for domestic fair trade products, is trying to launch this movement in India. Shop for Change launched a range of fair trade clothes along with designer Anita Dongre’s prêt label AND. The collection featured an ad campaign that starred fair trade cotton farmers along with former Miss India, Gul Panag.
This collection was made with fair trade cotton from Chetna’s farmers in Orissa, who were paid Rs. 35 per kilo of cotton rather than the market price of Rs. 30 per kilo. The FLO also fixes a fair trade price, which includes a minimum price for the product and a fair trade premium. Says Reykia Fick, external relations co-ordinator, FLO, “On top of stable prices (usually the fair trade minimum price), producer organisations are paid a fair trade premium — additional funds to invest in social or economic development projects.”
Farmer members of Chetna, in Andhra Pradesh’s Karimnagar district, have used this premium along with an international grant to build a storage warehouse for their cotton. During the off-season, they rent out the warehouse as a marriage hall and distribute earnings for the co-operative. Another farmer group in Maharashtra’s Akola district has used the premium to build a school. In Kerala’s Kannur district, the premium is used to create a fund for distressed farmers. It has also allowed the community to set up solar sensing technology as a benign blockade warding wild elephants off the cashew nut trees. Their cashew produce is labelled Jumbo Cashews in the European market.
All of this may or may not result in a price premium for a consumer depending on whether a retailer chooses to crunch its margins. Increasingly, retailers have started selling fair trade products without a price premium for consumers. Dongre’s fair trade collection sold at the same price as her other clothes. Cadbury’s launched a fair trade version of its Dairy Milk chocolate internationally at the same price as the rest of its Dairy Milk chocolates.
In case of fair trade products “it is the imagery which is different rather than a product differentiation,” says Shital Mehta, COO of premium menswear brand, Van Heusen. Right now fair trade numbers are small. Companies want to portray themselves as fair employers but are just experimenting with a small percentage of their products. Will they ever get all their products under the fair trade umbrella?
That change will come when it becomes a civil society movement as it has in the West, says Tomy Mathews, founder of Fair Trade Alliance of Kerala. Mathews’ alliance has been supplying through the FLO for years and he says, “Attempts to create independent labels diverting from the uniform global message on global trade justice is doing disservice to the philosophy of fair trade. I don’t look fairly on [the] Spice Board initiative or the Shop for Change initiative. The moment you confuse market with different logos you’re already losing the game before it begins.”
Retailers that have included more equitable conditions for artisans and weavers, such as Fabindia and Anokhi, have done well here already and this movement can get extended to farmers as well, says Roopa Mehta, president of the Fair Trade Forum of India.
But there may still be some distance between promise and scale in the market. Devangshu Dutta, CEO of retail consulting company, Third EyeSight, says he sees a market developing for fair trade products, albeit slowly. “Things will change. But that change will have to come from the customer side. Currently, it is a very limited market but it could be a business proposition for a few companies.”
by Saumya Roy, Shloka Nath
Source : www.business.in.com
Thursday, July 22, 2010
Saturday, June 12, 2010
Start up Saturday Seminar on Social Media
Today I had the opportunity to attend a seminar on Social Media organized by Startup Saturday which is an initiative by Head Start Network to provide entrepreneurs in each city with a monthly community driven forum that is structured in agenda but open in discussions. A Startup Saturday provides a forum for entrepreneurs to discuss, present, network and learn from peers, prospective customers, adopters, partners and investors.
The fundamental idea is to have all parts of the innovation ecosystem interact with each other with high frequency and through rich conversation. We strongly believe that this would lead to faster evolution of the entire ecosystem.
The key not speakers were
Mr.Aditya Gupta from iGenero http://bit.ly/bSRkvG
Mr. Karthik from 84Ideas http://bit.ly/a9E4bP
Mr. Shameek Chakravarthy from Ohana Media. http://bit.ly/ddZ7OT
What fascinated me was the key note speakers were all below 30 years of age bracket and were very composed, main discussions revolved around various pros and cons of social media.
The first presentation by Karthik talked about “Why” there is a need for someone/organization to jump into the social media band wagon and social media is one latest tool in the arsenal of an effective brand promoter and is not a replacement of conventional brand building exercises. The presentation also talked about the various pitfalls to be avoided while increasing your reach to your customers / potential customers.
A second presentation was followed by Shameek which mostly talked about different evaluation metrics/analytics which could drive your brand marketing strategy and understanding the consumer patterns. How effectively one can analyze the data and fine tune their marketing strategies. The presentation also talked about the quality of the audience whom you try to reach through social media than the quantity. There were some detailed case studies presented.
Third presentation was done by Aditya Gupta of iGenero his emphasis was on the tools and the quality of the content marketed through various social media tools. His take on external tools like Twitter or Facebook were that these are the latest medium which might get outdated by time but the content on your website and the info on that should be more dynamic than static, and companies should design and develop content on their website's/blogs which would strike conversations rather than providing the normal info.
All in all the entire seminar was food for though, which has tinkered my brain cells to do social media differently.
Wednesday, May 26, 2010
.Net Technical Architect For a Global Product Development Company @ Chennai
My client is A Swiss company focused on innovation and quality, they design personal peripherals to help people enjoy a better experience with the digital world. They are a NASDAQ listed company and the are distributed in more than 100 countries worldwide through retail channels.
Position : . Net Technical Architect
Location : Chennai
Years of Exp : 8 to 12
Roles and Responsibility
My Client is looking for .Net Technical Architect who should be
Hands-on, ideally 50% or more of their time is writing code
Experienced in design patterns, scalability, security and designing maintainable solutions (SOA)
Guru level in .NET
Excellent communication skills
Up to date on the latest .NET framework and early adopter of new releases
Quick learner
Mail me a copy of your latest resume if this position is of interest to you @ abijith@optionsindia.com
Friday, August 03, 2007
Rupee Vs. India Inc.
Reserve Bank of India, the nation's central bank, has had a tough first six months at office -- first to keep inflation under check and then to delicately address the runaway rise of the Indian rupee (against the dollar).
A series of measures linked to curbing credit growth and lowering short-term interest rates twice this year, have pegged inflation to 4.27 per cent for the week ending July 4 from a two-year high of 6.73 per cent in January-end. Currently, India's inflation is within the medium-term range set by the RBI.
A variety of factors are, however, keeping the rupee firm against the dollar, which has risen by nearly 10 per cent between January-July this year. The rupee stands at a near-decade high of 40.3 against the dollar, from 44.2 when the year began.
Rupee appreciation has been the sharpest in three decades in the April-June quarter this year. And analysts expect the rupee to gain further.
The impact of a rupee rise
As the rupee rises against the dollar (or conversely the dollar weakens) Indian exports firms earn less and thus begin to lose their competitive edge -- whether it be textile, jewellery, software, drugs or automobiles.
India's 'big four' in the software pack -- Infosys], TCS , Wipro and Satyam have already seen their net income in the first quarter ending June, fall due to the sharp rupee rise. This is because India's software companies bill several clients in dollar terms.
A weak dollar thus hits currency-linked earnings.
The impact is seen through:
Lower exports, as exporters are unable to maintain necessary profit margins if their dollar-linked earnings fall. Analysts now predict that India's export target of $160 billion may not be met. A more 'realistic' export target for this year has been pegged at $135-140 billion.
If the rupee continues to gain against the dollar, India's competitive strength in world trade (which is already negligible) will weaken. This, in turn, shrinks new job avenues.
Exporters are keener to sell their product/services locally, if possible. This would increase local supplies and lower prices and inflation.
Export lobby groups and trade analysts are now urging the government to act to curb the rupee's rise. The equation is simple. In a competitive business environment where operating margins will determine survival, export houses are in a fix.
Jobs may be lost
However, on the other hand, if the rupee keeps strengthening, a lot many people may actually lose jobs. Exporters are also considering layoffs, which may eventually affect 275,000 jobs by the year-end.
Yet another fallout of the rupee rise is the proposal by the IT and BPO companies in India which plan to increase the working hours of their employees and doing away with a 5-day week and making them work on Saturdays too.
According to a study by the Union commerce ministry, the worst hit sectors are infotech, textile, leather, handicrafts, marine products, engineering, sports goods, toys and agri products.
How will the Rupee surge impact you?
With factors suggesting that the rupee could rise, we could see a scenario of an increasing percentage of goods and services being offered locally, which would lead to lower prices and hence curb inflation further.
Industries, where domestic prices are linked to the cost of imported raw material -- like metals, have and will lead to further lowering of input cost of imported aluminium and copper. A reduction in the domestic prices is expected. Obviously, importing price-sensitive electronics and gadgets would also be cheaper, as would other retail items.
An appreciating rupee shows the strength of the economy, which can be seen when one travels overseas, if you try to convert what the dollar is worth. So maybe you should plan your overseas trip now, if you have enough disposable income.
You obviously have concerns if you are an exporter or work in an export-house. Another groups of people who may not be happy to see the rupee rising, would be those who hold dollar-denominated accounts.
A series of measures linked to curbing credit growth and lowering short-term interest rates twice this year, have pegged inflation to 4.27 per cent for the week ending July 4 from a two-year high of 6.73 per cent in January-end. Currently, India's inflation is within the medium-term range set by the RBI.
A variety of factors are, however, keeping the rupee firm against the dollar, which has risen by nearly 10 per cent between January-July this year. The rupee stands at a near-decade high of 40.3 against the dollar, from 44.2 when the year began.
Rupee appreciation has been the sharpest in three decades in the April-June quarter this year. And analysts expect the rupee to gain further.
The impact of a rupee rise
As the rupee rises against the dollar (or conversely the dollar weakens) Indian exports firms earn less and thus begin to lose their competitive edge -- whether it be textile, jewellery, software, drugs or automobiles.
India's 'big four' in the software pack -- Infosys], TCS , Wipro and Satyam have already seen their net income in the first quarter ending June, fall due to the sharp rupee rise. This is because India's software companies bill several clients in dollar terms.
A weak dollar thus hits currency-linked earnings.
The impact is seen through:
Lower exports, as exporters are unable to maintain necessary profit margins if their dollar-linked earnings fall. Analysts now predict that India's export target of $160 billion may not be met. A more 'realistic' export target for this year has been pegged at $135-140 billion.
If the rupee continues to gain against the dollar, India's competitive strength in world trade (which is already negligible) will weaken. This, in turn, shrinks new job avenues.
Exporters are keener to sell their product/services locally, if possible. This would increase local supplies and lower prices and inflation.
Export lobby groups and trade analysts are now urging the government to act to curb the rupee's rise. The equation is simple. In a competitive business environment where operating margins will determine survival, export houses are in a fix.
Jobs may be lost
However, on the other hand, if the rupee keeps strengthening, a lot many people may actually lose jobs. Exporters are also considering layoffs, which may eventually affect 275,000 jobs by the year-end.
Yet another fallout of the rupee rise is the proposal by the IT and BPO companies in India which plan to increase the working hours of their employees and doing away with a 5-day week and making them work on Saturdays too.
According to a study by the Union commerce ministry, the worst hit sectors are infotech, textile, leather, handicrafts, marine products, engineering, sports goods, toys and agri products.
How will the Rupee surge impact you?
With factors suggesting that the rupee could rise, we could see a scenario of an increasing percentage of goods and services being offered locally, which would lead to lower prices and hence curb inflation further.
Industries, where domestic prices are linked to the cost of imported raw material -- like metals, have and will lead to further lowering of input cost of imported aluminium and copper. A reduction in the domestic prices is expected. Obviously, importing price-sensitive electronics and gadgets would also be cheaper, as would other retail items.
An appreciating rupee shows the strength of the economy, which can be seen when one travels overseas, if you try to convert what the dollar is worth. So maybe you should plan your overseas trip now, if you have enough disposable income.
You obviously have concerns if you are an exporter or work in an export-house. Another groups of people who may not be happy to see the rupee rising, would be those who hold dollar-denominated accounts.
Monday, July 30, 2007
"Blind Men and the Elephant" - A first step in understanding IT services
So here are two young IT professionals turned- writers, Was Rahman and Priya Kurien, who have attempted to rewrite the story exploring the intricacies of today’s ‘least understood’ IT industry. It would be wrong to say Was Rahman and Priya Kurien are trying to demystify Information Technology (IT) in their book "Blind Men and the Elephant". The industry is too much of a behemoth for one book to be able to do that.
Elaborating on the book, Was Rahman, a post graduate in Management and IT from Coventry University says, “In the poem, the six blind men described each part of an elephant and guess it was the elephant. Similar is the case with the industry as nobody has given its full history. Each group gives its own descriptions, based on its perspective.’’
Priya, an engineering graduate from Guindy Engineering College, says, “The book talks about almost all aspects of the industry from its fascinating past to the future.’’ Was and Priya’s experience in the industry has helped them gain a good understanding of the inner conflicts.
Was Rahman, who started his career in investment banking, has been in the industry for the last two decades. With five years’ experience in Infosys Technologies, he was also responsible for the company’s European Strategy, which included leading its transformation journey from supplier of commodity IT services to solver of Business problems.
Priya, who had a distinguished 13-year-career on the technology front of the industry, also co-developed the firm’s European Strategy and solutions programme.
“The industry had a fascinating history and all are talking about it. But nobody knows where it actually started,’’ she quips.
Like John Godfrey Saxe's parable, the IT services industry is slippery as the "snake", is "a tree" under which the wise man as well as the fool find shade, blows in fresh air like a "fan", ties one up in knots "like a rope" or...
To hit the stands in early August, the book wants "to make people think of the future" and "where the industry is headed" and about the pitfalls in its being and growing.
"We are trying to start a debate, what is the role of the IT services industry?" say Rahman and Kurien in their must-read.
"History repeats itself," Rahman told IANS at an interaction ahead of the release of the book in India, recalling that busts inevitably follow booms and that the IT services industry is reaching an equilibrium, which both the service sector and the customer have to come to terms with soon.
"Most people don't understand what the IT industry is all about, though in the 21st century, most people use IT in their lives in one way or the other," explained Kurien.
This rings a bell, especially when we come face to face with the jargon-filled world of COBOL (common business oriented language), ERPs (enterprise resource planning) and MRPs (material resource planning).
Each specific IT service sector is getting more specialised and more "driven by profit", but not becoming meticulous enough to cover its back, thus exposing itself to technology that can make it not only outdated but the service entirely redundant.
The book looks in some detail at some great IT service sector stories, but they all end with a cautionary note - the euphoria needs to be contained.
The industry is not about technology. Let's not forget, said the authors, "it is about the service, it is about the investment, about leadership and empowerment", and any of these missing can make the industry crash.
Elaborating on the book, Was Rahman, a post graduate in Management and IT from Coventry University says, “In the poem, the six blind men described each part of an elephant and guess it was the elephant. Similar is the case with the industry as nobody has given its full history. Each group gives its own descriptions, based on its perspective.’’
Priya, an engineering graduate from Guindy Engineering College, says, “The book talks about almost all aspects of the industry from its fascinating past to the future.’’ Was and Priya’s experience in the industry has helped them gain a good understanding of the inner conflicts.
Was Rahman, who started his career in investment banking, has been in the industry for the last two decades. With five years’ experience in Infosys Technologies, he was also responsible for the company’s European Strategy, which included leading its transformation journey from supplier of commodity IT services to solver of Business problems.
Priya, who had a distinguished 13-year-career on the technology front of the industry, also co-developed the firm’s European Strategy and solutions programme.
“The industry had a fascinating history and all are talking about it. But nobody knows where it actually started,’’ she quips.
Like John Godfrey Saxe's parable, the IT services industry is slippery as the "snake", is "a tree" under which the wise man as well as the fool find shade, blows in fresh air like a "fan", ties one up in knots "like a rope" or...
To hit the stands in early August, the book wants "to make people think of the future" and "where the industry is headed" and about the pitfalls in its being and growing.
"We are trying to start a debate, what is the role of the IT services industry?" say Rahman and Kurien in their must-read.
"History repeats itself," Rahman told IANS at an interaction ahead of the release of the book in India, recalling that busts inevitably follow booms and that the IT services industry is reaching an equilibrium, which both the service sector and the customer have to come to terms with soon.
"Most people don't understand what the IT industry is all about, though in the 21st century, most people use IT in their lives in one way or the other," explained Kurien.
This rings a bell, especially when we come face to face with the jargon-filled world of COBOL (common business oriented language), ERPs (enterprise resource planning) and MRPs (material resource planning).
Each specific IT service sector is getting more specialised and more "driven by profit", but not becoming meticulous enough to cover its back, thus exposing itself to technology that can make it not only outdated but the service entirely redundant.
The book looks in some detail at some great IT service sector stories, but they all end with a cautionary note - the euphoria needs to be contained.
The industry is not about technology. Let's not forget, said the authors, "it is about the service, it is about the investment, about leadership and empowerment", and any of these missing can make the industry crash.
Friday, July 27, 2007
Mastering the art of Job Hunting !!
Where do I start for a job change or a job hunt ??
What would be the right career move ??
How do I market my curriculum vitae ??
Do you ask yourself these questions before a job change ?? Most of us do and are worried how to headhunt for the right opportunity for the position matching our aspirations.
So I thought to pen down some universal tips and tricks.
1. Preparing a presentable resume.
2. Marketing your resume
3. Handpicking the employers
4. Attending interviews
5. Negotiating your CTC
6. Picking the cream of offers
1. Preparing a presentable resume
Analyze your resume : The resume is a selling tool that outlines your skills and experiences so an employer can see, at a glance, how you can contribute to the employer's workplace.
The most effective resumes are clearly focused on a specific job title and address the employer's stated requirements for the position. The more you know about the duties and skills required for the job--and organize your resume around these points--the more effective the resume.
Optimize your resume : “You will need information to write a good resume.” Not just information about jobs you've held in the past but also information to select the most relevant accomplishments, skills and experience for THIS position. The more you know about the employer and the position, the more you can tailor your resume to fit the job.
2. Marketing your resume
“Your resume has to sell you in short order.” While you may have all the requirements for a particular position, your resume is a failure if the employer does not instantly come to the conclusion that you "have what it takes." The first hurdle your resume has to pass--whether it ends up in the "consider file" or the "reject file"--may take less than thirty seconds.
Below are a few tips to effectively market your resume
- Executive Search Firms : Submitting your resume to Executive Search Firms are the hassle free way of headhunting a job, they are professional’s who have a wide gamut and reach of employers / opportunities to offer . They can even help you in preparing your resume, interview process and offer negotiations; half of your work is done if you submit your resume to these firms.
- Referrals through friends : Let your friends know that your are on a job hunt and looking out for a good opportunity, ask them to refer your candidature to their employers.
- Job Sites : Jobsites are an effective way to market your profile. Update your resume in their respective database and wait for the responses. Always keep a tap on the different jobs posted by employers
- Career / Job Fairs : Career Fairs / Job Fairs are good medium to gather info about different employers and the kind of opportunities they advertise.
3. Handpicking the employers :
Once you are done with the marketing and you start getting responses for your “Marketing Drive”, analyze the response and hand pick a few employers where you might be interested to work and continue with the process further.
4. Attending Interviews :
Lot has been written on this topic I am not elaborating much on this you can have a detailed info here.
5. Negotiating Your Salary :
This is a crucial part of every interview. Before you accept a job offer, you have to make sure the offer is one with which you are pleased. If not, you may have to negotiate. You can find more guidance from this article.
6. Picking the cream of offers :
By the end of this exercise you will be having at least a couple of offers with you. Now you have to make a decision depending on what would be your learning curve with the employer, Work Culture, Projects / Clients / Products, Other Benefits, Brand name of the employer etc.
I guess I have covered most of the things, if missed out anything please comment would be glad to add it up to this posting.
Cheers and Happy hunting !!!!
Password to crack the new IT matrix
For a while now the two words that have characterised the IT industry are “cost arbitrage”. Investors and analysts now want the industry to learn two new words: Pricing power.
Hit on the cost side because of an increase in employee costs and on the revenue side because of a rise in the value of the rupee against other currencies, the industry needs to figure out if its clients need it enough to allow them to raise prices.
“I think it is obvious that these companies do not have power to renegotiate prices to completely offset the adverse circumstances,” says the India head of a multi-strategy fund that currently managed about $2.5 billion. Most companies are negotiating a price increase of 1-2% on contracts coming up for renewal. This is unlikely to nullify the 5-6% decline in profit margins. No wonder then that most frontline IT stocks have underperformed the Sensex by more than 10% over the last six months.
One stark indicator of the state of the industry is the return on incremental capital employed, essentially the additional profits generated by deploying additional capital in the business. On this criterion, most top firms have shown a decline over the last two years. “These guys have a great business. Profits are growing at 25-30%, and revenue growth is strong. It is just that they may not be great stock market investments because the capital efficiency of the business may have declined,” says the fund manager.
For many industry experts IT companies may not be doing enough. “IT companies have done a reasonable job till now but if the rupee and the wages keep rising then they will need to do a lot more,” says Gartner regional research director Partha Iyengar. The IT industry has always relied on external triggers to show the way.
It was Y2K in 1999 and then the Internet mania in 2000 that shaped the business model of the industry. And that was setting up a process to move work offshore quickly and delivered in a “factory environment”. “Everybody then followed this business model that won the Y2K battle for India. I suspect we may be at a similar inflection point and we will see people now choosing differentiated strategies,” says the head of a private equity firm that has large investments in the IT sector.
For almost all the companies the core of the strategy will really mean figuring out how they deliver their bread-and-butter service: The application development and maintenance or ADM business. Since the ADM business is close to 50% of the revenues any strategic move has to deal with this chunk carefully.
So TCS is talking about using much more automation while Cognizant has set up a software factory at Coimbatore where they will use both scale as well as automation to be more efficient in delivering such services. There are other companies that are taking their ADM businesses away from Mumbai or Bangalore to smaller towns like Nashik, Bhubaneshwar or Pune.
All these are the cost-side measures. Things that can get better margins are as yet unaddressed. “The consulting businesses of these companies are yet to take off and these companies have not been able to identify any high-profit niches,” says the fund manager.
To be fair to the IT companies, they have developed deeper relationships with their clients but not in new areas. So, in normal ADM contracts Indian companies do it almost like a turnkey contract today while four to five years ago they would get all the requirements and only do the programming.
In enterprise solutions (SAP software related work) many India companies have moved ahead from doing just grunge work and writing small time programmes for SAP software. “Most of the global rollouts of enterprise software and its customisation in large companies is being handled right out of India and that is a huge step,” says Mr Iyengar.
But there is nothing spectacular in the pipeline that will transform these companies over a five-year horizon. “I think they need to become much more choosy in where they direct their resources. For example, HCL is not going to rebid for almost $16 million worth of contracts,” says Mr Iyengar.
Choices such as these are clearly difficult. Indian companies do not want to walk away from contracts and give smaller companies an opportunity to enter their accounts. Something they had benefited from when large companies like IBM and Accenture and Cap Gemini chose to focus on higher-end business 7 years ago. But clearly something has to give for the industry to get the buzz back. And no, we are not talking about small-fry acquisitions or sponsored ADS programmes.
Hit on the cost side because of an increase in employee costs and on the revenue side because of a rise in the value of the rupee against other currencies, the industry needs to figure out if its clients need it enough to allow them to raise prices.
“I think it is obvious that these companies do not have power to renegotiate prices to completely offset the adverse circumstances,” says the India head of a multi-strategy fund that currently managed about $2.5 billion. Most companies are negotiating a price increase of 1-2% on contracts coming up for renewal. This is unlikely to nullify the 5-6% decline in profit margins. No wonder then that most frontline IT stocks have underperformed the Sensex by more than 10% over the last six months.
One stark indicator of the state of the industry is the return on incremental capital employed, essentially the additional profits generated by deploying additional capital in the business. On this criterion, most top firms have shown a decline over the last two years. “These guys have a great business. Profits are growing at 25-30%, and revenue growth is strong. It is just that they may not be great stock market investments because the capital efficiency of the business may have declined,” says the fund manager.
For many industry experts IT companies may not be doing enough. “IT companies have done a reasonable job till now but if the rupee and the wages keep rising then they will need to do a lot more,” says Gartner regional research director Partha Iyengar. The IT industry has always relied on external triggers to show the way.
It was Y2K in 1999 and then the Internet mania in 2000 that shaped the business model of the industry. And that was setting up a process to move work offshore quickly and delivered in a “factory environment”. “Everybody then followed this business model that won the Y2K battle for India. I suspect we may be at a similar inflection point and we will see people now choosing differentiated strategies,” says the head of a private equity firm that has large investments in the IT sector.
For almost all the companies the core of the strategy will really mean figuring out how they deliver their bread-and-butter service: The application development and maintenance or ADM business. Since the ADM business is close to 50% of the revenues any strategic move has to deal with this chunk carefully.
So TCS is talking about using much more automation while Cognizant has set up a software factory at Coimbatore where they will use both scale as well as automation to be more efficient in delivering such services. There are other companies that are taking their ADM businesses away from Mumbai or Bangalore to smaller towns like Nashik, Bhubaneshwar or Pune.
All these are the cost-side measures. Things that can get better margins are as yet unaddressed. “The consulting businesses of these companies are yet to take off and these companies have not been able to identify any high-profit niches,” says the fund manager.
To be fair to the IT companies, they have developed deeper relationships with their clients but not in new areas. So, in normal ADM contracts Indian companies do it almost like a turnkey contract today while four to five years ago they would get all the requirements and only do the programming.
In enterprise solutions (SAP software related work) many India companies have moved ahead from doing just grunge work and writing small time programmes for SAP software. “Most of the global rollouts of enterprise software and its customisation in large companies is being handled right out of India and that is a huge step,” says Mr Iyengar.
But there is nothing spectacular in the pipeline that will transform these companies over a five-year horizon. “I think they need to become much more choosy in where they direct their resources. For example, HCL is not going to rebid for almost $16 million worth of contracts,” says Mr Iyengar.
Choices such as these are clearly difficult. Indian companies do not want to walk away from contracts and give smaller companies an opportunity to enter their accounts. Something they had benefited from when large companies like IBM and Accenture and Cap Gemini chose to focus on higher-end business 7 years ago. But clearly something has to give for the industry to get the buzz back. And no, we are not talking about small-fry acquisitions or sponsored ADS programmes.
Infy’s Finacle head puts in papers
Infosys Technologies is seeing the exit of another top level official with the head of its banking product business leaving the organisation. Merwin Fernandes, who was heading Infosys’ banking product business — Finacle — has put in his papers.
Mr Fernandes has spent close to a decade in Infosys and was the VP and global head — Finacle. He moved into the role following the elevation of Girish Vaidya as senior vice-president, Infosys Leadership Institute. However, it is not known what will be the Mr Fernandes’ future plans, though speculation is rife is that he will be moving into one of the rival businesses of Finacle. Confirming the development, Infosys in a statement said: “Yes, we can confirm that Merwin Fernandes has resigned from the services of the company to pursue his personal interests. At this stage the organisation is in the process of appointing a successor. The successor will be announced shortly to ensure a smooth transition.” Sources said Infosys has asked Mr Fernandes to stay on in the organisation till a successor has been found. Already, Infosys has sent letters to the various banks which are its customers, notifying the change. This will probably be another top level official exit from Infosys after Akshay Bhargava left its BPO business. Its other high profile exits have been Hema Ravichander.
Finacle — a core banking solution has been doing well for Infosys having recorded over 50% growth year-on-year (YoY). For 2006-07, it registered revenues of Rs 538 crore recording 50.7% YoY growth. Finacle constitutes 4% of Infosys revenues which has 91 customers with presence in 55 countries. It has a dominant share among the Indian PSU banks. Syndicate and Canara Banks have chosen to implement Flexcube of i-flex.
Finacle has been positioning itself as a global player and is targeting the global tier 1 and tier 2 banks. It had recently bagged an order from Emirates Bank of Dubai. It is also looking actively at the regions of South East Asia, western Europe and Australia and New Zealand where deals might start off from anywhere between $40 million and go up to $500 million.
At the marketplace, Finacle is competing not only against the Indian players like i-flex, FNS of TCS but also against the established global players like Misys, Temenos and Metavante. The current market size of core banking solutions is expected to be in the multi-billion dollars range spread over a longer period of time.
Mr Fernandes has spent close to a decade in Infosys and was the VP and global head — Finacle. He moved into the role following the elevation of Girish Vaidya as senior vice-president, Infosys Leadership Institute. However, it is not known what will be the Mr Fernandes’ future plans, though speculation is rife is that he will be moving into one of the rival businesses of Finacle. Confirming the development, Infosys in a statement said: “Yes, we can confirm that Merwin Fernandes has resigned from the services of the company to pursue his personal interests. At this stage the organisation is in the process of appointing a successor. The successor will be announced shortly to ensure a smooth transition.” Sources said Infosys has asked Mr Fernandes to stay on in the organisation till a successor has been found. Already, Infosys has sent letters to the various banks which are its customers, notifying the change. This will probably be another top level official exit from Infosys after Akshay Bhargava left its BPO business. Its other high profile exits have been Hema Ravichander.
Finacle — a core banking solution has been doing well for Infosys having recorded over 50% growth year-on-year (YoY). For 2006-07, it registered revenues of Rs 538 crore recording 50.7% YoY growth. Finacle constitutes 4% of Infosys revenues which has 91 customers with presence in 55 countries. It has a dominant share among the Indian PSU banks. Syndicate and Canara Banks have chosen to implement Flexcube of i-flex.
Finacle has been positioning itself as a global player and is targeting the global tier 1 and tier 2 banks. It had recently bagged an order from Emirates Bank of Dubai. It is also looking actively at the regions of South East Asia, western Europe and Australia and New Zealand where deals might start off from anywhere between $40 million and go up to $500 million.
At the marketplace, Finacle is competing not only against the Indian players like i-flex, FNS of TCS but also against the established global players like Misys, Temenos and Metavante. The current market size of core banking solutions is expected to be in the multi-billion dollars range spread over a longer period of time.
Lenovo to invest $11m in HP factory
PC major Lenovo on Thursday announced it would invest $11 million in setting up a new manufacturing unit in Baddi, Himachal Pradesh. The plant, Lenovo’s second in India, would have a capacity of two million units a year and will manufacture both desktop and notebook PCs.
Lenovo’s investment in the new plant will be spread over a period of five years. The plant will be operational in the third quarter of the current fiscal.
The Baddi plant, which will employ 350 people, will support regional customer requirements, including product assembly, distribution services and reverse logistics. It will also offer additional value-added services like product configuration, the company said.
“India is an integral part of Lenovo’s global manufacturing strategy.
The company already has a plant in Pondicherry that has a capacity of one million units a year. It also opened an innovation centre in Mumbai last year, its third in the world after those in USA and China.
Lenovo’s investment in the new plant will be spread over a period of five years. The plant will be operational in the third quarter of the current fiscal.
The Baddi plant, which will employ 350 people, will support regional customer requirements, including product assembly, distribution services and reverse logistics. It will also offer additional value-added services like product configuration, the company said.
“India is an integral part of Lenovo’s global manufacturing strategy.
The company already has a plant in Pondicherry that has a capacity of one million units a year. It also opened an innovation centre in Mumbai last year, its third in the world after those in USA and China.
Thursday, July 26, 2007
MS tool to rival Google Analytics
The software giant Microsoft is upping the ante in its war against the search giant Google. The company is readying a tool which is aimed at taking on Google Analytics product.
The software maker is gearing up to release a beta version of its Web analytics tool called Gatineau says Ian Thomas, who works for Microsoft's Digital Advertising Solutions Group in his blog. The service promises to offer features beyond Google and is expected to go live later this year.
According to the posting, the tool will allow users to segment Web traffic by both age as well as by gender. However, Thomas stresses that Microsoft will extract the demographic data anonymously from users' Live ID profiles.
The Gatineau project is based on the technology Microsoft acquired from DeepMetrix in 2006.
Thomas said that the target audience is similar to that of Google Analytics, though he says it won't just replicate its functionality.
Thomas added that Microsoft has been ramping up the project slowly to avoid the teething problems Google had when it launched its free Web Analytics service in November 2005. Google was forced to suspend new subscriptions for the service a week after its launch due to an unforeseen demand which affected its performance. The service was later reopened to new users in January 2006.
Microsoft is yet to announce an official release date for the software.
The software maker is gearing up to release a beta version of its Web analytics tool called Gatineau says Ian Thomas, who works for Microsoft's Digital Advertising Solutions Group in his blog. The service promises to offer features beyond Google and is expected to go live later this year.
According to the posting, the tool will allow users to segment Web traffic by both age as well as by gender. However, Thomas stresses that Microsoft will extract the demographic data anonymously from users' Live ID profiles.
The Gatineau project is based on the technology Microsoft acquired from DeepMetrix in 2006.
Thomas said that the target audience is similar to that of Google Analytics, though he says it won't just replicate its functionality.
Thomas added that Microsoft has been ramping up the project slowly to avoid the teething problems Google had when it launched its free Web Analytics service in November 2005. Google was forced to suspend new subscriptions for the service a week after its launch due to an unforeseen demand which affected its performance. The service was later reopened to new users in January 2006.
Microsoft is yet to announce an official release date for the software.
Sony unveils new Vaio range
Aiming at the burgeoning population of youngsters in India, Sony has unveiled a range of its 'Vaio' laptops to lure youth of the nation and double its market share in notebooks' production.
Currently Sony enjoyed around 5.6 per cent share of the retail notepad sales, but the two-month long campaign would help the company double its market share.
The new CR range of 'Vaio' notepads featuring different colors and designs is priced between Rs 54,990 to Rs 64,990.
The company is also offering zero per cent financing scheme to make them affordable.
Sony would run a 90-day long promotional programme in print media, electronic media and even in night clubs and shopping malls.
For establishing a connection with people in 18-35 age group, Sony India has launched a Rs 10 crore promotional campaign for shopping malls and night clubs besides print and electronic advertisements.
Earlier Sony India had announced a sales target of two billion dollar for this year, of which 11 per cent is expected to come from the sales of 'Vaio' range.
Currently Sony enjoyed around 5.6 per cent share of the retail notepad sales, but the two-month long campaign would help the company double its market share.
The new CR range of 'Vaio' notepads featuring different colors and designs is priced between Rs 54,990 to Rs 64,990.
The company is also offering zero per cent financing scheme to make them affordable.
Sony would run a 90-day long promotional programme in print media, electronic media and even in night clubs and shopping malls.
For establishing a connection with people in 18-35 age group, Sony India has launched a Rs 10 crore promotional campaign for shopping malls and night clubs besides print and electronic advertisements.
Earlier Sony India had announced a sales target of two billion dollar for this year, of which 11 per cent is expected to come from the sales of 'Vaio' range.
Wednesday, July 25, 2007
Top four IT players lose 10K employees in Q1
Indian IT companies, grappling with an appreciating rupee eating into their profits, are also finding it hard to retain employees with the top-four firms - TCS, Infosys, Wipro and Satyam - witnessing an exodus of about 10,000 people in the first quarter.
Although, all the four firms collectively hired more than 25,000 employees in the April-June period, the net addition was just about 16,300 - taking their total headcount to 2,85,357 employees.
Except for Satyam Computers, attrition rate went higher at Infosys, Tata Consultancy Service and Wipro from both the previous quarter as well as the year-ago period.
All the four companies reported an adverse impact of rupee rise on their profitability and margins, and are looking at various hedging measures, which include improving employee utilization rates.
However, analysts believe the high attrition rates, mostly triggered by employees seeking higher salaries, could adversely impact the companies' plans to improve utilization rates.
TCS, the biggest in terms of revenue as well as headcount, saw an exodus of about 2,500 employees, while just over 2,000 people quit the country's second largest software exporter, Infosys.
The employee loss is estimated to be much higher at about 3,500 at Wipro, the country's third-biggest IT firm, while Satyam, the smallest of the four, saw the lowest number -- about 1,600 people -- leaving.
Interestingly, April-June quarter is the period when most of the software firms implement annual wage hikes and see a sharp surge in new hiring’s.
TCS, Infosys, Wipro and Satyam had net additions of 5,512, 3,730, 4,319 and 2,716 employees respectively in the quarter.
TCS reported an attrition rate of 11.5 per cent, up from 10.6 per cent a year ago and 11.3 per cent in the previous quarter, while it stood at 13.7 per cent for Infosys, unchanged from the previous quarter but higher than 11.9 per cent in the April-June period last year.
Satyam saw its attrition rate falling to 14.9 per cent from 15.7 per cent in the January-March period this year and 19.2 per cent in the year-ago period, where as Wipro witnessed a sharp surge to 20 per cent from 17 per cent in the previous quarter and 15 per cent in the year-ago quarter.
Wipro says its high attrition rate was driven by various factors such as seasonality and a spike in the number of employees
going for higher studies during the quarter, as well as the company's practise of implementing annual wage hikes in the third quarter.
The annual hikes are fully reflected in first quarter results of Infosys and TCS, while some of the other front line IT firms do the same either in the second quarter or spread it over a number of quarters.
Although, all the four firms collectively hired more than 25,000 employees in the April-June period, the net addition was just about 16,300 - taking their total headcount to 2,85,357 employees.
Except for Satyam Computers, attrition rate went higher at Infosys, Tata Consultancy Service and Wipro from both the previous quarter as well as the year-ago period.
All the four companies reported an adverse impact of rupee rise on their profitability and margins, and are looking at various hedging measures, which include improving employee utilization rates.
However, analysts believe the high attrition rates, mostly triggered by employees seeking higher salaries, could adversely impact the companies' plans to improve utilization rates.
TCS, the biggest in terms of revenue as well as headcount, saw an exodus of about 2,500 employees, while just over 2,000 people quit the country's second largest software exporter, Infosys.
The employee loss is estimated to be much higher at about 3,500 at Wipro, the country's third-biggest IT firm, while Satyam, the smallest of the four, saw the lowest number -- about 1,600 people -- leaving.
Interestingly, April-June quarter is the period when most of the software firms implement annual wage hikes and see a sharp surge in new hiring’s.
TCS, Infosys, Wipro and Satyam had net additions of 5,512, 3,730, 4,319 and 2,716 employees respectively in the quarter.
TCS reported an attrition rate of 11.5 per cent, up from 10.6 per cent a year ago and 11.3 per cent in the previous quarter, while it stood at 13.7 per cent for Infosys, unchanged from the previous quarter but higher than 11.9 per cent in the April-June period last year.
Satyam saw its attrition rate falling to 14.9 per cent from 15.7 per cent in the January-March period this year and 19.2 per cent in the year-ago period, where as Wipro witnessed a sharp surge to 20 per cent from 17 per cent in the previous quarter and 15 per cent in the year-ago quarter.
Wipro says its high attrition rate was driven by various factors such as seasonality and a spike in the number of employees
going for higher studies during the quarter, as well as the company's practise of implementing annual wage hikes in the third quarter.
The annual hikes are fully reflected in first quarter results of Infosys and TCS, while some of the other front line IT firms do the same either in the second quarter or spread it over a number of quarters.
Oracle forms R&D network for innovation
Enterprise software company Oracle today said it will form a research and development (R&D) network for its 19 centers across Asia Pacific and Japan to build, test and showcase technology innovations.
The new single network will link 19 development and solution centers - six Oracle Asia R&D Centers (OARDC) in India, Japan, Korea, Singapore and two in China as well as 13 solution centers in the Asia-Pacific region. These centers focus on developing effective solutions for the local markets in addition to contributing to global product development, a Oracle release said here.
"This new collaboration will enhance their Asia Pacific innovation development process as well as benefit their customers and partners in the region.
"With all sides of the globe participating in contributing to technology solutions, our customers will gain access to some of the most cutting edge IT projects in the world. Customers and partners will also be able to collaborate with Oracle's vast R&D network to apply new thinking in the way software can be used to stimulate global growth and innovation in any industry or country", he added.
The OARDC would focus on product development, solution development, strategic projects and partner enablement.
The Asia Pacific and Japan R&D network is also linked into the global Oracle development centers worldwide. Oracle recently reported an investment of 2.2 billion dollar on global research and development during 2007, a 17 per cent increase from the previous fiscal.
The new single network will link 19 development and solution centers - six Oracle Asia R&D Centers (OARDC) in India, Japan, Korea, Singapore and two in China as well as 13 solution centers in the Asia-Pacific region. These centers focus on developing effective solutions for the local markets in addition to contributing to global product development, a Oracle release said here.
"This new collaboration will enhance their Asia Pacific innovation development process as well as benefit their customers and partners in the region.
"With all sides of the globe participating in contributing to technology solutions, our customers will gain access to some of the most cutting edge IT projects in the world. Customers and partners will also be able to collaborate with Oracle's vast R&D network to apply new thinking in the way software can be used to stimulate global growth and innovation in any industry or country", he added.
The OARDC would focus on product development, solution development, strategic projects and partner enablement.
The Asia Pacific and Japan R&D network is also linked into the global Oracle development centers worldwide. Oracle recently reported an investment of 2.2 billion dollar on global research and development during 2007, a 17 per cent increase from the previous fiscal.
Infy may announce European buy today
Infosys Technologies Ltd, India's second-largest software services exporter, may announce an acquisition in Europe on Wednesday.
The size of the deal, expected to be in the back-office services segment, could be around $200 million, they said, citing unnamed sources.
Infosys, whose customers include ABN AMRO, Goldman Sachs and Airbus, was close to acquiring the finance and accounting back-office services arm of Dutch consumer electronics group Philips.
The size of the deal, expected to be in the back-office services segment, could be around $200 million, they said, citing unnamed sources.
Infosys, whose customers include ABN AMRO, Goldman Sachs and Airbus, was close to acquiring the finance and accounting back-office services arm of Dutch consumer electronics group Philips.
Tuesday, July 24, 2007
BPOs too outsource processes!
Faced with rising operational costs and higher-than-the-industry attrition rates, captive centres in India are turning to third-party BPOs/vendors to manage their centres and take over the less strategic work, while retaining control over some of the key functions.
Smaller captives, with up to 200-250 employees, are learnt to have approached third-party BPOs for a tie-up of this kind. Wipro is learnt to be looking at deals in this area.
A recent Forrester Research report pointed out that 60% of captives in India are currently struggling due to high operational costs, skyrocketing attrition rates and lack of management support.
The report also said that about 20% of existing captives are expected to adopt a hybrid approach by using third parties for less critical work and keeping more strategic work to themselves. Attrition rates for captives hover around 40%, against the industry’s 30-35%.
Companies like Wipro enterprise solutions, WNS Global Services, Infosys BPO, ExlService Holdings have been approached by captives, both for complete buy-outs and for taking over operations.
Smaller captives, with up to 200-250 employees, are learnt to have approached third-party BPOs for a tie-up of this kind. Wipro is learnt to be looking at deals in this area.
A recent Forrester Research report pointed out that 60% of captives in India are currently struggling due to high operational costs, skyrocketing attrition rates and lack of management support.
The report also said that about 20% of existing captives are expected to adopt a hybrid approach by using third parties for less critical work and keeping more strategic work to themselves. Attrition rates for captives hover around 40%, against the industry’s 30-35%.
Companies like Wipro enterprise solutions, WNS Global Services, Infosys BPO, ExlService Holdings have been approached by captives, both for complete buy-outs and for taking over operations.
Patni buys US co Taratec for $27 m
Patni Computers has made its fifth acquisition by buying out US-based life science information technology consulting company Taratec for $27.2 million in an all-cash deal.
The acquisition, funded through internal accruals, will see an upfront payment and a three-year contingent payment depending on the performance. This gives Patni an entry into the life sciences segment. Taratec provides integrated business, IT and regulatory compliance products and services, and has over 150 people on its rolls with centres in the US and Puerto Rico. Taratec, with a topline of $20 million, has over 75 clients in some of the leading companies in the life sciences industry such as Aventis, Glaxo Smithkline and Pfizer, among others.
According to industry statistics, IT spend by life science firms is expected to reach $22 billion by 2009 with IT services and software representing the largest growth areas. Typically, life sciences companies can spend over $1 billion and take over 7-10 years to launch a product with a heavy dependence on IT.
The life sciences market is going through a change with increasing pressure on growth and margins. Leading pharma companies are trying to use IT to drive research and development (R&D) and business objectives and performance.
Taratec also brings in long-term customer relationships which will be valuable for Patni in getting a headway into the segment.
The primary markets for Patni through Taratec will be the US and Europe, though Japan is a strong future potential.This is the second biggest acquisition for Patni after its buyout of Cymbal for $78 million in November 2004.
Patni for some time has been acquiring a few companies with a consulting capability, and in the first week of July 2007 had acquired a telecom consultancy firm called Logan-Orviss.
The acquisition, funded through internal accruals, will see an upfront payment and a three-year contingent payment depending on the performance. This gives Patni an entry into the life sciences segment. Taratec provides integrated business, IT and regulatory compliance products and services, and has over 150 people on its rolls with centres in the US and Puerto Rico. Taratec, with a topline of $20 million, has over 75 clients in some of the leading companies in the life sciences industry such as Aventis, Glaxo Smithkline and Pfizer, among others.
According to industry statistics, IT spend by life science firms is expected to reach $22 billion by 2009 with IT services and software representing the largest growth areas. Typically, life sciences companies can spend over $1 billion and take over 7-10 years to launch a product with a heavy dependence on IT.
The life sciences market is going through a change with increasing pressure on growth and margins. Leading pharma companies are trying to use IT to drive research and development (R&D) and business objectives and performance.
Taratec also brings in long-term customer relationships which will be valuable for Patni in getting a headway into the segment.
The primary markets for Patni through Taratec will be the US and Europe, though Japan is a strong future potential.This is the second biggest acquisition for Patni after its buyout of Cymbal for $78 million in November 2004.
Patni for some time has been acquiring a few companies with a consulting capability, and in the first week of July 2007 had acquired a telecom consultancy firm called Logan-Orviss.
US IT spend to rise, Indian cos say amen
IT investment and spending is set to rise in the US, according to a forecast by Forrester Research. This may be good news for Indian vendors hurt by the rising rupee and worries of troubles in the sub-prime lending space spilling over into other areas.
“With a moderate tech investment slowdown mostly behind us, the tech sector should experience improving prospects in the second half of 2007.
The US has been witnessing a slowdown in spending on computer and communications and to a lesser extent in areas such as IT services and outsourcing. The demand environment for Indian IT firms, however, has been strong and this was re-affirmed in the current quarter where the tech leaders posted strong growth from the North America region.
For Infosys Technologies, North America revenues were at 62.6% of its total revenues, unchanged from the previous quarter, and for Tata Consultancy Services up from 51% to 61%. Even smaller players, such as Tech Mahindra, with British Telecom as it largest client, maintained US revenues at 19% of total revenues, unchanged from the previous quarter even as its revenues grew.
“As has been true for the past two to three years, the Indian vendors of Infosys, Tata Consultancy Services (TCS), and Wipro outpaced the rest of the industry,” the Forrester analysts noted.
Sector-wise, in the first quarter of 2007, the computers and peripherals saw a fall in demand, while growth in communication equipment was flat. Software witnessed as healthy demand of 11%, while services saw a 6% growth.
As the slowdown tapers off, Forrester predicts that IT services spends in the US will grow by 8% in the second quarter, as will spends on computers and peripherals. Software and communications equipment are predicted to grow 10% and 9% respectively. However, the analysts did not totally rule out the possibility of a recession threat.
“The depressing effects over time of a slumping housing market on consumer spending could turn out to be greater than they have been so far. A spike in oil prices could drive gasoline and heating oil prices back to the peaks of 2006,” the report said.
“With a moderate tech investment slowdown mostly behind us, the tech sector should experience improving prospects in the second half of 2007.
The US has been witnessing a slowdown in spending on computer and communications and to a lesser extent in areas such as IT services and outsourcing. The demand environment for Indian IT firms, however, has been strong and this was re-affirmed in the current quarter where the tech leaders posted strong growth from the North America region.
For Infosys Technologies, North America revenues were at 62.6% of its total revenues, unchanged from the previous quarter, and for Tata Consultancy Services up from 51% to 61%. Even smaller players, such as Tech Mahindra, with British Telecom as it largest client, maintained US revenues at 19% of total revenues, unchanged from the previous quarter even as its revenues grew.
“As has been true for the past two to three years, the Indian vendors of Infosys, Tata Consultancy Services (TCS), and Wipro outpaced the rest of the industry,” the Forrester analysts noted.
Sector-wise, in the first quarter of 2007, the computers and peripherals saw a fall in demand, while growth in communication equipment was flat. Software witnessed as healthy demand of 11%, while services saw a 6% growth.
As the slowdown tapers off, Forrester predicts that IT services spends in the US will grow by 8% in the second quarter, as will spends on computers and peripherals. Software and communications equipment are predicted to grow 10% and 9% respectively. However, the analysts did not totally rule out the possibility of a recession threat.
“The depressing effects over time of a slumping housing market on consumer spending could turn out to be greater than they have been so far. A spike in oil prices could drive gasoline and heating oil prices back to the peaks of 2006,” the report said.
Monday, July 23, 2007
TCS, Infy, Wipro top employers in IT-ITeS
Tata Consultancy Services (TCS), Infosys Technologies and Wipro Technologies have emerged the top IT and ITeS employers in Nasscom’s top 20 employer rankings for financial year 2006-07 .
The top 20 companies collectively employ over 0.5 million people — or just over 31% — of the 1.6 million employed directly in the industry. The rankings are based on the India headcount of firms with IT-ITeS operations in India, as reported to Nasscom in its annual survey. Other companies to figure in the top ten, in the order they’re ranked, are HCL Technologies, Cognizant, Satyam, HP, Genpact, Oracle and Intelenet Global Services .
The IT-ITeS industry, the country’s largest employment generator in the organised sector, is projected to employ over 10 million people directly and indirectly by 2010, from over 7.5 million currently, according to Nasscom. The industry body has attributed the growth in employee base to factors like healthy growth environment, attractive remuneration, various employment opportunities based on varying skill sets, and availability of talent. “What we do need to work on is the quality factor to ensure we remain the highest employment generator and maintain our share of the global offshore IT and ITeS industry ,” said Nasscom president Kiran Karnik.
The top 20 companies collectively employ over 0.5 million people — or just over 31% — of the 1.6 million employed directly in the industry. The rankings are based on the India headcount of firms with IT-ITeS operations in India, as reported to Nasscom in its annual survey. Other companies to figure in the top ten, in the order they’re ranked, are HCL Technologies, Cognizant, Satyam, HP, Genpact, Oracle and Intelenet Global Services .
The IT-ITeS industry, the country’s largest employment generator in the organised sector, is projected to employ over 10 million people directly and indirectly by 2010, from over 7.5 million currently, according to Nasscom. The industry body has attributed the growth in employee base to factors like healthy growth environment, attractive remuneration, various employment opportunities based on varying skill sets, and availability of talent. “What we do need to work on is the quality factor to ensure we remain the highest employment generator and maintain our share of the global offshore IT and ITeS industry ,” said Nasscom president Kiran Karnik.
Mastek acquires US-based LLC (Vector) for $9 mn
IT solutions provider Mastek Ltd on Thursday announced the acquisition of US-based Vector Insurance Services LLC (Vector) for $9 million.
Vector is a technology solutions provider and third party administrator that focus on the North American life and annuity insurance industry, having two of America's largest insurance carriers as its customers.
The acquisition will be done by Mastek's wholly-owned US subsidiary MajescoMastek which will be acquiring a 90 per cent equity stake in Vector in an all-cash transaction for $4.5 million, as quoted by its Chairman and Managing Director, Sudhakar Ram.
"This is payable at closing and a similar amount payable over the next two years as earn-out based on business performance. The acquisition is being funded through internal accruals," Ram said.
This acquisition is revenue and earnings accretive to Mastek and is expected to strengthen the opportunity pipeline for the company in the insurance vertical.
Mastek will now be able to offer a more complete solution for insurance carriers including new business, underwriting and policy administration products by adding 'software as a service (SaaS) capabilities to its existing end-to-end enterprise software solution offerings.
The Vector operation is currently in the process of getting integrated with Mastek's existing operations, which should get implemented by August 2007.
The existing management team of Vector will continue to look after the business, led by its founder Harold Apple who has extensive insurance sector experience and will report to William McCarter, President of MajescoMastek.
Commenting on company's performance, Ram said "we are targeting a 35 per cent growth in dollar terms in FY08. We believe this level will be sustainable going forward."
Mastek is looking at adding three more verticals, which includes healthcare in the near future.
On the company's expansion plans, Ram said that Mastek has taken up expansion plans by adding 1,500 seating capacity at its Mhape unit. It is also planning to set up a 5,000 seating capacity unit near Chennai.
The company's headcount will increase from the present 3,500 to 10,000 in the next 2-3-year period.
For the July-September 2007 quarter, Mastek expects its consolidated revenues to be in the range of Rs 205-210-crore.
Net profit after tax and minority interest is likely to be around Rs 25-26-crore.
For the full year ended June 30, 2007, the company posted revenue of Rs 812.7 crore as compared to Rs 701.1 crore last fiscal. The net profit stood at Rs 90.4 crore, translating into an EPS of Rs 31.8.
Vector is a technology solutions provider and third party administrator that focus on the North American life and annuity insurance industry, having two of America's largest insurance carriers as its customers.
The acquisition will be done by Mastek's wholly-owned US subsidiary MajescoMastek which will be acquiring a 90 per cent equity stake in Vector in an all-cash transaction for $4.5 million, as quoted by its Chairman and Managing Director, Sudhakar Ram.
"This is payable at closing and a similar amount payable over the next two years as earn-out based on business performance. The acquisition is being funded through internal accruals," Ram said.
This acquisition is revenue and earnings accretive to Mastek and is expected to strengthen the opportunity pipeline for the company in the insurance vertical.
Mastek will now be able to offer a more complete solution for insurance carriers including new business, underwriting and policy administration products by adding 'software as a service (SaaS) capabilities to its existing end-to-end enterprise software solution offerings.
The Vector operation is currently in the process of getting integrated with Mastek's existing operations, which should get implemented by August 2007.
The existing management team of Vector will continue to look after the business, led by its founder Harold Apple who has extensive insurance sector experience and will report to William McCarter, President of MajescoMastek.
Commenting on company's performance, Ram said "we are targeting a 35 per cent growth in dollar terms in FY08. We believe this level will be sustainable going forward."
Mastek is looking at adding three more verticals, which includes healthcare in the near future.
On the company's expansion plans, Ram said that Mastek has taken up expansion plans by adding 1,500 seating capacity at its Mhape unit. It is also planning to set up a 5,000 seating capacity unit near Chennai.
The company's headcount will increase from the present 3,500 to 10,000 in the next 2-3-year period.
For the July-September 2007 quarter, Mastek expects its consolidated revenues to be in the range of Rs 205-210-crore.
Net profit after tax and minority interest is likely to be around Rs 25-26-crore.
For the full year ended June 30, 2007, the company posted revenue of Rs 812.7 crore as compared to Rs 701.1 crore last fiscal. The net profit stood at Rs 90.4 crore, translating into an EPS of Rs 31.8.
China eyes India's slot as top outsourcing hub
India, which has emerged as the back-office of the world in recent years, is expected to face stiff competition from countries like China, Malaysia and Singapore even as the global outsourcing industry is pegged to reach a market size of $1,430 billion by 2009-end.
A survey conducted by global consultancy firm Frost and Sullivan has ranked India as the top destination for shared services and outsourcing (SSO) across various verticals. The country is followed by China, Ireland, Singapore, Malaysia, Mexico, Czech Republic, Poland, the Philippines and Canada.
Low labour costs and abundant supply of skilled manpower are the key factors behind India's sustenance as the top outsourcing destination globally. Outsourcing sector in India is experiencing consolidation and SSO providers are moving up the value chain, expanding their onshore presence to strengthen global delivery capabilities, the report said.
But there is a threat from countries like China which is fast emerging as an attractive destination for outsourcing IT, research and development and procurement services, it added.
India's growth is beleaguered by factors like high attrition rates, poor infrastructure, rising wages and appreciation of rupee against US dollar, the report said.
"SSO is no longer just about cost arbitrage, instead SSO operators are adding value through their skill sets and competencies wherever they are located," Frost & Sullivan Vice-President Asia-Pacific (ICT Practice) Nitin Bhat said.
The study also forecasts the global SSO market will grow at a compound annual rate of 15 per cent to reach a market size of 1,430 billion dollars by end-2009.
Malaysia, which boasts of excellent infrastructure and low attrition rates, also makes for an ideal outsourcing hub, the Frost and Sullivan study said. The south-east nation is already a strong player in banking, financial services and insurance (BFSI), transportation and energy verticals.
Besides, companies such as Dell, Satyam and IBM have recently made outsourcing investments in Malaysia, making it a hub catering to the technology sector, it pointed out.
The study covered Fortune 500 and Forbes 2000 companies and was conducted across seven major industry verticals -- banking, financial services and insurance, technology/ICT, healthcare industry, transportation and logistics, energy, fast-moving consumer goods and media and entertainment.
A report by audit firm PricewaterhouseCoopers (PWC) has also said although India remains the most favoured destination for outsourcing, countries like Singapore were gaining favour.
A number of financial services companies, including Barclays and Credit Suisse have expanded their support operations with the Monetary Authority of Singapore actively promoting the country as a financial centre.
"Service providers are gaining domain specific capabilities to move-up the value chain. This trend is expected to boost further consequence to decreasing cost arbitrage, increased competition, and the relentless search for value," Bhat said.
A survey conducted by global consultancy firm Frost and Sullivan has ranked India as the top destination for shared services and outsourcing (SSO) across various verticals. The country is followed by China, Ireland, Singapore, Malaysia, Mexico, Czech Republic, Poland, the Philippines and Canada.
Low labour costs and abundant supply of skilled manpower are the key factors behind India's sustenance as the top outsourcing destination globally. Outsourcing sector in India is experiencing consolidation and SSO providers are moving up the value chain, expanding their onshore presence to strengthen global delivery capabilities, the report said.
But there is a threat from countries like China which is fast emerging as an attractive destination for outsourcing IT, research and development and procurement services, it added.
India's growth is beleaguered by factors like high attrition rates, poor infrastructure, rising wages and appreciation of rupee against US dollar, the report said.
"SSO is no longer just about cost arbitrage, instead SSO operators are adding value through their skill sets and competencies wherever they are located," Frost & Sullivan Vice-President Asia-Pacific (ICT Practice) Nitin Bhat said.
The study also forecasts the global SSO market will grow at a compound annual rate of 15 per cent to reach a market size of 1,430 billion dollars by end-2009.
Malaysia, which boasts of excellent infrastructure and low attrition rates, also makes for an ideal outsourcing hub, the Frost and Sullivan study said. The south-east nation is already a strong player in banking, financial services and insurance (BFSI), transportation and energy verticals.
Besides, companies such as Dell, Satyam and IBM have recently made outsourcing investments in Malaysia, making it a hub catering to the technology sector, it pointed out.
The study covered Fortune 500 and Forbes 2000 companies and was conducted across seven major industry verticals -- banking, financial services and insurance, technology/ICT, healthcare industry, transportation and logistics, energy, fast-moving consumer goods and media and entertainment.
A report by audit firm PricewaterhouseCoopers (PWC) has also said although India remains the most favoured destination for outsourcing, countries like Singapore were gaining favour.
A number of financial services companies, including Barclays and Credit Suisse have expanded their support operations with the Monetary Authority of Singapore actively promoting the country as a financial centre.
"Service providers are gaining domain specific capabilities to move-up the value chain. This trend is expected to boost further consequence to decreasing cost arbitrage, increased competition, and the relentless search for value," Bhat said.
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