Tuesday, September 29, 2009

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IT firms pull out all stops on staff training

Indian IT majors may have tightened their belts in various areas to contain costs as a fallout of the global economic slowdown. However, most of them see continuing value when it comes to employee training, even though it skims crores of rupees off their top-lines.

Top tier IT firms — including Tata Consultancy Services (TCS), Infosys Technologies, Wipro and HCL Technologies — have identified the need to train the brains they handpick annually from India’s top engineering colleges and technical institutes as a critical task, even as the industry is seeing a degree of upturn in client demand.

India’s largest IT services provider, TCS, for instance, spends 2 per cent of its revenue every year on training new entrants. Bangalore-headquartered Infosys recently announced the opening of a grand training facility at its Mysore campus. Infosys annually spends over Rs 800 crore on training alone. Wipro spends about 2 per cent of its net sales in providing training to employees.

While Infosys and TCS have, to a certain extent, tried to centralise their training resources, Wipro’s strategy has been of a federal nature to cater to local manpower requirements. Wipro has set up an archipelago of training centres in proximity to its competency centres all over India and overseas.

“Wipro believes in taking learning as close as possible to the learner. Hence, for fresh recruits, training is conducted at the development centres where the employee is to be placed. Training happens primarily at our Talent Transformation Centres in Bangalore, Hyderabad, Pune, Chennai, Kolkata and Kochi,” says Sreekala Ramamurthy, GM (talent transformation), Wipro Technologies. Overseas recruits, she says, are either provided training at the company’s global centres like the Atlanta Development Centre or “...recruits are flown down to our India offices”.

HCL, too, has decentralised its training infrastructure across the globe because its employees are no longer confined to a particular geography or location. According to Anand Pillai, senior V-P and global head (quality, talent transformation & intrapreneurship development), HCL Technologies: “Since learners are spread across the globe, the entire training department is also spread across the world. Our programmes are standardised to cater to global learning challenges and simultaneously manage different cultural nuances and local sensitivities.”

TCS provides an Initial Learning Programme (ILP) at the company’s corporate learning centre in Thiruvananthapuram. “We invest heavily in world-class training for our employees. ILP training is primarily conducted at our corporate learning centre at Thiruvananthapuram for Indian and non-Indian trainees. We replicate our fresher training programme at Guwahati, Bhubaneswar, Coimbatore and Baroda, as well as overseas, to bring scalability to our training model,” says Ajoy Mukherjee, V-P & head (global HR), TCS.

TCS’ new facility, the Peepul Park, is spread over 12 acres of newly acquired land in Technopark. The 3.5-lakh square feet Peepul Park is snazzily designed and also houses a Leadership Development Institute. The ILP Learning Block can accommodate 1,000 employees at a time, a hostel block accommodates 500 people, with a recreation centre and library thrown in. The facility has a capacity of 1,500 people.

The ILP is replicated in overseas geographies for new hires from countries like Australia, China, India, Hungary, Uruguay, the UK and the US. TCS also ensures that it hires people with diverse educational backgrounds and across geographies.

Infosys recently expanded the company’s global training centre, located at its 337-acre Mysore campus, by setting up another dedicated facility (GEC-II) for training. However, Infosys also maintains training infrastructure at all its development centres. The company recently extended the training duration for new recruits (freshers).

“We consider training as an investment in the future. Our investments to enhance our training capabilities are in keeping with future requirements,” justifies S Gopalakrishnan, CEO and MD, Infosys Technologies.

U.S. unveils multi-billion dollar opportunity for Indian IT

U.S. President Barrack Obama's incessant push for a better healthcare sector in U.S. will be the silver-lining for the staggered IT service sector in India, as it unveils a multi-biilion dollar opportunity. Obama has allocated $37 billion of stimulus funding to drive the adoption of EHRs and as per McKinsey estimates the resulting growth in EHRs will require an overall spend of $175 billion.

The EHR rollout will need the Indian IT firms' deep expertise in services such as systems integration, application management and legacy modernization, as the established software vendors lack the manpower to provide the services. Nearly, $50 billion of the spending will be devoted to IT services and training.

The second big opportunity for Indian firms lies in BPO. The reform will see an influx of over 30 million newly covered individuals; insurers will look to outsourcing partners to help them enroll new members and process their call and claim needs. The rising cost pressures will force insurers and hospitals to concentrate only on a few core functions (such as benefit and services design, sales and marketing). The rest of the back-office services like member database management, claims processing and support services - enrolment processing, will be outsourced.

The final opportunity hold big for the players in the data analytics market. These could range from comparative effectiveness research into different treatments or drug combinations to analysis of call, claims and clinical data for customer lifecycle needs and marketing. McKinsey estimates that the overall market for 'real world data' analytics could be worth over $10 billion.

BPO companies begin hiring again

After more than two quarters of no hiring, walk-in interviews for BPOs are back in the picture. Impacted by the global credit crunch, BPO firms had cut down the employees on the bench and frozen the hiring. Now, with the market witnessing positive signs of revival, walk-in interviews are back on the job sites and newspaper advertisements.

“Actions are back on track again and walk-in-interviews are happening as earlier. The downturn had impacted this segment, but it was not a major one,” Perry Madan, executive director, Elixir Web Solutions, told Financial Chronicle over the phone.

He said there has been a growth of around 15 per cent in the walk-in-interviews, which witnessed a negative growth during the downturn.

“Walk in interviews have started, but have not picked up as it was earlier before the downturn happened, as new projects are not coming from the US and Europe. Companies are now also looking at experienced people unlike earlier when even fresh pass-outs from colleges and schools were hired and given training,” Global Hunt director Sunil Goel said. He added that earlier it was a different game when people were just hired and given training for the processes. Karthik Shekhar, general secretary of union of ITeS professionals said that the there has been some hiring in BPO firms but the number of vacancies is relatively small compared to the mass hiring earlier. “Now we find hiring only for few experienced positions and the number of applicants is also huge. In certain cases, for 10-15 openings, there are more than 1,000 applicants,” Shekhar said.

However, there are few companies that have not been affected much and the walk-in-interviews are happening the same way as earlier. “During the downturn, the attrition rate reduced a bit as people stayed longer due to fear of losing jobs in newer companies. But, walk in interviews remained by and large similar, as we were not desperate for hiring more people,” Serco CEO Aditya Gupta said.

Hiring tools used for firing

With a dip in recruitments in the face of economic slowdown, skill assessment tools have now assumed a new and more ‘structured’ role — to help companies internally gauge the capabilities of an existing employee and decide whether he should be trained further, promoted or sacked.

Though the use of these tools for recruitment purposes has taken a back seat now, their demand for internal assessment tests has gone up, said Madan Padaki, CEO of MeriTrac Services. “The ball is now in the employer’s court. He has more choices as the availability of talent in the marketplace is more,” he said.

Skill assessment solution providers are witnessing a 20 to 25 per cent increase in demand from employers for assessing their workforce despite the fact that many of them have become leaner during the downturn, said R Kannan, CEO of Assess People.

“MertiTrac has been handling 90,000-125,000 assessments a month for the past two years. The firm has noticed a sharp rise in enquiries from IT/ITeS, BFSI and retail companies during the past six months. From around 10 enquiries in a quarter, a year ago, MeritTrac has received 25 enquiries for internal assessments each during the last two quarters,” said Padaki.

“Looking at the nature of questions framed for assessment tests, it is evident that at least 25 per cent of them were used to find non-performers, which could be used for downsizing purposes. This trend started only post-October last year,” said Padaki.

Almost 60 per cent of the demand is from IT and ITeS companies.

Organisations are focusing on three areas — effectiveness of training, a framework to determine employee retention and promotion and mapping their career path.
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TCS: We need more time

The new head of India's top outsourcing firm, Tata Consultancy Services Ltd, said that it would take another few months to tell whether business spending was recovering, as customers were still working on their IT budgets for 2010.

"We'll have to wait for the next three months. All the customers are going through their cycles now," N Chandrasekaran, who takes over as chief executive when S Ramadorai retires on October 5, said in an interview.

TCS, which provides consulting, system integration and call center management, competes with India's Infosys Technologies Ltd and Wipro Ltd as well as big global players such as IBM, Hewlett-Packard Co and Accenture which offer similar services to multinational corporate clients.

Ramadorai, in the same interview, said the company was seeing more stability but that a more substantial recovery would take time.

"When is there going to be growth? I think it's going to take a while," he said.

Despite the cautious outlook and a recently announced plan by Dell Inc to buy technology services company Perot Systems, Chandrasekaran said he did not see a need for TCS to consolidate through mergers and acquisitions.

"It's not a question of ... getting squeezed" by US companies beefing up their services offerings, Chandrasekaran, currently chief operating officer, said.

"There is a lot of room for organic growth. We're expanding our footprint, we're expanding our portfolio of services that we offer," he said. But he added that TCS would consider acquisitions that bolster the company's portfolio of services.

He also said the company plans to add 1,000 jobs in the United States in the next year to boost its presence in a market TCS sees recovering ahead of other regions like Europe. The company currently has around 13,000 workers in the US.

On sale: Wipro's France facility

Wipro Ltd, India’s third largest provider of software services, is seeking a buyer for its Sophia Antipolis centre, said Christophe Martinoli, country head for France at the company’s Wipro Technologies business.

“We have been always looking for buyers and we will continue to look favorably on any proposal that we may get from interested parties willing to continue part” or all of the center’s activities, Martinoli said in an email interview on Thursday.

The facility, one of the Bangalore-based company’s five offices in France, employs about 60 workers.

The company has told the French government that it will try to redeploy workers from the facility and assist them in seeking jobs outside the company, he said.
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Mahindra Satyam can now bid for govt deals

IT exporter Mahindra Satyam has been exempted from providing financial statements in bids for government projects enabling the company to participate in tenders called by government units, which have one of the highest IT spends in the domestic market. A majority of these tenders require the financial statements of the bidder to be provided as prerequisite.

Mahindra Satyam’s financials are in the process of being restated after its promoter and former chairman, Ramalinga Raju, confessed to falsifying the accounts in January this year. After the scam-hit company was taken over by Tech Mahindra, the board under the chairmanship of Kiran Karnik had sought an exemption from providing its financials, so it could be eligible to bid for government projects.

Satyam has so far lost out on a Railways contract estimated at Rs 100 crore, with the opportunity to more effectively participate in future contracts worth Rs 3,000 crore. It also lost out an enterprise resource planning implementation contract from BSNL for around Rs 250 crore to rival, HCL Infosystems.

“This directive, along with the Mahindra & Mahindra balance sheet, will help us participate in tenders by government departments and PSUs. The directive says the audited financials should not be a point of contention and we (Satyam) should be considered based on our technical proficiency,” a highly placed Mahindra Satyam official told ET.

However, the company is not likely to contest those bids that it has already lost out to rivals. “Earlier, we were not even being invited for bidding — now at least we will be able to participate in them. But there may be still some government contracts where we cannot participate if there are other criteria,” the official said.

The firm is currently participating in around 15-20 bids from public sector undertakings and government departments, said Sanjay Venkatraman, who heads the India business unit at Mahindra Satyam.

“These projects range from Rs 20 crore to Rs 100 crore and are in the areas of e-governance and citizen services,” Mr Venkataraman added.

The exemption from the ministry of corporate affairs is valid only till December this year and since the restatement of accounts are expected to take up to March, Mahindra Satyam is likely to apply for the exemption to be extended till that date. The company has created a separate division under its India business unit to focus on government projects.

Mahindra Satyam lost a Railways contract estimated at Rs 100 crore, with the opportunity to more effectively participate in future contracts worth Rs 3,000 cr.

It also lost out an enterprise resource planning implementation contract from BSNL for around Rs 250 crore to HCL Infosystems.

Mahindra Satyam is currently participating in around 15-20 bids from public sector undertakings and government departments.
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HCL to hire 2,000 software engineers to serve new customers

India’s fourth-largest software exporter HCL Technologies plans to hire 2,000 software engineers in the next three-four months to leverage new client base and existing operations across verticals, said a top company executive.

While 30% of the new hires would be freshers, the remaining 70% will comprise experienced professionals. This will take the company’s total workforce to more than 57,000 globally.

The software major struck various IT outsourcing services deal in the past few months, which has led to an increase in demand for workforce. Till last year, the company was high on campus hiring and took 15,000 freshers and professionals on rolls.

However, the firm intends to go slow on campus hiring this year owing to overall slowdown in demand for IT services world-wide.

“We are following just-in-time model of hiring. Unlike earlier when we used to give hiring guidance 18 months in advance, it will be a quarter or two in advance, as we are yet to have a clear visibility on where the industry is heading. Focus will be on lateral hiring for core IT processes across sectors,” said HCL Technologies global head (human resources) Dilip Kumar Srivastava.

He said the company has no plans to alter the compensation package of the freshers and that variable component of the salary will solely be performance based. Early this year, the company had put a freeze on employee salaries and resorted to bonus cutbacks, citing tight demand and declining volumes in the US and Europe as the rationale.

HCL has added a couple of new clients in the past few months. The firm bagged two IT outsourcing services contracts worth $110 million from Texas-based energy companies, Energy Future Holdings and Oncor.

To support the growing business, the company will also scale up headcount in Texas over the next few months.
The company currently serves clients in sectors, such as aerospace, defence, financial services, government, retail, lifesciences and telecom.

IBM part of failed UK security project

IBM was the main supplier in a failed project by British intelligence to upgrade its communications system so various organizations and agents in different locations could share information, a report said.

The Register, an online technology publication, said IBM's failure to meet deadlines, as well as security concerns, led the Cabinet Office to scrap the project last year after years of development and write off 24.4 million pounds ($39 million).

IBM declined to comment.

The report said IBM was the lead contractor in the second phase of the SCOPE project, which aimed to bolster collaboration among the branches of British intelligence including the MI5 Security Service, MI6 Secret Intelligence Service, the Government Communications Headquarters, and the Foreign Office.

The UK Intelligence and Security Committee said in its last annual report, presented to Parliament in March, that phase 2 of the SCOPE program had been delayed numerous times and had finally been abandoned.
Courtesy: indiatimes

Friday, September 25, 2009

GE deal to stay with Mahindra Satyam for 3 yrs

The US-based conglomerate General Electric (GE) has extended its multi-million dollar contract with Mahindra Satyam for three years starting January 1, 2010, giving a boost to the IT firm, which has started winning new outsourcing deals.

Mahindra Satyam, which also counts Citigroup, GlaxoSmithKline (GSK), Cisco Systems and Nissan, among its clients, is one of the top three vendors for GE. Its contract with GE has been for over a decade now in specialised areas of development, maintenance, business intelligence and engineering services.

Around 1,500 employees will work on the GE deal. “GE recognises the support extended over the years by Mahindra Satyam, and their commitment to delivery excellence, even during trying times,” said Steve Morrison, GDC leader of GE.

GE has signed a similar contract with 11 other vendors. “The extension is a testimony to the commitment our associates have demonstrated and truly symbolises the value we have been able to add through our services,” said Arvind Malhotra, global account executive of Mahindra Satyam.

Harit Shah, IT analyst Angel Broking, sees GE’s decision to extend the contract as a vote of confidence on the new management at Mahindra Satyam. Two months ago, global pharma major GSK extended its contract with Mahindra Satyam for five years to provide SAP and other critical systems support. Satyam had been working with GSK since 2002 in providing IT services.

The US-based OC Tanner — a human resource consulting and services company — followed suit. Last week, the firm renewed its contract with Mahindra Satyam to providing application development services to the US-based company.

Over the past four months, Mahindra Satyam, earlier known as Satyam Computers, is reported to have gained over 32 new customers, including some large clients. It has around 430 clients now.

Satyam was acquired by Pune-based IT services firm Tech Mahindra in April, after the firm’s defamed founder B Ramalinga Raju confessed to perpetrating India’s biggest corporate fraud. Customer confidence took a knock after Raju’s confession. The company is now attempting to regain contracts to turnaround, even as its accounts are in the process of being re-stated.

Shares of Mahindra Satyam fell 1.7% to close at Rs 116.70 on the Bombay Stock Exchange on Thursday.

Satyam to lift freeze on promotions, selectively

Mahindra Satyam is lifting the freeze on promotions, even though they will be on a selective basis. This follows similar moves made by IT majors Cognizant, Wipro and Infosys and is indicative of an improved environment, say analysts.

Mukund Menon, head of business HR worldwide, Mahindra Satyam, told Financial Chronicle that while no pay hikes are planned this year, there will be promotions for star performers.

The Hyderabad-based firm has also decided to reinstate the variable portion of salary and other benefits for associates across all levels, effective from October 2009.

Cognizant and Wipro were among the first to give promotions to selected personnel in FY10.

According to industry trackers, multinational firms such as Accenture and IBM have also given promotions and hikes to top performers.

Infosys and TCS are also comtemplating promotions and hikes this year. These firms had earlier said that they will not give any promotions and salary hikes in FY10 considering the present market environment.

Company officials suggest that the initiative by these firms is due to the improving business scenario. Some HR analysts, however, say that it’s not just a better demand scenario that is driving companies to give promotions and hikes. Kris Lakshmikanth, CEO of Head Hunters India, says that selective increments have primarily been at the project manager and above levels even while several companies have decreased their salary package offerings at fresher levels.
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US tech industry lost 115K jobs in H1

Seems Indian techies have been luckier than their counterparts in the US. According to a study by TechAmerica Foundation, US technology industry cut 115,000 jobs in the first half of 2009, compared to the 72,900 tech jobs added in the same period in 2008.

However, in the US too, the tech sector seems better than other industry verticals. While between June 2008 to June 2009, tech lost 224,100 jobs, a 3.7% decline; the US private sector shed jobs at a higher pace of 5.1%.

The Washington-based non-profit foundation also said that high-tech manufacturing in the US continues to shed jobs, having lost 69,500 from January to June 2009. The high-tech services sectors shed 45,500 jobs from January to June 2009, a 1% drop.

The report also said that for the first time in its 5-year history, all three services sectors saw losses: engineering and tech services lost 21,500 jobs, while communications services shed 13,600 jobs. In software services the job cuts stood at 10,400.
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TechM, IBM, TCS in race for $400-mn Sistema deal

Tech Mahindra, IBM and TCS are vying for a $400-million (Rs 1,800 crore) IT outsourcing contract from Sistema Shyam Teleservices (SSTL), said a person familiar with the matter.

Negotiations are on with these companies for a 10-year deal, but the contract will contain a clause that will allow Sistema Shyam to exit after five years, he said, requesting anonymity. Sistema — one of the largest public diversified corporations in Russia and the CIS — has a 74% stake in the JV with the Shyam Group that offers mobile services under the ‘MTS’ brand in India. Sistema Shyam is the only CDMA player, among the new crop of telecom operators.

“A final decision on the deal is expected to be taken by the year-end,” said Rajeev Batra, chief information officer of SSTL. He confirmed that these three IT companies were in the reckoning for the contract, but did not confirm the value of the contract.

The proposed deal will not include the operator’s BPO operations, as the telco has already outsourced its customer care operations to Essar Group’s Aegis BPO.

The winning company will manage SSTL’s IT systems across the 22 telecom circles in the country. SSTL, which is scheduled to launch telephony services in Delhi next month, plans to be a pan-India operator by the third quarter of next year. While a senior Tech Mahindra executive confirmed that the talks with SSTL were on, the TCS spokesperson declined to comment. But, TCS had earlier said it was aggressively chasing deals in telecom, financial services, life sciences and retail.

IT major IBM, too, did comment on being in the race for the SSTL contract. Early this year, SSTL had tied up with IBM for designing and building its green data centres in Chennai and Gurgaon.

SSTL executives said the company was exploring an operating expenditure model for this IT outsourcing contract. This model of outsourcing is considered more cost-efficient for companies since it allows the IT partner to take the telco’s IT assets on its books. While SSTL is yet to award its IT contract, most other new operators have already done so. Etisalat DB recently awarded the contract worth $400 million to Tech Mahindra, while Datacom’s IT infrastructure management has been awarded to IBM for about $200 million.

Unitech Wireless, in which Norway’s Telenor holds a controlling stake, has outsourced its IT infrastructure management to Wipro for about $500 million.

SSTL was among the nine new companies that were given licenses early past year to launch mobile services. So far, the company has launched CDMA-based services in six circles and has about two million customers in its network.

The country has seven pan-India mobile phone operators led by Bharti Airtel, Reliance Communications (RCOM) and Vodafone Essar. A string of new players like Datacom, Loop, S Tel, Unitech Wireless and Swan are also in the process of rolling out nationwide services.

The country has close to 450 million mobile subscribers and a telecom penetration of over 41%.

Thursday, September 24, 2009

Dell may retain Perot Systems staff

Dell India will look to retain almost all of Perot System’s employees and will not be in a hurry to sink the Perot Systems brand, thou gh the personal computer giant has entered into an agreement to acquire the latter, after searching for a services firm for years.

An official with Dell India told Financial Chronicle on condition of anonymity that Perot would remain a separate brand until such time that the acquisition was complete and the results start showing. Then it will be known as Dell’s services unit. It is not immediately clear as to how long that process will take, but indications are that it could be completed by January next year.

Officially, Dell India is not willing to share more details. “It’s too early for us to comment on what it means for the company in India,” said Dell India’s head of corporate communications, Minari Shah.

The official whom FC spoke to in Dell India said the company is on the lookout for more acquisitions in the services space. “A few of the Indian IT firms are on the radar,” the person said.

“Other big players namely IBM and HP had moved into other higher margin businesses such as services and software. There was pressure on Dell to get out of this pure hardware giant portfolio. As you know, the margins in the hardware business was getting tough to maintain,” the person added.

Dell has close to 12,000 people in India, spread across four segments, research & development, marketing, domestic sales and business process outsourcing. The company’s BPO centres are in four cities—Chandigarh, Hyderabad, Bangalore and Gurgaon.

Perot Systems has over 8,000 employees across six centres in India. The Bangalore, Noida and Pune centres cater to the application development and infrastructure services. Hyderabad, with around 80-100 people, offers engineering services. The company’s BPO operations are run from Chennai and Coimbatore and consists of over 4,000 people.

But it is not clear whether everyone of them would be retained when the integration gets completed. “It’s too early for us to say anything on that front,” said Minari Shah.

However, insiders felt that all Perots Systems employees will be retained. Rajiv Mehta, senior IT analyst with India Infoline, told FC that it remains to be seen what kind of advantage Dell will enjoy in India with this acquisition.

“Perot is a small firm. It employs only 8,000 people and that’s not a large scale operation,” he said. Dell’s vice-president (product marketing) Sally Stevens told Financial Chronicle that Dell is fashioning itself into a solutions provider from an end-to-end standpoint. “We have been able to help our customers save a lot of money during the downturn with our product offerings,” she said.

Dell’s global commercial customer base spans large corporations, government agencies, healthcare pro viders, educational institutions and small and medium enterprises.

Expect pay hikes and promotions, Infosys tells employees

Infosys Technologies has told its over one lakh employees that they can expect pay hikes and promotions by October, joining India’s top tech companies in lifting wage freezes and signalling rising optimism for the software industry’s growth prospects.

India’s second-largest software exporter has kicked off a performance appraisal process right in the middle of the festival season, saying in an email last week to staff that hikes and promotions will be effective next month.

“Yes, we are giving hikes this October. It will happen across the board,” Infosys group HR head Nandita Gurjar told ET NOW over phone from Poland on Tuesday. She did not say what the extent of the salary increase would be.
India’s largest Software company TCS, third-ranked Wipro, as well as Cognizant and HCL, have already announced a return to salary hikes and their ranks have been joined by smaller rivals such as MphasiS-EDS, Sonata Software and Symphony Services.

Som Mittal, president of software industry grouping Nasscom, said IT services providers have been winning large deals in recent months and investments in new markets are beginning to pay off, driving the revival.“The downturn has been severe but the industry has worked to see that the impact is minimal. They have done well in the first quarter. This is a people-led industry, so lot of companies are selectively rewarding employees who have worked hard,” he observed.

Infosys’ Ms Gurjar said the company decided to skip the promotion cycle in April this year as employee utilisation and billing rates were low. But a sharp rise in utilisation rates since made it decide to reward staff.

While improved demand and natural attrition have pushed up the utilisation rate at Infosys, operating margins are also seen well ahead of its target of 30%. Infosys’ wage bill is estimated at 45-46% of sales, and the company has projected that FY10 revenue will grow by 3.1-4.6% to $4.45-4.52 billion.

Nasscom has projected that the $60-billion IT services industry, which employs about 2.5 million, will grow by just 4-7% this fiscal, hit hard by a recession in its main market, the US.

“The downturn is bottoming out, and we will do a review of the growth target in December. But this 4-7% target also factors in selective promotions and hikes,” Mr Mittal said.

In a normal year, employees in tech firms get pay hikes of 5-15%, but this time companies such as Wipro are being selective about who gets rewarded and restricting pay-raises to only the best performers. MphasiS and Sonata Software, on the other hand, are linking pay hikes to the companies’ performance.
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Wipro, TCS bag major IT services contracts

Two of India's IT bellweather companies Tata Consultancy Services and Wipro bagged contracts from major agencies. Wipro Ltd, India's No. 3 outsourcing company, said on Wednesday it had won a three-year IT services contract from Aquarion Water Company, one of the largest water utilities in the United States.

Tata Consultancy Services (TCS) on the other hand has won India's largest state-wide area network (SWAN) project from the Andhra Pradesh government.

Financial details of the Wipro deal were not disclosed. TCS' five-year project is based on a build, own, operate and transfer (BOOT) model. "This is the fourth SWAN project TCS has bagged in a row," said a company statement here Wednesday.

It is now implementing SWAN projects in Chhattisgarh, Tamil Nadu, and Bihar.

The proposed SWAN project will enable the state government to start and run various e-governance projects and citizen services. The project would be rolled out in 12 months and TCS will then maintain it for five years.

"We are happy to partner with TCS for this project. This is yet another initiative of the state government to take a wide array of services to the common man," said Sameer Sharma, secretary and chairman of Andhra Pradesh Technology Services.

The project envisages connecting state headquarters with 1,088 sub-divisions and 23 district headquarters.

Once the project is commissioned, the network will enable the state to have video-conferencing facility across government offices and enable them to communicate and conference with each other over VoIP (voice over IP) phones, which will reduce the government's phone bills considerably.

Various e-governance applications like RTO, healthcare, education, municipality would also ride on this network backbone, said Sanjay Kumar, managing director of Andhra Pradesh Technology Services.

Wipro wins 3-yr contract from US utility

Wipro Ltd, India's No. 3 outsourcing company, said on Wednesday it had won a three-year IT services contract from Aquarion Water Company, one of the largest water utilities in the United States. Financial details of the deal were not disclosed.

TCS bags Rs 140 cr AP network project

Tata Consultancy Services on Wednesday said it has been awarded a state-wide area network (SWAN) project from the Andhra Pradesh government, which targets to connect the state’s headquarters with all 23 district offices in the state to increase efficiency in government functioning.

Andhra Pradesh IT secretary Sameer Sharma said the size of the deal would be about Rs 140 crore. This is the largest such contract in the country and will be based on the build-own-operate-transfer (BOOT) model, that is typically used in infrastructure projects for five years, TCS said in a statement.

Sun losing $100 mn a month: Oracle

Oracle Corp Chief Executive Larry Ellison said Sun Microsystems Inc is losing about $100 million a month as European regulators delay approving his company's $7 billion purchase of the struggling hardware maker.

Ellison also said it would not be necessary for Oracle to divest Sun's MySQL database software business to satisfy European regulators who have expressed concerns about his company's ownership of the unit.

"We're not going to spin it off," Ellison said in response to a question during a dinner at one of Silicon Valley's most prominent speaker's forums, the Churchill Club.

Ellison, the world's fourth-richest man according to Forbes, expects the deal will eventually be cleared by European regulators as it was in the United States, without any conditions.

The European Commission is conducting an in-depth probe into whether the competition would be stifled by the combination of Oracle's database, the world's top seller, and Sun's MySQL database, which is widely used to run popular websites.

"The longer this takes, the more money Sun is going to lose," Ellison said during the one-hour-plus on-stage interview conducted by Ed Zander, the former CEO of Motorola Corp and a former Sun executive.

TCS bullish on government deals worth Rs 3000 crore

Tata Consultancy Services (TCS) is looking at Rs 3,000-crore government projects to help it double its revenues from the domestic market in three years.

The country’s largest IT services company is chasing 24 projects related to technology implementation in railways, defence, power and several state governments. The company hopes to bag a large number of these projects in the coming 12-18 months and double the share of its domestic business to 10% in three years. “We expect to increase domestic revenues to double digits by 2012,” said Tanmoy Chakrabarty, vice-president and head of global government industry group at TCS.

The increased activity in the domestic market - particularly from underpenetrated government departments and ministries - will help the portfolio of the export-focused domestic IT services firms as the global slowdown has seen their growth tapering off.

“Prior to elections, decisions were on hold. But now with the new government settling down, we expect quite a few large projects to be announced in the domestic market in 12-18 months,” said George Paul, executive vice-president for marketing at HCL Infosystems. HCL is also pursuing technology projects related to power, telecom and computerisation of municipal corporations in several states.

Infosys Technologies, the country’s second-largest IT services company, is similarly pursuing opportunities in the domestic market. The Bangalore-based company’s nascent India business unit has bid for defence, telecom, railways and some power projects. The company was unavailable for comments as it is observing a mandatory silent period before announcing its financial results for the second quarter.

In a recent interaction with ET, Infosys’ India business unit head Binod HR had said, “Given that the government is technically underpenetrated, there are a large opportunities to tap. We will be pursuing them.” The company had recently bagged a 10-year e-business project from the ministry of commerce.

Small to mid-sized companies such as Mumbai-based Spanco that has bagged projects in Maharashtra and Orissa see opportunity in the domestic market. “We are chasing businesses like modernising public distribution system, border check posts and developing e-districts,” said Kaustubh Dhavse, head of business strategy at Spanco.

As government departments increasingly take the hi-tech path, there will be plenty of business for locally-focused IT players.

Wipro looks to sell French unit as employee protests mount

Wipro plans to explore options to sell its development centre at Sophia Antipolis, France, because of extensive employee protests against shutting it down.

The issue had snowballed into a major controversy with the involvement of the local French government officials. Wipro had initiated talks to close down the centre that it acquired from Newlogic because of poor demand. The centre employs around 60 people.

“As part of the ongoing process, we will continue to look favourably on any proposal that we may get from interested parties willing to continue part of totality of the activities in the Sophia Antipolis centre,” Pramod Idiculla, general manager (strategy), Wipro Technologies, told ET. The Indian IT firm acquired privately-held Newlogic in 2005 for around $56 million.

A cross-section of consultants ET spoke to said Wipro may find it hard to sell the facility in this environment. “I am not sure, if the Newlogic unit will find any buyers. A safer bet would be to wait for the demand to improve and then take a call,” said a semiconductor design consultant based in Germany.

“These 60-odd engineers may be few in numbers, but any move to sack them will create a public unrest in this region, there’s already pressure on EU countries to ensure that jobs do not go outside the region,” he added.

Wipro tops R&D chart with $800 m revenue

Wipro Technologies leads the Indian IT research & development (R&D) services revenue chart with a revenue of $800 million, a management survey said on Wednesday.

TCS, with revenues of around $700 million, closely follows Wipro, with HCL next in line with $523 million. Infosys, according to the survey, is way down with revenues of under $100 million from R&D services.

Zinnov Management Consulting, which carried out the survey, said mid-market companies such as Aricent, MindTree, Symphony Services, Global Logic and Sonata Software, which generate over $150 million from R&D services, will soon rise to the forefront. The total R&D services market in India is worth $3.5 billion.

Wipro Technologies joint CEO Girish Paranjpe told Financial Chronicle that R&D is in the company’s DNA. “We were the early birds in offering R&D services outsourcing. As a company, we pride ourselves in being the best in this space,” he said.

Paranjpe said the R&D wave started with hi-technology, moving on to telecom, and now it is flowing into aerospace and healthcare. “I am hoping that Wipro will be able to raise over $1 billion from the R&D space in a couple of years,” he added.

Karthik Ananth, engagement manager, Zinnov said, “Even though the growth of R&D service providers in India has been relatively flat over the past year, many of them have seen an improvement in their operation margins because of conscious efforts to optimise the cost of operations. Margins have improved by 6-8 per cent.”

He said a company such as Infosys has traditionally lagged in the R&D services space. “That’s not surprising. They have not been focusing on it,” said Ananth.

The survey said the impact of recession on R&D service providers has been felt across four key levers —contract re-negotiation, increase in sales cycle, bankruptcy of clients and fears of business continuity risk.

Infosys bags award for IT services

Infosys Technologies was named for 2008 'Partner in Progress' award from Sears Holdings Corporation. In a press release here today the company said Infosys received the award for superior Information Technology services and outstanding client support.

The award is presented annually to a select group of supplier companies that provide quality products and services, apparel, appliances and tools to marketing, facilities design and technology.

Less than one per cent of 'Sears Holdings' over 30,000 suppliers get coveted award each year. Sandeep Dadlani, Vice President and Head of client services for retail, consumer packaged goods and logistics, Infosys, said ''We are honoured that Sears had chosen us as a winner of the coveted award for the third year in a row. We are privileged to be part of Sears commitment to improving its own customers' experience''.

The Partners in Progress programme recognises suppliers for product or service quality, innovation, diversity and overall market performance.
The winners were selected from nominations submitted by Sears Associates, who purchased goods and services for the company in 2008.
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Wipro expands UK centre

Wipro Technologies, the global IT services business of Wipro Limited, announced the expansion of its facility in Reading and opening of a new office in London.

The center at Reading was inaugurated by The Right Worshipful the Mayor of Reading. This center is an extension of the existing development center facility. This facility will be used for building centers of excellence, delivering customer projects and training purposes.

Speaking on this occasion the Mayor of Reading, Councilor Fred Pugh, said, “It is very encouraging that an international company is ready to invest in Reading in these difficult times. Wipro is a major employer in Reading and a major player in the business community the Council is pledged to support.”

Continuing its business expansion in the UK, Wipro is also inaugurating its new office premises in London. This office would be the headquarters for Wipro’s UK operations. The facility will serve as a sales office with state-of the art infrastructure.

Laxman Badiga, Chief Information Officer, Wipro Technologies said, “Taking on the ownership of the facility at Reading is the first of its kind for Wipro overseas and hence makes this occasion special. The Reading center started with just one floor and had a little over 30 employees when we began. The expansion in Reading and opening of the new office in London has only reinforced our commitment to the region.”

Ayan Mukerji, Head of Europe Operations, Wipro Technologies said, “Today, Wipro has grown to become a leading IT Services company in the UK. Both the centers at Reading and London will be a key hub for recruiting, training of local staff and also gives an opportunity to offer an onsite development center premises to more customers.”

Revenues from Wipro’s European operations account for approx 26% of the IT major’s overall IT Services revenue. UK is one of the key markets for Wipro with a large customer base. The establishment of the new offices will now facilitate Wipro’s growth strategy in the UK and the overall growth in the European region.

Tuesday, September 22, 2009


MindTree to slash trainees' salary, campus hiring

MindTree, an international information technology (IT) company is planning to take similar steps like TCS and other IT giants by slashing the salary of trainees and campus hiring to stabilize the company's performance.

On the current trends, S Janakiraman, President, Group CEO - Product Engineering Services, MindTree said, "Revising salary is the need of the hour. This will bring a change in mindset of employees, and variable pay should not be linked only to the company's revenue, but also on productivity of the employee. We have already revised the variables in the R&D division, and this segment has shown great recovery in the last few months."

The company, which offered jobs to 750-780 students in 2008-09 fiscal, is planning to decrease the number in the next year. Janakiraman said, "To maintain our strong relationship with some prominent colleges, we will keep hiring from the campus, but seeing the affect of slowdown, we are planning to hire lesser number of engineers next year."

As the economy has started recovering, all the companies have started looking beyond the boundary. On the similar note, MindTree is planning to open a bridge office in China by the end of 3rd quarter (December 2009) of the current fiscal. Janakiraman said, "We are in the process of registering the subsidiary shortly. The engineers to China centre will be outsourced from India as there is a language barrier for local hiring. The subsidiary will act as a bridge for Chinese customers and global giants who have presence in China." Currently, the company has only one customer 'Widget' in China.

In the quarter ended June 30, 2009, the company's total revenues were at $62.1 million, indicating an increase of 36.3 percent Year over Year (YoY). The profit after tax (PAT) was $11.56 million with an increase of 554.6 percent YoY. However, Quarter over Quarter (QoQ), revenues declined by 9.8 percent in rupee terms.

Indian IT firms see demand for high-value apps

Indian IT firms are experiencing more demand for building high-value applications from customers for upgrading or maintaining their business software, reports the Livemint.

Enterprise resource planning (ERP) is a high-margin segment that includes consulting as a key component and commands at least 40 percent higher billing rates than development and maintenance services. This software is typically sold and maintained by firms like SAP AG and Oracle. Indian firms began acquiring ERP capabilities in the recent years to enter the league of companies such as International Business Machines (IBM) and Accenture.

For example, Infosys Technologies and HCL, India's second and fifth largest software firms, fought a bid last year to buy British ERP implementation and consulting firm Axon Group.

This impulse came during the slowdown, when firms in the U.S. and Europe, the biggest markets for Indian IT firms, reduced technology budgets and spent minimum on the projects for maintaining existing IT infrastructure to keep their businesses running.

With the market showing signs of revival, firms such as British oil explorer BP and power equipment maker ABB Group have started to upgrade their business applications but prefer outsourcing the work to firms in low-cost countries such as India.

"Clients are becoming more open to discretionary IT spending, especially in areas such as enterprise resource planning, in which deep spending cuts have already happened," said Harmendra Gandhi and Pinku Pappan, Analysts, Nomura Financial Advisory and Securities.

By discretionary spending, the analysts are referring to the money that customers keep aside to spend over their planned IT budget.

"Customers are also talking about some transformation of deals, apart from offshoring support and maintenance work. Thus, the propensity to spend out of the 2009 Budget is much more now compared with that a quarter ago," said Gandhi and Pappan.

The shift to Indian firms was also motivated by price increases at their regular vendors. Germany's SAP raised its annual support costs to 22 percent last year of the license fee from 17 percent earlier, describing this would bring down the total cost of ownership of the license for the customers.

"Firms had not factored in a hike in maintenance fee during the recession and are exploring outsourcing to Indian vendors, who can maintain at half the cost, but with the risk of losing support on upgrades from the vendor," said Asheesh Raina, Principal Research Analyst, Gartner.

Firms such as Wipro, HCL, Cognizant and even smaller companies such as Defiance Technologies, the IT services unit of the Hinduja Group, say customers want to improve efficiency and integrate their business software with their core processes, not just to cut costs. It does helps that Indian ERP firms are cheaper by at least a third than Accenture or IBM.

"Saving costs and capital continues to be the most important thing clients are discussing," said Sangita Singh, Head, Enterprise Application Services (EAS), Wipro. The company had one third of 26 customers added in Q1 belonging to the segment.

"You don't have many companies spending $100-200 million on new licenses. It may be in the range of $50-70 million. The implementation business is three to four times on licenses," said Singh.

HCL earns nearly a quarter of its overall revenue from business software projects. EAS projects accounted for 23.6 percent of its fourth quarter revenue of Rs.2,908 crore, up from 10.8 percent a year ago.

US Jobless rate tops 12% in 5 states

Five states posted jobless rates above 12% in August, according to federal data released Friday. California, Nevada and Rhode Island each hit record-high rates, the Labor Department said.

-Michigan: 15.2%
-Nevada: 13.2%
-Rhode Island: 12.8%
-California: 12.2%
-Oregon: 12.2%
Source: CNNMoney

Michigan led the nation in unemployment, with a rate of 15.2%, while Nevada was next at 13.2% and Rhode Island was third at 12.8%. California and Oregon were tied for the fourth spot, each with unemployment at 12.2%.

"The losses tend to be heavy in states that have a high concentration of manufacturing jobs or were hit hard by the housing bust," said Mark Vitner, economist at Wachovia.

In August, 27 states and the District of Columbia recorded month-over-month unemployment rate increases, while 16 states posted a decrease in unemployment and seven saw rates hold steady.

The total number of nonfarm jobs fell in 42 states and the District of Columbia, while 8 states saw an increase.

The state-by-state unemployment report for August came after the government reported earlier this month that American employers cut 216,000 jobs in August, sending the nationwide unemployment rate to 9.7% from 9.4% in July.

Hexaware recalls 90% of benched employees

Hexaware Technologies has recalled 90 per cent of its benched employees for active work as it gears up for a revival in the information technology (IT) space. The move follows a ramp-up in business from the company’s existing customers.

“Over the past couple of months, we have seen renewed interest from our present customers in various sectors. Hence, we decided to get our people off the bench,” said Moorthi Chokkanathan, executive vice-president & global head - enterprise solutions.

Hexaware, a mid-cap IT and business process outsourcing services and consulting firm, had announced the formation of a ‘virtual bench’ of 350 employees in March this year, to control costs and raise utilisation rates. The remaining 10 per cent of employees, who are still on the bench, are being put through what Chok kanathan calls a ‘cross-tra in ing programme’. Through the programme, the company is working on enhancing the skill sets of the employees in order to make them fit for various job needs.

“Moreover, we are hiring at an average of 50 to 60 new people every month to keep up with our manpower requirements,” Chokkana than claimed. The company said it is also inducting 115 fresh employees, which it has recruited from various college campuses.

Hexaware, which has a strong presence in the enterprise resource planning (ERP) segment, is planning to unveil its ERP shared services support, a new 24x7 service offering, this week. The new service would help its clients bring down their IT management costs by 20-30 per cent, the company claims.

“Over the past year or so, we have realised that several companies are looking for more while wanting to pay less, due to the depressed market conditions. This ser vice is a response to those clients’ needs,” Chokkanathan said.

IT 2008-09: Salary hikes & attrition

The average IT sector attrition rate, which was 18 per cent last year has dropped to 15 per cent, according to a survey by IDC, a premier global provider of market intelligence, advisory services, and Dataquest.

Despite the marginal increase in salaries, a freeze on fresh induction, layoffs, cutting down on talent and keeping offer letters on hold, the industry saw a dip in attrition rate to 15 per cent.

The average retention rate, defined as percentage of employees retained out of the total employees as on March 31, 2008, improved to 85 per cent, from 79 per cent in 2008, the survey stated.

The survey results indicate a visible improvement in work environment even though the average salary increases during the year were pared to 1.4 per cent.

The salary increases for employees with less than two years of experience earned 2 per cent increase. Those between 5.1 and 10 years received an average salary hike of 5 per cent and those with over 10 year experience earned four per cent salary increase.

In addition to work-life balance, job security came out as a crucial factor in the survey. The study reveals that there is a drastic fall in the number of people who feel that their job is secure within their company.

The reducing bench and mass layoffs by the larger players seems to have left an impact on the minds of people.

A majority of IT employees said they changed jobs for better salaries and compensation (53 per cent), overseas postings (38 per cent), better job security (18 per cent), flexible working hours (18 per cent) and training and development (9 per cent).

The survey also reveals that companies have become more transparent in their communication with employees giving them a sense of belonging. They have also gone ahead and adopted a higher degree of professionalism in their dealings with employees as well as customers or suppliers.

Another key finding is that more employees are satisfied with the interest shown by their companies as well as their immediate seniors in helping them strike a work-life balance compared to last year.

More employees believe that training has helped them in their all round growth. On the salary and compensation front, a surprisingly high number of employees feel that they are being paid at par with industry standards compared to last year.

India to lead 2nd wave of IT adoption: IBM

India may lead the second wave of IT (information technology) adoption as companies here kept up investments despite the recession and seemed more forward-looking than their counterparts globally, according to IBM Corp.

Forty per cent of Indian companies, surveyed by IBM in July, said they wanted to be first to adopt a new technology, while only 11 per cent said they would wait till technology was widely available.

"In India, companies have cut back less and have really continued their investments. I think India is poised to lead the second wave of IT adoption and small-and-medium businesses (SMBs) are the engines driving this economic growth," IBM Corp's Vice President General Business and Marketing said.

"I know of many companies that suffered from the recession but Indian companies have continued and survived...because they seem to be more forward-looking than their counterparts in the West and round the world," Channa said.

The recession had forced 37 per cent companies world-wide to slash their IT budgets compared to only 15 per cent in India, the survey said.

The US-based multinational has identified India as one of its major growth markets and will continue to invest here along with Brazil, China and Russia.

"We embarked on a geographical expansion in India and opened 13 new offices in Tier II cities. We will continue to invest here and in other growth markets, mainly BRIC countries," IBM India/South Asia Director Ramesh Narasimhan said.

IBM intends to cash in on the business coming from SMBs, which represent more than 90 per cent of all businesses and employ over 90 per cent of the world's workforce, producing more patents than large firms.

IBM's General Business unit accounts for about 20 per cent of the company's total revenue world-wide and is one of the fastest growing units for IBM India.

"The SMB market is, and will remain, a key focus for IBM India. Mid-size business is important to IBM as 75 per cent of the worlds GDP comes from SMBs," Channa said.

Today, companies are under pressure to act quickly in response to economic uncertainty and maximise returns on their investments while improving service to customers, at lower risk and reduced budgets, he added.

"We are reducing cost, improving service delivery and enabling business innovation for SMBs. IBM will continue to invest in the mid-market," Channa said.

Dell buys Perot Systems for $3.9 bn

Dell Inc said Monday it has agreed to buy the information technology services company Perot Systems Corp for about $3.9 billion as it looks to expand beyond the personal computer business.

Round Rock, Texas-based Dell said it will offer $30 per share in cash for Perot, which is based in Plano, Texas. This represents a 68 percent premium over Perot's closing share price Friday, and Perot shares shot up 66 percent in premarket trading Monday.

Adding options and restricted stock to Perot's 121 million outstanding common shares, Dell said the deal is worth $3.9 billion.

Dell said Perot, founded by former presidential candidate Ross Perot, will expand the company's IT services offerings for businesses and widen the pool of potential customers for its computers.

It expects to close the deal in the November-January quarter. Analysts have been expecting an acquisition from Dell, which hired IBM Corp's former mergers and acquisitions chief earlier this year and has raised almost $1 billion in debt since March.

The company's shares fell 79 cents, or 4.7 percent, to $15.90 in premarket trading, while Perot's stock shot up $11.79, or 66 percent, to $29.70.

Polaris plans expansion in Europe

India's financial technology firm Polaris Software Lab is planning to expand its footprint in the European markets beyond continental Europe and Sweden could be the base to cater to the large untapped region.

"We are interested in expanding our European market base and we see Sweden as a potential hub to cater to the northern, central and eastern Europe," Polaris EMEA Chief Operating Officer Chander Singh said.

Polaris is considering joint venture alliances with local service providers, system integrators and others to be able to serve large customers in Sweden and other Baltic and Nordic countries.

"In the next three years, revenue from Sweden and nearby Baltic countries and other Nordic nations should increase four-fold to be in the range of USD 10 million to USD 15 million," Singh said.

The company, which earned USD 300 million revenue last fiscal, gets 85 per cent of its revenue from the banking, financial services and insurance (BFSI) vertical.

Polaris earns one-third of its revenue from the Europe- Middle-East-Africa (EMEA) region and expects to add up to 20 per cent of its revenue from Europe through the expansion planned.

Friday, September 18, 2009

IT competitiveness: US is No.1, India at 44

India and China by virtue of their large pool of skilled IT employees enjoy a significant advantage among emerging markets but lack of IT infrastructure remains a dampener, blunting their competitive edge, a report by Economic Intelligence research said.

Economic Intelligence Unit (EIU) is the research arm of London-based publication, Economist. The report, 'Resilience amid Turmoil: Benchmarking IT Industry Competitiveness 2009', ranks India at the 44th position in the IT Industry Competitive Index 2009, four positions higher than its 2008 ranking.

Overall, 66 countries feature in the index. "In emerging markets, large pools of IT skilled employees remain a significant advantage for China, India Russia and other countries, but uneven progress in other areas such as IT infrastructure, remains a drag on their IT competitiveness," the report said.

However, despite accusations against the Obama regime of being 'protectionist', the US retains the top ranking, followed by Finland, Sweden, Canada, the Netherlands and the Broadband networks are becoming increasingly essential to IT firms' competitiveness, the report said, adding the slow march of the technology (broadband) in emerging markets including those with large IT sectors such as India, Russia and Brazil , could impede their IT firms' growth.

Forecasting a fierce competition to acquire best talent once the recession blues fade away, the EIU research calls for coordinated efforts among governments, universities and IT firms to improve the quality of technology, training and expand the pools of potential hires in Asia.

Investment in skills development remains a long-term imperative, the report said, adding, "In Asia, IT training would benefit from greater investment in business studies and language skills," it said.

"The Intellectual Property (IP) regimes are improving in many emerging markets but more progress is needed. As innovation becomes more important than low-cost labour to IT firms in China and India, IP enforcement is expected to improve in these countries as well," the report observed.
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Infosys, Wipro and HCL in race for low-value US deals

Infosys Technologies, Wipro and HCL Technologies are among the software service providers that are laying foundation for the next round of multi-million dollar orders from the big US corporations, by pitching for low-value, but politically important US state governments’ orders.

Infosys, which counts JP Morgan and Morgan Stanley as clients for its services, bids for Arizona Public Service’s (APS) 400 positions, who work in its information-services department, and another 400 or so contractors to raise the staff strength for undisclosed amount.

Nine other US states, some from where politicians opposed offshoring work, are looking to outsource their healthcare operations worth over $2 billion, said Wipro chief strategy officer KR Lakshminarayana, and the company hopes to get a slice of these.

“The discussions are not about offshore outsourcing, but more about working with newer outsourcing vendors, who can deliver locally and keep the jobs here at lower rates,” said a senior executive at one of the Bangalore-based tech firms exploring this opportunity. Many US states such as Missouri, Virginia and Arizona, which are battling falling revenues amid the worst economic slump in their country since the 1930s, are attempting to reduce costs and at the same time want to increase employment opportunities for their citizens. So, they are including clauses such as recruitment of minimum number of staff from their states.

Indian companies, which were used to contracts of hundreds of million-dollars at one go, are bidding for these low-value orders since their traditional clients are cutting down on technology spending and at the same time provides visibility, which would be helpful in getting big orders when tech spending recovers.

“The marketing muscle that comes from such contracts is huge and working with the US state governments send out a signal of importance to other customers,” said Siddharth Pai, managing director of outsourcing advisory firm TPI’s India unit. “For the Indian IT companies this is not a core business, but it creates a halo effect,” he added.

While the global government IT outsourcing market is estimated to be around $100 billion, experts tracking the sector said the US state governments could outsource projects worth up to $5-6 billion this year. States, which in the past opposed the outsourcing of work to Indian companies by the likes of Microsoft and Citigroup, are now turning to the same Indian companies, as their mission now is in line with that of the companies cut costs.

Rodney Nelsestuen of US-based research firm TowerGroup, said state governments in the US are suffering from a reduction in tax revenue due to high unemployment and lower spending on taxable items by the US consumers. “Significant budget cuts are making it difficult for states to maintain the level of services that residents expect. Outsourcing has become an option that governments are looking at,” he added.

The orders from these state governments are for maintenance of records, accounts, healthcare and other administrative jobs, said a consulting firm engaged with a few governments.

Indian companies are not worried about the fact that they may be at a disadvantage to their US peers such as IBM and Hewlett-Packard, which are more familiar with the functioning of the local governments. “As long as you have the competency and ability to deliver what they want and from where they want, you are as competitive as your local peer,” said Wipro’s Mr Lakshminarayana. Wipro already has a $407-million deal from the state of Missouri for application, maintenance and development (AMD) and BPO work for the state’s healthcare division, which it bagged in December 2007.

“They always ask us how many local jobs will we create and that sometimes is an important factor,” he added. TCS, Wipro, Infosys and Cognizant are among a few vendors, who have already hired local citizens. TCS has hired 120 people for its centre in Cincinnati.

“The level of success that India-based outsourcers will have in the future rests on their ability to add local talent, their ability to be viewed as global service companies and not just India-centric, and how quickly they assimilate government requirements – something India-based companies should be good at given their outsourcing history on a global and multi-industry scale,” said Mr Nelsestuen.

Vodafone to move 450 jobs to India, Tasmania

Mobile services provider Vodafone Hutchison has announced offshoring a total of 450 call centre jobs from Melbourne to India and Tasmania.

The decision comes three months after Vodafone Australia Ltd and Hutchison 3G Australia formed a 50:50 joint venture.

A spokesman for Vodafone Hutchison Australia, who earlier flagged a total of 380 job cuts, said the company would transfer an unspecified number of positions to a call centre in Mumbai and about 100 jobs to Kingston, Tasmania.

Service Stream, the company that was running Vodafone contract confirmed the telecom operator's plans to end the contract employing 450 in customer service and support roles starting in October to February, in a move that will shift the positions to Vodafone offices in India and Tasmania.

Service Stream acting managing director Michael Doery said the company would try to find new roles for the affected employees, but was unlikely to accommodate them.

"We're trying to do the right thing for our staff but not give them false expectations," he was quoted as saying in 'The Age'.

UBS in talks with Cognizant, Genpact to sell its BPO units

Switzerland-based bank UBS, which is looking to exit its captive business and knowledge process outsourcing units, is in advanced negotiations with leading IT firms Cognizant and Genpact, said four people familiar with the development. The deal is expected to be announced soon, they added.

UBS India Service Centre, or ISC, which has two offices in Hyderabad along with its Krakow (Poland) centre, is valued at close to $100 million (about Rs 480 crore at current exchange rates), according to an executive familiar with the transaction. The deal, if it were to eventually transpire, could also include a sweetener for the new owner in the form of a multi-year contract with a committed revenue of around $400 million.

If successful, this would be the second time a global bank would be hiving off its largely India-based BPO arm. In 2008, Citigroup sold two of its captive units — Citigroup Global Services to TCS for $505 million and Citi Technology Services to Wipro for $100 million.

Between Cognizant and Genpact, the former could likely bid more aggressively as “it has been hungry for an acquisition in the captive BPO space,” said an executive from a large advisory firm who is familiar with the businesses. Also, Cognizant could leverage on the process outsourcing business in the banking and financial services (BFS) space, he added.

Genpact and Cognizant declined to comment on the deal. Pramod Bhasin, president & CEO of Genpact, said in a text message: “No comments on any M&A type of rumours please.” In an e-mailed response to ET’s query, a UBS spokesman said: “UBS continually seeks to explore commercial opportunities in all jurisdictions in which it operates that have the potential to be of benefit to the company and its component businesses. However, UBS remains committed to all its activities in India.”

Thursday, September 17, 2009

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Mid-size IT companies to ring in pay hikes

After software giant Wipro lifted freeze on promotions and hikes, although selectively, mid-sized technology firms like MphasiS-EDS, Sonata Software and Symphony Services are also planning to increase salaries and give bonus.

IT services firm MphasiS, which recently bagged new outsourcing contracts, has announced a recompense bonus for its staff which the company feels is possibly an innovative compensation model. “For good performers, the bonus can be 15-25% higher than the average pay hike,” MphasiS chief human resources officer Elango R said.

Recompense bonus will compensate for the salary freeze which was introduced in early 2009. “It is a one-time adjustment in the form of a bonus to reward employees for their commitment and contribution,” said Mr Elango.

The recompense bonus is guaranteed up to the third quarter and is linked to the company’s overall performance and that of the business units as well as to the performance of employees, which includes the individual appraisal rating, for the fiscal year ending 2009.

“If in the fourth quarter, the company achieves its targets again, the bonus size will get bigger. In case they do not meet targets, the bonus will still be paid out on a pro-rata basis based on the third quarter results,” Mr Elango pointed out. He said this bonus was possible not only by winning new businesses, but also through
operational efficiencies.

Offshore product firm Symphony Services is planning to hike salaries for all its employees by 7-8% once its budget is ready. “We are noticing that other companies are also contemplating hikes of 5-8%. However, companies are keeping a watch on the overall market,” C Mahalingam, executive vice-president and chief people officer of Symphony Services, said.

Like MphasiS, Sonata Software, too, has introduced a new package called ‘company-linked performance pay’. Last year, the firm had dropped annual incentives and appraisals due to the economic meltdown. “But this year, there will be appraisals, salary increments between 7-10% and incentives based on performance because the market is getting better and Sonata is getting projects from the UAE, the US and the UK,” said a person privy to the developments.

These changes come at a time when layoffs and salary cuts have become a rather controversial method to control cost. Experts like Ashok Reddy, managing partner and co-founder of staffing company, Teamlease, said business is picking up and companies are increasing salaries based on employee performance, revenue and profit rise. “Many companies are restructuring pay scales or cost-to-company compensations. And attrition rate will also grow as more jobs are coming in,” said Mr Reddy.

Going forward, mid-sized companies will explore more innovative compensation models that will be based more on performance, experts said. To boot, apart from the bonus plan, MphasiS has announced a quarterly performance-linked pay model for FY10. “Effective November, a percentage of annual fixed and base salary will be converted to variable which will be paid based on quarterly performance of the company and the business unit,” Mr Elango said.

Satyam wins 32 new clients since May

Indian IT services firm Mahindra Satyam has gained 32 new customers in the last four months, and some large clients are returning to the company, a top official said.

"Some of the large clients we had lost earlier are coming back and are reassigning new business," Atul Kunwar, the company's president of the Middle East, Europe, India and Asia Pacific regions, said on the sidelines of an industry conference.

The company, earlier know as Satyam Computer Services, currently has about 420 clients, he said, compared with 480 in January before it was left battling for survival after Satyam's founder revealed India's biggest corporate fraud.

Satyam was acquired by Tech Mahindra in an auction in April and subsequently renamed. The number of employees the company has on reserve has come down to 7,000 from 8,500 in July, Kunwar said.

"With the business improving and new deals coming in, we have slowly started taking in employees from the virtual pool."

Oracle ends computer tie-up with HP

Oracle Corp has ended a high-profile computer-building partnership with Hewlett-Packard Co as Oracle prepares to acquire Sun Microsystems Inc, a rival of HP.

Sun, the world's No. 4 server maker, and Oracle have jointly developed a second-generation version of a specialized database computer, dubbed Exadata. Oracle and HP launched the first version a year ago.

Oracle Chief Executive Larry Ellison unveiled the new machine on Tuesday, almost a year after he announced his company's entry into the hardware business with help from HP. At the time, he said that HP would be a key ally in that effort.

But the dynamics of that relationship have changed since April, when Oracle agreed to buy Sun for more than $7 billion. Hewlett-Packard and Sun are fierce rivals in the markets for server computers and storage equipment.

The new Exadata computer is the first of what Ellison has said will be many products that wed Sun's hardware with Oracle's software.

An Oracle spokeswoman said Oracle would continue to sell the Exadata computers, built in partnership with HP, until existing inventory is sold out, if customers request that model.

Officials at Hewlett-Packard could not be reached for comment.

When Ellison unveiled the HP partnership a year ago, he told customers that the product could not have been developed without that company's assistance.

On Tuesday he bragged that Sun's technology made the database computer far superior to hardware from rivals including Teradata Corp and Netezza Corp.

"Everything is bigger about Exadata, Version 2. Everything is faster about Exadata, Version 2," he said during a presentation to customers that was broadcast over the Internet.

Oracle does not break out sales of the Exadata machine. But during the company's most recent earnings call, Ellison said that it was one of the most successful products he had launched since he founded the company more than 30 years ago.

TCS opens centre in Argentina; to employ 250

Expanding its footprint in Latin America, the country's largest software exporter TCS today said it has opened a new delivery centre in Buenos Aires for providing consulting, BPO and IT services which will employ 250 professionals.

"Our growing presence in Latin America continues to be of strategic importance to our overall business growth and we remain committed to working in close collaboration with institutions and universities (here) to help foster the development of local talent in Argentina and provide our customers with IT solutions from this location," TCS CEO S Ramadorai said.

The new centre would provide consulting, advanced IT solutions, BPO services and IT product implementations besides, housing the company's first regional SAP centre, the company said in a statement.

This is the eighth global delivery centre of TCS in Latin America, in addition to centers in Brazil, Argentina, Uruguay and Mexico.

Indian IT companies have been focusing on South America and countries such as Argentina and Brazil as a destination for offering services to clients in the US time zone.

Shares of TCS were trading at Rs 568.50, down 0.42 per cent in afternoon trade at the Bombay Stock Exchange.
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Companies continue to send employees overseas amid cost cuts: KPMG

Companies across the world have continued to send employees overseas to take advantage of business opportunities, despite a reduced budget for international assignment programs during the economic downturn, a KPMG survey says.

According to a survey of 470 human resources (HR) executives by the global consultancy, firms are implementing a variety of options to potentially save costs associated with long-term or standard assignments.

Some of these options include short-term assignments (STAs), currently being used by 79 per cent of firms, while permanent transfers is being utilised by 45 per cent of organisations, the survey said.

"KPMG survey results mirror our experience with clients. We saw that companies/employers often adjusted parts of their programs and examined alternate assignment types based on their business needs, but continued to send assignees to work on long-term business opportunities overseas," KPMG LLP managing director of Global Mobility Advisory Services Achim Mossmann said.

"As the decline in global economy affected almost every area of business and most firms assessed cost-effectiveness of their operations, international assignments were no exception," Mossmann added.

The KPMG survey also revealed that firms made changes to various policy provisions to save costs.

For example, to help determine the cost of living adjustment (COLA) calculation on their assignee packages, 31 per cent of the firms surveyed are using an "efficient purchaser index".

The index is a sliding scale measurement of the ratio of the cost-of-living between the home and host locations, which assumes that an experienced assignee is a 'smart shopper' and is able to purchase goods and services more economically than the average assignee.

The KPMG survey revealed that 49 per cent of respondents find assignees take too much time to administer. Perhaps in response to this view, almost half (47 per cent) of the respondents outsource parts of their international assignment programs to gain access to a service provider's global resources and expertise.

"In some cases, HR departments have been downsized leaving fewer people to manage more work. In these situations, administrative models are often reviewed to achieve efficiency and cost savings," Mossmann said.

The KPMG report stated that outsourcing certain program elements can help reduce the time and effort spent by HR professionals and allows the organisation to tap into the economies of scale in an outsourcing environment.

"As organisations continue to utilise international assignments, they also need to make sure there is a mechanism in place to measure how these assignments provide long-term benefits to the organisation," it added.

We over-hired: Infosys COO

Infosys Technologies Ltd, India's second-ranked software exporter, said the business environment is challenging and clients are cautious in spending, although pressure for price cuts has eased.

The company, which employs more than 100,000 people, is not seeing any reason to accelerate hiring at this point of time due to the uncertain business environment, Chief Operating Officer Shibulal said.

" We are very honestly over-hired ," he said. "There is a very slight blip of activity, but there is nothing to tell me it (a recovery) is secular in nature."

Hopes of a pick-up in demand for outsourcing, which had been hit by the global downturn, increased after major Indian IT firms including Infosys beat street estimates in their April-June earnings and announced some large deals in the recent months.

But Infosys officials said that decision making by clients continued to be slow. "The situation is still quite challenging," S D Shibulal said. "If you look at our customers, they are not really seeing any increase on their revenue side. And because they are not seeing any increase on their revenue side, they will continue to be concerned."

The head of Nasscom, India's leading IT industry lobby, said signs of recovery in the United States were yet to translate into real business growth for outsourcing firms, though a pick-up was expected in the second half of the year.

Infosys Chief Executive S Gopalakrishnan said he expected technology spending by the company's clients to be flat in 2010 from the previous year. Ahead of the news, shares in the company valued at about $27 billion, closed up 0.9 per cent, underperforming a 1.5 per cent rise in the benchmark index. The company's shares have doubled so far in 2009, outperforming a 70 per cent rise in the broader market.

Large deals yet to come
Infosys has forecast its first annual revenue fall for the year to March 2010 on demand for fee cuts by its overseas clients. Most negotiations with clients on price cuts was over and the company was not seeing a second round of such talks, Shibulal said, but large deal flows were yet to resume.

"Overall, deals above $500 million which used to be there before the downturn, they have not reappeared in significant manner," he said. Infosys and local rivals Tata Consultancy Services and Wipro last month won IT services contracts from oil and gas major BP Plc.

Shibulal said Infosys' share of the contract was worth $116 million over five years.

Chinese investors asked to hire Indians

Chinese investors should employ more Indians to run their projects in India instead of bringing large number of workers from China. This is New Delhi's latest response to complaints concerning India's reluctance to grant enough visas for Chinese workers.

An India-specific approach will have to be thought over by Chinese companies, S Jaishankar, India's new ambassador in Beijing told a conference attended by Indian and Chinese businessmen and officials. He pointed out that companies from other foreign countries did not feel the need to bring their own workers to projects in India, which has a vast reservoir of skilled workmen and a long history of industry and entrepreneurship.

"I have personal experience in working with many of India's other major economic partners. I cannot recall their investments and projects requiring such large manpower support from home," Jaishankar, who was earlier ambassador in Singapore, said.

The statement comes at a time when several Indian companies have joined the chorus along with their Chinese partners about increasing the issuance of visas for Chinese workers. But the Indian government is not encourahing this because large inflow of foreign labour can thwart skill development and cause heart-burning among Indian workers.

It is possible that business models of non-Chinese investors are based more heavily on collaborating with local Indian capabilities, he said, while speaking at a seminar organized by Ficci and the China Council for Promotion of International Trade.

Indian companies sourcing equipment and services from China should advise and assist the sellers on reducing their dependence on Chinese workers and using more of Indian skill, Jaishankar said.

No Easy Visas
Companies from other foreign countries do not feel the need to bring own workers to projects in India, says ambassador Jaishankar His statement comes at a time when Indian comapnies have also joined the chorus with their Chinese partners for increasing the issuance of visas Indian govt is not encouraging this as large inflow of foreign labour can hit skill development and welfare of Indian workers.

Adobe buys Omniture for $1.8 bn

Adobe Systems plans to pay $1.8 billion for fast-growing business software maker Omniture as the maker of Photoshop and Acrobat looks to turn around declining sales.

Adobe, which announced the deal on Tuesday as it reported lower quarterly sales and profit, has been struggling over the past year as the recession hurt technology spending and customers declined to upgrade older versions of its programmes.

The acquisition would give Adobe a new stream of revenue to offset that decline. Omniture charges customers fees based on monthly website traffic, so sales are less sensitive to economic swings than Adobe.

“There is no way Adobe can grow organically. This is a smart move,” said Global Equities Research analyst Trip Chowdhry.

Wednesday, September 16, 2009

Verizon to axe more jobs

Verizon's Chief Financial Officer John Killian is not sugarcoating what's in store for the ILEC's workforce: more job cuts are coming. During an investor conference late last week, Killian said additional employee reductions are necessary, but would not offer a specific timeline when these cuts would occur. Over the past year, Verizon laid off 8,000 workers with plans to cut another 8,000 in the second half of 2009.

The recent economic downturn, ongoing voice line loss and accelerated growth of its wireless and FiOS video services drove these job cuts, according to Killian. To extract more savings out of its wireline business, the company also will consolidate its call centers and integrate some services.

"We've been steadily reducing our overall work force size," Killian said to analysts during an investor conference. "But, we realized that we need to do more and in an accelerated pace."

Indian public sector IT spending to reach $5.1 Billion by 2011

With the aim to modernize its services, IT spending by India's public sector reached an estimated $3.1 billion in 2008.

The spending is further expected to grow to $5.1 billion by 2011, indicating a compounded annual growth rate (CAGR) of nearly 19 percent from 2007 to 2011, says a report by Springboard Research, an IT market research and advisory firm.

According to the 'Public sector IT opportunity in India' report, more than two-thirds of the total IT spending will be undertaken by the central government, with state government and local governments contributing to the rest of the spending. The report provides a detailed coverage of the public sector market dynamics in India, including buying process, for the key segments like healthcare, education, defense and public safety. "The re-election of the Congress-led UPA government will spur further investments in e-governance projects, including the $5 billion National e-Governance Plan," said Nilotpal Chakravarti, Senior Research Analyst - Vertical Markets at Springboard.

The report also notes that education is the biggest individual market segment in terms of spending with an 11 percent share of total spending; while defense and public safety and taxation and finance round up the list of top three segments. In terms of IT segments, hardware corners half of the overall spending, while IT services has a bigger share than software.

According to the report, the current key challenges IT vendors are facing include slow decision-making process despite the adoption of e-procurement, delays caused by bureaucratic hassles and complex bidding procedures and a price-sensitive market. On the other hand, the end-users (citizens) face challenges in the lack of transparency and efficiency in government services, lack of integration among different government agencies and poor mechanisms of complaint handling. In its future market outlook, Springboard points out the high growth rate for healthcare and education. Other areas of future high growth include public transportation and utilities projects.

Wipro partners with Schneider Electric

Indian IT major Wipro Technologies has partnered with global energy management firm Schneider Electric to market its industrial automation solutions in India.

Under the agreement, Wipro will offer an additional commercial channel and outstanding project execution capability Schneider to market and deliver its state-of-the-art solutions.

To begin with, Wipro will market Schneider Electric's Ampla MES solution to the mining, mineral processing and metals industries.

This solution helps manufacturers enhance the efficiency, productivity and reliability of their industrial operations and improve their return.

"Our partnership with Wipro is an indicator of our commitment to the Indian market. It shows our willingness to go beyond conventional business models to grow our business here," Schneider executive vice-president Michel Crochon said.

Infosys opens training centre in Mysore

United Progressive Alliance (UPA) chairperson Sonia Gandhi inaugurated a world-class corporate education centre of Infosys Technologies at its Mysore campus.

The facility is an extension of the IT major's Global Education Centre (GEC), which was inaugurated by Prime Minister Manmohan Singh in February 2005.

With the GEC II, set up at an investment of Rs 800 crore, Infosys can now train 14,000 new recruits at the same time.

Given its infrastructure and size of operations, GEC is the largest corporate education centre in the world, Infosys officials said.

After the inauguration, Gandhi said the centre was a testimony that India can also build world-class education and training centres.

"It's a pleasure to be on this beautiful campus. It has a marvellous setting for a university to train and educate young minds," she told a gathering, mostly young employees of the IT bellwether.

"The GEC is the testimony that India can have world-class education centres. The success of Infosys is because of its hard work, dedication and talent."

Karnataka Chief Minister B S Yeddyurappa, Infosys chief mentor N R Narayana Murthy, and chief executive S Gopalakrishnan were also present on the occasion.

The building of the new facility shares architectural resemblance with that of India's parliament and Rome's Colosseum. The entire Infosys campus here is spread over 337 acres.

Murthy told the audience that the main goal of Infosys was to fight poverty with the power of entrepreneurship and creating jobs. "The centre is a proof of the progress we have made so far. GEC is the largest monolith classical building of post independent India," added Murthy.

Infosys, according to officials, invests an average of Rs 250,000 on training a potential employee over a period of 16 weeks.
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Wipro wins 3-year contract from Japan's ANA

Wipro has won a three year outsourcing contract from All Nippon Airways (ANA), the first airline in the world to procure the Boeing 787 Dreamliner. The financial details of the deal have not been disclosed, but Wipro will deliver materials management system to ANA that will help manage the parts life cycle, reports Economic Times.

The system will strengthen regulatory compliance, predict parts demand better and help manage inventory levels. The new Materials Management system will be built in a scalable, flexible platform. ANA, with its fleet of 209 aircraft, is embarking on transforming its legacy materials management system to support the new fleet, in line with the expansion of its business at Tokyo's Haneda Airport with its upcoming fourth runway in 2010.

ANA will be able to increase its cost competitiveness, improve the quality of its aircraft part maintenance business and improve asset management with the new system. The complete program will be managed by Wipro, which will deliver services such as application development, program management and vendor management thereby enabling ANA to gain a sustainable competitive advantage.

Takanori Yukishige, Senior Vice President, ANA Information Technology Services said, "We are starting a new journey and this program will set a benchmark for our future way of doing business. We look forward to further leveraging our partnership with Wipro to gain competitive advantage."
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No variable pay for TCS trainees for first six months

India’s top software exporter Tata Consultancy Services (TCS) has said that fresh recruits will not be eligible for variable pay during the first six months when they are on training. The decision will take effect from this quarter when about 1,500 freshers are scheduled to join the company.

“The compensation re-structuring is primarily from a productivity point of view — we want them (freshers) to understand variable component is really a ‘variable’ and will depend on how well they perform in their project. We want that accountability and mindset change to happen from day one,” said Ajoy Mukherjee, head, global HR. During the training period, freshers are not billable as they don’t work on any client projects, and hence do not contribute to company profits.

Freshers at TCS get variable pay of Rs 5,000 a month. The move will result in savings of close to Rs 75 crore for the company, as it has recruited about 25,000 students from campuses in 2008. These freshers are expected to join the company during the course of fiscal but depending on business demand and training capacity.

“There will be savings as a result of this — not very significant but not very low either. The primary reason is not savings, but a mindset change,” said Mr Mukherjee. He said TCS would honour all the campus offers that were made with 1,500 freshers joining this quarter and the rest by the end of the fiscal.

The concept of variable pay was introduced for freshers last year, and the training period, which was for three months, was extended by another three months in the fourth quarter of last fiscal. The company had also decided not give any increments this year, and Mr Mukherjee said there were no changes to this as of now. Last year, it had given a 10% annual increment to all employees. However, those employees, who have been promoted, have been given nominal increments this year, he said.

Companies are not yet returning to big spending and TCS is still in a mode of being as efficient as possible, he added.

The company is also recruiting 250 freshers from US universities for its Cincinnati campus in the current fiscal. However, these freshers have a different compensation structure and will not be affected by the change in variable pay policy. TCS is attempting to replicate the same model it has in India on its Cincinnati campus as well. It will hire students from technical fields on campus and train them.

IT industry may create 40k jobs this fiscal: Nasscom

NASSCOM has projected that some 30,000-40,000 students will be absorbed by IT companies this fiscal. Talking to ET, Nasscom president Som Mittal said: “Typically, we take one to two lakh people annually into our industry. In the current fiscal, we had made offerings to 80,000 fresh graduates, of which we are expecting that some 30,000-40,000 will join.”

He further added: “This year, we have asked companies to recruit those who have completed their eighth semester to ensure that hiring is closer to the need of companies. This is being done, so that companies don’t have a huge talent pool who are in the pipeline to join the industry.”

Asked about the outlook of the industry in 2010-11, He said the industry was on a wait-and-watch mode about the growth in FY11. “We will review the situation in December this year. We have already reached end of the recession. By end of the calendar year 2009, we expect deals, some large deals are coming up.”

Mr Mittal said the industry in the past one year has witnessed slowdown in growth, as a result of the global crisis. Nasscom estimates for the IT-BPO industry for 2009-10, include export growth at 4-7% and domestic market growing at 15-18%.

While uncertainty prevails, the sentiment now being reflected is that the worst of the crisis is over. “The industry has demonstrated maturity, resilience and enhanced efficiency. Of specific interest was the growth in domestic market, a three-fold growth in emerging verticals and geographies, enhanced globalisation and over 90% repeat business from clients in this tough environment,” he said.

Mckinsey & Company in its report on the perspective of the IT industry by 2020 has given the current pace of reforms and expected constrains in talent and infrastructure supply, the exports component of the Indian IT industry is expected to reach $175 billion in revenues by 2020.

The domestic component will contribute $50 billion in revenues by 2020, which is larger than the total exports revenues for India now.

The Nasscom president said the during the recessionary period the IT industry has invested in new verticals and geographies, which would start yielding results shortly. “Continental Europe, Latin America, the Middle-East, Japan and Korea remain the new emerging markets for IT industry,” he said.

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