GRASS VALLEY, Calif.—High-tech companies clustered in the Sierra foothills east of Sacramento are being hit by the down economy, just like their counterparts in Silicon Valley to the west. The recession is forcing layoffs and cutbacks for firms in Grass Valley and Nevada City that produce things such as television broadcasting equipment, medical devices and circuit boards.
The Nevada County Economic Resource Council says more than 80 tech companies employ about 2,000 workers in the area. That's about 7 percent of the county's work force. The county's unemployment rate hit 8.4 percent in December, up from 5.5 percent a year earlier. Grass Valley Group, a 280-employee company that started the tech trend in 1959, just laid off 7 percent of its employees and is up for sale.
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Tuesday, February 24, 2009
About 20 mid-cap IT firms willing to sell out
Source: SiliconIndia
Mumbai: Reeling under the burden imposed on them by the current financial slowdown, 15 to 20 mid-sized IT companies that generate revenues of $100 - $150 million are willing to sell out, reports Business Line.
Many overseas IT majors who do not have a well-developed India strategy are already showing interest in those companies as Indian promoters seem to have become more realistic when it comes to valuations, according to merchant bankers and private equity players.
Rajesh Subramaniam, Managing Director, Walden International India, a private equity firm, said, "The business models of several IT companies, especially the ones exclusively servicing the U.S. financial services industry, have become redundant due to the global financial crisis. If one were to look at companies in the $100-200 million range, there would easily be more than 20 IT firms that would be interested in selling out."
Analysts think that while companies with revenue upwards of $500 million can manage price cuts with a manageable dent in margins, the ones with the revenue from $100 to $150 find it extremely difficult woo customers with discount or other offers.
"Mid-tier IT companies have very little scope to offer price cuts or discounts to customers," says Ranu Vohra, Managing Director and CEO of investment banking company, Avendus Capital.
Valuations have been the reason why many prospective deals involving multi-national IT players did not go through in the last three years. However, that seems to have changed: "We have seen valuations dropping by 30-40 percent compared to last year," said Atreya.
Mumbai: Reeling under the burden imposed on them by the current financial slowdown, 15 to 20 mid-sized IT companies that generate revenues of $100 - $150 million are willing to sell out, reports Business Line.
Many overseas IT majors who do not have a well-developed India strategy are already showing interest in those companies as Indian promoters seem to have become more realistic when it comes to valuations, according to merchant bankers and private equity players.
Rajesh Subramaniam, Managing Director, Walden International India, a private equity firm, said, "The business models of several IT companies, especially the ones exclusively servicing the U.S. financial services industry, have become redundant due to the global financial crisis. If one were to look at companies in the $100-200 million range, there would easily be more than 20 IT firms that would be interested in selling out."
Analysts think that while companies with revenue upwards of $500 million can manage price cuts with a manageable dent in margins, the ones with the revenue from $100 to $150 find it extremely difficult woo customers with discount or other offers.
"Mid-tier IT companies have very little scope to offer price cuts or discounts to customers," says Ranu Vohra, Managing Director and CEO of investment banking company, Avendus Capital.
Valuations have been the reason why many prospective deals involving multi-national IT players did not go through in the last three years. However, that seems to have changed: "We have seen valuations dropping by 30-40 percent compared to last year," said Atreya.
Layoffs in India
Sun Micro lays off 150 in India last week
Global IT firm Sun Microsystems has laid off over 150 employees in India around late in January, most of them software developers from the company's Bangalore office, a source close to the development informed Hindustan Times.
Another round of lay-offs is slated around the last week of February and will impact support staff from departments like marketing, human resources and sales, the source added.
Another round of lay-offs is slated around the last week of February and will impact support staff from departments like marketing, human resources and sales, the source added.
IT cos move to designing medical products
Source: TheEconomicTimes
From doing bits and pieces of design and testing on the electronics inside, a few Indian software firms are now partnering with their overseas clients to help them launch medical equipment and other devices for the Indian market.
Firms, HCL Technologies, for instance, have moved on from being offshore providers to becoming advisors on emerging market strategies for clients and even designing and manufacturing the final product.
Others like Tata Consultancy Services (TCS) and MindTree, which were earlier doing verification and support for semiconductor vendors, are now partnering with them for end-to-end chip and product design.
“There are 4-5 firms here that are currently working on this model. What we are seeing, especially in industries like medical equipment and automotive, is that the manufacturer washes his hands of completely. The Indian IT firm handles everything from where to buy the chip to where to manufacture. This is more of an exploratory model, but if it works, we could see more such instances,” said Gartner Research principal research analyst Ganesh Ramamoorthy.
“We were not addressing the Indian market earlier, we were providing some pieces of the project and other technical resources. Now, we have started taking responsibility for the entire product. The client gives us the concept and then, we do everything starting from market research to the final prototype,” said HCL Technologies V-P and global head, life sciences and healthcare, Pradeep Nair.
HCL’s life sciences division has partnered with IIT Kharagpur; MIT, Apollo Hospitals and Doctor Kares Hospital. It is now taking this ‘cradle to grave’ model to other BRIC countries.
“The time-to-market pressure is very high. We are seeing more such end-to-end chip and product opportunities, especially in the area of automotive, hand-held devices, telecom infrastructure and consumer electronics,” said TCS head (embedded hardware) Rajaram Nayak. When launching a device for a new market such as India, the manufacturer has to consider various factors such as price points, user interface, local regulatory requirements and even reliability of power supply.
“A US company wanting to launch a portable sugar monitoring equipment in India may outsource the entire design to the Indian firm,” said Mr Ramamoorthy. “Semiconductor vendors looking to develop new products in niche segments such as automotive and medical devices for emerging markets, should either consider end-to-end outsourcing and product design or negotiate an equal risk/ reward partnership with Indian design services vendors,” he added.
MindTree president and co-CEO (R&D services), Vinod Deshmukh, said that because companies such as MindTree understood chip design they could also work with product manufacturers. Electronic equipment manufacturers consume a large number of semiconductors, making chip design a key element in the product design chain. “More and more electronics are going into hospitals. We are seeing this segment grow 70% even today,” said HCL Tech head, marketing (life sciences) Ravi Vij.
From doing bits and pieces of design and testing on the electronics inside, a few Indian software firms are now partnering with their overseas clients to help them launch medical equipment and other devices for the Indian market.
Firms, HCL Technologies, for instance, have moved on from being offshore providers to becoming advisors on emerging market strategies for clients and even designing and manufacturing the final product.
Others like Tata Consultancy Services (TCS) and MindTree, which were earlier doing verification and support for semiconductor vendors, are now partnering with them for end-to-end chip and product design.
“There are 4-5 firms here that are currently working on this model. What we are seeing, especially in industries like medical equipment and automotive, is that the manufacturer washes his hands of completely. The Indian IT firm handles everything from where to buy the chip to where to manufacture. This is more of an exploratory model, but if it works, we could see more such instances,” said Gartner Research principal research analyst Ganesh Ramamoorthy.
“We were not addressing the Indian market earlier, we were providing some pieces of the project and other technical resources. Now, we have started taking responsibility for the entire product. The client gives us the concept and then, we do everything starting from market research to the final prototype,” said HCL Technologies V-P and global head, life sciences and healthcare, Pradeep Nair.
HCL’s life sciences division has partnered with IIT Kharagpur; MIT, Apollo Hospitals and Doctor Kares Hospital. It is now taking this ‘cradle to grave’ model to other BRIC countries.
“The time-to-market pressure is very high. We are seeing more such end-to-end chip and product opportunities, especially in the area of automotive, hand-held devices, telecom infrastructure and consumer electronics,” said TCS head (embedded hardware) Rajaram Nayak. When launching a device for a new market such as India, the manufacturer has to consider various factors such as price points, user interface, local regulatory requirements and even reliability of power supply.
“A US company wanting to launch a portable sugar monitoring equipment in India may outsource the entire design to the Indian firm,” said Mr Ramamoorthy. “Semiconductor vendors looking to develop new products in niche segments such as automotive and medical devices for emerging markets, should either consider end-to-end outsourcing and product design or negotiate an equal risk/ reward partnership with Indian design services vendors,” he added.
MindTree president and co-CEO (R&D services), Vinod Deshmukh, said that because companies such as MindTree understood chip design they could also work with product manufacturers. Electronic equipment manufacturers consume a large number of semiconductors, making chip design a key element in the product design chain. “More and more electronics are going into hospitals. We are seeing this segment grow 70% even today,” said HCL Tech head, marketing (life sciences) Ravi Vij.
Infosys
Infosys eyes two European firms
Infosys Technologies is eyeing European software firms BCC and Ciber Novasoft among others as potential acquisitions, the Economic Times said on Monday citing two people familiar with the development. The paper said a final transaction could be some time away, quoting one source as saying there was no agreement yet on the valuations of the two firms.
Poland-based BCC, which has annual revenues of $180-200 million, could cost more than $300 million, the paper quoted a source as saying. Ciber had an annual revenue of almost $75 million, the paper said. Officials at Infosys could not be reached for comment immediately. Both BCC and Ciber provide services to companies using products of German business software maker SAP. Lasy year, Infosys bid for British consultancy and SAP services provider Axon but lost to smaller Indian rival HCL Technologies.
Poland-based BCC, which has annual revenues of $180-200 million, could cost more than $300 million, the paper quoted a source as saying. Ciber had an annual revenue of almost $75 million, the paper said. Officials at Infosys could not be reached for comment immediately. Both BCC and Ciber provide services to companies using products of German business software maker SAP. Lasy year, Infosys bid for British consultancy and SAP services provider Axon but lost to smaller Indian rival HCL Technologies.
Patni eyes Europe, appoints new execs
Patni Computer Services, on Monday announced that it has appointed four new executives to drive its international businesses.
According to the company, its strategy is to build businesses in Europe to complement business in the US and India. The four new appointments were made with the intention of developing businesses in Germany, Austria and Switzerland (DACH) area.
Increasingly, Indian IT companies are spreading their geographies to reduce their business risks. Two of the three large deals bagged by Tata Consultancy Services, India’s largest software services company, in the recent past were from European markets.
According to the company, its strategy is to build businesses in Europe to complement business in the US and India. The four new appointments were made with the intention of developing businesses in Germany, Austria and Switzerland (DACH) area.
Increasingly, Indian IT companies are spreading their geographies to reduce their business risks. Two of the three large deals bagged by Tata Consultancy Services, India’s largest software services company, in the recent past were from European markets.
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