India's largest software services exporter, Tata Consultancy Services (TCS), is aiming to move beyond its traditional Western market to serve new transnational companies in the emerging markets to become a truly global company.
"We want to become global not just in terms of sales but from a people perspective," TCS Head Natarajan Chandrasekaran told the Financial Times in an interview.
Multinationals in emerging markets now account for about one-fifth of the company's sales. TCS has operations in about 42 countries and about nine per cent of its workforce is foreign. At present, it contributes nearly 10 per cent of the revenue of the Tata conglomerate.
Besides diversifying its client base, TCS is pursuing an "integrated full service" business model to garner higher revenue.
Under this model, TCS would design, develop and manage a given client's software as well as maintain its hardware systems and handle its business processes.
After years of double-digit - sometimes even triple-digit-growth, India' outsourcing companies got battered pursuant to the global economic slowdown as their largest clients, the global financial services groups, faltered under the pressure.
Accordingly, TCS' Chandrasekaran told FT that the company has to restore growth first as the past six quarters were challenging as revenue grew just 7 per cent for the year ended March, down more than 30 per cent previously.
However, Chandrasekaran was optimistic about a recovery and said that whether the global recovery is "V-shaped, W-shaped or 'square root'-shaped", clients will look to the offshore outsourcing industry to cut costs.
The Indian Information Technology industry including -- TCS and its peers such as Infosys Technologies and Wipro -- played a major part in "the country's transformation from ox-cart economy to fast-growing, sophisticated Asian giant."
The IT industry generated $47 billion in exports in the fiscal year ending in March and claims it has created nearly half of India's urban jobs directly and indirectly.
Thursday, November 19, 2009
Satyam
Satyam rejects Rs 1,230-cr claims
Mahindra Satyam on Tuesday rejected claims worth Rs 1,230 crore made by 37 companies linked to the company’s former promoter B Ramalinga Raju in a filing to the stock exchange.
The company said the claims were legally untenable. Satyam received letters from these 37 companies reclaiming the money a day after Raju confessed to the Rs 7,000-crore fraud.
Raju, in his confession statement, said he owed Rs 1,230 crore to some of the privately-owned companies of the Raju family who had loaned out money to the IT firm. He said the amount was an understated liability and was not stated in the books of the firm that were dressed for seven years.
A Satyam spokesperson said the companies sent legal notices to Satyam two weeks ago. The notices claim the money back to allegedly repay their creditors, some of whom include Maytas Properties and Maytas Infra.
However, the information pack given to the bidders has listed this only as a claim and not a liability since there are no entries in the company’s books.
After Raju’s disclosure about financial wrongdoings, the Indian government had superseded the company’s board appointing its nominees to monitor the fraud-struck firm’s bidding process. Tech Mahindra emerged as the highest bidder and acquired control of Satyam in April this year.
Satyam, while disclosing the financials for October-December 2008 quarter and the first two months of 2009, had said that the 37 companies had made claims totalling Rs 1,230 crore from it. The company then said it didn’t acknowledge any of these claims as the matter was being investigated.
The fraud is still being investigated by the Central Bureau of Investigation, the country’s apex investigation body. Satyam’s shares closed at Rs 104.85 on BSE on Tuesday.
The company said the claims were legally untenable. Satyam received letters from these 37 companies reclaiming the money a day after Raju confessed to the Rs 7,000-crore fraud.
Raju, in his confession statement, said he owed Rs 1,230 crore to some of the privately-owned companies of the Raju family who had loaned out money to the IT firm. He said the amount was an understated liability and was not stated in the books of the firm that were dressed for seven years.
A Satyam spokesperson said the companies sent legal notices to Satyam two weeks ago. The notices claim the money back to allegedly repay their creditors, some of whom include Maytas Properties and Maytas Infra.
However, the information pack given to the bidders has listed this only as a claim and not a liability since there are no entries in the company’s books.
After Raju’s disclosure about financial wrongdoings, the Indian government had superseded the company’s board appointing its nominees to monitor the fraud-struck firm’s bidding process. Tech Mahindra emerged as the highest bidder and acquired control of Satyam in April this year.
Satyam, while disclosing the financials for October-December 2008 quarter and the first two months of 2009, had said that the 37 companies had made claims totalling Rs 1,230 crore from it. The company then said it didn’t acknowledge any of these claims as the matter was being investigated.
The fraud is still being investigated by the Central Bureau of Investigation, the country’s apex investigation body. Satyam’s shares closed at Rs 104.85 on BSE on Tuesday.
IT market
SAP goes flexible to save customers
Business software group SAP AG said that it will offer more flexible contracts to help it hold on to customers. The global economic crisis and technology changes allowing customers to use software on demand instead of buying a major IT system is putting a squeeze on IT spending.
SAP has enjoyed double-digit growth in the past but its software licence sales dropped 31 per cent in the third quarter.
"We will give our customers the option to decide which software they want to use," Chief Executive Leo Apotheker said, adding clients can rent or buy.
"All in all we want to make SAP faster, simpler and more agile," Apotheker said.
Businesses such as McDonald's, Pepsi, Audi, Apple and GE are just a few of SAP's more than 92,000 customers.
SAP focused in the past on contracts with large customers but is increasingly turning towards mid-sized companies and Apotheker said the delayed Business by Design software for this segment would be launched in 2010.
SAP said it also hopes to offset the decline in licence revenue with more smaller contracts and an increase in global entreprise agreements.
SAP has high hopes for its in-memory data bank technology, which is designed to save and access data on a chip instead of a server. Intel provided the chip for the technology that SAP says will allow companies to access and analyse data in real time.
"It's like an ABS system in a car, analysing data at lightning speed and making decisions based on that so you don't hit a tree," said Apotheker, speaking to journalists in the company's Berlin office.
Apotheker said that while the worst of the economic crisis was over it was too early to speak of an upswing.
Asked about recurring rumours of Microsoft interest in SAP, Apotheker said it was company policy to not comment on such rumours.
"However, management, board, shareholders and customers see the future of SAP positively and it should remain an independent company," Apotheker said.
SAP has enjoyed double-digit growth in the past but its software licence sales dropped 31 per cent in the third quarter.
"We will give our customers the option to decide which software they want to use," Chief Executive Leo Apotheker said, adding clients can rent or buy.
"All in all we want to make SAP faster, simpler and more agile," Apotheker said.
Businesses such as McDonald's, Pepsi, Audi, Apple and GE are just a few of SAP's more than 92,000 customers.
SAP focused in the past on contracts with large customers but is increasingly turning towards mid-sized companies and Apotheker said the delayed Business by Design software for this segment would be launched in 2010.
SAP said it also hopes to offset the decline in licence revenue with more smaller contracts and an increase in global entreprise agreements.
SAP has high hopes for its in-memory data bank technology, which is designed to save and access data on a chip instead of a server. Intel provided the chip for the technology that SAP says will allow companies to access and analyse data in real time.
"It's like an ABS system in a car, analysing data at lightning speed and making decisions based on that so you don't hit a tree," said Apotheker, speaking to journalists in the company's Berlin office.
Apotheker said that while the worst of the economic crisis was over it was too early to speak of an upswing.
Asked about recurring rumours of Microsoft interest in SAP, Apotheker said it was company policy to not comment on such rumours.
"However, management, board, shareholders and customers see the future of SAP positively and it should remain an independent company," Apotheker said.
Sunday, November 15, 2009
IT market, Outsourcing
Syntel rated top IT outsourcer on Forbes "200 best small companies" list
Syntel, a global information technology services and Knowledge Process Outsourcing (KPO) company, announced on Friday that it is the top-ranked IT outsourcing company on Forbes Magazine's "200 Best Small Companies" list for 2009.
Syntel jumped more than 60 spots on this year's list, which ranks the fastest-growing companies in America with annual revenues between $5 million and $750 million.
In order to be named one of Forbes' "200 Best Small Companies," firms are evaluated based on a number of criteria looking at both short and longer-term performance, including sales, profit, and earnings-per-share (EPS) growth rates, return on equity, and stock price.
Syntel, which has been named to the list for three consecutive years, jumped more than 60 spots to rank 27th overall. Syntel's ascent was attributable to strong growth in EPS and return on equity, as well as stock performance that ranked in the top 10 relative to the industry.
"It's an honour to receive this recognition from Forbes," said Keshav Murugesh, CEO and president of Syntel. "Syntel's performance over the last year has been very strong despite a difficult economic environment, which is a testament to the passion, talent and dedication of our employees worldwide. We will continue to focus on our core strengths of delivering flexible, innovative solutions to help our customers increase efficiency and maximise their technology investments."
Syntel jumped more than 60 spots on this year's list, which ranks the fastest-growing companies in America with annual revenues between $5 million and $750 million.
In order to be named one of Forbes' "200 Best Small Companies," firms are evaluated based on a number of criteria looking at both short and longer-term performance, including sales, profit, and earnings-per-share (EPS) growth rates, return on equity, and stock price.
Syntel, which has been named to the list for three consecutive years, jumped more than 60 spots to rank 27th overall. Syntel's ascent was attributable to strong growth in EPS and return on equity, as well as stock performance that ranked in the top 10 relative to the industry.
"It's an honour to receive this recognition from Forbes," said Keshav Murugesh, CEO and president of Syntel. "Syntel's performance over the last year has been very strong despite a difficult economic environment, which is a testament to the passion, talent and dedication of our employees worldwide. We will continue to focus on our core strengths of delivering flexible, innovative solutions to help our customers increase efficiency and maximise their technology investments."
IT market, TCS
TCS’ passport project misses 3rd deadline
The Indian government's ambitious 'Passport Seva' project, which seeks to give out passports in three days, has missed another deadline - Friday, the 13th of November.
This will be the third time the external affairs ministry's project -- a major e-governance initiative -- will not meet its launch date. Officials are blaming software glitches for the delay.
The first deadline was in June, then October, before the revised date of November 13 was arrived at. The pilot project was to take off in Bangalore.
Minister of State of External Affairs Shashi Tharoor had said in a tweet dated October 30 that the project "should be rolled out next month after some technological snags delayed it".
According to officials, the physical infrastructure is ready. This includes a user-friendly building with swanky interiors, 25 counters and electronic token boards.
"The software which will be the basis for the new system is still having too much problem," said an official.
Information Technology major Tata Consultancy Services is in charge of implementing the project after it signed the contract in October 2008. The project is reportedly worth over Rs 1,000 crore.
The pilot project would have seen 'Passport Seva' centres in Bangalore and later in Hubli and Mangalore, also in Karnataka, followed by Chandigarh, Ludhiana in Punjab and Ambala in Haryana.
A mini centre will also be opened in Gulbarga (Karnataka) as an addition in the pilot project. The project is to run for two months. According to informed sources, the software is giving basic problems like flawed printing of passports. "There was a problem in audit trail," said an official.
In all the passport offices in the country and missions abroad, the ministry looks after the process of passport services, while the software is provided by the state-run National Informatics Centre.
"As far as software goes, we did not have any problem over the years," said a senior foreign ministry official. But one key problem with the TCS has been lack of domain knowledge.
The Department of Information Technology's Standarization Testing and Quality Certification (STQC) has done three rounds of testing on the software. But all of them have found hundreds of bugs which are being slowly rooted out.
"We will have another round of STQC testing before we decide on the future course," he said. The ministry has issued a letter to TCS invoking the penalty clause in the master services agreement -- after failing to start the pilot project in October.
This will be the third time the external affairs ministry's project -- a major e-governance initiative -- will not meet its launch date. Officials are blaming software glitches for the delay.
The first deadline was in June, then October, before the revised date of November 13 was arrived at. The pilot project was to take off in Bangalore.
Minister of State of External Affairs Shashi Tharoor had said in a tweet dated October 30 that the project "should be rolled out next month after some technological snags delayed it".
According to officials, the physical infrastructure is ready. This includes a user-friendly building with swanky interiors, 25 counters and electronic token boards.
"The software which will be the basis for the new system is still having too much problem," said an official.
Information Technology major Tata Consultancy Services is in charge of implementing the project after it signed the contract in October 2008. The project is reportedly worth over Rs 1,000 crore.
The pilot project would have seen 'Passport Seva' centres in Bangalore and later in Hubli and Mangalore, also in Karnataka, followed by Chandigarh, Ludhiana in Punjab and Ambala in Haryana.
A mini centre will also be opened in Gulbarga (Karnataka) as an addition in the pilot project. The project is to run for two months. According to informed sources, the software is giving basic problems like flawed printing of passports. "There was a problem in audit trail," said an official.
In all the passport offices in the country and missions abroad, the ministry looks after the process of passport services, while the software is provided by the state-run National Informatics Centre.
"As far as software goes, we did not have any problem over the years," said a senior foreign ministry official. But one key problem with the TCS has been lack of domain knowledge.
The Department of Information Technology's Standarization Testing and Quality Certification (STQC) has done three rounds of testing on the software. But all of them have found hundreds of bugs which are being slowly rooted out.
"We will have another round of STQC testing before we decide on the future course," he said. The ministry has issued a letter to TCS invoking the penalty clause in the master services agreement -- after failing to start the pilot project in October.
IT market
Intel to pay AMD $1.25b, settle all disputes
Intel Corp will pay rival chipmaker Advanced Micro Devices Inc $1.25 billion to settle all outstanding legal disputes, in a move that can hasten the resolution of Intel's antitrust troubles.
AMD, whose shares jumped 22 percent, agreed to withdraw essentially all its regulatory complaints and litigation against Intel, ending a global campaign that it has waged on the world's largest chipmaker for 12 years.
Some analysts said the deal takes the steam out of a pending U.S. Federal Trade Commission investigation into Intel's business practices.
But others said Intel has critics beyond AMD and its regulatory troubles are far from over. Among Intel's adversaries are graphics chip maker Nvidia Corp and New York Attorney General Andrew Cuomo.
Intel Chief Executive Paul Otellini denied any wrongdoing by the company but said it decided to settle the dispute with AMD to avoid the risk of a triple-damages finding by a jury.
"Intel got the fact that it was a major risk of a huge settlement in front of a jury," said Broadpoint Amtech analyst Doug Freedman. "It removes the coin-flip of a jury trial."
AMD has argued that Intel used illegal means to preserve its 80 percent share of the global market for central processing units, which are the brains of personal computers.
Regulators in Asia and Europe have agreed, imposing fines and other remedies on Intel. The U.S. Federal Trade Commission is close to filing its own complaint, sources have said.
FTC Chairman Jon Leibowitz said the agency will review the settlement and could not comment further because of its ongoing investigation. Otellini said Intel will meet with the FTC to explain the settlement.
Experts have said it is in Intel's interest to resolve its antitrust troubles as quickly as possible so it does not wind up like Microsoft Corp, which has spent a decade fighting competition agencies around the world.
IN COURT AGAINST NVIDIA
If the FTC goes ahead with its complaint, Intel will have to address broader questions on its business practices that go beyond its dealings with AMD.
"If they (FTC) were going to file a lawsuit, they're going to file a lawsuit. It will have no impact," John Briggs, antitrust attorney with Axinn Veltrop Harkrider LLP said of the AMD settlement.
The AMD deal covers central processing units and has nothing to say about the fast-growing market for graphics processing units, which facilitate pictures and video on PCs.
Graphics chip maker Nvidia is already in Delaware court with a patent dispute with Intel, and said its ability to compete is being squelched by the larger company.
"We would be extremely disappointed with a decision to drop the FTC case. We don't think that protects consumers for current technology, as well as future technology," said Nvidia's general counsel, David Shannon.
New York Attorney General Andrew Cuomo has separately filed an 83-page lawsuit last week asserting that Intel threatened computer makers and paid billions of dollars in kickbacks to maintain its market dominance.
A source familiar with the matter said the AMD-Intel settlement does not change the attorney general's complaint.
"We strongly disagree with the New York Attorney General's case, and believe the complaint is entirely without merit. Discounting and rebates are standard business practices and perfectly legal," Otellini said.
Intel has hired WilmerHale partner and antitrust specialist Douglas Melamed to fill its vacant general counsel position, a source familiar with the company said.
GLOBAL SETTLEMENT
AMD agreed to drop a lawsuit against Intel in Delaware and two cases in Japan, saying the settlement creates a level playing field and is "a pivot from war to peace." AMD noted though that some narrow issues on Intel rebates remain.
The two companies also sealed a five-year cross license deal and gave up any claims of breach from a previous licensing agreement, paving the way to make AMD fully "fabless."
AMD had spun off its chip fabrication factories into GlobalFoundries, but was forced to maintain a majority ownership because of existing licensing provisions.
An independent GlobalFoundries is expected to combine with Chartered Semiconductor Manufacturing Ltd in Singapore because both companies have heavy investment from Abu Dhabi's sovereign wealth fund.
"It will take time for people to understand how operating conditions in the processor business have changed. But make no mistake, they have changed," said AMD CEO Dirk Meyer.
Analysts expect AMD, which reported its 12th consecutive quarterly loss last month, to use the settlement to pay down some of its $3.2 billion of debt.
"It eliminates a large amount of uncertainty for both companies. $1.2 billion is a lot of money and I believe AMD will use it to accelerate their debt payment," said Joanne Feeney of FTC Equity Capital Markets.
Shares of AMD jumped $1.16 to $6.48, lifting its market value to about $4.3 billion from $3.6 billion.
Shares of Intel fell 16 cents to $19.68, in line with the broader decline on Nasdaq.
Intel chipmaker adjusted its fourth-quarter outlook due to the settlement, raising its spending forecast to $4.2 billion from $2.9 billion. It said its effective tax rate would be about 20 percent, down from 26 percent.
(Additional reporting by Steve Eder in New York, Yun Chee Foo in Brussels, Gabriel Madway and Ian Sherr in San Francisco, and Diane Bartz in Washington)
Courtesy: mydigitalfc.com
AMD, whose shares jumped 22 percent, agreed to withdraw essentially all its regulatory complaints and litigation against Intel, ending a global campaign that it has waged on the world's largest chipmaker for 12 years.
Some analysts said the deal takes the steam out of a pending U.S. Federal Trade Commission investigation into Intel's business practices.
But others said Intel has critics beyond AMD and its regulatory troubles are far from over. Among Intel's adversaries are graphics chip maker Nvidia Corp and New York Attorney General Andrew Cuomo.
Intel Chief Executive Paul Otellini denied any wrongdoing by the company but said it decided to settle the dispute with AMD to avoid the risk of a triple-damages finding by a jury.
"Intel got the fact that it was a major risk of a huge settlement in front of a jury," said Broadpoint Amtech analyst Doug Freedman. "It removes the coin-flip of a jury trial."
AMD has argued that Intel used illegal means to preserve its 80 percent share of the global market for central processing units, which are the brains of personal computers.
Regulators in Asia and Europe have agreed, imposing fines and other remedies on Intel. The U.S. Federal Trade Commission is close to filing its own complaint, sources have said.
FTC Chairman Jon Leibowitz said the agency will review the settlement and could not comment further because of its ongoing investigation. Otellini said Intel will meet with the FTC to explain the settlement.
Experts have said it is in Intel's interest to resolve its antitrust troubles as quickly as possible so it does not wind up like Microsoft Corp, which has spent a decade fighting competition agencies around the world.
IN COURT AGAINST NVIDIA
If the FTC goes ahead with its complaint, Intel will have to address broader questions on its business practices that go beyond its dealings with AMD.
"If they (FTC) were going to file a lawsuit, they're going to file a lawsuit. It will have no impact," John Briggs, antitrust attorney with Axinn Veltrop Harkrider LLP said of the AMD settlement.
The AMD deal covers central processing units and has nothing to say about the fast-growing market for graphics processing units, which facilitate pictures and video on PCs.
Graphics chip maker Nvidia is already in Delaware court with a patent dispute with Intel, and said its ability to compete is being squelched by the larger company.
"We would be extremely disappointed with a decision to drop the FTC case. We don't think that protects consumers for current technology, as well as future technology," said Nvidia's general counsel, David Shannon.
New York Attorney General Andrew Cuomo has separately filed an 83-page lawsuit last week asserting that Intel threatened computer makers and paid billions of dollars in kickbacks to maintain its market dominance.
A source familiar with the matter said the AMD-Intel settlement does not change the attorney general's complaint.
"We strongly disagree with the New York Attorney General's case, and believe the complaint is entirely without merit. Discounting and rebates are standard business practices and perfectly legal," Otellini said.
Intel has hired WilmerHale partner and antitrust specialist Douglas Melamed to fill its vacant general counsel position, a source familiar with the company said.
GLOBAL SETTLEMENT
AMD agreed to drop a lawsuit against Intel in Delaware and two cases in Japan, saying the settlement creates a level playing field and is "a pivot from war to peace." AMD noted though that some narrow issues on Intel rebates remain.
The two companies also sealed a five-year cross license deal and gave up any claims of breach from a previous licensing agreement, paving the way to make AMD fully "fabless."
AMD had spun off its chip fabrication factories into GlobalFoundries, but was forced to maintain a majority ownership because of existing licensing provisions.
An independent GlobalFoundries is expected to combine with Chartered Semiconductor Manufacturing Ltd in Singapore because both companies have heavy investment from Abu Dhabi's sovereign wealth fund.
"It will take time for people to understand how operating conditions in the processor business have changed. But make no mistake, they have changed," said AMD CEO Dirk Meyer.
Analysts expect AMD, which reported its 12th consecutive quarterly loss last month, to use the settlement to pay down some of its $3.2 billion of debt.
"It eliminates a large amount of uncertainty for both companies. $1.2 billion is a lot of money and I believe AMD will use it to accelerate their debt payment," said Joanne Feeney of FTC Equity Capital Markets.
Shares of AMD jumped $1.16 to $6.48, lifting its market value to about $4.3 billion from $3.6 billion.
Shares of Intel fell 16 cents to $19.68, in line with the broader decline on Nasdaq.
Intel chipmaker adjusted its fourth-quarter outlook due to the settlement, raising its spending forecast to $4.2 billion from $2.9 billion. It said its effective tax rate would be about 20 percent, down from 26 percent.
(Additional reporting by Steve Eder in New York, Yun Chee Foo in Brussels, Gabriel Madway and Ian Sherr in San Francisco, and Diane Bartz in Washington)
Courtesy: mydigitalfc.com
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