Verizon Data Services India (VDSI), the captive IT support arm of US-based Verizon corporation, may be looking at a gradual recruitment spread over the coming year, resulting in a 10% increase in its current headcount of 4,500.
This would be on par with its headcount growth of 11% per annum in FY08 and FY09. VDSI, one of the top software exporters from Chennai, provides IT support to its parent company’s wireline telecom arm Verizon Telecom (VzT), operating only in the US and enterprise network solutions arm Verizon Business (VzB), which operates in various countries, including India. In that sense, it is an IT software and services company serving just one sector — telecom.
Speaking to ET, VDSI senior VP and MD Rahul Saxena said, “Globally, telecom, as a sector, has not really been hit by the recession. In any case, VDSI being the only IT support centre for VzT and internal IT contracts not diminishing during a slowdown, we have been able to sustain our business.” VzT has a 700-strong IT support centre in Argentina, mainly to cater to its local operations. VDSI remains its only large captive IT unit.
Monday, August 3, 2009
H1-B, NRIs, Outsourcing
Congress may push India's IT firms to Mexico with H-1B crackdown: ComputerWorld
Source: ComputerWorld
If U.S. clamps down on visas, India's alternative may be Mexico and NAFTA.
As Indian firms fight the threat of H-1B restrictions, IT services companies might not leave their fate to politics. In an effort to reduce their need for visas, they may look to increase their presence south of the border.
Indian IT firms have boosted operations in Mexico in recent years to serve Latin American and U.S. customers. One advantage to doing so involves the North American Free Trade Agreement (NAFTA), which enables Mexican and Canadian professionals to work in the U.S. without an H-1B visa.
In other words, Indian firms could send employees to Mexico, and then move some of their Mexican workers to the U.S. under the auspices of the treaty. The Mexican workers would not need an H-1B visa to work in the U.S., though they would need what's called a TN visa. That visa is available to Mexican and Canadian nationals who qualify under a number of professional categories and meet specific education and experience requirements.
If Indian companies set up a visa safety net in Mexico it will be because of concerns about legislation from U.S. Sens. Chuck Grassley, (R-Iowa), and Dick Durbin, (D-Ill.). Of particularly concern is the bill's so-called "50-50" rule that limits the number of workers on H-1B or L-1 visas to half of a firm's total U.S. headcount. The majority of Indian companies in the U.S. have far more people working with visas than not.
The NAFTA benefit -- essentially allowing Indian companies to move relatively lower cost workers in and out of the U.S. without the H-1B visa -- was cited this week by Phaneesh Murthy, president and CEO of IT services firm iGate Corp., in Fremont Calif. IGate has the majority of its 6,500-plus workforce in India.
Murthy told analysts during an earnings call that U.S. visa restrictions could prompt his company to increase work in Mexico.
"We will probably utilize a higher growth in our Mexican center by having more people come from Mexico to the U.S., where they don't need the H-1B because of being part of NAFTA," said Murthy, according to a transcript on the financial site Seeking Alpha. "So, I think our business models will change and we are ready for those changes in business model," he said.
Many of the major Indian firms have operations in Mexico. MexicoIT, an industry group in Mexico City, said there are 500,000 IT professionals in the country, with another 65,000 graduating each year from colleges with degrees in IT-related skills. While costs are higher in Mexico than in India, Alfredo Pacheco, CEO of MexicoIT, said the difference is only about 10% to 12%.
Put in perspective, Mexico today is little more than a niche location for the large Indian firms. For instance, Mumbai-based Tata Consultancy Services (TCS) announced last month its third delivery center in Mexico with plans for 500 workers. TCS has 142,000 workers worldwide, but 92% of those workers are Indian, with the rest scattered around the world, according to company data.
Another way Indian firms can reduce their reliance on H-1B visas is to complete more of their U.S. customer work offshore. That's something U.S.-based IT providers have been trying to emulate. Eric Simonson, managing principal of research at the Everest Group, in Dallas, said between 75% and 80% of the workers at the Indian firms work offshore. In its most recent quarter, TCS cited improvements in its offshore ratio; Simonson believes it's because the vendor's customers are "more comfortable with how the model is developing and willing to push the the needle a little more."
There has been no action yet on the Grassley/Durbin legislation. Sen. Chuck Schumer, (D-N.Y.), hopes to introduce a comprehensive immigration reform bill by Labor Day that would bring a different approach to the H-1B visa issue. If there are restrictions on H-1B visas, NAFTA's provisions provide interesting possibilities for the Indian firms.
The NAFTA Professional TN visa is not capped; it's good for three years, and can be extended, according to Anastasia Tonello, a parter at Laura Devine Attorneys LLC in New York. Compared to the H-1B, it is also much easier to get, she said. Technology workers would likely seek TN visas as either computer systems analysts or as management consultants.
Jorge Pinto, professor of international business at Pace University in New York, said Mexico is coming into its own as a technology provider and more Mexican students are studying engineering in the U.S. Although the cost of living in Mexico is cheaper, Pinto doesn't see the main benefit of using Mexican workers as saving money. Instead, it's more a way of having an increasingly educated talent pool that is a short flight away from the U.S. "The advantage is not really cheap labor, it's a much more complicated matter," he said.
Lynn McNeal, a partner at outsourcing advisory firm TPI Inc. in Houston, doesn't believe that Mexico competes as well as lower-cost countries in Latin American, but its proximity to the U.S. already attracts significant investment. "The trend is well under way, regardless of the threat from Congress," he said.
If U.S. clamps down on visas, India's alternative may be Mexico and NAFTA.
As Indian firms fight the threat of H-1B restrictions, IT services companies might not leave their fate to politics. In an effort to reduce their need for visas, they may look to increase their presence south of the border.
Indian IT firms have boosted operations in Mexico in recent years to serve Latin American and U.S. customers. One advantage to doing so involves the North American Free Trade Agreement (NAFTA), which enables Mexican and Canadian professionals to work in the U.S. without an H-1B visa.
In other words, Indian firms could send employees to Mexico, and then move some of their Mexican workers to the U.S. under the auspices of the treaty. The Mexican workers would not need an H-1B visa to work in the U.S., though they would need what's called a TN visa. That visa is available to Mexican and Canadian nationals who qualify under a number of professional categories and meet specific education and experience requirements.
If Indian companies set up a visa safety net in Mexico it will be because of concerns about legislation from U.S. Sens. Chuck Grassley, (R-Iowa), and Dick Durbin, (D-Ill.). Of particularly concern is the bill's so-called "50-50" rule that limits the number of workers on H-1B or L-1 visas to half of a firm's total U.S. headcount. The majority of Indian companies in the U.S. have far more people working with visas than not.
The NAFTA benefit -- essentially allowing Indian companies to move relatively lower cost workers in and out of the U.S. without the H-1B visa -- was cited this week by Phaneesh Murthy, president and CEO of IT services firm iGate Corp., in Fremont Calif. IGate has the majority of its 6,500-plus workforce in India.
Murthy told analysts during an earnings call that U.S. visa restrictions could prompt his company to increase work in Mexico.
"We will probably utilize a higher growth in our Mexican center by having more people come from Mexico to the U.S., where they don't need the H-1B because of being part of NAFTA," said Murthy, according to a transcript on the financial site Seeking Alpha. "So, I think our business models will change and we are ready for those changes in business model," he said.
Many of the major Indian firms have operations in Mexico. MexicoIT, an industry group in Mexico City, said there are 500,000 IT professionals in the country, with another 65,000 graduating each year from colleges with degrees in IT-related skills. While costs are higher in Mexico than in India, Alfredo Pacheco, CEO of MexicoIT, said the difference is only about 10% to 12%.
Put in perspective, Mexico today is little more than a niche location for the large Indian firms. For instance, Mumbai-based Tata Consultancy Services (TCS) announced last month its third delivery center in Mexico with plans for 500 workers. TCS has 142,000 workers worldwide, but 92% of those workers are Indian, with the rest scattered around the world, according to company data.
Another way Indian firms can reduce their reliance on H-1B visas is to complete more of their U.S. customer work offshore. That's something U.S.-based IT providers have been trying to emulate. Eric Simonson, managing principal of research at the Everest Group, in Dallas, said between 75% and 80% of the workers at the Indian firms work offshore. In its most recent quarter, TCS cited improvements in its offshore ratio; Simonson believes it's because the vendor's customers are "more comfortable with how the model is developing and willing to push the the needle a little more."
There has been no action yet on the Grassley/Durbin legislation. Sen. Chuck Schumer, (D-N.Y.), hopes to introduce a comprehensive immigration reform bill by Labor Day that would bring a different approach to the H-1B visa issue. If there are restrictions on H-1B visas, NAFTA's provisions provide interesting possibilities for the Indian firms.
The NAFTA Professional TN visa is not capped; it's good for three years, and can be extended, according to Anastasia Tonello, a parter at Laura Devine Attorneys LLC in New York. Compared to the H-1B, it is also much easier to get, she said. Technology workers would likely seek TN visas as either computer systems analysts or as management consultants.
Jorge Pinto, professor of international business at Pace University in New York, said Mexico is coming into its own as a technology provider and more Mexican students are studying engineering in the U.S. Although the cost of living in Mexico is cheaper, Pinto doesn't see the main benefit of using Mexican workers as saving money. Instead, it's more a way of having an increasingly educated talent pool that is a short flight away from the U.S. "The advantage is not really cheap labor, it's a much more complicated matter," he said.
Lynn McNeal, a partner at outsourcing advisory firm TPI Inc. in Houston, doesn't believe that Mexico competes as well as lower-cost countries in Latin American, but its proximity to the U.S. already attracts significant investment. "The trend is well under way, regardless of the threat from Congress," he said.
BPO
NASSCOM's Best BPOs list
As a part of the findings of its annual survey on the performance of the Indian IT-BPO services sector for FY08-09 and outlook for FY09-10, NASSCOM released the annual rankings for the Top 10 BPO rankings for FY08-09. NASSCOM also released Top employers of Indian IT services sector for FY08-09.
The NASSCOM survey estimates that the IT-BPO export revenues will grow by 4-7% to reach $48-50 billion in FY09-10.
1. Genpact
Genpact provides a wide range of services, including Finance & Accounting, Collections and Customer Service, Insurance, Supply Chain & Procurement, Analytics, Enterprise Application, IT Infrastructure and Management.
Genpact manages complex processes in multiple geographic regions, delivering its services from a global network of more than 35 operations centers in 12 countries.
2. WNS Global Services
WNS delivers the entire spectrum of business processes – from shared back office processes to industry-specific front and middle office processes, all the way to complex, actionable research and analytics.
3. IBM Daksh
In April 2004, IBM Corporation acquired Daksh e-Services to serve as a global hub to manage business processes for clients across the world.
With 25 service delivery centers in India and the Philippines, IBM Daksh is an integral part of IBM's BPO/BTO delivery network around the world.
4. Wipro BPO
In 2002, Wipro took a quantum jump in the BPO services by acquiring the then Spectramind. Wipro BPO Solutions, complements the services offered by Wipro Technologies, making it one of the largest BPO service players.
5. TCS BPO
Tata Consultancy Services is an IT services, business solutions and outsourcing organization that delivers real results to global businesses, ensuring a level of certainty no other firm can match.
TCS offers a consulting-led, integrated portfolio of IT and IT-enabled services delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development.
6. Firstsource Solutions Ltd
Firstsource is a global provider of business process management services. It offers a wide range of services across banking and financial services, telecommunications and media and the healthcare industry.
Firstsource provides services throughout the customer lifecycle, including customer acquisition, customer care, billing and collections, transaction processing and business research and analytics.
7. Aditya Birla Minacs
Aditya Birla Minacs provides customized business process outsourcing (BPO) solutions focused on five core areas of capability: customer relationship management/contact centers, integrated marketing services, knowledge and process outsourcing, finance and accounting outsourcing and IT.
The company combines expertise in these areas to improve revenue, customer service, and operating margin for Fortune 500 clients.
8. Aegis Ltd
Aegis is one of the fastest growing BPO companies in India. An Essar Group enterprise, Aegis offers the benefits of the global delivery model, strong financial strength, deep domain expertise, comprehensive and flexible solutions offerings, and a rich international talent pool.
9. Infosys BPO
Infosys BPO is an end-to-end outsourcing services provider. It address business challenges through its integrated IT and business process outsourcing solutions.
Infosys BPO is a global company with 12 delivery centers across the Asia Pacific, Latin America, Europe and India.
10. HCL BPO
HCL BPO, a division of HCL Technologies Limited started its venture early in 2001 and is now a dominant player in the BPO field drawing revenue of $232.15 million. With over 11,400 professionals operating out of India, UK and USA, HCL BPO runs 21 delivery centres. HCL BPO offers 24X7 multichannel, multilingual support in eight European languages.
The NASSCOM survey estimates that the IT-BPO export revenues will grow by 4-7% to reach $48-50 billion in FY09-10.
1. Genpact
Genpact provides a wide range of services, including Finance & Accounting, Collections and Customer Service, Insurance, Supply Chain & Procurement, Analytics, Enterprise Application, IT Infrastructure and Management.
Genpact manages complex processes in multiple geographic regions, delivering its services from a global network of more than 35 operations centers in 12 countries.
2. WNS Global Services
WNS delivers the entire spectrum of business processes – from shared back office processes to industry-specific front and middle office processes, all the way to complex, actionable research and analytics.
3. IBM Daksh
In April 2004, IBM Corporation acquired Daksh e-Services to serve as a global hub to manage business processes for clients across the world.
With 25 service delivery centers in India and the Philippines, IBM Daksh is an integral part of IBM's BPO/BTO delivery network around the world.
4. Wipro BPO
In 2002, Wipro took a quantum jump in the BPO services by acquiring the then Spectramind. Wipro BPO Solutions, complements the services offered by Wipro Technologies, making it one of the largest BPO service players.
5. TCS BPO
Tata Consultancy Services is an IT services, business solutions and outsourcing organization that delivers real results to global businesses, ensuring a level of certainty no other firm can match.
TCS offers a consulting-led, integrated portfolio of IT and IT-enabled services delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development.
6. Firstsource Solutions Ltd
Firstsource is a global provider of business process management services. It offers a wide range of services across banking and financial services, telecommunications and media and the healthcare industry.
Firstsource provides services throughout the customer lifecycle, including customer acquisition, customer care, billing and collections, transaction processing and business research and analytics.
7. Aditya Birla Minacs
Aditya Birla Minacs provides customized business process outsourcing (BPO) solutions focused on five core areas of capability: customer relationship management/contact centers, integrated marketing services, knowledge and process outsourcing, finance and accounting outsourcing and IT.
The company combines expertise in these areas to improve revenue, customer service, and operating margin for Fortune 500 clients.
8. Aegis Ltd
Aegis is one of the fastest growing BPO companies in India. An Essar Group enterprise, Aegis offers the benefits of the global delivery model, strong financial strength, deep domain expertise, comprehensive and flexible solutions offerings, and a rich international talent pool.
9. Infosys BPO
Infosys BPO is an end-to-end outsourcing services provider. It address business challenges through its integrated IT and business process outsourcing solutions.
Infosys BPO is a global company with 12 delivery centers across the Asia Pacific, Latin America, Europe and India.
10. HCL BPO
HCL BPO, a division of HCL Technologies Limited started its venture early in 2001 and is now a dominant player in the BPO field drawing revenue of $232.15 million. With over 11,400 professionals operating out of India, UK and USA, HCL BPO runs 21 delivery centres. HCL BPO offers 24X7 multichannel, multilingual support in eight European languages.
IT market
IIHT plans 100 centres overseas
After establishing its presence in China, IT training company Indian Institute of Hardware Technology (IIHT) has its eyes set on the emerging markets. The Bangalore-headquartered IT hardware training firm is planning to set up 100 centres globally in the next three years.
Essentially looking at the franchisee model, the company is eyeing countries including South Africa, Nigeria, Rwanda, Saudi Arabia, Vietnam, Mauritius and Egypt for providing hardware training. At present, IIHT has five centres in Africa and one in Turkey.
“We are planning to join hands with local business partners. The tie-ups will be such that IIHT will get 20 per cent of the revenue generated by each of these centres,” said IIHT CEO
N Keshav Raju. The hardware training firm also plans to open 80 new centres in India by the end of this financial year. “At present we have about 220 centres and we intend to establish our presence in tier III as well as tier IV cities,” Raju added.
On the firm’s operations in China, Raju said that while its earlier plans of setting up 100 centres in China by 2009 have been delayed, it is confident of achieving this target by 2012. IIHT has 14 centres in China from which it generates 5 per cent of its revenue.
It has already signed up with 10 colleges in India to provide training to students on infrastructure management services (IMS). By the year end, IIHT will scale up this number to 100 colleges across the nation.
It has also started working with the government to capture vocational education segment in India. “The government is increasingly showing more interest in vocational education and also investing money in this sector. We being a niche player would like to make full use of that space,” he said.
Essentially looking at the franchisee model, the company is eyeing countries including South Africa, Nigeria, Rwanda, Saudi Arabia, Vietnam, Mauritius and Egypt for providing hardware training. At present, IIHT has five centres in Africa and one in Turkey.
“We are planning to join hands with local business partners. The tie-ups will be such that IIHT will get 20 per cent of the revenue generated by each of these centres,” said IIHT CEO
N Keshav Raju. The hardware training firm also plans to open 80 new centres in India by the end of this financial year. “At present we have about 220 centres and we intend to establish our presence in tier III as well as tier IV cities,” Raju added.
On the firm’s operations in China, Raju said that while its earlier plans of setting up 100 centres in China by 2009 have been delayed, it is confident of achieving this target by 2012. IIHT has 14 centres in China from which it generates 5 per cent of its revenue.
It has already signed up with 10 colleges in India to provide training to students on infrastructure management services (IMS). By the year end, IIHT will scale up this number to 100 colleges across the nation.
It has also started working with the government to capture vocational education segment in India. “The government is increasingly showing more interest in vocational education and also investing money in this sector. We being a niche player would like to make full use of that space,” he said.
Recession
US recession 'seems to be ending'; Recovery to be gradual: IMF
The sharp fall in the economic output of the world's largest economy, the United States seems to be ending but the recovery is likely to be gradual as there are still some financial strains, the International Monetary Fund has said.
IMF in its annual report on the US said: "As a result of their increasingly strong and comprehensive policy measures, the sharp fall in economic output seems to be ending, and confidence in financial stability has strengthened."
IMF has projected the real GDP for the United States for 2009 at negative 2.6 per cent, and for the year 2010, it would improve significantly and was pegged at 0.8 per cent.
However, as some financial strains are still round the corner, the recovery is likely to be gradual. "With financial strains still elevated, the recovery is likely to be gradual, and risks are tilted to the downside," the IMF report said.
The prospect in the job market however remains weak as the unemployment rate for United States is on an uptrend. The unemployment rate for US which was as low as 5.5 per cent in 2004 is likely to touch 9.3 per cent in 2009 and would further deteriorate to 10.1 per cent in the year 2010, IMF added.
As per the IMF executive board assessment, policies under the Financial Stability Plan like-- stress tests, debt guarantees, and capital injections-- have contributed to a significant improvement in financial conditions.
IMF in its annual report on the US said: "As a result of their increasingly strong and comprehensive policy measures, the sharp fall in economic output seems to be ending, and confidence in financial stability has strengthened."
IMF has projected the real GDP for the United States for 2009 at negative 2.6 per cent, and for the year 2010, it would improve significantly and was pegged at 0.8 per cent.
However, as some financial strains are still round the corner, the recovery is likely to be gradual. "With financial strains still elevated, the recovery is likely to be gradual, and risks are tilted to the downside," the IMF report said.
The prospect in the job market however remains weak as the unemployment rate for United States is on an uptrend. The unemployment rate for US which was as low as 5.5 per cent in 2004 is likely to touch 9.3 per cent in 2009 and would further deteriorate to 10.1 per cent in the year 2010, IMF added.
As per the IMF executive board assessment, policies under the Financial Stability Plan like-- stress tests, debt guarantees, and capital injections-- have contributed to a significant improvement in financial conditions.
Infosys, IT market, Outsourcing, TCS, Wipro
IT majors chase Rs 2,500-cr railways’ outsourcing deal
Tech firms TCS and Wipro, apart from several others, are in pursuit of up to Rs 2,500-crore outsourcing contract at Indian Railways, as the world’s biggest civilian employer plans to procure a human resource management system (HRMS) and other modules for integrating and automating functions of payroll, accounting and pension.
With around 1.6 million employees, Indian Railways aims to have a centralised system for managing its staff better. The organisation plans to spend around $1.5 billion over the next two to three years on technology.
“We will be coming out with a request for proposal very soon. The idea is to have built-operate-transfer (BOT) model with the vendors,” said a senior railways official. He requested anonymity because he is not authorised to talk about the project.
In order to avoid high capital investments in acquiring these solutions, railways is exploring cost-effective models such as software-as-a-service, wherein entire infrastructure and application software will be owned by vendors. “We also plan to bring performance and efficiency-linked parameters for paying these vendors,” the official added. At least two senior officials at Indian tech firms chasing this contract confirmed their interest on conditions of anonymity because they are not authorised to speak to media about their companies’ business pursuits.
“It will be a PPP and the pricing will be based on the number of transactions, while the IT company will fund and manage the entire IT set-up,” one of the executives said.
Indian Railways, which is the second largest rail network in the world, also plans to outsource another contract called ‘implementation of software-aided train scheduling’, valued at around Rs 450 crore. TCS, Infosys, Wipro and Mahindra Satyam are already bidding for this contract. The project will help railways do real-time train scheduling and management with the help of a software solution.
“Wipro is already doing two pilots for Indian Railways. One is a pilot for RFID and will be rolled out in next 12-18 months. The company is doing another control charting pilot for Railways where it charts the movement of trains,” another person familiar with outsourcing contract being awarded by Railways said. Both TCS and Wipro declined to offer specific comments about these contracts.
Railways is planning to outsource three more contracts over the next few months, with each estimated to be in the range of Rs 450 crore to Rs 500 crore. Apart from the asset management contract, the railways plans to invite bids for a contract to develop and deploy a solution for automating and integrating the functions of finance and payroll and the other one for material management solution.
With around 1.6 million employees, Indian Railways aims to have a centralised system for managing its staff better. The organisation plans to spend around $1.5 billion over the next two to three years on technology.
“We will be coming out with a request for proposal very soon. The idea is to have built-operate-transfer (BOT) model with the vendors,” said a senior railways official. He requested anonymity because he is not authorised to talk about the project.
In order to avoid high capital investments in acquiring these solutions, railways is exploring cost-effective models such as software-as-a-service, wherein entire infrastructure and application software will be owned by vendors. “We also plan to bring performance and efficiency-linked parameters for paying these vendors,” the official added. At least two senior officials at Indian tech firms chasing this contract confirmed their interest on conditions of anonymity because they are not authorised to speak to media about their companies’ business pursuits.
“It will be a PPP and the pricing will be based on the number of transactions, while the IT company will fund and manage the entire IT set-up,” one of the executives said.
Indian Railways, which is the second largest rail network in the world, also plans to outsource another contract called ‘implementation of software-aided train scheduling’, valued at around Rs 450 crore. TCS, Infosys, Wipro and Mahindra Satyam are already bidding for this contract. The project will help railways do real-time train scheduling and management with the help of a software solution.
“Wipro is already doing two pilots for Indian Railways. One is a pilot for RFID and will be rolled out in next 12-18 months. The company is doing another control charting pilot for Railways where it charts the movement of trains,” another person familiar with outsourcing contract being awarded by Railways said. Both TCS and Wipro declined to offer specific comments about these contracts.
Railways is planning to outsource three more contracts over the next few months, with each estimated to be in the range of Rs 450 crore to Rs 500 crore. Apart from the asset management contract, the railways plans to invite bids for a contract to develop and deploy a solution for automating and integrating the functions of finance and payroll and the other one for material management solution.
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