Cognizant has pipped Wipro in terms of revenue from the North America — a major market for Indian IT companies. The New Jersey-based company, whose major operations are in India, now ranks third after TCS and Infy. Cognizant’s revenues from the region touched $621 million during April-June 2009 quarter while Wipro’s revenues fell $16 million to $617 million in the same quarter.
“Cognizant has been reporting better results than the others. The company is growing at 13-14 % and is gaining market share more than the others in the region and are growing faster than the competition ,” Manik Taneja of Emkay Research said.
Interestingly, from July-September 2008 quarter till April-June 2009, Cognizant has been the only one in the top four to have consistently gained in revenues from the region. TCS topped the quarter with $774 million and Infy $726 million.
“Cognizant focuses on a limited number of geographies and industries and has built deep capabilities and insights in those areas. Through a combination of deep consulting and domain expertise, and high-touch relationship management , Cognizant has built leadership positions in each of the areas. We will continue to invest in North America, while expanding in other markets like Europe and Asia Pacific,” a Cognizant spokesperson said.
Manish Dugar, CFO, Wipro Technologies told ToI, “We do not believe that we have fallen behind in North America... we continue to win large deals... see good traction in terms of deal pipeline... Our revenues in the US have broadly been in line with our overall performance. While the macroeconomic environment has been challenging in the US, we are starting to see semblance of stability in the markets.”
Thursday, August 20, 2009
IT market
SAP looks to India for enterprise market growth
Validating some of the forecasts made by technology analysts such as Gartner and Forrester about the Indian market, the Indian arm of global software major, SAP, has recorded over 100% growth in licence fee revenues in the June 2009 quarter, even as developed markets like the US and the UK struggle to grow.
The German software maker enjoys a dominant position in the enterprise market and its India subcontinent head, Ranjan Das, is suddenly in focus because India and China are two regions that are still delivering good growth in hard times.
“There is a slowdown. But, India and markets like China are still growing rapidly for SAP, which is both good and bad. Good because we’re getting a lot of attention and focussed investment from SAP, but personally, bad for me because expectations are high,” Mr Das told ET in an exclusive interview.
In terms of total revenue (licence fees plus consulting and support fees), growth from the India sub-continent was 62% as compared to a 12% fall in growth for the Asia-Pacific and Japan region. Licence fee revenue is revenue from the sale of the product giving the customer the licence to use it on a specified number of installations. If the customer also wants maintenance and support or consulting, these are in addition to the licence fees.
SAP does not share absolute revenue figures for India, but Mr Das said the sub-continent had become one of the top-10 revenue generating regions for the software maker, despite being the 14th largest economy in world.
Only two years ago, India was at number 15, but today it is at 7th or 8th. India is even bigger than China for SAP, according to Mr Das. A year and half ago, SAP was expecting to double its India’s business, now it is looking at 40-60% growth.
Mr Das feels the reason why India is beating China is because Indian companies have a better understanding of the value software can provide in bringing cost efficiencies. The big IT spenders for SAP here are telecom firms, public sector undertakings, and services firms. It recently announced engagements in telecom with Vodafone, Tata Teleservices and BSNL.
The German software maker enjoys a dominant position in the enterprise market and its India subcontinent head, Ranjan Das, is suddenly in focus because India and China are two regions that are still delivering good growth in hard times.
“There is a slowdown. But, India and markets like China are still growing rapidly for SAP, which is both good and bad. Good because we’re getting a lot of attention and focussed investment from SAP, but personally, bad for me because expectations are high,” Mr Das told ET in an exclusive interview.
In terms of total revenue (licence fees plus consulting and support fees), growth from the India sub-continent was 62% as compared to a 12% fall in growth for the Asia-Pacific and Japan region. Licence fee revenue is revenue from the sale of the product giving the customer the licence to use it on a specified number of installations. If the customer also wants maintenance and support or consulting, these are in addition to the licence fees.
SAP does not share absolute revenue figures for India, but Mr Das said the sub-continent had become one of the top-10 revenue generating regions for the software maker, despite being the 14th largest economy in world.
Only two years ago, India was at number 15, but today it is at 7th or 8th. India is even bigger than China for SAP, according to Mr Das. A year and half ago, SAP was expecting to double its India’s business, now it is looking at 40-60% growth.
Mr Das feels the reason why India is beating China is because Indian companies have a better understanding of the value software can provide in bringing cost efficiencies. The big IT spenders for SAP here are telecom firms, public sector undertakings, and services firms. It recently announced engagements in telecom with Vodafone, Tata Teleservices and BSNL.
BPO
BPOs focus on $200 bn European market
The $200-billion IT services market in Europe is throwing up greener pastures for major Indian software services companies as new geographies show positive traction besides the traditional market of United Kingdom. Hitherto, UK had remained the key market for the Indian IT services majors like TCS, Infosys, Wipro—and even for Cognizant. It is estimated that more than three-fourth of these companies’ revenue in Europe actually comes from UK.
However, the current economic downturn is changing the contours for these companies in Europe with non-UK countries showing better traction. According to Jens Butler, principal analyst, IT services and sourcing group, Ovum, “The downturn has impacted the UK significantly more than most of Europe (except maybe Spain) and as such, discretionary spend has been reigned back substantially—which will impact the 25%-50 % growth rates they (Indian companies) have been experiencing to date.”
The investments made by these IT majors in countries outside of UK like Nordics, Germany, France and Switzerland are paying rich dividends for them now. For example, TCS in its latest quarterly results reveal that the contribution from continental Europe has marginally increased while it has actually declined in the UK. In the case of Cognizant, continental Europe (non-UK ) accounted for 43% of its revenue its European revenue, recording around 75% growth in 2008.
“In Europe, global sourcing of IT and BPO are relatively underpenetrated, more so in Continental Europe.... We continue to remain optimistic about the growth in Europe ,” said R Chandrasekaran, president and MD, Global Delivery, Cognizant.
“Certain country markets such as the Nordics and Germany that have been slowly moving towards more use of Indian offshore labour, have seen more momentum towards offshoring driven by a combination of the economic climate, the availability of key referenceable customers and the substitution of lower cost Indian labour to replace more expensive Western contractors,” The Bathwick Group principal Katy Ring said.
This shift has also got to do with the sizeable base of Indian IT majors in UK which is estimated to be around $3 billion and recording high growth rates in the future is expected to be very challenging.
Butler pointed out that “continental Europe is a less mature and smaller market for the Indian providers and as such, given the differing base size and experience , there is more likely to be above average growth in newer entry markets.”
BG Srinivas, head of Europe for Infosys, in a recent interview said that their revenue from smaller countries like Nordics and Switzerland is much higher than larger economies such as Germany and France.
Despite the heterogeneity of the European continent with differing cultures and languages, it is expected that this kind of a growth momentum is likely to be maintained in the near future.
Ring said: “Basically, we are seeing a time-lag effect as some country markets within Europe catch-up with the UK’s use of Indian service providers and so growth is likely to continue to be faster in Europe (from a smaller base) than in the UK.”
“The Indian vendors are not standing still and considering less traditional alternative revenue streams, be that from a service or geographic perspective,” Butler said.
However, the current economic downturn is changing the contours for these companies in Europe with non-UK countries showing better traction. According to Jens Butler, principal analyst, IT services and sourcing group, Ovum, “The downturn has impacted the UK significantly more than most of Europe (except maybe Spain) and as such, discretionary spend has been reigned back substantially—which will impact the 25%-50 % growth rates they (Indian companies) have been experiencing to date.”
The investments made by these IT majors in countries outside of UK like Nordics, Germany, France and Switzerland are paying rich dividends for them now. For example, TCS in its latest quarterly results reveal that the contribution from continental Europe has marginally increased while it has actually declined in the UK. In the case of Cognizant, continental Europe (non-UK ) accounted for 43% of its revenue its European revenue, recording around 75% growth in 2008.
“In Europe, global sourcing of IT and BPO are relatively underpenetrated, more so in Continental Europe.... We continue to remain optimistic about the growth in Europe ,” said R Chandrasekaran, president and MD, Global Delivery, Cognizant.
“Certain country markets such as the Nordics and Germany that have been slowly moving towards more use of Indian offshore labour, have seen more momentum towards offshoring driven by a combination of the economic climate, the availability of key referenceable customers and the substitution of lower cost Indian labour to replace more expensive Western contractors,” The Bathwick Group principal Katy Ring said.
This shift has also got to do with the sizeable base of Indian IT majors in UK which is estimated to be around $3 billion and recording high growth rates in the future is expected to be very challenging.
Butler pointed out that “continental Europe is a less mature and smaller market for the Indian providers and as such, given the differing base size and experience , there is more likely to be above average growth in newer entry markets.”
BG Srinivas, head of Europe for Infosys, in a recent interview said that their revenue from smaller countries like Nordics and Switzerland is much higher than larger economies such as Germany and France.
Despite the heterogeneity of the European continent with differing cultures and languages, it is expected that this kind of a growth momentum is likely to be maintained in the near future.
Ring said: “Basically, we are seeing a time-lag effect as some country markets within Europe catch-up with the UK’s use of Indian service providers and so growth is likely to continue to be faster in Europe (from a smaller base) than in the UK.”
“The Indian vendors are not standing still and considering less traditional alternative revenue streams, be that from a service or geographic perspective,” Butler said.
Cost cutting, Recession
Most employees in dark abt biz performance impact on pay
Companies in different parts of the world are keeping their employees better informed about business activities amid economic downturn, but on pay and benefits, the communication seems to be far less, says a survey.
According to global consultancy firm Watson Wyatt, many companies have either communicated to employees about their business performance or plan to do the same in the coming months.
However, the report noted that a considerable chunk of firms surveyed have not informed their employees much about the impact of business performance on pay and benefits.
"Though three-fourths of companies have communicated to employees about the organisation's business performance or plan to do so within 12 months, a considerable number of companies aren't making the connection between the business results and things that affect workers most personally: pay and benefits," the report noted.
The findings are the outcome of a survey covering a total of 328 employers from North America, Europe, the Middle East and Australia who took part in the study, from late-April through mid-June 2009.
In the coming months, only 28 per cent of companies plan to increase communication to employees on business performance. But, when it comes to benefits for employees, only 27 per cent intend to increase their communication while it is only 19 per cent in the case of pay.
"During the past year, employers across many industries have encountered significant challenges in dealing with the global economic downturn,
"... Messages to employees explaining these changes have not been easy to deliver. Employees are concerned and confused. They do not know what all this means for their future or when the next take-aways will come along," the report said.
In terms of the medium of communication with employees, 'face-to-face discussions', 'staff meetings' and 'e-mails' are preferred, the report added.
As per the survey, leaders at different levels of their organisations have different goals for communication efforts. Among those surveyed, about 49 per cent senior leaders are most apt to communicate to ease employee stress regarding the impact of economic downturn on business.
Source: EconomicTimes
According to global consultancy firm Watson Wyatt, many companies have either communicated to employees about their business performance or plan to do the same in the coming months.
However, the report noted that a considerable chunk of firms surveyed have not informed their employees much about the impact of business performance on pay and benefits.
"Though three-fourths of companies have communicated to employees about the organisation's business performance or plan to do so within 12 months, a considerable number of companies aren't making the connection between the business results and things that affect workers most personally: pay and benefits," the report noted.
The findings are the outcome of a survey covering a total of 328 employers from North America, Europe, the Middle East and Australia who took part in the study, from late-April through mid-June 2009.
In the coming months, only 28 per cent of companies plan to increase communication to employees on business performance. But, when it comes to benefits for employees, only 27 per cent intend to increase their communication while it is only 19 per cent in the case of pay.
"During the past year, employers across many industries have encountered significant challenges in dealing with the global economic downturn,
"... Messages to employees explaining these changes have not been easy to deliver. Employees are concerned and confused. They do not know what all this means for their future or when the next take-aways will come along," the report said.
In terms of the medium of communication with employees, 'face-to-face discussions', 'staff meetings' and 'e-mails' are preferred, the report added.
As per the survey, leaders at different levels of their organisations have different goals for communication efforts. Among those surveyed, about 49 per cent senior leaders are most apt to communicate to ease employee stress regarding the impact of economic downturn on business.
Source: EconomicTimes
IT market, New Deals
India's education sector to step up its IT spending
India's education sector is forecasted to increase its IT spending from an estimated $356 million in 2008 to $704 million by 2012, reflecting in a Compounded Annual Growth Rate (CAGR) of 19 percent during 2007-2012, according to the research study by Springboard Research, an IT Market Research industry. Majority of educational institutes in India are expected to spend on networking and basic infrastructure upgrades in the next two years.
According to Springboard's report "Inside the Campus: IT in India's Education Sector", Wireless LAN (WLAN), Storage Area Network (SAN) and ERP are the three most popular IT solutions adopted by educational institutes in India. "In particular, a large number of institutions are opting for networking solutions, storage and ERP implementations to support their business, upgrade operations and streamline budgets," said Nilotpal Chakravarti, Senior Research Analyst - Vertical Markets at Springboard Research.
Findings of the report are based on Springboard interviews of IT solution providers, System Integrators and solution vendors in the education vertical, along with a survey of 250 IT decision-makers from primary, secondary and higher educational institutions in India.
The report revealed that majority of institutes reported moderate to high IT spending on software (up to 50 percent of their total IT spending). In contrast, 18 percent of respondents reported spending more than 75 percent of their budgets on hardware. Spending on IT services remains low in the Indian education sector with nearly half of respondents spending up to 25 percent of their budgets on services. "License and subscription fee renewals take up a large piece of spending, while network infrastructure upgrades will enable students and teachers to have more access to quality curriculum-based digital content such as digital learning objects," Chakravarti said. When questioned on their future IT investment plans, survey respondents gave the highest importance to networking, PCs and servers and student administration systems. The report revealed high level of home PC penetration among students in major cities in India with 74 percent of school students and 86 percent of college and higher education students estimated to have access to personal computers at home.
Also, a majority of respondents in the survey named Microsoft as a leader in providing educational software and solutions. Other key solution players in the market are IBM, NIIT and Oracle. According to the survey respondents, IBM led the market in servers and storage infrastructure, HP was ranked as top PC vendor in the education market and D-Link and Cisco are the top two networking vendors in the education sector in India.
"Educational institutions in India are presently focused on the deployment of IT systems that will enable them to improve the educational process for their students, and to stay ahead of the competition," said Chakravarti.
According to Springboard's report "Inside the Campus: IT in India's Education Sector", Wireless LAN (WLAN), Storage Area Network (SAN) and ERP are the three most popular IT solutions adopted by educational institutes in India. "In particular, a large number of institutions are opting for networking solutions, storage and ERP implementations to support their business, upgrade operations and streamline budgets," said Nilotpal Chakravarti, Senior Research Analyst - Vertical Markets at Springboard Research.
Findings of the report are based on Springboard interviews of IT solution providers, System Integrators and solution vendors in the education vertical, along with a survey of 250 IT decision-makers from primary, secondary and higher educational institutions in India.
The report revealed that majority of institutes reported moderate to high IT spending on software (up to 50 percent of their total IT spending). In contrast, 18 percent of respondents reported spending more than 75 percent of their budgets on hardware. Spending on IT services remains low in the Indian education sector with nearly half of respondents spending up to 25 percent of their budgets on services. "License and subscription fee renewals take up a large piece of spending, while network infrastructure upgrades will enable students and teachers to have more access to quality curriculum-based digital content such as digital learning objects," Chakravarti said. When questioned on their future IT investment plans, survey respondents gave the highest importance to networking, PCs and servers and student administration systems. The report revealed high level of home PC penetration among students in major cities in India with 74 percent of school students and 86 percent of college and higher education students estimated to have access to personal computers at home.
Also, a majority of respondents in the survey named Microsoft as a leader in providing educational software and solutions. Other key solution players in the market are IBM, NIIT and Oracle. According to the survey respondents, IBM led the market in servers and storage infrastructure, HP was ranked as top PC vendor in the education market and D-Link and Cisco are the top two networking vendors in the education sector in India.
"Educational institutions in India are presently focused on the deployment of IT systems that will enable them to improve the educational process for their students, and to stay ahead of the competition," said Chakravarti.
Infosys, New Deals
Infosys bids for over 10 govt deals
Infosys Technologies, India's second-largest IT services exporter, has bid for more than 10 large government projects in India as part of a drive to lower its dependence on the US market, an official said.
Infosys, which gets more than half its business from the United States, plans to generate $1 billion in revenue from the Indian market in 2-3 years versus an insignificant level now, the head of its India business unit said.
"There are large opportunities in India. So we are definitely going to go after these kinds of businesses very aggressively in India," Binod Rangadore said. "We have a very healthy pipeline right now."
The market for technology and business outsourcing services in India is expected to expand five-fold by 2020 to $90 billion to $100 billion on the back of a growing economy, according to a recent study by lobby group NASSCOM and consultancy McKinsey.
Outsourcing firms such as Infosys and bigger rival Tata Consultancy Services are tapping new markets such as India, China, Japan and countries in Europe to beat a recession in the United States.
The Indian firms face competition from big global players such as IBM Inc, Hewlett-Packard and Accenture that have raided their home turf as they look for growth outside their mature markets.
US business software maker CA expects its bookings, an indicator of future business, will rise 50 percent in the year to March 2010 and by 30-40 percent for the following two years on growing technology spending.
Infosys, which set up its India business unit in late 2007 as part of a strategy to diversify its revenue base, has put in bids for IT services contracts from railways and state-run telecom Bharat Sanchar Nigam Ltd (BSNL) among others, Rangadore said.
He declined to set a timeframe for the outcome of the bids. The US market had contributed 63.2 percent of Infosys’ 2008/09 revenue of $4.4 billion, with just 1.3 percent coming from India.
Rangadore said the business from IT services in India was very
Window of opportunity
Last month, Infosys said it had won a contract to design, develop and support a portal for the ministry of commerce and industry. A government official said the contract was valued at Rs 150 million ($3 million) for three years.
Infosys, which has a market value of $23 billion, has also won a project from the tax authorities for a project to enable electronic filing by taxpayers, Rangadore said.
He said spending on technology by private companies was seeing a slowdown in India due to the economic downturn, but investment by the government remained robust and was likely to increase in the near term.
A host of IT services firms are expected to vie for the government's initiative to provide the country's more than 1 billion people with identity cards, a new project which is being headed by Infosys co-founder Nandan Nilekani.
"The window of opportunity in India is probably in the next one to two years when most of the decisions will be made for large spending in India," Rangadore said.
The Infosys stock has jumped about 75 percent this year, compared with a 54 percent rise in the main index.
small and bulk of the revenue in India came from Finacle, the banking solutions and services unit of Infosys.
Infosys, which gets more than half its business from the United States, plans to generate $1 billion in revenue from the Indian market in 2-3 years versus an insignificant level now, the head of its India business unit said.
"There are large opportunities in India. So we are definitely going to go after these kinds of businesses very aggressively in India," Binod Rangadore said. "We have a very healthy pipeline right now."
The market for technology and business outsourcing services in India is expected to expand five-fold by 2020 to $90 billion to $100 billion on the back of a growing economy, according to a recent study by lobby group NASSCOM and consultancy McKinsey.
Outsourcing firms such as Infosys and bigger rival Tata Consultancy Services are tapping new markets such as India, China, Japan and countries in Europe to beat a recession in the United States.
The Indian firms face competition from big global players such as IBM Inc, Hewlett-Packard and Accenture that have raided their home turf as they look for growth outside their mature markets.
US business software maker CA expects its bookings, an indicator of future business, will rise 50 percent in the year to March 2010 and by 30-40 percent for the following two years on growing technology spending.
Infosys, which set up its India business unit in late 2007 as part of a strategy to diversify its revenue base, has put in bids for IT services contracts from railways and state-run telecom Bharat Sanchar Nigam Ltd (BSNL) among others, Rangadore said.
He declined to set a timeframe for the outcome of the bids. The US market had contributed 63.2 percent of Infosys’ 2008/09 revenue of $4.4 billion, with just 1.3 percent coming from India.
Rangadore said the business from IT services in India was very
Window of opportunity
Last month, Infosys said it had won a contract to design, develop and support a portal for the ministry of commerce and industry. A government official said the contract was valued at Rs 150 million ($3 million) for three years.
Infosys, which has a market value of $23 billion, has also won a project from the tax authorities for a project to enable electronic filing by taxpayers, Rangadore said.
He said spending on technology by private companies was seeing a slowdown in India due to the economic downturn, but investment by the government remained robust and was likely to increase in the near term.
A host of IT services firms are expected to vie for the government's initiative to provide the country's more than 1 billion people with identity cards, a new project which is being headed by Infosys co-founder Nandan Nilekani.
"The window of opportunity in India is probably in the next one to two years when most of the decisions will be made for large spending in India," Rangadore said.
The Infosys stock has jumped about 75 percent this year, compared with a 54 percent rise in the main index.
small and bulk of the revenue in India came from Finacle, the banking solutions and services unit of Infosys.
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