IT market
With the aim to modernize its services, IT spending by India's public sector reached an estimated $3.1 billion in 2008.
The spending is further expected to grow to $5.1 billion by 2011, indicating a compounded annual growth rate (CAGR) of nearly 19 percent from 2007 to 2011, says a report by Springboard Research, an IT market research and advisory firm.
According to the 'Public sector IT opportunity in India' report, more than two-thirds of the total IT spending will be undertaken by the central government, with state government and local governments contributing to the rest of the spending. The report provides a detailed coverage of the public sector market dynamics in India, including buying process, for the key segments like healthcare, education, defense and public safety. "The re-election of the Congress-led UPA government will spur further investments in e-governance projects, including the $5 billion National e-Governance Plan," said Nilotpal Chakravarti, Senior Research Analyst - Vertical Markets at Springboard.
The report also notes that education is the biggest individual market segment in terms of spending with an 11 percent share of total spending; while defense and public safety and taxation and finance round up the list of top three segments. In terms of IT segments, hardware corners half of the overall spending, while IT services has a bigger share than software.
According to the report, the current key challenges IT vendors are facing include slow decision-making process despite the adoption of e-procurement, delays caused by bureaucratic hassles and complex bidding procedures and a price-sensitive market. On the other hand, the end-users (citizens) face challenges in the lack of transparency and efficiency in government services, lack of integration among different government agencies and poor mechanisms of complaint handling. In its future market outlook, Springboard points out the high growth rate for healthcare and education. Other areas of future high growth include public transportation and utilities projects.
New Deals, Wipro
Indian IT major Wipro Technologies has partnered with global energy management firm Schneider Electric to market its industrial automation solutions in India.
Under the agreement, Wipro will offer an additional commercial channel and outstanding project execution capability Schneider to market and deliver its state-of-the-art solutions.
To begin with, Wipro will market Schneider Electric's Ampla MES solution to the mining, mineral processing and metals industries.
This solution helps manufacturers enhance the efficiency, productivity and reliability of their industrial operations and improve their return.
"Our partnership with Wipro is an indicator of our commitment to the Indian market. It shows our willingness to go beyond conventional business models to grow our business here," Schneider executive vice-president Michel Crochon said.
Infosys
United Progressive Alliance (UPA) chairperson Sonia Gandhi inaugurated a world-class corporate education centre of Infosys Technologies at its Mysore campus.
The facility is an extension of the IT major's Global Education Centre (GEC), which was inaugurated by Prime Minister Manmohan Singh in February 2005.
With the GEC II, set up at an investment of Rs 800 crore, Infosys can now train 14,000 new recruits at the same time.
Given its infrastructure and size of operations, GEC is the largest corporate education centre in the world, Infosys officials said.
After the inauguration, Gandhi said the centre was a testimony that India can also build world-class education and training centres.
"It's a pleasure to be on this beautiful campus. It has a marvellous setting for a university to train and educate young minds," she told a gathering, mostly young employees of the IT bellwether.
"The GEC is the testimony that India can have world-class education centres. The success of Infosys is because of its hard work, dedication and talent."
Karnataka Chief Minister B S Yeddyurappa, Infosys chief mentor N R Narayana Murthy, and chief executive S Gopalakrishnan were also present on the occasion.
The building of the new facility shares architectural resemblance with that of India's parliament and Rome's Colosseum. The entire Infosys campus here is spread over 337 acres.
Murthy told the audience that the main goal of Infosys was to fight poverty with the power of entrepreneurship and creating jobs. "The centre is a proof of the progress we have made so far. GEC is the largest monolith classical building of post independent India," added Murthy.
Infosys, according to officials, invests an average of Rs 250,000 on training a potential employee over a period of 16 weeks.
New Deals, Outsourcing, Wipro
Wipro has won a three year outsourcing contract from All Nippon Airways (ANA), the first airline in the world to procure the Boeing 787 Dreamliner. The financial details of the deal have not been disclosed, but Wipro will deliver materials management system to ANA that will help manage the parts life cycle, reports Economic Times.
The system will strengthen regulatory compliance, predict parts demand better and help manage inventory levels. The new Materials Management system will be built in a scalable, flexible platform. ANA, with its fleet of 209 aircraft, is embarking on transforming its legacy materials management system to support the new fleet, in line with the expansion of its business at Tokyo's Haneda Airport with its upcoming fourth runway in 2010.
ANA will be able to increase its cost competitiveness, improve the quality of its aircraft part maintenance business and improve asset management with the new system. The complete program will be managed by Wipro, which will deliver services such as application development, program management and vendor management thereby enabling ANA to gain a sustainable competitive advantage.
Takanori Yukishige, Senior Vice President, ANA Information Technology Services said, "We are starting a new journey and this program will set a benchmark for our future way of doing business. We look forward to further leveraging our partnership with Wipro to gain competitive advantage."
Cost cutting, IT market, TCS
India’s top software exporter Tata Consultancy Services (TCS) has said that fresh recruits will not be eligible for variable pay during the first six months when they are on training. The decision will take effect from this quarter when about 1,500 freshers are scheduled to join the company.
“The compensation re-structuring is primarily from a productivity point of view — we want them (freshers) to understand variable component is really a ‘variable’ and will depend on how well they perform in their project. We want that accountability and mindset change to happen from day one,” said Ajoy Mukherjee, head, global HR. During the training period, freshers are not billable as they don’t work on any client projects, and hence do not contribute to company profits.
Freshers at TCS get variable pay of Rs 5,000 a month. The move will result in savings of close to Rs 75 crore for the company, as it has recruited about 25,000 students from campuses in 2008. These freshers are expected to join the company during the course of fiscal but depending on business demand and training capacity.
“There will be savings as a result of this — not very significant but not very low either. The primary reason is not savings, but a mindset change,” said Mr Mukherjee. He said TCS would honour all the campus offers that were made with 1,500 freshers joining this quarter and the rest by the end of the fiscal.
The concept of variable pay was introduced for freshers last year, and the training period, which was for three months, was extended by another three months in the fourth quarter of last fiscal. The company had also decided not give any increments this year, and Mr Mukherjee said there were no changes to this as of now. Last year, it had given a 10% annual increment to all employees. However, those employees, who have been promoted, have been given nominal increments this year, he said.
Companies are not yet returning to big spending and TCS is still in a mode of being as efficient as possible, he added.
The company is also recruiting 250 freshers from US universities for its Cincinnati campus in the current fiscal. However, these freshers have a different compensation structure and will not be affected by the change in variable pay policy. TCS is attempting to replicate the same model it has in India on its Cincinnati campus as well. It will hire students from technical fields on campus and train them.
IT market, new openings
NASSCOM has projected that some 30,000-40,000 students will be absorbed by IT companies this fiscal. Talking to ET, Nasscom president Som Mittal said: “Typically, we take one to two lakh people annually into our industry. In the current fiscal, we had made offerings to 80,000 fresh graduates, of which we are expecting that some 30,000-40,000 will join.”
He further added: “This year, we have asked companies to recruit those who have completed their eighth semester to ensure that hiring is closer to the need of companies. This is being done, so that companies don’t have a huge talent pool who are in the pipeline to join the industry.”
Asked about the outlook of the industry in 2010-11, He said the industry was on a wait-and-watch mode about the growth in FY11. “We will review the situation in December this year. We have already reached end of the recession. By end of the calendar year 2009, we expect deals, some large deals are coming up.”
Mr Mittal said the industry in the past one year has witnessed slowdown in growth, as a result of the global crisis. Nasscom estimates for the IT-BPO industry for 2009-10, include export growth at 4-7% and domestic market growing at 15-18%.
While uncertainty prevails, the sentiment now being reflected is that the worst of the crisis is over. “The industry has demonstrated maturity, resilience and enhanced efficiency. Of specific interest was the growth in domestic market, a three-fold growth in emerging verticals and geographies, enhanced globalisation and over 90% repeat business from clients in this tough environment,” he said.
Mckinsey & Company in its report on the perspective of the IT industry by 2020 has given the current pace of reforms and expected constrains in talent and infrastructure supply, the exports component of the Indian IT industry is expected to reach $175 billion in revenues by 2020.
The domestic component will contribute $50 billion in revenues by 2020, which is larger than the total exports revenues for India now.
The Nasscom president said the during the recessionary period the IT industry has invested in new verticals and geographies, which would start yielding results shortly. “Continental Europe, Latin America, the Middle-East, Japan and Korea remain the new emerging markets for IT industry,” he said.
According to the 'Public sector IT opportunity in India' report, more than two-thirds of the total IT spending will be undertaken by the central government, with state government and local governments contributing to the rest of the spending. The report provides a detailed coverage of the public sector market dynamics in India, including buying process, for the key segments like healthcare, education, defense and public safety. "The re-election of the Congress-led UPA government will spur further investments in e-governance projects, including the $5 billion National e-Governance Plan," said Nilotpal Chakravarti, Senior Research Analyst - Vertical Markets at Springboard.