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Source: economictimes.indiatimes.com

BANGALORE: India’s fourth-largest software exporter, Satyam Computer Services, is seen as the favourite to win a significant IT outsourcing contract from Indian Railways as the country’s top tech firms intensify efforts in the local market to offset slowing demand overseas.

A senior Railways official told ET that the Hyderbad-based company has bid the lowest for a project to provide an asset management solution based on SAP business software for four locomotive sheds. He declined to reveal the value of the bids but said that TCS, India’s largest software exporter, and Wipro, the third largest, were among the bidders.

A Satyam spokeswoman confirmed that the Hyderabad-based company is the lowest bidder, but declined to provide further details. Officials at Wipro, TCS and Infosys did not comment.The contract will be the first in a series of outsourcing deals worth almost Rs 2,000 crore to be awarded by Railways over the next few months.

This paper reported last week that TCS has emerged as the lowest bidder for the country’s largest e-governance contract, pipping Wipro and Infosys Technologies, India’s second-ranked software exporter.

TCS bid Rs 1,677 crore for a project to computerise the Employee State Insurance Corporation and provide smart cards to around 1.5 crore industrial workers. In October, TCS signed a deal worth over Rs 1,000 crore with the Indian government for a project to improve passport services.

Government departments and state-owned companies are expected to spend nearly Rs 10,000 crore during the year ending March 2009. Next year, this sector will buy IT hardware and software worth around Rs 9,000 crore, said a senior official at a research firm which is working with government bodies to plan their IT spending.

The national e-governance plan is also under review, so estimates for next year could change.India’s software companies, which earn bulk of their revenue from overseas, have been paying increasing attention to the domestic market in the face of a slowdown in their main markets in the US and Europe.

Software industry grouping Nasscom is expected next month to revise lower its growth forecast of 21-24% for software and services exports in the year to March 2009. India exported software and services worth about $40 bn during April-March 2008 while the domestic IT market, including hardware, grew by 43% to $23.1 bn.

While Satyam has bid lower than its rivals for the first of Railways’ planned contracts, bidding will only get more competitive for the rest of the deals. “We plan to have a multi-vendor strategy, and ideally would like to have different vendors,” the Railways official said. “We will spend around Rs 8,000 crore on IT over the next five years.”

Railways plans to outsource three more contracts over the next few months, each estimated to be worth Rs 450-500 crore. The projects will be for automating and integrating its finance and payroll functions, materials management and software-aided train scheduling.

India’s top tech firms are also bidding aggressively for a contract from BSNL, estimated to be worth Rs 400 crore and due to be finalised by the end of this year. The state-owned telecom company is looking to implement a project to automate and integrate its business processes such as finance, payroll, marketing and customer service.

With rapid growth in demand for data storage capacity, which is expected to double by 2012, India will emerge as the hub for data centre hosting for West Asia, South East Asia and East Africa, predicts Gartner. The demand being largely from sectors like financial institutions, telecom operators, manufacturing and services.

According to the Gartner, the captive and hosted capacity of India will take a big leap from 1.1.337 million square feet in 2007 to 5.143 million square feet till 2012. The report states that storage demand in India is increasing significantly; where it was one pentabyte in 2001, it has soured to 34 pentabytes by 2007, leading to growing data centre uptake in enterprises.

‘The potential for Indian data centers is large with the external-controller-based (ECB) market expected to grow by more than 22 percent in 2008, making India the fourth largest market for ECB storage in the Asia-Pacific region, says Nareshchandra Singh, principal research analyst at Gartner.

Large financial institutions and telecom companies are capable of building data centers to fulfill growing requirement for data storage, but the suffice the increasing demand from SMB sector provides opportunity for data centre hosting providers to develop data centre outsourcing infrastructure to cater to this vast segment.

Gartner also predicts that captive data centre capacity will rise to 2.571 million square feet by 2012 with compound annual growth rate (CAGR) of 29 percent. The hosted data centre capacity is estimated to grow 33 percent CAGR to 2.573 million square feet by 2012 getting to the total capacity to 5.143 million square feet. Gartner takes into account only facilities with gross space capacity of and over 1,000 square feet. But there are some hurdles which has to be deal with like security issues and data retention concerns, along with biggest challenge of regular power supplies in the country.

Source: economictimes.indiatimes.com

NEW DELHI: In a first of its kind acquisition of a India-focused BPO by a foreign company, the UK-based $6-billion Serco Group has bought out Gurgaon-based BPO major InfoVision.

The deal marks the entry of Serco Group, a business services company, into India. The company has bought a 60% stake and will acquire the rest over the next couple of years.

According to sources, Serco will pay about $75 million for the Rs 250-crore InfoVision. ET had reported earlier in September that Serco is among the frontrunners to acquire InfoVision.

InfoVision group has about 10,000 personnel and 60 clients. Serco, which offers a whole spectrum of support services but did not have a presence in the BPO space prior to the InfoVision acquisition, plans to have a workforce of 20,000 in the next 2-3 years.

The formal announcement of the acquisition is expected by the second week of December. When contacted, InfoVision group president & CEO Aditya Gupta declined to comment on the development. An email sent to Serco has also failed to elicit a response.

According to sources, in India, Serco, through its arm Serco Global Services, outsources IT and BPO functions to Patni Computer Systems, Genpact and Microland. The outsourcing by Serco involves about 500 seats across the three companies.

The acquisition comes at a time when the domestic BPO space is buzzing with activity despite a global slowdown. In fact, the domestic BPO space, with players like Aegis, Intelenet and others, is seeing fast growth as companies in India are increasingly outsourcing their non-core activities like customer care and transaction processing to third-party players.

According to sources, the buyout offers Serco a foothold in the fast-growing market with ample growth potential. The domestic BPO market, estimated at around $1.8 billion, is expected to grow to about $10 billion by 2012. Net margins for domestic as well as international BPO work are quite similar at 12-15%, making the domestic market more attractive.

The InfoVision buyout by Serco comes close on the heels of the $505-million TCS buyout of Citigroup Global Services, the captive BPO arm of Citi in India, and WNS Holdings acquiring Aviva Global Services, the outsourcing arm of insurance major Aviva, for $228 million.

However, in case of InfoVision, an Indian BPO firm has been bought by an overseas major, unlike the other deals where captive arms of MNCs have been bought by Indian companies.

InfoVision operates from 24 locations across 16 cities in India. Its clients include Deutsche Bank, HSBC, American Express, Aviva, Max New York Life and FMCG players like Whirlpool.

Source: timesofindia.indiatimes.com

HYDERABAD: The global meltdown has turned a boon for legal services industry in the city. With many companies in the US and Europe trying to cut costs, they are searching for cheap and good quality legal aid through legal process outsourcing companies (LPOs).

Around 100 LPOs have come up in the city in the last one year, a CEO of an LPO told TOI.

Interestingly, around 70 per cent of them mushroomed in the past five months of the global crisis. Further, the growth of the industry under the prevailing circumstances is expected to be between 50 and 100 per cent.

“There is tremendous growth in the market because the industry is more stable with clients from the US and UK thinking that LPOs are a good option to reduce costs and get good quality legal services,” Quislex (LPO), CEO, Ram Vasudevan told TOI.

Companies save 50 to 75 per cent of their costs on legal services once their work is outsourced.

“Some companies have saved as much as $9,00,000 per deal just because they outsourced the work. There is no loss for clients if the LPO is reliable,” Vasudevan said. LPOs, including Mind Quest, Pangea and Lawscribe and Quislex are cashing in on the boom. Most of these companies have a work force of 200 to 300 lawyers. Many big LPOs offer a variety of services, including legal help in mergers and acquisitions, contract analysis, contract procurement and litigation analysis.

The companies which seek legal aid are mainly software companies and MNCs.

Law students find the sector lucrative with pay packages in the range of Rs 10.5 lakh to Rs 17 lakh per annum.

“While the meltdown is affecting many law firms, the students find LPOs a good avenue to work. Many such companies have come forward to recruit students from the university,” HRD, IP, chair professor and head, Center for IP Law Studies, Nalsar University of Law, Dr V C Vivekanandan said.

And the icing on the cake is that many LPOs are planning to induct fresh recruits in the summer of 2009.

Source: www.businessweek.com

ARMONK, N.Y.-International Business Machines Corp. said Thursday that it received an $873 million contract from the state of Georgia for information technology outsourcing services.

Under the contract, IBM will combine 11 independent IT groups into one and provide various data center services like mainframe and midrange system management and security services.

The contract runs over eight years and has two one-year extension options.

Computer maker Dell Inc. will work as a subcontractor to IBM, updating and managing Georgia’s client systems and offering service desk support, while printing services will come from printer and copier maker Xerox Corp.

Source: in.reuters.com

NEW YORK (Reuters)Nick Zieminski - The economic crisis may present a growth opportunity for India’s top outsourcing firm, Tata Consultancy Services Ltd (TCS), as U.S. financial services companies look to cut costs, but that opportunity is likely some months away, the company’s CEO said on Wednesday.

It does not make sense for Wall Street firms to run their own “captive” back-office information technology operations that perform functions such as order processing, TCS Chief Executive Subramanian Ramadorai told Reuters.

“Captives will disappear, in my opinion,” he said in an interview. “It’s one of the big ticket items that will give them the savings they want.”

TCS, part of India’s Tata Group, provides services such as consulting, system integration and back-office outsourcing. Last month, it bought Citigroup Inc’s back-office unit in India for $505 million, a deal that is expected to close by early January.

Ramadorai did not hold discussions with Citi while in New York this week, but added: “We continue to meet them.”

As clients consolidate, Ramadorai said he saw further opportunity for Tata.

“If Bank of America goes and buys Merrill Lynch, they will be integrating,” he said. “That (creates) some opportunities for us.”

Both Bank of America Corp and Merrill Lynch & Co Inc are clients. As banks look to shrink and cut costs, they could save 20 percent to 30 percent on technology systems, he said.

Read More

Source: economictimes.indiatimes.com

BANGALORE: Leading Indian tech firms, including Infosys and Wipro, are evaluating SAP service providers such as BearingPoint and IDS Scheer for a potential acquisition, as they seek to increase their revenues from customers that run SAP software in Europe. While BearingPoint counts Volkswagen among its large SAP services customers, IDS Scheer offers SAP-based consulting and services to companies such as Audi, Bayer, CropScience and BMW.

A senior official at a leading Indian IT company confirmed that his company is indeed looking at opportunities such as BearingPoint and IDS Scheer. “BearingPoint has been open to M&A for some time now, and we could be interested in the European or SAP unit of the company than doing an overall acquisition,” he said requesting anonymity. “IDS Scheer is also a good opportunity, especially because of its services and product competencies, and could be easier to execute since the promoter holding is over 70%.” “These deals are being discussed for around 1-1.5 times of the target’s revenues,” he added.

BearingPoint reported a net loss of $30.5 million and revenues of $801 million for the September quarter. When contacted by ET, a BearingPoint spokesperson declined to comment. However, the company admitted during its third quarter results that the M&A opportunities are being discussed.

“BearingPoint retained financial advisors to explore ways to improve its capital structure and liquidity in light of its evolving cash position. These alternatives initially included a merger or sale of the company as a whole, a sale of all or substantially all of the assets of the company or the sale by the company of any of its six principal business units,” the company said in a statement.

UK-based Clearwater Corporate Finance is working with some of the Indian IT firms. “We cannot name our clients, but there are things in the pipeline and 2009 might see some of these deals happening,” Emma Leathley, senior analyst with the firm told ET.

SAP-based service providers in Europe have been on the acquisition radar of the top Indian IT firms. In August this year, Infosys offered to acquire UK-based Axon Group for $755 million. However, Axon has now recommended a higher, counter-offer of $780 million made by HCL Technologies.

Infosys chief executive Kris Gopalakrishnan said on Monday that his company is still seeking acquisitions in Europe and Japan for up to $700 million. When contacted by ET, both Wipro and Infosys officials declined to comment on any specific M&A opportunities being evaluated by their companies. A Wipro official however told ET last week that his company is currently in discussions for M&A opportunities in Europe.

India’s biggest software services company TCS also believes that local skills are critical for addressing the lucrative SAP services market in Europe.

“There are good M&A opportunities in Germany for addressing the market better,” said Girish Ramachandran, director TCS Europe. “To expand in SAP services Indian companies will need to create a much stronger onshore delivery model in their key markets. Acquisitions are one way to achieve this,” said Peter Schumacher, president and CEO of Frankfurt, Germany-based Value Leadership Group.

Germany-based IDS Scheer reported revenues of around $496.4 million in 2007, is also among the companies being evaluated for acquisition by the Indian tech firms. IDS Scheer chairman August-Wilhelm Scheer was quoted by the German magazine WirtschaftsWoche earlier this month that “a sale would not be an unrealistic development if the restructuring programme fails to boost profitability.”

However, lack of exposure to offshore outsourcing could be a bottleneck when it comes to integrating with the Indian companies, added Mr Schumacher. IDS Scheer did not respond to the email queries sent by ET on Monday.

Source: www.business-standard.com

India is clearly on Ben Verwaayen’s mind, the chief operating officer of global telecommunications firm Alcatel-Lucent.In his own words, India is important for two reasons; “One it is a huge market. It’s a market with very creative players, different competing business models and sensitive to new services than any other market. The second reason is the talent and resources it offers.”

Verwaayen who recently took over the reins of Alcatel-Lucent is focused on garnering market share and bringing back the telecommunication giant to profitability. Since the merger of France-based Alcatel and, Lucent of US, the company has been facing problems. It has been reporting losses for the six consecutive quarters. The latest was €40 million.

Alcatel-Lucent has close to 4,500 people in India engaged in sales, customer support, services, software development and R&D. The country is a major hub for Alcatel-Lucent’s R&D activities. The software development centres are located at Gurgaon, Noida, Chennai, Bangalore and Hyderabad.

Verwaayen, however, does not consider India as a low-cost destination. Rather he does not like to use the word offshore in the context of India. “If it is just about cost then I would not have been in India but to some other low-cost country. For me India is a high talent country,” he adds.

As the person who was heading British Telecom’s (BT) operations before taking over Alcatel-Lucent, he has pushed over a billion dollar of outsourcing work to India.

While he did not say anything specific with regard to outsourcing, he felt that more than outsourcing it is about creating an eco-system and co-sharing. “I see India as the centre of innovation and we would like to work in collaboration with other units. I am very much into best partnership model and it has to be more on the basis of shared resources,” said Verwaayen.

Alcatel-Lucent has established Bell Labs Research Centre in Bangalore. The Center’s mission is to conduct fundamental and applied research in scientific fields related to computing and communications software.

In terms of technology too, Verwaayen thinks that India will be faster in adopting 4G. “I think 4G will be here much faster than people think. Because I feel India is a information hungry market and 4G is nothing else but the ability to use video across the screen. Whether you travel, at home or anywhere else you want to see the same information,” he said.

Source: timesofindia.indiatimes.com

NEW DELHI: Bad times in the West may force companies to offshore more jobs to cheaper destinations like India, making it the last bastion for jobs growth, although US President-elect Barack Obama is vocally against outsourcing.

US-based staffing services firm Manpower, whose India business has grown 50% this year, sees some slowing down in ITeS and finance sectors in the short-term but growth would return by mid-summer when effects of stimulus packages announced by multiple countries start showing, its CEO Jeff Joerres said.

“In the global scenario India looks optimistic. Though the employment outlook looks slightly down but optimistic on a relative basis… we have to see how the wave hits the shores,” he said.

However, companies that struggled to justify outsourcing in good times would find it easier to move jobs to low-cost destination citing savings, Joerres said.

Obama, in the run up to the presidential election, had spoken of ending tax breaks for companies that shift jobs overseas and give them to those investing at home.

Since the sub-prime credit crisis brewed into a global economic storm, there has been a 15-20% slowdown in jobs growth globally as companies see their bottom lines shrinking.

Besides India, the countries that look promising in terms of hiring are China, Middle East and East Europe. These countries are likely to report promising growth rate as they have a booming domestic market and also because the base is small, he said.

A survey by Manpower in September had ranked India as the most optimistic market for new jobs.

Source: inhome.rediff.com

After going through a series of mergers and acquisitions, Mindteck, a Bangalore-headquartered IT services company, is looking to consolidate its various businesses which will see more work being moved offshore, to locations in India.

The company has changed its sales model by moving 70 per cent of the outsourcing works to India, which was earlier being delivered in the US.

“Our sales model has changed a lot. Now, wherever we go, we try to sell 70 per cent offsore and 30 per cent onshore. So the same team which was earlier managing 10 projects in the US is now managing 20-30 projects because a lot more work is coming to India,” Pankaj Agarwal, group CEO & MD, Mindteck (India), told Business Standard.

Mindteck was formed in 1999 by a group of investors from Europe, the US and West Asia. Other than Mindteck, these promoters had also invested in four other companies - Primetech Solutions, Infotech Consulting, Mindteck UK and Mindteck Singapore.

Because all these companies had common promoters and similar service offerings, in February 2007 Mindteck acquired Infotech Consulting. Then in April this year, the other three companies also merged with Mindteck to form Mindteck Inc. Post-mergers, the promoters hold close to 65 per cent in Mindteck.

After acquisitions, the company is going for a consolidation of office space by shutting down offices at some locations and bringing down its development and delivery work to select locations.

As part of its strategy to provide customers with best-shoring model, the company has almost doubled its office space in India by opening additional offices in Bangalore and Kolkata. The company has also shut down its office in Hyderabad to move the jobs to Bangalore and Delhi.

“Since each of the acquired company had offices at locations where we already had a presence, we have started rationalising our office space. We are trying to consolidate our locations which will help us bring down the overhead cost,” said Agarwal.

Armed with complimentary services from the companies it acquired, and delivery capabilities in multiple locations across the globe, Mindteck is cross-selling services of the acquired entities to mutual clients.

“Before the acquisitions, Mindteck had a major footprint in India with a very small footprint in the US, whereas Infotech Consulting was present only in the US. It made so much sense to combine them and have a much bigger footprint in the US which has given a lot of opportunity for us to cross-sell,” added Agarwal.

Mindteck has also begun moving a lot of backoffice work to India from its locations in the US, Europe, Singapore and West Asia.

Source: www.business-standard.com

The Greek mythological battle for Pandora’s box or the military games played by the US army will now have to make way for Indian epic hero Hanuman and rustic games like “gilli danda” and “kabaddi” as the Indian console gaming market gets set for launch of locally developed games.

Indian console gaming enthusiasts, who have been trying their skills manoeuvring on alien land of Greek in the “God of War” or tried a hand on “Uncharted Territories” with alien military warriors, could now have some “desi” flavour with Sony Computer Entertainment all ready to launch games developed by Indian developers on Indian themes in the next one-and-a-half years. “So far, 100 per cent of the console games are imported,” said Sony Computer Entertainment’s Country Manager Atindriya Bose. “Though India has a strong IT infrastructure, we have not seen any Indian-developed games for the console market,” he said.

Most of the current work being done was more of an outsourcing work, he said, adding, “Roughly out of the 150-odd animation and gaming firms, an estimated 20-30 of them are involved in the outsourcing component for the console gaming segment.”

In view of the rapid growth in the Indian gaming market, with the console market having grown seven times, Sony Computer Entertainment has tied up with Indian firms to launch eight games, four of which will be out by early 2009 and the remaining four between 2009-end and early 2010, he said.

Source: in.ibtimes.com

Acquisition is in the air. Japan’s biggest mobile services provider NTT DoCoMo Inc. is reportedly buying about 26 percent stake in India’s second biggest CDMA-based mobile phone operator Tata Teleservices for 260 billion yen ($2.7 billion).

According to Japan’s Nikkei Net Interactive website, the companies will announce the deal on Wednesday afternoon.

The website said DoCoMo will obtain about 20 percent stake in the form of new shares and purchase the remaining 6 percent stake from existing shareholders in the Indian company.

Meanwhile, Japan’s Sankei newspaper said, without quoting sources, that DoCoMo plans to spend $1.5 billion to buy 25 percent stake in Tata Teleservices.

DoCoMo said in a statement it had not made any such decision while Tata Teleservices has refused to comment on the matter.

If the stake buy goes ahead, it will give DoCoMo veto power as, under Indian laws of acquisition, stakes exceeding 25 percent give shareholders such rights.

Company sources said DoCoMo was in talks with Tata Teleservices since September.

According to a DoCoMo spokesman, the Japanese company will send one of its executives to sit on the Tata board.

The deal comes at a time when top Indian mobile operators are vying to acquire rights for operating high-speed 3G services. Tata Teleservices, an affiliate of the $66 billion Tata Group, is India’s sixth largest mobile services provider with around 30 million subscribers, after Bharti Airtel, Reliance Communications, Vodafone-Essar, Bharat Sanchar Nigam Ltd (BSNL) and Idea Cellular. Of these, only Reliance Communications operate on the CDMA-based network.

According to Shinji Moriyuki, a telecoms analyst at Mitsubishi UFJ Securities, DoCoMo’s latest acquisition would be positive for the company, especially with its extensive knowledge of 3G network services to which many developing countries are now moving.

Read More

Source: timesofindia.indiatimes.com

MUMBAI: With a view to broadening its footprint in Europe, leading software major Satyam Computer Services, is mulling acquisitions in France, a top company official said.

“We see fairly large opportunities and are looking at acquisitions of French companies to expand our operations,” Satyam’s Continental Europe Head, Peter Heij, told visiting journalists at the company’s Wiesbaden facility near Frankfurt recently.

The company is also mulling an expansion in Germany, the largest economy in Europe, he said.

Satyam has recently sealed a few acquisitions, those of Nitor Global Solutions and Citisoft Plc in the UK and S&V Management Consultants in Belgium.

“Our vision is have 30 per cent of our global revenue emanating out of Europe by FY 10. To enter some of the European countries, we have to hire local people and acquire companies. We need to have an office in France,” Heij said.

In the current business scenario, European markets are evolving as a major IT park for software development. These markets are demanding greater knowledge and understanding of country-specific issues, EU directives and resolutions, he said.

France preferred to undertake sourcing of IT services in its own language and with local firms. Major international firms are well represented in France with providers like AtosOrigin, Sopra, Sogeti & Thales capitalising on the advantage of “being French”.

At 9.1 per cent, Germany’s CAGR for application outsourcing spending falls below the European average of 10 per cent. Of the Euro 2.4-billion that German firms spend on application outsourcing today, Euro 1.3-billion goes towards application maintenance services.

At the corporate level, Europe has been identified as one of the main focus regions. As a result there is increased management attention and more investment in the European region, Heij said.

“Our European strategy has succeeded in delivering profitable growth. In 2007, we demonstrated that we were focused on building sustainable and profitable relationships.

Our 2007 plan has delivered a growing position in European markets, deeper engagement with our major accounts and revenue growth above market trend,” Heij said.

Asked whether recession in the US would slow down global growth or have a wider impact, Heij said, the deterioration in financial markets and tighter credit conditions have increased the risk of recession and failure of businesses.

“With continued inflationary pressure from higher oil, commodity and food prices, monetary policy decisions will have to strike a delicate balance between growth and inflation,” he said.

Customers will have less money to spend but business activity would neither reduce substantially nor come to a complete standstill, Heij said.

Source: www.thehindubusinessline.com

Bangalore - US companies are now seen better placed to chart their outsourcing strategy with the completion of the Presidential polls, but technology spending in calendar 2009 could be staggered and determined by the pace of economic recovery.

In the run-up to the polls, customers had held back their decisions on technology spending because of the anti-outsourcing backlash witnessed in the earlier elections. The delay had created uncertainty for the Indian software exporters, who earn over half of their revenues from the US, the largest IT services market. This uncertainty had further aggravated with the economic meltdown in the US that has now spread to Europe too.

“Companies had put their decisions on the backburner because of the political uncertainty,” said Mr Chandramouli, Engagement Manager at Zinnov Management Consulting Ltd, a Bangalore-based firm that advises clients on outsourcing strategy. “With the stability on the political front, customers would look forward to overcoming their internal business uncertainties by improving efficiency and optimising costs with the help of technology,” he added.

Positive sentiment

The new government and the mega packages to put back the economy on recovery track has created a positive sentiment that is expected to prompt companies to go ahead with their technology spending plans.

“There will be some opening in customer spending early next year, which will be in bits and pieces and staggered throughout the year linked to the economic recovery,” said Mr S. Sabyasachi, research director at neoIT, an offshore advisory firm.

Quoting a recent client poll by neoIT, Mr Sabyasachi said technology spending till the first half of 2009 is expected to remain the same as that of last year or increase marginally.

Considering the current market conditions, the IT vendors do not foresee a surge in new projects in the current quarter. “We expect that 2009 client budgets will take longer to finalise this year when compared to prior years. As a consequence, projects which normally might get started in Q4 in expectation of a Q1 budget approval are unlikely to kick off during Q4,” said Mr Francisco D’Souza, CEO of Cognizant Technology Solutions in a post-earnings conference call.

Research firm Gartner has projected that IT spending would increase by 2.3 per cent in 2009, down from its earlier estimates of 5.8 per cent.

“Economic turmoil is the key reason for delay in decision making. Though there were concerns before the polls, because of Obama’s stance on outsourcing, the rhetoric will not have any impact on businesses,” said Mr Vinu Kartha, Principal at Tholons Inc. “Post-elections, they would offshore as soon as the economy bounces back,” he added.

Source: www.webwire.com

DALLAS – Architel, a Dallas-based IT infrastructure outsourcing company, has signed a definitive agreement to acquire the assets of Atlas Technology Group, Inc. (OTC BB: ATYG), including ATG US, Tribeworks, Inc., Atlas Group Holdings Limited, and Atlas Technology Group NZ. Financial terms of the agreement were not disclosed.

AtlasTG, headquartered in Seattle, provides outsourced application software support services and software for clients worldwide. The company specializes in remotely supporting custom-built applications and networks using proprietary process, monitoring, and management systems.

As a publicly traded company, AtlasTG’s market capitalization was recently as high as $47,450,000. The new company formed from AtlasTG’s assets will be 100 percent debt-free, and will operate as a private, wholly owned subsidiary of Architel.

“Recent developments in software, monitoring systems and communications now permit IT outsourcing services to be effectively offered from remote sites,” said Scott Ryan, chief executive officer of Architel. “Adding AtlasTG’s software and support capabilities extends our ability to serve new client segments and to build upon AtlasTG’s global customer base.”

“This agreement ensures that AtlasTG customers will continue to receive the high level of service they have come to expect – and that’s only the beginning,” said Dennis Sita, chief technology officer at AtlasTG. “Combining AtlasTG’s technology and know-how with Architel’s human and capital resources will enable us to bring innovative services to market and reach our full potential.”

In addition to its core support services, AtlasTG in August introduced AtlasTG Tools 3.0, a software suite for IT management and monitoring that offers more comprehensive integration than other products on the market. A software-as-a-service offering, AtlasTG Tools 3.0 includes reACT™ incident management software, proACT™ monitoring software, bizACT™ reporting software, and interACT™ knowledge management software.

“AtlasTG’s product development team now has the resources to drive the software-as-a-service model using the diverse toolset developed by AtlasTG over a period of three years and at a cost of millions of dollars,” said Architel co-founder Alexander Muse, who will assume the role of chairman of AtlasTG.

With the addition of AtlasTG’s support and software businesses, Architel will maintain support operations in Dallas; Seattle; and Manila, Philippines.

Also as part of the transaction, Architel will acquire BLive Networks, a hosted desktop sharing service purchased by AtlasTG in 2006.

Source: itservices.cbronline.com

Bupa, a healthcare organization, has appointed Patni Computer Systems, a provider of IT and business process outsourcing services, to provide a managed service for its core business applications.

The Patni team will include 40 technical specialists based in the UK and India and the contract is a three-year agreement. Patni had been working with Bupa for two years before agreeing this new contract and is reportedly one of a small number of third party suppliers retained by Bupa as part of its multi-vendor outsourcing strategy.

The new contract with Patni forms part of a worldwide initiative by Bupa to drive change within its IT function. This initiative has three main aims: to improve levels of service to the business, to support quality software developments and to promote global re-use of applications and processes, said Patni.

As part of the new service, Patni will work with David Guest, chief applications officer at Bupa, to manage and support group applications including PeopleSoft, business intelligence reporting applications, web applications and a second phase of business intelligence tools.

Brian Stones, executive vice president at Patni, said: “We are delighted to extend our relationship with Bupa and to play a part in its strategy to improve customer service, increase transparency and predictability of IT costs and build repeatable global solutions. Patni has the global footprint and technical expertise to help ensure success for Bupa’s IT team.”

Source: www.hindu.com

London (IANS): In a reversal of the trend of British companies opening call centres in India, Tech Mahindra has decided to open one in Britain.

The Indian IT company, considered India’s sixth largest software exporter, will be opening the call centre at Jarrow, South Tyneside, and expects to create 500 jobs in three years.

“We are a global organisation. Our expansion plans are based on customer requirements. Here the customers and business opportunities coincided,” Mahesh Nagaraj, Tech Mahindra’s vice-president for strategic initiatives, was quoted as saying by The Financial Times during a visit to South Tyneside Friday.

The Tyneside regional development agency, One North East, will service the clients of Tech Mahindra. It will focus on delivering government sector services in application development and support and business processing outsourcing services.

One of its users will be British Telecom, which has a 35 percent stake in Tech Mahindra.

The Indian company already has five contact centres in Milton Keynes, Belfast and London.

Source: www.thehindubusinessline.com

New Delhi - The country’s services sector exports, including BPO, software and financial services exports, are likely to take a hit during the fourth quarter of 2008 on account of the ongoing global meltdown, a report by global research firm Deloitte has said.

“The ongoing slowdown in the US economy will likely to affect the future growth in India’s exports. Experts predict that US businesses would likely either reduce outsourcing or withhold expansion plans,” the report ‘Deloitte Global Economic Outlook’ for the fourth quarter of this year said.

As a result, BPOs, financial services and other software exports contributing to about 2 per cent of India’s GDP are likely to be affected, the report added.

The report said the country’s economic growth may fall by as much as 2 per cent over the next few years in the backdrop of the current financial crisis. “India will face slower growth prospects with analysts predicting a fall of as much as two percentage points over the next couple of years,” it said.

Source: sify.com

Bangalore: After streamlining its internal recruitment process, Bangalore-based IT consulting firm MindTree Ltd plans to add consulting in recruitment process outsourcing (RPO) to its existing service offerings.

“Although we have implemented RPO at MindTree for just about a year now and we are still in a pilot phase, we are confident that we have enough expertise to offer this as a niche consulting service to clients,” says Sanjay Shelvankar, Vice-President, Talent Acquisition, MindTree Ltd.

Though IT companies routinely advocate business process management, technology adoption and outsourcing to their clients, they lag behind in adopting the same internally, especially in the recruitment process, according to him.

MindTree’s Talent Acquisition division has designed and put in place an RPO that is scalable and can overcome the inefficiencies of the current recruiting system. The model also increases accountability towards results, reduce the cost per hire and effort per hire, says Shelvankar.

In 2007-08, for instance, MindTree hired 1,300 laterals, but had 60,000 people showing interest to join the company with over 165 vendors sending resumes for the jobs. With the industry’s track record of 15-18 per cent hit ratio, the IT company’s recruitment division had to grapple with risks such as wrong hires, delayed hires, no-shows and the associated costs with these.

MindTree now has an RPO vendor on premise working on contracts that are risk-reward types with payments tied to outcomes. “In fact, our cost per hire has now reduced from Rs 57,000 to Rs 41,000 after the RPO implementation,” he says.

With this experience, MindTree intends to offer consulting in the area for the IT industry and has identified a couple of ‘competent RPO providers’. Shelvankar says the company would initially tap MNCs with captive centres in India for the consulting business.

According to industry estimates, the current RPO market is around Rs 10,000 crore in India with HR companies offering RPO as one of their services.

Source: economictimes.indiatimes.com

BANGALORE: Struggling British banks accepting a government bailout package will cut IT spending by up to a fifth and face pressure to move their offshore call centres in India and other countries back home, a UK-based research firm said.

British banks such as Barclays, Lloyds TSB and Royal Bank of Scotland (RBS), which have accepted government cash to recapitalise, will halt spending on technology until the second quarter of 2009 and even cancel their offshore outsourcing programmes in pursuit of low-risk models, TowerGroup said. Such developments will be extremely bad news for India’s software vendors, for whom the UK is a key market.

According to industry estimates, India exported around $6 billion (Rs 29,000 crore) worth of software and BPO services to the UK during year-ended March 2008, accounting for some 15% of the country’s total software exports.

Lloyds has outsourcing deals with top Indian software vendors Wipro and Satyam Computer Services, while RBS counts among Infosys Technologies’ clients. Furthermore, both Barclays and RBS have captive offshore centres in India.

“National interest may result in the UK banks bringing their call centres back to Britain,” TowerGroup European research director Bob McDowall told ET.

“Banks which have substantial government shareholding will have to consider carefully not only the financial impact, but shareholder reaction if outsourcing and offshoring result in job losses in the UK,” he added. Out of a $792 billion bailout plan for the financial services sector, the British government is setting aside $79 billion to buy stakes in stricken banks.

The partial nationalisation is seen putting pressure on the banks to cut IT spending and reevaluate their offshore outsourcing plans. “One could see a reduction in overall IT spend in the financial services sector of 15-20% in 2009 compared with 2008,” Mr McDowall said. The financial crisis and the worsening economic situation are also triggering rate cuts for all new IT contracts being signed in the UK.

Many UK banks have asked their IT suppliers to take a rate cut of almost 12%. According to the Association of Technology Staffing Companies, hourly rates for IT projects in the UK have fallen to around $69, from $79 in the last quarter of 2007.

“The 12% slump is primarily due to new contracts being signed at lower rates rather than renegotiated deals,” a statement by the association said.

A situation akin to that in the UK might also develop in the US, spelling further trouble for Indian IT companies. The world’s largest economy is implementing a $700 billion financial bailout package of its own and accounts for nearly 60% of software exports from India. “There is already a noticeable freezing of spending on IT development, including suspension of non-critical projects (in the US),” Mr McDowall said.