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Information Technology - Sector
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US financial giant Citigroup, which has been shedding non-core assets, plans to sell its Indian back office operation to Tata Consultancy Services, people familiar with the matter said, in a deal that one source said would be worth $505 million.
Citi`s sale of the back-office unit to India`s biggest software services exporter was set to be announced later on Wednesday, the source said.
A TCS spokeswoman said the company had called a news conference at its Mumbai headquarters at 0900 GMT and declined further comment. A Citigroup spokesman declined to comment.
Citigroup Global Services, the India back office unit, began as a business processing arm for Citi India in 1992 and expanded to serve Citi`s global operations in 1998, according to its website.
The unit, which employs 12,000 people, operates out of seven facilities across Indian cities and offers back office services to Citi`s consumer, corporate and global wealth management entities in 50 countries, the website showed.
Source : The Financial Exporess...
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Friend
Better sell off whatever you have otherwise watch Sensex touching below 6000 yes Sensex not Nifty, so better save your money or just forget your investment for 4 years.
All the worst for all the investors at this point....
In reply to:
Is it good to invest in IT for Short
Posted by :
Manjunath PL
I have invested in IT shares like Iflex and Infy looking for short term gains. Since the market is going down I would like to invest further in IT. Name the shares for short and long.
Thank you,
Anagha Manjunath 
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Infy, Wipro, TCS at loss--how much
Ultimately, therefore, the big losers in the global financial crisis in this country are likely to be the iconic software firms like Infosys, Wipro and Tata Consultancy Services (TCS).
Much of their business comes from the erstwhile giant investment banks and that could affect their profitability in the short term.
In the medium-to-long term, however, these companies are likely to have greater resilience given their innovative approach in the past to hunting out new markets and customers.
The other area where worries still remain is the pullout of funds by foreign institutional investors from the country`s equities and debt markets.
The bourses have been showing considerable volatility ever since the news came in about the failure of Lehman and the domino-like effect on other investment banks.
v.krishnamoorthy...
Large Software Companies may go backrupt overnight
Posted by :
RadhupriyaTracked by: 0 Boarder
Hi,
Only TCS & Wipro had hedged the revenue for 3 years. In fact Infy hedging exposure is very low that too for a shorter duration (one or two quarters).
Please correct me if I am wrong.
Regards
...
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All the sectors excluding IT remains growth oriented & would bounce back to their levels again as they show long term bullishness & growth stories intact. While doubt about IT would be more intense when US the biggest consumer or customer of Indian IT companies is in deep financial crisis, so many are going to cut their spending on lavish & luxurious IT sector. Also, due to US employment problems, US Inc will start growing IT industry at home. I think people as well as many investors ignoring this again n again. Ignoring not going to solve the problem, it would create huge disappointments in coming years.
I think bubbles yet to burst in IT sector. Seeing IT 40% correction over next year. BSEIT index could hit 1000 benchmark. ...
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I have invested in IT shares like Iflex and Infy looking for short term gains. Since the market is going down I would like to invest further in IT. Name the shares for short and long.
Thank you,
Anagha Manjunath...
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They`re also struggling to find enough IT talent at home. There are more technology jobs in the U.S. now than there were at the height of the dotcom boom in 2000. Yet enrollment in IT courses is half what it was eight years ago. Despite a recent rise in the number of engineers graduating from American universities, Mr. Brame sees a 20% to 40% shortage for tech talent.
Given the gap, U.S. firms will continue to throw more work to companies in India like Tata—no matter what the headaches. “We can`t find enough people with the skills we need here, so we have to tap the world economy,” said Mr. Abbattista. “This is a race for talent.”
Back in Kolkata, they`re getting ready for that race. In the farmland beyond the outskirts of the city—in the complex that houses Tata`s buildings—construction crews are working feverishly to keep up with the demand for space from technology outsourcers in India. Cranes dot the skyline, with builders putting up steel frames that will soon tower over the landscape.
The days of blending in appear to be over.
------------------------------------------------
Shrugging Off a U.S. Slowdown
So far, India`s outsourcers have suffered little from troubles in the U.S. While the mantra for most Indian outsourcers these days is “ascend the value chain,” it`s hard to move up if your best clients are headed in the opposite direction.
Nevertheless, the impact of the U.S. slowdown on offshoring budgets is unclear. Financial firms, hammered by the subprime mess, make up the largest customer base for India`s outsourcers. In fact, a report from Wachovia Capital Markets noted that the collapse of investment bank Bear Stearns was followed by a “sharp, several-week pause in decision-making” on offshore projects.
But the Wachovia report also noted that reined-in technology budgets might not prove to be a hammer blow to IT outsourcers. “The very slow recovery from the credit crisis, and potential for further losses among capital markets and banking firms, is likely to keep a damper on overall IT spending growth, offset in part by a continuing shift of work to lower-cost offshore locations.”
Gartner`s Kurt Potter, however, noted that in the past, economic uncertainty caused a mild decline in outsourcing activity as companies focused on immediate cost-cutting initiatives. And he added that “the perception that outsourcing growth would increase more due to economic uncertainty, thereby being countercyclical, has not proven to be entirely true.”
Still, he says the troubles in the U.S. have so far failed to slow the amount of work being sent offshore. “At this time, we are not seeing an impact on outsourcing due to the economic uncertainty.”
Any effect from the current tremors on Wall Street will likely be brief. Following the short dip in business after the collapse of Bear Stearns, Wachovia reported that: “Channel checks suggest that the pace of business is improving...within the Financial Services vertical, the insurance sector is indicated to be seeing the most dramatic improvement.” Mr. Potter reckons the market for IT outsourcing will still grow by $77 billion over the next five years, putting it over the $400 billion mark.
By Carleen Hawn...
In reply to:
FOCUS: TECHNOLOGY,Outsourcing`s next level
Posted by :
sambala
The idea was likely first hatched at General Electric. Back in the mid-`90s, GE was keen to generate more of its income from outside the U.S. To do that, then-CEO Jack Welch decided the company would need to acquire and integrate other businesses—and to do that, GE needed standards and sets of processes that could be applied to all the acquisitions.
So the U.S. conglomerate established company-owned centers of excellence around the globe, placing them under the corporate banner of GE Capital International Services (GECIS). Eventually, General Electric spun off a 60% share of GECIS for $480 million, selling the stake to two private equity firms, Oak Hill Capital Partners and General Atlantic Partners. The outsourcing specialist, headquartered in India, was renamed Genpact and went public last year in an initial public offering on the New York Stock Exchange that raised nearly $500 million.
Not all American businesses have been as successful with their Indian captives.
Dell shut down its hardware R&D center in Bangalore last year. The computer maker relocated that high-end operation to its facilities in Taiwan and Austin, Texas. The year before, Apple shuttered its technical support center in Bangalore—a month after opening it. Citigroup is reported to be currently shopping all or part of its India-based captive, Citi Global Services.
Expect others to follow suit. A recent Forrester Research study found that the cost of the average employee working at a captive center in India is $4,944 a month. That number dips to $4,231 for a worker at a third-party supplier. Forrester concluded that more than 60% of the current captive BPOs in India are in bad shape.
Ken Brame, who until recently served as CIO for auto parts retailer AutoZone, believes captive operations only make sense under certain circumstances. The size of the operation tops the list. The greater the scale at the captive, the better the chance of reducing selling, general and administrative expenses and operating in the black. If an IT project requires several hundred people or more, setting up an offshore captive in India might be the way to go, said Mr. Brame.
If a job can be done by less than 100 workers, however, an outsourced development team may well be a better choice. Even in the age of digital connections, Mr. Brame said communicating with employees working halfway around the world can be frustrating. “You can`t just jump on a plane.”
He speaks from experience. In 2004, AutoZone began outsourcing some of its software development to India—albeit on an extremely small scale. He kept his IT design team in-house in Memphis, but began sending some generic software application development to about 10 workers in India, through Infosys. That operation has grown to include some BPO functions, but it is still comparatively small, with just 50 programmers.
For more sensitive projects, like developing inventory indexing and automation software, Mr. Brame set up a “captive near-shore” practice in Chihuahua, Mexico. “It was so easy for me to go down there to check on our guys, since we were in the same time zone.”
The time difference between Memphis, Tenn., and Bangalore, on the other hand, is 101/2 hours. This can complicate things mightily. To keep mix-ups to a minimum, an outsourcer will often assign staff to a client`s facilities. Mr. Brame noted that Infosys “sent a few guys to Memphis who stayed at the office late every night to be the communication link between my employees and the outsourcers in India.”
But the joys of proximity cannot be overstated. “When we`re doing application design [at home], we can hand a project spec to someone in the next cubicle and they`ll ask questions,” he said. “But if you`re sending it off to India, you`ve got to do a much more thorough job of documenting what you want those vendors to do. That is something that a lot of companies struggle with.”
Cont.....
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The idea was likely first hatched at General Electric. Back in the mid-`90s, GE was keen to generate more of its income from outside the U.S. To do that, then-CEO Jack Welch decided the company would need to acquire and integrate other businesses—and to do that, GE needed standards and sets of processes that could be applied to all the acquisitions.
So the U.S. conglomerate established company-owned centers of excellence around the globe, placing them under the corporate banner of GE Capital International Services (GECIS). Eventually, General Electric spun off a 60% share of GECIS for $480 million, selling the stake to two private equity firms, Oak Hill Capital Partners and General Atlantic Partners. The outsourcing specialist, headquartered in India, was renamed Genpact and went public last year in an initial public offering on the New York Stock Exchange that raised nearly $500 million.
Not all American businesses have been as successful with their Indian captives.
Dell shut down its hardware R&D center in Bangalore last year. The computer maker relocated that high-end operation to its facilities in Taiwan and Austin, Texas. The year before, Apple shuttered its technical support center in Bangalore—a month after opening it. Citigroup is reported to be currently shopping all or part of its India-based captive, Citi Global Services.
Expect others to follow suit. A recent Forrester Research study found that the cost of the average employee working at a captive center in India is $4,944 a month. That number dips to $4,231 for a worker at a third-party supplier. Forrester concluded that more than 60% of the current captive BPOs in India are in bad shape.
Ken Brame, who until recently served as CIO for auto parts retailer AutoZone, believes captive operations only make sense under certain circumstances. The size of the operation tops the list. The greater the scale at the captive, the better the chance of reducing selling, general and administrative expenses and operating in the black. If an IT project requires several hundred people or more, setting up an offshore captive in India might be the way to go, said Mr. Brame.
If a job can be done by less than 100 workers, however, an outsourced development team may well be a better choice. Even in the age of digital connections, Mr. Brame said communicating with employees working halfway around the world can be frustrating. “You can`t just jump on a plane.”
He speaks from experience. In 2004, AutoZone began outsourcing some of its software development to India—albeit on an extremely small scale. He kept his IT design team in-house in Memphis, but began sending some generic software application development to about 10 workers in India, through Infosys. That operation has grown to include some BPO functions, but it is still comparatively small, with just 50 programmers.
For more sensitive projects, like developing inventory indexing and automation software, Mr. Brame set up a “captive near-shore” practice in Chihuahua, Mexico. “It was so easy for me to go down there to check on our guys, since we were in the same time zone.”
The time difference between Memphis, Tenn., and Bangalore, on the other hand, is 101/2 hours. This can complicate things mightily. To keep mix-ups to a minimum, an outsourcer will often assign staff to a client`s facilities. Mr. Brame noted that Infosys “sent a few guys to Memphis who stayed at the office late every night to be the communication link between my employees and the outsourcers in India.”
But the joys of proximity cannot be overstated. “When we`re doing application design [at home], we can hand a project spec to someone in the next cubicle and they`ll ask questions,” he said. “But if you`re sending it off to India, you`ve got to do a much more thorough job of documenting what you want those vendors to do. That is something that a lot of companies struggle with.”
Cont.....
...
In reply to:
FOCUS: TECHNOLOGY,Outsourcing`s next level
Posted by : sambala
Ashutosh Vaidya, head of Wipro`s global practice for business process outsourcing, said business executives typically do two things during a downturn: “They will look for opportunities to help them take out costs, and areas where they can add value. If we can take out one-third of their BPO costs, that`s a big deal. If I [demonstrate] areas where Wipro can add business value, that is icing on the cake.”
Existing customers will no doubt zero in on the value-add proposition. Take Allstate.
The insurance company began outsourcing 10 years ago, setting up a captive operation in Ireland to deal with Y2K issues. It began sending IT work to India in 2003. “Cost was not what made us look at India seriously,” said Anthony Abbattista, vice president of enterprise technology, strategy and planning for Allstate Insurance. “The real reason we looked at India was...getting other people`s ideas and brain force.”
The carrier, which sold $37 billion worth of insurance policies last year, now uses three outsourcing vendors on the subcontinent: Syntel, Wipro and Infosys. Although the Indian outsourcers do handle some simpler tasks for Allstate, like IT maintenance, they also work on higher-value—and more crucial—functions.
One example: the processing of premium payments. Allstate receives millions of these checks each month. Once that flood of cash is applied to groups within the company, Allstate must reconcile accounts—no small task. Outsourcers in India handle much of the work flow. Equally important, Mr. Abbattista said, the company`s Indian vendors have figured out ways of making the monthly reconciliation chore run more smoothly. “We use them for process innovations, things making us stronger and better at IT procedures.”
Nevertheless, Allstate “co-sources” some of the work to U.S.-based vendors such as IBM. “We`ve not handed over the whole responsibility to anyone,” Mr. Abbattista granted.
Indeed, outsourcing veterans say that projects with global applications—a billing and communication system for a multinational bank, for example—may be better-suited to a U.S. outsourcer like IBM or Hewlett-Packard or others that have a strong global presence. “They can set up a center for you in South America or Africa,” said Mr. Coyne. “The Indian companies are just now learning to do that.”
Co-sourcing also lessens the risk of sending sensitive company data or projects out of house. That should be important to finance managers. “Any CFO should be concerned with outsourcing. Fiscally, there are savings opportunities, [but] the CFO is in the spot of making sure you don`t mortgage the future of the company by making the wrong decision,” said Mr. Abbattista. “[My] job is to maintain the right amount of control over our IT. Co-sourcing rather than only outsourcing it all gives you a higher level of control and quality; that`s why we do it.”
Certainly, getting locked in to an offshoring arrangement with a single vendor can be risky. “It depends on the culture of your company and how comfortable you are giving up various aspects of control,” said Mr. Abbattista. “For Allstate, co-sourcing to make sure that we have high quality in these arrangements is a value that we feel very strongly about.”
It may not be the cheapest way to work, but he insisted that, for Allstate, outsourcing to India isn`t about cost-arbitrage. “What outsourcing lets us do is keep the strategic work with us.”
That seems to be the modus operandi for scores of U.S. companies—even as they ship increasingly complex work to the subcontinent. “Most companies have found over time that the best method is to "outsource your context and keep your core,`” said Mr. Coyne.
Cont.....
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Ashutosh Vaidya, head of Wipro`s global practice for business process outsourcing, said business executives typically do two things during a downturn: “They will look for opportunities to help them take out costs, and areas where they can add value. If we can take out one-third of their BPO costs, that`s a big deal. If I [demonstrate] areas where Wipro can add business value, that is icing on the cake.”
Existing customers will no doubt zero in on the value-add proposition. Take Allstate.
The insurance company began outsourcing 10 years ago, setting up a captive operation in Ireland to deal with Y2K issues. It began sending IT work to India in 2003. “Cost was not what made us look at India seriously,” said Anthony Abbattista, vice president of enterprise technology, strategy and planning for Allstate Insurance. “The real reason we looked at India was...getting other people`s ideas and brain force.”
The carrier, which sold $37 billion worth of insurance policies last year, now uses three outsourcing vendors on the subcontinent: Syntel, Wipro and Infosys. Although the Indian outsourcers do handle some simpler tasks for Allstate, like IT maintenance, they also work on higher-value—and more crucial—functions.
One example: the processing of premium payments. Allstate receives millions of these checks each month. Once that flood of cash is applied to groups within the company, Allstate must reconcile accounts—no small task. Outsourcers in India handle much of the work flow. Equally important, Mr. Abbattista said, the company`s Indian vendors have figured out ways of making the monthly reconciliation chore run more smoothly. “We use them for process innovations, things making us stronger and better at IT procedures.”
Nevertheless, Allstate “co-sources” some of the work to U.S.-based vendors such as IBM. “We`ve not handed over the whole responsibility to anyone,” Mr. Abbattista granted.
Indeed, outsourcing veterans say that projects with global applications—a billing and communication system for a multinational bank, for example—may be better-suited to a U.S. outsourcer like IBM or Hewlett-Packard or others that have a strong global presence. “They can set up a center for you in South America or Africa,” said Mr. Coyne. “The Indian companies are just now learning to do that.”
Co-sourcing also lessens the risk of sending sensitive company data or projects out of house. That should be important to finance managers. “Any CFO should be concerned with outsourcing. Fiscally, there are savings opportunities, [but] the CFO is in the spot of making sure you don`t mortgage the future of the company by making the wrong decision,” said Mr. Abbattista. “[My] job is to maintain the right amount of control over our IT. Co-sourcing rather than only outsourcing it all gives you a higher level of control and quality; that`s why we do it.”
Certainly, getting locked in to an offshoring arrangement with a single vendor can be risky. “It depends on the culture of your company and how comfortable you are giving up various aspects of control,” said Mr. Abbattista. “For Allstate, co-sourcing to make sure that we have high quality in these arrangements is a value that we feel very strongly about.”
It may not be the cheapest way to work, but he insisted that, for Allstate, outsourcing to India isn`t about cost-arbitrage. “What outsourcing lets us do is keep the strategic work with us.”
That seems to be the modus operandi for scores of U.S. companies—even as they ship increasingly complex work to the subcontinent. “Most companies have found over time that the best method is to "outsource your context and keep your core,`” said Mr. Coyne.
Cont........
In reply to:
FOCUS: TECHNOLOGY,Outsourcing`s next level
Posted by : sambala
Info-tech firms in India are being hammered by lower-priced rivals. To land more profitable work from U.S. customers, they`re reinventing themselves from data bucket shops to full-service technology providers.
On a dusty, tree-lined road in a suburb of Kolkata (formerly Calcutta), you`ll find Tata Consultancy Services. Actually, it`s easy to miss this West Bengal outpost of Tata, which houses one of many IT services units belonging to one of India`s largest conglomerates. The company`s facilities—two inconspicuous, dark brown towers shoehorned between what look like residential buildings—go almost unnoticed amid the clatter of food hawkers and rickshaws.
But to many U.S. business executives, Tata Consultancy Services is anything but anonymous. The company is one of India`s best-known vendors to technology outsourcers, along with Infosys Technologies, Cognizant and Satyam Computer Service. Tata`s client roster reads like a who`s who of U.S. corporations, including Alcoa, Chrysler, Motorola and Prudential.
And the list continues to grow. Despite the demonization of offshoring by politicians and labor leaders, there appears to be little chance of U.S. corporations weaning themselves off Indian outsourcing anytime soon. This year alone, American companies will send some $24 billion worth of IT business to cities such as Kolkata, Chennai, Hyderabad and Bangalore (which may help explain why terrorists set off a series of bombs in that city in late July).
While American companies initially made the passage to India to tap into the country`s vast reservoir of low-wage workers, that`s hardly the big attraction now. Seeking out the lowest-price outsourcers comes with a full set of pitfalls and trapdoors. “One, you may only see very short-lived savings, because as technology changes, all the stuff you`re doing needs to be reinvented,” said Shaun Coyne, who served as CIO for Toyota Financial Services and works now as a private consultant. “Two, your IT operations will constantly be moving to the lowest-cost country, for the simple reason that place is going to be changing over time.”
What`s more, other locations—including Eastern Europe and Latin America—often offer better value for simple tasks like data processing.
Even those in the India outsourcing sector concede it`s hard for them to compete on price alone these days. Part of the problem stems from the remarkable success of these companies. Buoyed by its technology sector, India`s GDP, pegged at $1 trillion last year, is soaring, up 9% a year. With that robust growth, however, the rupee has strengthened mightily vs. the U.S. dollar, making India more expensive for American firms. At the same time, local wages have risen sharply—up 15% annually over the past three years.
The result? India`s IT workers come cheap, but they no longer come dirt cheap.
“If it`s just about costs,” said Mr. Coyne, “India is not the place to go.”
To fend off lower-priced rivals, India`s outsourcers have reinvented themselves. No longer low-margin, data bucket shops, they now bill themselves as full-service technology providers—”moving up the value chain,” as India`s National Association of Software and Services Companies put it.
Assignments from clients can include writing software code that builds core business applications, as well as hardware diagnostics and managing entire business functions.
Tata Consulting`s 10-year contract with AC Nielsen is typical of the full-service model that India`s outsourcers are now touting. The company handles a variety of technology tasks for the ratings specialist, enabling the company to centralize multiple systems and technologies. Said Sridhar Bakshi, who oversees one of Tata Consulting`s delivery centers: “[Our] whole strategy is centered around a fully integrated services play that looks at a combination of IT services, BPO, infrastructure services and consulting as the key focus area.”
BPO, short for business process outsourcing, is fast gaining in popularity with corporate clients. BPO now accounts for nearly 30% of India`s IT outsourcing revenue—with U.S. companies among the biggest customers.
In some cases, American businesses are outsourcing business processes work after shutting down their own company-owned operations in India (known as captives). In others, they`re simply expanding the amount of work they farm out to their outsourcers.
Either way, research firm Gartner believes India`s outsourcing market is growing by as much as 40% annually among the U.S. companies it services.
It`s hard to say how the current economic downturn might ultimately affect that projections. But managers at India`s top outsourcing vendors see real possibilities in the current problems in the U.S.
Cont.....
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Info-tech firms in India are being hammered by lower-priced rivals. To land more profitable work from U.S. customers, they`re reinventing themselves from data bucket shops to full-service technology providers.
On a dusty, tree-lined road in a suburb of Kolkata (formerly Calcutta), you`ll find Tata Consultancy Services. Actually, it`s easy to miss this West Bengal outpost of Tata, which houses one of many IT services units belonging to one of India`s largest conglomerates. The company`s facilities—two inconspicuous, dark brown towers shoehorned between what look like residential buildings—go almost unnoticed amid the clatter of food hawkers and rickshaws.
But to many U.S. business executives, Tata Consultancy Services is anything but anonymous. The company is one of India`s best-known vendors to technology outsourcers, along with Infosys Technologies, Cognizant and Satyam Computer Service. Tata`s client roster reads like a who`s who of U.S. corporations, including Alcoa, Chrysler, Motorola and Prudential.
And the list continues to grow. Despite the demonization of offshoring by politicians and labor leaders, there appears to be little chance of U.S. corporations weaning themselves off Indian outsourcing anytime soon. This year alone, American companies will send some $24 billion worth of IT business to cities such as Kolkata, Chennai, Hyderabad and Bangalore (which may help explain why terrorists set off a series of bombs in that city in late July).
While American companies initially made the passage to India to tap into the country`s vast reservoir of low-wage workers, that`s hardly the big attraction now. Seeking out the lowest-price outsourcers comes with a full set of pitfalls and trapdoors. “One, you may only see very short-lived savings, because as technology changes, all the stuff you`re doing needs to be reinvented,” said Shaun Coyne, who served as CIO for Toyota Financial Services and works now as a private consultant. “Two, your IT operations will constantly be moving to the lowest-cost country, for the simple reason that place is going to be changing over time.”
What`s more, other locations—including Eastern Europe and Latin America—often offer better value for simple tasks like data processing.
Even those in the India outsourcing sector concede it`s hard for them to compete on price alone these days. Part of the problem stems from the remarkable success of these companies. Buoyed by its technology sector, India`s GDP, pegged at $1 trillion last year, is soaring, up 9% a year. With that robust growth, however, the rupee has strengthened mightily vs. the U.S. dollar, making India more expensive for American firms. At the same time, local wages have risen sharply—up 15% annually over the past three years.
The result? India`s IT workers come cheap, but they no longer come dirt cheap.
“If it`s just about costs,” said Mr. Coyne, “India is not the place to go.”
To fend off lower-priced rivals, India`s outsourcers have reinvented themselves. No longer low-margin, data bucket shops, they now bill themselves as full-service technology providers—”moving up the value chain,” as India`s National Association of Software and Services Companies put it.
Assignments from clients can include writing software code that builds core business applications, as well as hardware diagnostics and managing entire business functions.
Tata Consulting`s 10-year contract with AC Nielsen is typical of the full-service model that India`s outsourcers are now touting. The company handles a variety of technology tasks for the ratings specialist, enabling the company to centralize multiple systems and technologies. Said Sridhar Bakshi, who oversees one of Tata Consulting`s delivery centers: “[Our] whole strategy is centered around a fully integrated services play that looks at a combination of IT services, BPO, infrastructure services and consulting as the key focus area.”
BPO, short for business process outsourcing, is fast gaining in popularity with corporate clients. BPO now accounts for nearly 30% of India`s IT outsourcing revenue—with U.S. companies among the biggest customers.
In some cases, American businesses are outsourcing business processes work after shutting down their own company-owned operations in India (known as captives). In others, they`re simply expanding the amount of work they farm out to their outsourcers.
Either way, research firm Gartner believes India`s outsourcing market is growing by as much as 40% annually among the U.S. companies it services.
It`s hard to say how the current economic downturn might ultimately affect that projections. But managers at India`s top outsourcing vendors see real possibilities in the current problems in the U.S.
Cont.....
...
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Enterprises in emerging countries including China, India and Brazil — where IT adoption is at a nascent stage — are more prone to loss of company data and other sensitive information due to flouting of company rules by employees.
Even though the behavioural risks of employees behind the data loss are common across different countries, certain practices that result in a serious breach of company policies are more common in China and India, according to a recent study by US-based market research firm InsightExpress. Employees in this region, for instance, carry company data on portable devices and alter the security settings on work devices to access unauthorised websites
THE LEAKAGE TRAIL
Leaving devices unprotected is common
Leaving computers logged on when away from seats results in potential theft of company data
20 per cent of the employees store their system login and passwords on their computers
In terms of altering security settings on company-issued laptops, China leads with about 42 per cent; Brazil, 26 per cent; India-20 per cent
the study was based on surveys of more than 2,000 employees belonging to enterprises belonging to different sectors including information technology (IT), in 10 different countries including the US and UK.
The survey reveals that the blurring of the line between work life and personal life is one of the prime factors behind the loss of comapny information by the employees, either knowingly or due to ignorance.
This is leading to proliferation of collaborative devices and applications such as mobile phones, laptops, Web 2.0 applications, video and other social media, used for personal and business purposes.
“Too often, we tend to solve data loss problems without understanding the reasons behind this. Emerging countries like China, India and Brazil are yet to come to the same kind of experience level as enterprises in developed countries are in terms of their IT practice, which makes them more prone to data leakage,” John Stewart, vice-president and chief security officer, Cisco, said.
He said the security in any organisation is ultimately rooted in users' behaviour. “So businesses of all sizes and employees in all professions need to understand how behavior affects the risk and reality of data loss, and what that ultimately means for both the individual and enterprise.”
The study also notes that eight out of every 10 end-users use their company-issued computer for personal matters that includes sending and receiving of personal email through a personal email account on a regular basis. In India, 90 per cent of the respondents agreed that they are sending and receiving personal email through a personal email account on their work devices.
Even though it is a standard practice in organisations to block certain websites due to security reasons, 20 per cent of the employees said they are altering security settings on work devices bypassing the IT policy to access unauthorised Web sites. This was most common in emerging economies like China and India. In terms of altering the security settings on company issued laptops, China leads with about 42 per cent of the users agreeing to have indulged in such activities, followed by 26 per cent in Brazil and 20 per cent in India.
The surprising thing that seven of every 10 people who participated in the survey are aware that such practices are resulting in about half of their respective companies' data loss incidents. This belief is most common in India (79 per cent) and the US (74 per cent). Most of the users in China use their company issued computer for personal matters which includes email, instant messaging and downloading of music/videos.
Apart from incidents of data loss electronically, the study also found that in most cases employees share sensitive information with non-employees. One of every four employees participated in the survey admitted sharing sensitive information to non-employees, verbally.
“In spite of having standard policies in place, increasingly a great deal of information in businesses are getting leaked. This proves that no universal technology can protect data unless enterprises educate their employees about the issue by local training,” said Fred Kost, director marketing, security solutions group, Cisco.
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IT spending by global financial institutions may shrink by a fifth in 2009 as large entities such as Bear Stearns, Lehman Brothers, Merrill Lynch and Wachovia Corp become victims of the worsening credit crisis in the US.
The financial services sector is the biggest spender on technology worldwide and Indian service providers rely on the sector to earn over a third of their revenues.
Research firm Celent estimates IT spending on products and services by global financial institutionss to grow at 5.9 per cent to $362.4 billion in 2008 and to $386.8 billion in 2009.
“As of today, 20 per cent of the IT budgets for 2009 will be cut,” said Mr Sudin Apte, analyst and head of for Forrester Inc’s India operations. Consolidation and disappearance of some large entities from the financial services arena would lead to budget cuts.
“There will be immediate scrutiny of new discretionary projects and compliance will become a key as government plans a bail-out package. As a result, there will be more spending on compliance,” Mr Apte said.
Recently Forrester said 40 per cent of the large businesses in North America and Europe have reduced their overall IT budgets for 2008 in reaction to a slowing economy.
About half of the financial services clients surveyed by Forrester have slashed their IT budgets for 2008.
‘Worse than expected’
“The crisis is turning out to be worse than expected and I guess that some 600-800 small and medium banks in the US will go out of business as the credit flow dries up,” said Mr Phaneesh Murthy, CEO of iGATE Corp.
“As a result of this credit squeeze and consolidation, I think there will be a 15-20 per cent cut in IT budgets of financial services sector for 2009,” Mr Murthy added.
Slowdown
Celent estimates indicate that IT spending by financial institutions has already slowed down in past two years. IT spending stood at $342.1 billion in 2007, a year-on-year increase of 5.9 per cent, but lower than 8.7 per cent growth achieved in 2006.
“I guess there would be a moderate cut of 10-15 per cent because of consolidation and reduction in scale” Mr S.Sabyasachi, research director at neoIT, an offshore advisory firm.
Transformational and business process reengineering projects could take a back-seat as financial institutions look to efficiency to cut their costs, Mr Sabyasachi added.
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As said in the moring to watch and buy IT stocks ..now they are on run. Watch all IT stocks as today s day for IT stocks....
BSE Announcements on Infosys
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Udayan Mukherjee: Valuations great for IT right now.
Valuations are great for IT right now, but the problem is that the market is not sure about growth number that’s the debate. IT has lost so much ground even with any kind of bad news being reported by the IT companies actually. So it is not that any companies come out and said I am going to miss my guidance for the year. But the market in its wisdom has decided that those guidance numbers will not be met, growth will slowdown.
And what the market is pricing in after this kind of valuation is probably no more than 13-15% Compound Annual Growth Rate (CAGR) for IT companies over the next couple of years. That is very conservative because you just look at valuations; Infosys has now got crunch down to some 14-15 P/E on current year, Tata Consultancy Services (TCS) is trading at 12-times, Satyam is trading at 11-times.
These would at any other circumstance seem mouthwatering given that the rupee no longer going to sub-40 levels. But the market is through this pricing, telling you that whatever the companies may believe the market feels that the growth will not be more than 12-15%.
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Technology shares continued to see selling pressure on fears companies would miss their dollar-based guidance due to cross currency impact
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Technology shares continued to see selling pressure on fears companies would miss their dollar-based guidance due to cross currency impact...
