Monday, February 26, 2007

U.S., India Adjust Policies to enable greater trade in high technology

The U.S.A. and India agreed to begin adjusting their policies to enable greater trade in high technology, part of efforts to cement their fast-growing economic and political relations.

The U.S.-India High Technology Cooperation Group produced plans to ease U.S. export controls for selected Indian buyers, while tightening India’s regime governing exports of industrial items with military applications, US Assistant Secretary of Commerce Christopher Padilla told reporters.

The United States is committed to “clear up the Cold War cobwebs” of U.S. curbs on dual-use technology that imposed restrictions on pro-Soviet India, he said after the two-day meeting of government officials and business executives.

Washington has identified Indian technology companies that will be eligible for the U.S. “Trusted Customer Program” of streamlined or waived licensing requirements for buyers with good records of compliance with nonproliferation treaties.

India would be included in a program, proposed last year and under U.S. governmental inter-agency review that will also cover China and other states, Padilla said. To facilitate trade in chemicals, military supplies and other technology, Washington presented lists to New Delhi of products for which it wants India to bring its policies in line with international anti-proliferation standards.

Experts from the two countries would meet in several months and conduct a
“product-by-product comparison of the Indian control lists with the four major multilateral control regimes,”
Padilla said.

India’s policies on exports of nuclear technology and missiles were getting close to those of the Nuclear Suppliers Group and the Missile Technology Control Regime, he said.

India was also moving closer to harmony with the controls of the Australia Group, which aims to prevent chemical and biological materials from being sold to countries or others that would use them in weapons, said Padilla.

New Delhi still needed to close large gaps in its policies with those of the Wassenaar Arrangement, which governs dual-use items and conventional weapons, he added.

The United States and India dramatically advanced their relations in 2005 when visiting Indian Prime Minister Manmohan Singh and President George W. Bush signed a host of agreements, including a deal that, when finalized, would allow US sales of civilian nuclear equipment and fuel to India.

via: Globalservicesmedia

Thursday, February 22, 2007

Russian ITO Market to Grow by 40%-50% in 2007: neoIT

In 2007, Russian Information Technology Outsourcing (ITO) market will grow by 40%–50%, says a study by neoIT — a management consulting firm. Russia is currently the third largest IT outsourcing supply market, behind India and China. Russian IT companies are specialized in high-end software and embedded software product development, which acts as a differentiator from lower-priced offerings from Indian companies, according to the research.

The study predicts the key trends for 2007. The key trend this year is business transformation, which global companies will leverage to improve time-to-market, gain new business, standardize processes and significantly lower costs.

“Business transformation through services globalization is one of the most important levers that global companies can no longer afford to ignore,”
stated Atul Vashistha, CEO, neoIT.
“We see the services globalization industry continuing to grow at a brisk rate of 25%–30% in the coming year, as more and more companies ramp up their services globalization initiatives.”
The new report looks at the factors that contribute to the growth in services globalization and identifies several trends. The report also takes an in-depth look at the impact that the increasing number of sophisticated buyers, who now have several years of global sourcing experience, will have on the industry.

On the supplier side and perhaps more relevant for Indian companies, the report says, competitive forces are leading to increased supplier sophistication. The year 2007 will see an increased focus among service providers on developing industry-specific subject matter expertise through acquisitions. In fact, acquisitions will be a continuing trend in 2007 with the report saying that Eastern companies will acquire Western outfits to gain a global footprint and venture into services that demand a significant onshore presence. The companies based in the West will take a keen interest in setups in the East to stay competitive as well as explore eastern markets, which are not only cost effective delivery locations, but also rapidly emerging markets by themselves. Geographically, new locations are emerging, although India will continue to lead the supplier market, with Europe showing strong growth.

The research brief also predicts that billing rates will go up amongst the Tier 1 suppliers by two to three percent due to the growing demand for skilled resources, rise in wages and increased overheads incurred in maintaining quality or ensuring tight security.

The report also says that despite the ongoing debate about Tier 1 versus Tier 2 cities and concerns of wage inflation, attrition and infrastructure issues, Indian Tier 1 cities (NCR, Bangalore, Chennai, Hyderabad and Mumbai) will grow at a continued pace in attracting offshore delivery work, through 2007. The European market for global services is also expected to grow at a faster rate with European companies offshoring to India, China and the Philippines and other lower-cost locations, depending on the language and culture-dependence of the particular service.

Source: NeoIT, Global Services Mag

Monday, February 19, 2007

Remote Infrastructure Management Outsourcing (RIMO) Market Growth to Exceed US $8 Billion over Next Five Years

The Remote Infrastructure Management Outsourcing (RIMO) market is likely to exceed US $8 billion over the next five years, according to a new report released today by the Everest Research Institute.

The RIMO market, an emerging Infrastructure Outsourcing (IO) model, is growing at approximately 60 percent annually. According to the Infrastructure Outsourcing Roadmap report, 75 percent of this growth is attributed to renewals of pilot contracts with significant scope increases with the remaining 25 percent is attributed to new deals. The Roadmap report also provides insights into the benefits of RIMO for buyers, such as enhanced flexibility in IT asset ownership arrangements and increased control over IT service delivery, as well as discusses suppliers’ challenges in meeting these new trend demands. The report is the first of a series of four studies to be released this quarter by the Institute’s newly formed ITO Research Group, established to analyze the ever-changing ITO marketplace in greater depth and provide actionable insights into its future evolution.

“While the Infrastructure Outsourcing market appears calm on the surface and is growing in line with the overall IT industry,”
said Ross Tisnovsky, Vice President, ITO Research Group,
“there are significant structural changes in the market itself that are driven by emergence of new technologies in infrastructure and fundamental changes in the IT asset ownership dynamics.”

The report series will progressively build the picture of the IO market trends and dynamics through analyses of the effects on key market stakeholders relative to four key market developments:
(1) arrival of the labor arbitrage in the IO market;
(2) changes in the asset ownership dynamics;
(3) emergence of new business models in IO; and
(4) emerging global locations for offshore infrastructure management delivery.

The first report, Infrastructure Outsourcing Roadmap, revisits the IO market history and reviews the prevalent business models in this market (traditional outsourcing, managed services and RIMO). After an examination of the fundamental drivers of the new models, such as RIMO, the study describes the entry of the offshore suppliers and their approaches to the market’s growth. The report also discusses the economic rationale behind traditional and RIMO models of service delivery, defines the impact of labor arbitrage, and offers a balanced view of the growth prospects and next steps for the market constituents.

Following the Roadmap report, forthcoming reports this quarter from the Institute’s ITO Research Group are:
  • “Asset-light Outsourcing Model” will offer insights into one of the most important drivers of changes in the IO market – the IT asset ownership trends in an infrastructure outsourcing deal. The report will cover the historical reasons for asset ownership transfer in the IO deals and changes in the ITO landscape, which have prompted buyers to reconsider their asset ownership strategies. This report will also examine the decoupling of asset control from asset ownership requirement through remote management tools, the emergence of third-party financing alternatives, and looming changes in accounting that will further decrease the benefit of asset ownership transfer.

  • “Growth of Infrastructure Management Outsourcing” will predict growth scenarios for RIMO market and outline effects on the overall IO market. The report’s findings will be gleaned from an analysis of key market forces shaping the IMO marketplace that determine IMO growth prospects, as well as an outline of the Institute’s growth model for the RIMO space that incorporates the effects of key market forces and defines a mathematical model of key signing and renewal dynamics in the RIMO market.

  • “Selecting a Location for Remote Infrastructure Management Service Delivery” will provide a high-level view of the emerging global locations for offshore infrastructure management service delivery and identify the most attractive cities in pre-selected geographies by utilizing the Institute’s proprietary location selection methodology.

Tuesday, February 13, 2007

ChrysCapital to Sell Global Vantedge BPO to ACG

According to media sources, ChrysCapital, an Indian private-equity firm, and other shareholders are expected to sell their respective stakes in Global Vantedge, a US-headquartered credit and receivable management BPO services provider, to Aegis Communications Group (ACG), a US-based CRM BPO services provider, for about INR 1 billion.

Chrys Capital holds a 75 percent stake in Global Vantedge. The BPO firm has been offering credit and receivable management services to various clients including credit card companies, telecom operators, and auto companies catering primarily to the US and UK markets through its two Gurgaon-based centers in India since 2001.

Aegis has been operating from its 24 centers across the world offering a wide range of CRM services including customer acquisition and customer services, back-office services, and value-added services catering to the telecom, retail, financial services, energy, education, and logistics verticals. It employs about 9,000 professionals in India and the US.

Monday, February 05, 2007

About 80% Clients Satisfied with BPO Operations

According to a study conducted by NASSCOM-McKinsey titled, ‘Operational Excellence: The Next Frontier in Offshoring’, about 80 percent of clients are satisfied with the performance of BPOs. The study is in continuation of the two companies’ report regarding India’s ability to generate about USD 60 billion from IT/BPO export.

In addition, the pressure on various offshore companies is likely to increase due to high expectations from clients. Among the key findings, the study indicates that there is scope for various BPO firms to reduce cost by about 20-30 percent, and for IT firms to increase EBIT margins by about 3-6 percent.

In the BPO domain, the priorities of clients will shift towards other benefits, such as innovation and productivity, once the offshore services are well established. In addition, there is a lack of consistent performance across various companies due to inadequate recruiting practices. Owing to high retention rates, the performance of data-based operations is better than voice-based processes.

However, in the IT domain, the IT service providers are estimated to improve performance and consistency across six practice areas, including requirements gathering, solution design, and training. Despite client satisfaction and strong outcomes, inconsistencies are reported in issues, such as solution design, training, and recruitment. There has been a significant increase in clients seeking upstream services such as requirements gathering and solution design. At present, these services are not strong enough to competently meet a client’s demands. The leading IT performers are expected to increase salaries in the range from 15 percent to 18 percent, without impacting their profit margins.

According to Kiran Karnik, President, NASSCOM, India is the leader in the global offshoring market with about 50 percent market share. Companies need to focus on operational excellence to achieve the target of USD 60 billion from IT/BPO export revenues by 2010.