Wipro Technologies has acquired Infocrossing, Inc.

Deal information

• For US$600 million, this is the largest-ever overseas acquisition by an Indian IT firm
• The agreement is for $18.70 per share in an all cash deal

What’s in it for Wipro

• This deal will address the capability gap regarding capability gap we had regarding managed data center hosting services
• Wipro would be one of the world leaders in end-to-end IT infrastructure management solutions
• Through Infocrossing, Wipro would deepen their presence in the United States with the addition of five data center locations and approximately nine hundred employees
• Wipro healthcare arm is also going to get a boost as Infocrossing is also a heathcare solutions provider, where they have a unique IP and actually own the platform. Wipro will be able to provide healthcare solutions to their large customers, including the specific platform
• Infocrossing brings about 200 clients to Wipro, thus enhancing its total client base while providing an opportunity to cross-sell its other services

Other information:

Wipro was advised on the transaction by Citigroup and represented by the law firm of Wilson Sonsini Goodrich and Rosati, and Infocrossing was advised by Credit Suisse Securities (USA) LLC and represented by the law firm of Gibson, Dunn & Crutcher LLP.

About Infocrossing

Infocrossing, Inc. is a provider of selective IT infrastructure, enterprise application and business process outsourcing services delivering the computing platforms and proprietary systems that enable companies, regardless of industry, to process data and share information within their business, and between their customers, suppliers and distribution channels. Leading companies leverage Infocrossing's robust computing infrastructure, skilled technical team, and process-driven operations to reduce costs and improve service delivery by outsourcing the operation of mainframes, mid-range, open system servers, networks and business processes to Infocrossing

The International Association of Outsourcing Professionals (IAOP) has announced the names of companies that have been selected as 2007’s best outsourcing service providers – The Global Outsourcing 100.

Given below is the Top 20 list

Rank - Company - Strength*

1 - IBM - Size and Growth
2 - Capgemini - Customer Testimonials
3 - Hewlett-Packard - Executive Leadership
4 - Sodexho Alliance - Number of Centers/Locations
5 - Accenture - Balanced Strength
6 - Wipro Technologies - Balanced Strength
7 - Infosys - Customer Testimonials
8 - Genpact - Executive Leadership
9 - Tech Mahindra - Employee Management
10 - Cambridge - Executive Leadership
11 - Mastek - Methodologies/Innovation
12 - CGI Group - Number of Centers/Locations
13 - Xchanging - Size and Growth
14 - EDS - Methodologies/Innovation
15 - HCL Technologies - Methodologies/Innovation
16 - ARAMARK - Number of Centers/Locations
17 - ACS - Number of Centers/Locations
18 - Teletech - Balanced Strength
19 - Colliers International - Size and Growth
20 - Cognizant - Number of Centers/Locations

* Companies were judges on four critical characteristics: size and growth; customer references; organizational competencies; and management capabilities

For the full list visit http://www.outsourcingprofessional.org/content/23/152/1197/

International football organization chooses global consulting and information technology services company to deliver FIFA Extranet, Intranet, and customized Event Management System with Match AG

Satyam Computer Services, Ltd. (NYSE:SAY), a leading global consulting and information technology services company, announced today that it has signed two multimillion-dollar contracts to support FIFA and its major forthcoming events.

Thanks to the strength of its technical capabilities and flexible approach, Satyam has not only been selected to develop a customized Event Management System for one of the world’s premier sports organizations, but it has also been chosen to build an Extranet and Intranet for FIFA over the next 12 months. Satyam’s partnership will also include full, uninterrupted support for both solutions for FIFA, until the final whistle of each game.

Working primarily from FIFA’s Zurich headquarters, Satyam will provide in-country support for matches. It will also have teams work from offshore locations to enable lower costs and optimized CMM Level 5 quality.

“Clearly, FIFA organizes incredibly large-scale, high-profile tournaments. In fact, we host the world’s most widely viewed sporting events, with as many as 28 billion people watching the 2006 Tournament. As such, we cannot afford even a second’s downtime, even during the huge usage spikes throughout games,” said FIFA head of information technology solutions Michael Kelly. “That is why we have chosen the reliability, flexibility, and reusability of Satyam’s applications. This is the start of a long-term relationship that will see Satyam working closely with FIFA over the next few years.”

“We are delighted to have been chosen to deliver such critical applications for FIFA, and are committed to ensuring the success of managing its event logistics and Extranets/Intranet platforms,” said Dr. Keshab Panda, the senior vice president, director, and head of Satyam’s European operations.

A press release from Satyam Computer Services Ltd. website

Outsourcing can act as a key 'enabler' and catalyst for sectors such as telecom, organised retail, insurance, healthcare, hospitality and airlines, suugests a study.
According to a study by Everest Group, outsourcing can help the ''sunrise sectors'', which are witnessing tremendous growth for the last few years, in multiple ways, ranging from release of scarce capital, providing quality talent, innovative practices and management bandwidth.

The study further suggests that outsourcing may help these growth sectors free up their resources and focus on core business activities. ''So far, India has been seen as a leading supplier destination in the outsourcing arena. Its potential as a buyer of outsourcing has not yet been explored to the fullest. Today, sectors like telecom, organised retail, insurance, healthcare, hospitality, and airlines in India are witnessing unprecedented growth, which will further be fuelled by the increasing entry of global players, said Everest Group Country Head Gaurav Gupta.

It will be important to address the resultant operational growth challenges in these sectors to ensure that they maintain their momentum. Companies in these sectors will need to evaluate a range of 'build or buy' options, to address these constraints suitably, he added.

''Capital efficiency is a huge challenge for business leaders in these growing sectors. Outsourcing can create growth opportunities by releasing the capital otherwise required for investment in non-core assets and activities, thereby, reducing the capital investment required per unit of growth,'' said company
Senior Consultant Punish Mishra.

Outsourcing also reduces operating costs through more efficient and competitive service delivery. The study suggest that IT outsourcing alone can improve EBITDA margins by 30-50 basis points for the retailers, which is significant considering it is imperative for the retailer’s to expand margins.

This saving, apart from improving the bottom-line of companies, can be ploughed back into growth initiatives allowing retailers to drive additional four to five per cent growth with the same capital.

The study also highlights the impact of outsourcing and other challenges facing the country's sunrise sectors.

The study identifies issues of inadequate labour pool, poor quality talent and attrition by outsourcing to suppliers who have extensive experience in hiring in large numbers, creating a powerful engine to recruit and in training talent pool to meet global standards.

Source: http://news.webindia123.com/

Virtual Recruiter
Corporation enters chat room to recruit top talent

In January Lockheed Martin launched “live chat” feature on the Careers section of its Web site. The Corporation is the first in the industry to use an online, real-time environment for recruiting.

Scheduled chats take place regularly on topics ranging from software engineering and transitioning military personnel to available opportunities in specific locations. User questions range from questions on starting the application process to tips on how to get their resumes noticed. Participants can also talk about their skills and experience to see how they may fit in a particular program area. Corporate Staffing analyzes chat activity and identifies trends in topics and the process. Employees have already been hired as a result of virtual chat sessions, and many more are expected as the tool grows in popularity.

Source: Lockheed Martin newsletter story.

Comments:

• Such a system in very useful when there is an emergency to fill the seats
• This is surely going to help reduce cost per hire
• Improves job fit and reduces turnover

Infosys Technologies Ltd has signed a multi-million dollar outsourcing contract with Royal Philips Electronics’ (“Philips”) of the Netherlands.


Highlights:

• TCV: US$250 M
• Contract Duration: 7 years
• Philips will enter into a multi-year contract with Infosys BPO to provide F&A services and the processing of purchasing orders
• Infosys will also acquire three shared service centers located in India, Poland and Thailand from Philips for US$28 million
• This contract is amongst the largest Finance & Accounting BPO engagements from India and will expand Infosys’ global network, particularly strengthening its European operations

About PhilipsRoyal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in healthcare, lifestyle and technology, delivering products, services and solutions through the brand promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately 125,800 employees in more than 60 countries worldwide. With sales of EUR 27.0 billion in 2006, the company is a market leader in medical diagnostic imaging and patient monitoring systems, energy efficient lighting solutions, personal care and home appliances, as well as consumer electronics. For more info visit www.philips.com/

Hot action in the last quarter among top 4

Infosys

Plans investment of US$75.1m (Rs3.1bn) in a 8,000-seat development centre in Thiruvananthapuram; also setting up a 400-seat facility in Brno, Czech Republic and a 300-people centre in Mexico.

Introduced a non-compete agreement in employee contracts, barring the employee to work for the same client at a defined set of competing firms for a period of six months after their job termination at Infosys.

TCS

Bought out the joint-venture partner’s stake in the Brazil subsidiary for US$33.4m; inaugurated a new 500-seat centre in Mexico; targeting 5,000 employees in Mexico over the next five year.
ntegrated its financial services solutions (organic and from FNS acquisition) into a new SBU, TCS Financial Solutions.

Satyam

Launched a 4,500-sq ft near-shore development centre in Brazil; a 150-seat centre in Sydney (third in Australia); plans development centre in Vietnam by April 2009.

Announced extension of its existing contract with the Nestle group for a further three years; we estimate the current relationship at an annual run-rate of US$15m, that could go to US$25m. We estimate the pricing increase at about 3% in the renewed contract.

HCL Tech

Launched a 100-seat centre in Poland, its second in East Europe.

US$15m contract win from Alenia Aeronautica.

Worldwide market trends in Engineering Services

Engineering services is a huge market: global spending for engineering services is currently estimated at $750 billion per year, an amount nearly equal to India’s entire gross domestic product in 2005. By 2020, the worldwide spend on engineering services is expected to increase to more than $1 trillion.

Key sectors that dominate global engineering spends include high-technology / telecom, automotive and aerospace – accounting for over 55 percent of the total. Other sectors include industrial, defense, utilities and construction.



To date, offshoring of innovation services has largely been done in advanced countries — only 9 per cent of the world’s budget for engineering found its way to low-cost countries.





However, like in many other business functions, competitive pressures are driving large corporations to undertake their engineering activities on an increasingly global basis. A 2005 survey by Booz Allen and Duke University’s Centre for International Business Education and Research (CIBER) found that 36 per cent of companies surveyed sent some of their engineering offshore, 31 per cent offshored some research and development, and 16 per cent shipped out a portion of their product design



Of the $750 billion spent today, only $10-15 billion is currently being offshored—a tiny fraction of the total. India brings home about 12-15 percent of today’s offshored market, which it currently shares with Canada, China, Mexico, and Eastern Europe. This trend towards building increasingly global R&D footprints, observed over the past few decades, is expected to accelerate over the coming years with emerging economies – notably India emerging as the destination of choice for these expansions




Updated on: 27 Sep, 2006


Source: NASSCOM

NASSCOM has released the rankings of the top 20 IT-ITES employers in India for FY 06-07.

The rankings are based on the India-based headcount of firms with IT-ITES operations in India, as reported to NASSCOM in its annual survey.

Methodology

NASSCOM sends out a detailed questionnaire annually to all its member companies, accounting for 95 percent of the Indian IT software and ITES industry revenue. Information collated through the questionnaire includes: aggregate performance; service lines; verticals and geographies.

Key findings of the survey:

The top 20 companies collectively employ over 500,000 people of the 1.6 million employed directly in the industry

IT-ITES industry is India’s largest employment generator in the organized sector IT-ITES industry is creating jobs for over 7.5 million people both directly and indirectly and this figure is expected to cross 10 million by 2010

A varied combination of factors have led to this - healthy growth environment, attractive remuneration and different kinds of employment opportunities in the new economy based on varying skill sets, and above all the availability of talent in India which meets the employment projections

This industry needs to work on is the quality factor to ensure we remain the highest employment generator and maintain India’s share of the global offshore IT and ITES industry

Employment is spread across many cities, and the industry is increasingly going to tier II and tier III cities

This process of widespread geographical dispersion of the industry is being adversely affected by the non-extension of the STPI scheme and attendant tax incentives

A Frost & Sullivan study cited that the worldwide shared services and outsourcing (SSO) market is expected to grow at a CAGR of 15 percent over the next couple of years to reach USD 1.43 trillion by 2009 as compared to USD 930 billion in 2006.

The banking, financial services, and insurance (BFSI) sector spent the maximum on SSO at USD 273 billion in 2006, followed by the technology/ICT sector and the healthcare industry at USD 233 billion and USD 130 billion, respectively. The spending by other verticals, such as transportation and logistics and energy stood at USD113 billion and USD 84 billion, respectively.

In addition, India was cited as the most preferred destination for SSO operations, followed by China, Ireland, Singapore, Malaysia, Mexico, the Czech Republic, Poland, the Philippines, and Canada, while countries, such as Russia (for software development) and Dubai (for BFSI services) are also emerging as preferred SSO destinations.

The study also cited that the Philippines is a hub for back-office operations for IT and IT-related services, while Malaysia which already has a strong position in the BFSI, transportation and logistics, and energy verticals is also gaining the attention of technology companies (such as IBM and Satyam) due to its excellent infrastructure and low attrition rates.

According to TPI Index report for 1H 2007, the total contract value (TCV) of sourcing contracts awarded in 1H 2007 stood at USD 33 billion, reflecting a 34 percent decline over the TCV awarded in 1H 2006. This value is the smallest first-half TCV value since 2001. In addition, the total number of sourcing contracts witnessed a 25 percent decline in 1H 2007 as compared to 1H 2006.

The annualized contract value (ACV), or average annual spending also declined by 30 percent over 1H 2006 to reach USD 5.5 billion in 1H 2007. The study also reported that the number of BPO contracts awarded in 1H 2007 (78 contracts) were lower as compared to the number of contracts in 1H 2006.

In addition, according to the study, only 56 sourcing contracts were awarded in 1H 2007 in the Americas as compared to 86 contracts in 1H 2006. The TCV of these contracts declined from USD 24 billion in 1H 2006 to USD 10 billion in 1H 2007, reflecting the lowest first-half TCV value since 1994. In contrast, TCV of the contracts awarded in Europe increased from USD 14 billion in 1H 2006 to USD 18 billion in 1H 2007. In terms of sectors, financial services sector accounted for 47 of the total number of contracts having a worth of USD 11.5 billion in 1H 2007. Though the overall outsourcing industry did not perform well in 1H 2007, yet TPI expects a growth of 5 percent in annualized revenue for 2007 as compared to 2006.

A study by the Work Foundation cited that the threat of job losses in the UK due to offshoring to developing countries (such as India) was overstated. It is evident from the study that the computer and information services were the third largest imported services in the UK from India and stood at GBP 122 million; after travel and transport services valued at GBP 626 million and GBP 289 million, respectively. In addition, the study cited that IT and business services imports from Germany to the UK have increased by 4 and 16 times, respectively, as compared to imports from India.

Low labor cost was identified as one of the factors for offshoring. However, cultural aspects are extremely important for successful organizations while offshoring. The study also revealed that offshoring led to job losses of 5.5 percent of the total in Europe in 1Q 2007 as compared to 3.4 percent in 2005. In addition, it has been found that call center jobs in the UK have increased as against expected decline. The trade of services between the UK and India is increasing at a slower rate than expected. It increased from 0.4 percent in 1995 to 1.2 percent in 2004, reflecting a marginal increase.

According to other key findings, an increasing number of western companies are adopting a mix of business models with nearshore, offshore, and onshore operations, while a majority of successful Indian companies are expanding their business operations in western locations to cater to the onshore/nearshore needs of their clients.

Merrill Lynch Acquires Minority Stake in Copal Partners

Merrill Lynch, a US-based financial management and advisory company, has acquired a minority stake in Copal Partners, an Indian research firm, through an investment of USD 11 million in the company. The size of the stake acquired by Merrill Lynch was not disclosed. Deutsche Bank, a German financial services provider, and Citigroup, a New York-based financial services company, are the other investors and clients of Copal Partners.

At present, Copal Partners employs about 550 professionals across its operations in India, the UK, the US, and Mauritius. Since the company’s establishment in 2002, it has been offering financial research and analytics services to various investment banks, hedge funds, and private equity funds across the globe. According to Rishi Khosla, the CEO of Copal Partners, Merrill Lynch, Deutsche Bank, and Citigroup collectively hold a stake of about 25 percent in Copal Partners.

IT Exports by Top 10 IT Service Firms Reached INR 682.36Bn – Dataquest

According to a survey and analysis conducted by Dataquest, the IT software and services exports of India by the Dataquest top 10 IT service companies reached INR 682.36 billion in 2006–07 (FY 2007). Of this, nearly INR 392.60 billion was contributed by the top 3 IT services companies – Tata Consultancy Services, Infosys, and Wipro. Satyam accounted for INR 57.89 billion and IBM accounted for INR 48.80 billion, followed by HCL Technologies and Cognizant accounting for INR 45.98 billion and INR 45.84 billion, respectively.

Of the Dataquest top 10 IT service firms, 7 are Indian companies. The study also cited that the IT software and services exports of the Indian development centers of the three international companies (IBM, Cognizant, and Oracle) stood at INR 131.27 billion. Oracle stood at the eighth position with revenues worth INR 36.63 billion in the Dataquest top 10 IT service providers list, while Tech Mahindra stood at the ninth position with revenues worth INR 28.90 billion. Patni dropped two positions down to reach the 10th position, with revenues worth INR 25.73 billion.

In addition, the study revealed that a majority of the top 10 IT companies witnessed a significant increase in their revenues from their European operations in FY 2007. All the top 10 companies are focusing on combining their BPO operations with IT that has resulted in faster growth for BPO. According to the study, the weakening dollar and the strengthening rupee did not affect exporters significantly until the latter half of FY 2007.

According to Everest Research Group, software- and BPO-related functions worth about USD 9 billion were outsourced by big North American and European firms (primarily financial service firms) to their Indian captive centers in 2006. General Motors, Deutsche Bank, JP Morgan Chase, etc., are expanding their Indian offshore operations instead of outsourcing their software and back-office operations to Indian third-party service providers, such as Infosys Technologies, Tata Consultancy Services, and Wipro Technologies.

More than 50 centers have been set up over the past three years by such international firms in India and a majority of them plan to expand their operations two-fold over the next two years as the country offers a huge market. Moreover, such companies plan to conduct important businesses through these offshore centers. However, smaller US-based banks continue to outsource their operations to third-party vendors, such as Infosys, Genpact, and Cognizant Solutions, rather than establishing their offshore captives in India. According to Indian third-party vendors, international companies are also adopting a hybrid model under which work is divided between third-party vendors and company-owned offshore operations. Captive centers are growing at 30 percent annually and have employed more than 200,000 full-time employees for software development, back-office operations, high-end research, and product engineering.

Offshore Headcount Increases 18-fold in Financial Institutions – Deloitte

According to a study conducted by Deloitte, the number of jobs going offshore in the financial services sector has increased 18-fold over the past four years. It has been estimated that financial service firms across the globe have been saving about GBP 4.5 billion annually at present by offshoring to low-cost countries as compared to GBP 2.5 billion in 2003.

Currently, the British financial service industry has been saving GBP 1.5 billion annually by offshoring. The study also cited that the US- and UK-based financial service firms are increasingly offshoring their business processes. By 2006, about 75 percent of financial institutions were offshoring, while even less than 10 percent of financial institutions had offshore operations in 2001.

According to other key findings, the average offshore headcount has increased from 150 in 2003 to 2,700 in 2006. It has been found that offshoring has spanned across all business functions. However, functions, such as transaction processing, finance, and HR, are witnessing increase in growth. Firms that are offshoring one or two business processes are saving about 20 percent less on an average as compared to those offshoring over five business processes.

A study conducted by Deloitte cited that the number of jobs going offshore in the financial services sector has increased 18-fold over the past four years. It has been estimated that financial service firms have been saving about GBP 4.5 billion annually at present by offshoring to low-cost countries as compared to GBP 2.5 billion last year. The study also revealed that the US- and UK-based financial service firms are increasingly offshoring their business processes. By 2006, about 75 percent of financial institutions were offshoring, while even less than 10 percent of financial institutions had offshore operations in 2001. Among other key findings, the average offshore headcount has increased from 150 in 2003 to 2,700 in 2006. in addition, firms that are offshoring one or two business processes are saving about 20 percent less on an average as compared to those offshoring over five business processes.

In contrast, according to another study conducted by Compass Management Consulting, the UK-based financial service organizations are not benefiting from offshoring their call center operations to countries, such as India and China. This is because the cost saving benefits that are generally achieved by offshoring to low-cost destinations are diminishing due to increase in wages (by up to 15 percent annually) in such countries. In addition, communication inefficiencies (due to differences in speaking the English language) between the UK customers and offshore call center agents have also led to a decrease in productivity. It is evident that often offshore agents take twice the time as taken to handle a customer query call as compared to UK-based agents. Productivity is measured in terms of sales closed and new accounts opened. The study also cited that operating an onshore call center by financial service firms is capable of generating 10 sales (on an average) per month as compared to an offshore call center that is capable of generating only 4 sales per month. The study suggested that financial firms should focus on enhancing their onshore capabilities and adopt a 'fix and mix' approach towards call centers (having both onshore and offshore call center operations) as compared to a 'lift and shift' model (shutting down domestic operations and moving to offshore).

A recent study by Everest Research Institute cited that an increasing number of human resources outsourcing (HRO) buyers are focusing on accessing the best technologies and improved business process functions at present, rather than focusing on achieving cost savings. According to a company spokesperson, some HRO buyers are even ready to achieve cost savings of less than 10 percent or even zero percent as they are more inclined to access latest technologies and value-based functions; however, HRO buyers' major focus was on cost savings five years ago.

Among the key findings, about 54 percent of HRO buyers have outsourced about 10-12 HR processes out of 12 processes, with transaction-intensive and support HR processes being outsourced more frequently as compared to judgment-intensive processes. Other key findings cited that about 22 percent of HRO buyers did not outsource their HR training function, while about 45 percent revealed that they outsourced 1-5 training activities. However, about 22 percent of HRO buyers revealed that they have offshore operations.

According to the White Paper, titled 'Building a World-Class IT Services Outsourcing Industry in China' by EDS, the Chinese ITO industry is expected to generate revenues worth USD 18 billion by 2010 and USD 56 billion by 2015. The industry is also expected to create job opportunities for about 4 million professionals by 2015. In addition, the paper boasts of abundant supply of workforce, excellent infrastructure, and low-cost advantage in the country. The Chinese Information Industry Ministry estimated that the country's software outsourcing industry revenues grew by over 40 percent year-on-year to reach USD 1.4 billion in 2006. The ministry also expected the Chinese software and information services market to reach about USD 131.32 billion (CNY 1 trillion) by 2010. In addition, some newspapers sources cited that various Chinese provinces are offering tax rebates and have implemented favorable policies to facilitate the country's outsourcing industry and allow international companies to expand/open their offshore operations or set up joint ventures in the country.

NASSCOM, DRDO Collaborate to Develop Innovative Technologies

National Association of Software and Services Industry (NASSCOM), the Indian IT industry lobby, has signed a deal with the Indian Defence Research and Development Organisation (DRDO) to focus on developing innovative technologies.

Under the terms of the memorandum of understanding, NASSCOM’s expertise will complement DRDO’s capabilities to develop advanced projects for the IT industry. In addition, the agreement will enhance the involvement of the IT software companies for DRDO’s development projects.

DRDO’s advanced military systems projects are increasingly relying on software, thus, its partnership with NASSCOM is essential for the development of its software projects related to radars, electronic warfare systems, flight control systems, avionics, missile systems, and command, control, and communication systems.

According to Kiran Karnik, the President of NASSCOM, the partnership with the Indian R&D agency will allow NASSCOM to focus on creating an innovative ecosystem.

DRDO has been successful in developing various innovative technologies across areas, such as aerospace, control systems, communication, etc. This was the prime reason for NASSCOM to choose DRDO as its partner. In addition, the Indian IT industry is moving up the value chain in these areas, and thus, DRDO’s expertise is very relevant and of interest to the industry.