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IT, BPO export revenues likely to rise by 5.5 per cent
February 5, 2010
Source: PTI
NEW DELHI: Software industry grouping Nasscom on Thursday flagged the risk of protectionism in Western economies as its most pressing concern and forecast that the rate of export growth for information technology and business services would more than double from current levels during the fiscal to March 2011.
Export revenues of Indian IT and business process outsourcing (BPO) companies are expected to rise by 5.5% to cross $50 billion in the ongoing 2009-10 fiscal and accelerate by 13-15% to $56-$57 billion in 2010-11.
The BSE IT index, which includes the shares of top exporters TCS, Infosys, Wipro and HCL, fell by 2.1% while the benchmark Sensex index declined by 1.6%. Nasscom had originally estimated that India’s IT exports would cross $60 billion in the fiscal to March 2010 but later said that the target would take a year more to achieve after recession took hold of the US and Europe, the main markets for Indian tech firms.
“Spending is coming back and decisions are being made. The BPO sector is expected to grow faster than the IT sector. But unemployment in US remains a major concern,” said Nasscom chairman Pramod Bhasin.
With the United States battling record levels of unemployment, President Barack Obama said in a major speech last month that he will move to end tax breaks for companies that outsource work overseas. “Engaging with international governments to address protectionist sentiments will be the key focus area for us in 2010,” Nasscom president Som Mittal said.
The US accounts for over 60% of software export revenues. Nasscom said that among its other key concerns were geo-political risk, taxation policies that may affect cost-competitiveness, currency fluctuation and inflation.
Analysts said that much of the reduction in flab and cost efficiencies have already happened and growth will come more from the topline than the bottomline. “IT companies could find it challenging to move from the body-shopping business model to a value driven model,’’ said Akhilesh Tuteja, head of IT advisory at KPMG.
Nasscom said that the timing and strength of the recovery varies across regions, with Asia-Pacific leading the way, followed by the US. Europe still lags behind.
Verticals such as retail, healthcare and utilities are expected to contribute a rising share to revenues even as banking and financial services (BFSI) will continue to dominate deals in the domestic market. “`Banks will have to deleverage over the next five years. As they do so, it will reduce profits. To maintain profitability and margins they will offshore as it helps cut costs. This will translate to more work in the BFSI space for Indian companies,’’ Mr Bhasin said. Indian IT and BPO companies added just 90,000 employees in 2009-10. The industry employs about 2.3 million people.
While global demand is improving at a slow pace, the outlook for the domestic industry is getting better and seen growing at 15-17% during the next fiscal, buoyed by telecom, banking and e-governance. The business opportunity in e-governance alone is estimated to be $9 billion. Even as the industry grows bigger, the coming years will see a significant shift in business models, services lines, customers and talent structure. Increased focus is expected on lucrative offerings such as consulting, business intelligence and knowledge services. Small and medium businesses are also seen spending more, helped by business models that allow pay-per-use.
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Genpact acquires US-based Symphony
February 5, 2010
Source: PTI
NEW DELHI: India’s largest back-office firm Genpact on Wednesday announced the acquisition of US-based analytics and data management services provider Symphony Marketing Solutions (SMS), for an undisclosed amount.
Apart from expertise in data integration, modelling and consulting, the acquisition will see transfer of 1,200 SMS employees spread across centres in India and the US to Genpact’s payrolls. Currently, the Indian firm employs more than 37,000 people globally. Genpact shares rose 1.2% on Nasdaq, at 9.20 pm IST, post-announcement.
“SMS’ expertise across sectors will not only allow us to offer a broader range of services ranging from finance and accounting, procurement and supply chain to data management and advanced analytics solutions, but will also enhance smart enterprise processes in these verticals by leveraging strong insights,” Genpact chief executive Pramod Bhasin said.
SMS is a provider of analytics and data management services with domain expertise in the retail, pharmaceutical and consumer packaged industries. It is part of the India-based Software Technology Group of companies.
An industry expert close to the deal said that SMS will prove to be beneficial for Genpact as it comes with long term assured business from customers such as IRI.
US-based Information Resources Inc (IRI) has executed an eight-year contract, under which SMS will provide end-to-end data management and analytics services to the former. IRI is a provider of enterprise market information solutions and services and a strategic client of SMS.
In order to increase the proportion of long-term, predictable business, back office firms such as Genpact and EXL have been trying to acquire companies that bring assured revenues.
Genpact’s rival EXL had acquired a analytics firm, Inductis, last November. “However, the EXL deal did not prove to be too beneficial, as the business was mostly project based,” said an industry tracker familiar with these transactions. Both Genpact and EXL share Oak Hill as a common investor.
“We realised the need to have critical mass in terms of size, scale and client relationships to significantly accelerate growth and enable IRI and other clients to offer more value to their end-customers,” STG chairman Romesh Wadhwani said.
The combination of SMS’ domain expertise and capabilities in several verticals and Genpact’s scale and breadth of services and global delivery footprint creates a compelling value proposition, he added.
Recently Genpact was in news for having initiated talks with BPO firm Intelenet Global Services for a possible buyout. Genpact also acquired US’ largest drugstore Walgreen’s accounting back office in Danville as part of a 10-year outsourcing contract.
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GirnarSoft to set up facility in Mahindra World City
February 5, 2010
Source: ET Bureau
PUNE: Atlas Copco India — part of the e7.7-billion Sweden-based global provider of industrial productivity solutions — is stepping up global sourcing from India, as it strengthens its engineering centres for global use.
“Over the past three years, global sourcing from India has increased from e1 million to e7.5 million. We have a three-year-old logistics and global sourcing centre in Pune, which sources machined parts, aluminium castings, plastic parts, etc, from India mainly for our compressor plant in Antwerp,” said Filip Vandenberghe, managing director, Atlas Copco India, adding that this will grow, as they increase their supplier base. He was speaking to reporters on the eve of the company’s golden jubilee.
While products that Atlas Copco sells in India have a local content averaging 52%, Mr Vandenberge said they intend to increase this as well. This will grow in areas where they get economies of scale and this could rise to a maximum of 80% since the core of a compressor or a rock drill will come from a global manufacturing centre, where they have economies of scale.
Recognising India’s strength, the company is strengthening its engineering centres at Pune and Bangalore. All three centres, comprising a global engineering centre for Asia (GECIA), which is based in Pune, the engineering centre for construction and mining equipment technique (CMT) in Bangalore, which focuses on drilling solutions and products, and the advanced service and administrative provider (ASAP) centre, in Pune, which offers back-office accounting and HR support, will help increase global footprint.
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