IT Outsourcing India

Nasscom has forecast a drop in orders and profits over the short term. But many IT majors feel that by early 2009, the uptrend may be discernible.

The last quarter results of most IT majors have come, and on predictable lines. The net profit margins are down, confirming the earlier indications that the slowdown in the U.S. economy and the pressures on the global economy will have its impact on India, especially in its IT-ITeS sector. Leading exporter TCS had its net profit pruned to just 4.15 per cent in 2007-08 as compared to the previous year, while Wipro was even more flat at just 2.8 per cent. In this lot, Satya m reported a 18.6 per cent growth in net profit. Earlier, Infosys almost met its target and expectations with a 20.8 per cent rise in net profit.

Impact of results

The immediate impact of the flat results was felt in the stock markets and the IT companies took a beating. But behind these figures hidden is the real story. The National Association of Software and Service Companies (Nasscom), the apex body for software companies, has forecast a drop in orders and profits over the short term. How short will that short term be remains the question. Optimists put it at four to six months, but the more cautious extend it to even two years. The forecast is that things will revive in 2010, not before. But many IT majors feel that even by early 2009, the uptrend may be discernible. Some of them have even gone for acquisition of foreign firms or setting up shop in strategic countries. Good planning, for instance, helped Infosys cut down on expenditure, step up projects and revenues from the European market, and also cover up for the rupee. That only shows that proper planning and a more even spread across the global market can help companies overcome the U.S. slowdown.

Outsourcing industry

According to senior industry analysts and consultants, the meltdown in the American banking and financial sector is bound to take its toll in the outsourcing industry — the Indian IT-ITeS sector was expected to feel the impact early on. Not only will there be a drop in outsourcing or front office jobs done through Indian companies, but major projects under discussion are certain to be put off or delayed for better times. “Given the credit crunch in the U.S. economy and layoffs being reported, where is the question of IT maintenance or technology upgradation taking place anytime soon?” asks consultant T. K. Pandian. But others point out that even the recession will open new avenues such as the outsourcing of debt recovery to American financial and banking institutions to Indian BPOs.

Though the IT majors were not saying this in the open, they seem to have done their internal workings on the downtrend in their major main markets. While some of them have turned the focus on Europe and East Asia, others are looking to woo a new clientele of domestic firms which may not be averse to IT applications or outsourcing. “Given today’s competitive world and the recessionary trends, investors or analysts should not expect 30 per cent growth or double digit profits. Like the markets, we too need a cooling period and time to overhaul our operations,” reasons a Chief Operating Officer of a Bangalore-based second-tier IT firm.

Attrition

More than the technical, operating or finance chiefs, it is the human resource managers who seem most worried at the moment. Attrition poses a major challenge to them. “The problem is so complicated. We find it difficult to retain good talent, we continue to recruit, and most of the new recruits do not measure up to our standards and get benched,” explains Joseph Staley, a HR manager. It is something of a paradox that Nasscom estimates that the industry will need over one million jobs to be filled up this year, but there appears to be a dearth of qualified hands who can live up to expectations and stay on with the companies.

With fewer new projects and clients coming in for the short term, existing clients have become more demanding — on quality, perfection, communication, and schedules. So known performers end up doing more and the under-performers get benched. Consequently, the more competent staff needs to be “looked after better,” or they move to greener pastures. These are challenging times for the IT sector, which needs a comprehensive management policy in place to take care of clients, personnel, finances, and marketing.

Source : http://www.hindu.com/

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KOLKATA: Infosys’ headcount target of 5,000 at Kolkata is just for starters. The IT major intends to have more than 20,000 employees in the city over a period of time.

"Our Bangalore campus, which at 80 acres occupies slightly less area than the proposed Kolkata facility, presently has 22,000-23,000 employees. There’s no reason why we can’t get to that figure in Kolkata also," Infosys CEO & MD S Gopalakrishnan told TOI on Thursday. "In Kolkata’s case, achieving the 20,000-employee mark may actually take us much less time than what it took us to get to this number in Bangalore."

Infosys bridged the 20,000-mark in Bangalore 13 years after setting up its campus. Its proposed Kolkata campus, which would come up on 90 acres, would house both its software development and BPO operations.

The company also promised to invest Rs 500 crore to set up its maiden facility in West Bengal, which would initially employ 5,000 people.

"Finally, we are here," Infosys CEO & MD S Gopalakrishnan said after a meeting with chief minister Buddhadeb Bhattacharjee and state IT Debesh Das on Thursday. "At last, it has been done," a beaming Das added.

The proposed Infosys campus - whose first phase would be operational by end-2009 - would come up on 90 acres at Rajarhat.

 

Source :  http://timesofindia.indiatimes.com/

Differing from indications given by some of its competitors, consulting and information technology services major Accenture said it has faced no order deferral or cancellation from its clients despite the general mess surrounding the financial services sector in the US. On his second visit to the country in under two years , and this time with the entire board , chairman and chief executive officer William Green said other sectors and geographies were firing on all cylinders.

He added that the companys exposure to the risky capital market part of banking, financial services and insurance BFSI was in single digit percentage.

What serves us well is the diversity of our business. Our BFSI exposure is under 20 percent, and within that, the capital market is in single digits. Other sectors like telecom, pharma, retail and chemicals are all growing very well. Our businesses in India, Latin America, China, Russia, and Central Europe are all going through the roof, Green said.

Players like Tata Consultancy Services have said some BFSI clients have deferred engagements. Accenture clearly doesnt subscribe to the view. The discretionary part of our business is in single digit. We dont do boutique stuff. We do high performance stuff essential for the company. More often than not this cannot be cut down, he said.

Green said currently the US economy was in a better shape to withstand shocks than it was in previous recessions. Earlier, when the US economy slowed down, we found all players within the same sector slowed their spending. Now they cannot afford to do so since they are competing in the global marketplace and others geographies are growing. So while there are pockets of challenge, there are pockets of demand as well, he said. He forecast US economy recovery by the latter part of the year.

The USD 20 billion company plans to add about 60,000 gross about 40,000 net employees this year to its global network. This would take its India headcount past the 50,000mark this year, from about 37,000 currently.

The company is also betting big on the domestic IT domestic industry. It plans to add strength to its consulting practice in the country and foresees traction from services like merger integration, supply chain, human performance and operating models.

This is the first time that the company has bought its entire board members to India to showcase the countrys strengths.

Source : http://www.offshoringtimes.com/