IT Outsourcing India

Patni Computer and MphasiS are among the potential suitors looking to acquire the Indian software unit of troubled insurance giant AIG, said a banking source familiar with the development. The software unit, AIG Systems Solutions, is on the block as part of the insurance behemoths plans to divest assets globally and focus on its core business. Deloitte is running a sale process for the unit, which has over 1,000 employees and annualised business estimated at USD 30 million. The sevenyear-old AIGSS has centres in Chennai and Kolkata. The deal-making is still in preliminary stages.

Other middle-rung Indian IT firms like MindTree and a few private equity investors could also be in the race even as AIG’s lack of assurance on a committed business flow in the future has dampened the interest of some suitors, sources added. Polaris, TCS and MindTree figure in AIG’s vendor list.

The recent sale of the captive back-office arms of Citigroup and Aviva came with a multi-year assured business contract from these firms. The issue of business shrinkage as AIG divests many of its divisions was another concern for the suitors. The US Federal Reserve bailed out AIG from bankruptcy by pumping $85 billion loan in return for majority control.

The uncertainty over future business from AIG is likely to impact the deal valuation. One banking source said the deal could be valued at best as one-time revenue, which is around $30 million. But the fact that AIGSS has a high quality team engaged in 70% off-shore work could be a positive.

But the catch is whether AIG would sweeten the deal by offering a long-term outsourcing contract for the buyer. The history of such deals tells us that whoever buys a captive gets guaranteed business from the owner. I don’t think these buyers will buy without a guarantee of business,” said an analyst with an IT research and advisory firm, who did not wish to be named.

Precedents for a deal of this nature include Citi’s sale of its back-office arms Citigroup Global Services and CITOS to TCS and Wipro, respectively, and Aviva’s sale of its captive to WNS. In each case, the deal was accompanied by a multi-year outsourcing contract with the parent company.

AIGSS was set up as a joint venture company where AIG held 80% and Polaris Software Lab held the rest. Polaris incubated this company by sharing its physical and communication infrastructure and processes. But, when Polaris signed a professional services agreement with AIG Global Services last year, it sold its stake in AIGSS.

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

HCL Technologies on Wednesday announced signing a global outsourcing deal with MTV Networks (MTVN) to develop and support its online media platforms. MTV Networks is part of media conglomerate Viacom and owns brands such as MTV, VH1, Nickelodeon and Comedy Central. The outsourcing engagement with HCL is aimed at supporting content delivery on the Internet. HCL and MTVN signed the deal in the October- December quarter last year. It was not disclosed when HCL will start generating revenues from the contract.

The Indian IT firm will provide application development and maintenance services to the media firm. “We will also work on future technologies such as media players, search technologies and product engineering for MTVN,” said HCL Technologies senior director Srirama Srinivasan.

HCL will work on developing and supporting platforms for media players, social networking and games, among others, for MTVN. Most of the work under the engagement will be done at HCL’s existing centres in Chennai, while the user interface design would be supported from Noida. HCL will also set up a media centre for MTV Networks for developing new products such as media players. The IT firm didn’t reveal the investment earmarked for the centre that is likely to come up in Chennai.

HCL Technologies CEO Vineet Nayar said the firm’s innovative solutions and risk-and-reward sharing model has helped it bag a number of deals in the last several quarters. “We look forward to this partnership with MTVN and demonstrating the value which HCL brings,” he added.

In the last few months, HCL has won a number of deals including a $350-million total IT services outsourcing deal with Readers’ Digest Association (RDA) signed in March this year. Apart from ADM and infrastructure support, HCL would also work on digital content delivery for the media firm. It also won a seven-year, Rs 393-crore IT services deal from Indian general insurer National Insurance Company. HCL also signed a $100-million data centre services and transformation deal with printing major Xerox Corporation. More recently, it bagged a multi-million dollar deal from supply chain services firm UTi.

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

Extentia Information Technology, a global software development company, today announced the formalization of a strategic development relationship with CoSMIT GmbH, Germany, to provide software development and consulting services to their European clients.Extentia Information Technology is a software development and consulting organization primarily servicing North America and Europe. With strong technical skills both on Microsoft and Java platforms, Extentia is committed to delivering high quality, information technology solutions. The company focuses on providing global solutions, and addresses the needs of corporations and software development companies requiring Internet, webbased and clientserver solutions based on industry standards and emerging technologies.

With their consulting services and software solutions in the business intelligence space, CoSMIT have enjoyed rapid growth and success and can look back on numerous profitable years of business. CoSMITs product and service range covers Actuate Consulting, BIRT, Portal and Dashboard development, Databases, Training and custom tools for Business Intelligence.

With the increasing importance of open source software, BIRT solutions have become more attractive for organizations of all sizes. And with the increasing demand for BIRT based skills, CoSMIT, as an established integration service provider, is well positioned to further drive business and focus on customer needs in Europe.

In talking about the expanded collaboration, Mr. Anand Rahul, Business Unit Head at Extentia commented, Extentia is the perfect partner for CoSMITs increasing needs. We have substantial experience in enterprise application development, and specifically, the fit with our Java and open source teams is going to be perfect.

The partnership between CoSMIT and Extentia will allow CoSMIT to offer customers unique BIRT software solutions for their information processing needs. While the development of the software will be executed at Extentias development centre in India, a team of technical presales experts will work onsite with the CoSMIT team in Germany. With Extentias experience in managing global customers and projects, processes that minimize communication and requirements issues will be rapidly put into place.

While visiting with Extentia in September, Johannes Schabel, Managing Partner of CoSMIT commented, This global delivery model is a compelling opportunity for our customers that will help them operate more competitively and aggressively in a shrinking world. The close collaboration model will give our customers total control over the project while benefiting from a global delivery model. We are excited about this opportunity and are looking forward to working with Extentia.

When announcing the partnership, Umeed Kothavala, a director at Extentia noted that Extentia has valuable experience in building large and complex applications, and has an incredibly successful track record in delivery. Coupling this experience with CoSMITs strengths and presence in Europe is going to create a winning team. CoSMIT and Extentia have already worked together and this partnership is going to make our teams operate more seamlessly and bring the best of our strengths together.

The partnership with CoSMIT is part of Extentias growing European footprint, and reflects CoSMITs commitment to find the best solution partners for their delivery models.

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

Just few weeks after TCS won a contract from the UKs Child Maintenance and Enforcement Commission CMEC, another stateowned organisation Transport for London TFL is seeking vendors for an outsourcing contract worth around USD 100 million, as the countrys transport organisation seeks to consolidate its information technology helpdesk and serve around 30,000 of its staffs better. The contract is the second in a series of deals worth around USD23 billion being pursued by offshore service providers, including TCS, Infosys and Wipro from the UKs state owned departments. The UK aims to save almost USD 10.6 billion annually by lowering costs of back office and IT operations across its stateowned departments, and outsourcing could help the country achieve these savings, according to experts.

The contract also involves managing IT systems for around 18,000 users at TFL, which hopes to save almost USD 3.5 billion by making its business processes more efficient.

At a time when protectionist lobbies in the US are asking the Obama administration to curb offshore outsourcing, the UK is seeking to bring down operational costs of its public sector systems by outsourcing noncore IT and back office projects.

A review of the UKs public sector IT spending by the countrys treasury department earlier this month identified the potential of around USD10.6 billion in annual savings. Government IT spending in the UK is estimated to be around USD36 billion every year, Bob McDowall, says research director at TowerGroup Europe.

Back office operations and IT, led by Martin Read, recommends better management information, benchmarking and review of costs, and better governance of ITenabled change programmes to achieve USD5.9 billion of savings a year on back office operations, and USD4.7 billion of savings a year on IT spending, HM Treasury said in its study titled Operational Efficiency Program.

The UKs stateowned departments are seeking help from the Indian offshoring industry for bringing troubled government technology systems back on track and lower the cost of managing government IT systems anywhere between 25 to 40 percent. The UKs national healthcare modernisation programme pegged at almost USD9.6 billion is among some of the initiatives that failed to deliver.

Apart from the troubled National Health Service NHS modernisation programme, which needs restructuring, HM Revenue and Customs HMRC will also seek to outsource more work, as the department plans to make it mandatory for firms employing more than 50 employees to file tax related and other information online by 2011. The UK government IT projects almost always suffer from scope creep, financial and time overrun of a significant dimension, McDowall had said.

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