IT Outsourcing India

An improvement in the overall business climate has prompted Indian outsourcer Infosys to raise its revenue and earnings forecasts despite posting a slight drop in quarterly profit today.

Revenue at the IT services firm reached US$1.15bn (AU$1.27bn), a 5.1 percent decline on the same quarter a year ago but a 2.9 percent increase on the previous quarter.

Infosys expects revenue to reach approximately $4.6bn (AU$5.09bn) for the full fiscal year, which signifies a one per ent drop on last year’s numbers.

While the results have surpassed Infosys’ own expectations, the company’s predictions for the future are rather conservative.

Reasons for this approach include the absence of significant market growth, high unemployment and currency volatility, said Infosys head of Europe BG Srinivas.

“The worse is likely to be over, but I will still view the future conservatively while being cautiously optimistic,” he said.

Infosys was reported to be chasing some 12 to 15 outsourcing deals worldwide. But Srinvas said the sales processes are taking longer than usual as clients focus on supplier consolidation and strategy reviews.

Infosys is still hiring 2,000 staff globally with a view to expanding its sales capability. The firm reported that it is hiring senior technology architects and business consultants.

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But Chinese outsourcing companies, whose major customers are Japanese companies rather than US and European firms, still maintained a strong growth due to the country’s relatively lower labor cost, the government’s strong support and the abundant pool of college graduates.

"Our software outsourcing business increased 94 percent year on year in the first five months of this year," said Zheng Shiyu, CEO of Dalian Yidatec Co Ltd, one of China’s largest outsourcing firms.

The company acquired two Japanese counterparts during the past ten months and plans to attract more high-end customers.

In order to help it transform from a manufacturing base to a service hub, China aims to double in five years the export value of the outsourcing industry by 2010. By achieving that, the government announced earlier that it plans to woo some 100 multinationals to transfer part of their service outsourcing industry to China by building 10 cities with international standards.

It also plans to help 1,000 Chinese outsourcing companies grow into medium to large size enterprises within the five-year period ending 2010.

But experts said Chinese outsourcing companies still have a smaller scale and lack the experience and capacity to deliver complicated outsourcing services, when compared with their Indian counterparts like Infosys and TCS.

Liu Jiren, chairman of Neusoft, China’s largest outsourcing company, said Chinese outsourcing companies need to grow bigger to have the advantage of scale. He said Neusoft, which failed in its effort in March to acquire Dalian Hi-Think Computer Technology Corp, China’s second largest outsourcing company, is still in acquisition talks with many domestic and foreign companies.

He said as more US and European companies are starting to outsource their business to Chinese firms, China is expected outpace India in outsourcing in the next five to ten years.

 Source : http://www.chinadaily.com.cn/

Tata Consultancy Services (TCS), the country’s largest IT services firm, is exploring moreavenues in the life sciences and healthcare space as demand from clients gains momentum. Outsourcing analysts say there are deals worth USD300-400 million in the market at various stages of negotiations. Life sciences and healthcare is the sixth-largest vertical for TCS and accounted for 5.2 percent of the firm’s revenues at the end of fiscal year 2008-09. TCS provides offerings in the areas of clinical trial data management , pharmacovigilance and medical device design, besides software and solutions to aid drug discovery.

There are multiple small deals ranging between USD25-50 million and a couple of USD100 million deals by American pharma firms in the market, said an outsourcing analyst.

The sector has not been impacted so much by the economic slowdown. This presents an opportunity for outsourcing firms, he said. TCS vice-president and global life sciences and healthcare head Debashis Ghosh said the firm was exploring venturing into claims processing and other knowledge process outsourcing KPO work in the healthcare insurance area as well as genome analysis. Work in the area of genomics, which focuses on determining the entire DNA sequence of an organism, is already on at the firm’s innovation laboratory in Hyderabad. Genome analysis could help ascertain what diseases a person is prone to and, thus, lead to timely prevention and care, Ghosh said.

Meanwhile, the software services firm is also seeing strong demand from its traditional clients pharma companies and healthcare providers. Ghosh says there is increased pressure on pharma companies to improve R&D productivity as the spectre of patent expiry looms large over them.

One implication of that is pharma companies doing more clinical trials to assess the safety and efficacy of the drug. At the same time, healthcare regulators are becoming more vigilant worldwide. This signifies opportunities in the areas of clinical trial information management and pharmacovigilance for TCS.

While the Indian IT firm largely caters to clients in the US the largest healthcare market in the world emerging markets in Asia Pacific are also becoming more attractive as pharma companies look to tap these markets. A lot of work related to electronic medical records and hospital management systems is happening in Asia Pacific, Ghosh said.

He added that developments such as the Obama government’s re-look at the healthcare insurance system in the US and insurers in the West seeking to linking payments to outcome of treatment at hospitals will also spell growth opportunities for TCS.

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/