It is a dream turned bitter for many outsourcing vendors that signed deals with new telecom licensees hoping to replicate the phenomenal success of the IBM's outsourcing contract with Bharti Airtel, which grew into a multibillion dollar bagger for the firm. With the Supreme Court order cancelling all licences issued after 2008, the future revenues that the outsourcing vendors were banking on to recover their initial investment and turn in big profits is now mostly just a dream. Etisalat DB India has outsourcing contracts with Tech Mahindra that were estimated to grow to $400-500 million while Wipro has an outsourcing contract with Uninor estimated to grow to $500 million. Other than Wipro and Tech Mahindra, back office providers such as Firstsource Solutions, Spanco, Aegis and Intelenet Global Services have customer service contracts with the new telecom operators. In 2004, telecom operator Bharti Airtel and multinational IBM inked a 10-year outsourcing deal that created business history by growing to $2.5 billion in five years. The deal also brought two more lucrative IT outsourcing contracts into IBM's kitty from Vodafone and Idea, and yet another from Bharti's Africa operations. Wipro and Tech Mahindra, which were also in the fray in 2004, found the model too risky because it involved upfront investment from the IT vendor and revenues that were linked to subscriber growth. Several years later, hoping to replicate the same success Wipro and Tech Mahindra signed outsourcing contracts with Uninor and Etisalat DB, as did several back office providers. Wipro's contract with Uninor was to be a showcase transformation project, helping it win global deals. On Thursday, most of these companies only issued brief statements saying they needed to assess the impact. Wipro's chief financial officer Suresh Senpaty said, "We have not studied the impact so it's early to comment on what will happen. Everyone is still trying to understand what this means." A Tech Mahindra spokesperson said, "We are aware of this and are closely monitoring the development. At this point in time, we would not be able to offer any comment. Furthermore, as a policy, we do not comment on any details pertaining to client specific engagements." However, people familiar with the fierce competition that went into winning some of these contracts said outsourcing firms had agreed to extremely risky clauses to bag them. For instance, the initial investment made by one of the outsourcing vendors was covered by a bank guarantee that was renewable every few months. "The bet was the future revenue inflows would be sufficiently high to recover the costs and more," a senior industry professional requesting anonymity said. For business process outsourcing (BPO) firms that had customer service contracts for these circles, cancellation of the licences means even current revenue flows could be impacted. The impact could vary depending on their exposure to the new telecom licences that were issued. Spanco, for instance, does work with Videocon. All of Videocon's licences, except for Punjab, have been cancelled. Intelenet and Aegis do work with Uninor and Firstsource does work with Idea in some of the affected circles. Both Firstsource and Aegis issued statements saying that the revenue impact would be less than 1%. Fortunately for most of the BPO providers, they have large customer service contracts even with incumbents such as Vodafone, Bharti and Idea, which has 22 circles in all (nine have been cancelled). BPO contracts are typically covered by a minimum guarantee clause, which means customers have to mandatorily pay them for the minimum volume business even if it is not there. The telecom sector, which was the largest or second largest business for most of these BPO players, it's a rude awakening. "They may now have to deploy these people in other projects. There could be a glut of people with telecom skills both in IT and BPO," said an industry executive requesting anonymity.

Even as private equity majors continue to make the best of the rally in the Indian stock markets, they have lined two outsourcing companies for share sales. The two sales together could rake in over $200 million for the PE-backers of these companies, according to analysis of the current share prices of these companies. Business process outsourcing firm WNS (Holdings) Ltd has moved ahead with its offering and plans to sell 10.5 million American Depositary Shares (ADS) in an equal mix of primary and secondary offerings by Warburg Pincus. Private equity firm Oak Hill Capital Partners is also looking to completely exit ExlService Holdings, Inc., after halving its stake last year. WNS had filed for a shelf registration statement with the Securities and Exchange Commission (SEC) in October last year in which Warburg Pincus was allowed to sell its entire 47.9 per cent stake over a period of time. In the current offering, Warburg Pincus is selling 5.25 million ADS, with an option to sell another 1.575 million shares in case of over-allotment. This accounts for nearly one-third of Warburg Pincus’ current stake or over 15 per cent stake in WNS. The share price of WNS closed at $9.65 a unit on Wednesday, down 1.03 per cent on the New York Stock Exchange. At this price, Warburg Pincus could get nearly $66 million for its shares (including over-allotment). WNS is also raising primary capital through issue of 5.25 million ADS for general corporate purposes, which may include capital expenditures, acquisitions, debt refinancing and working capital. In another development, NASDAQ-listed business processing outsourcing firm ExlService Holdings has made a shelf registration in which it will raise $180 million. These funds can be raised through common stock, preferred stock, debt securities, depositary shares, etc. The shelf registration also allows Oak Hill Capital to sell its remaining 17.3 per cent stake in the firm. VCCircle reported in December that Oak Hill sold 17-18 per cent stake in the firm since September 2011, realising $120 million in the process. ExlService co-founders, former Bank of America executive Vikram Talwar and the current CEO Rohit Kapoor, are also selling part of their shares in this offering. The share price of ExlService closed at $24.96 on Wednesday, up 3.4 per cent. At this rate, Oak Hill Capital could realise $138.34 million for its stake. Oak Hill Capital, along with Financial Technology Ventures and ExlService management team, had acquired 100 per cent stake in the company from insurance firm Conseco, Inc. (now called CNO Financial Group) in 2002.

Infosys BPO, the back office subsidiary of Infosys, has acquired Australia-based sourcing and category management services firm Portland Group. The A$37-million all-cash deal is expected to be completed by early January 2012. According to Infosys, which has often been criticised by analysts and industry watchers for not being aggressive on acquisitions despite sitting on almost $4 billion of cash, the deal will help it establish presence in the Australian market with more offerings in the value-added segment. "The deal will essentially enable us to have a reach into the Australian market. It will enhance our sourcing and procurement capabilities. Infosys' focus has always been on value-added services and this will add to it," Swamithan D, CEO and MD of Infosys BPO. Portland Group has over 100 employees with a reported revenue of approximately A$31.3 million for the fiscal year ended June 30, 2011. "Portland Group has over 100 procurement specialists with domain expertise and some 40-odd clients. None of them is our clients as of now. The deal will certainly help us intensify our service offerings and take sourcing and procurement functions to a higher level," he added. The acquisition is expected to start contributing to Infosys revenue by next quarter. The country's second-largest IT services firm is seeing a greater role for its BPO business as it transforms itself from an IT services firm to a business solutions firm. According to the company's executive co-chairman, S Gopalakrishnan, BPO is now leading the sales in many of its new wins where earlier it would have been bundled along with IT services. Infosys' BPO business is set to hit the $500-million-mark in revenue this year. "For Infosys, only 7% of business comes from BPO services. But I see that as an opportunity. Traditionally you would have thought that BPO comes later. But now BPO is leading the sale and everything else gets pooled to BPO," Gopalakrishnan told ET in an interview last month. According to him, BPO is also gaining prominence as IT services firms move to platforms which have some amount of business processes embedded in them. Since October, the company has added incentives to its technology sales team if they are able to sell the BPO business as well. So far Infosys' technology sales team was only responsible for selling IT services. The last acquisition that Infosys made was also in the BPO business. In 2009, it acquired the US-based McCamish Systems to expand its presence in the insurance and financial services sector. The company signed a $250-million deal with Royal Philips Electronics of the Netherlands and acquired three shared service centres located in India, Poland and Thailand from Philips in 2007. Portland Group CEO Galvin Solsky said Infosys will provide Portland's clients with a highly compelling proposition that does not currently exist in the Australian market. "It (the deal) will allow us to offer our clients a truly integrated and globally competitive solution to deliver procurement benefits in the most effective and efficient way possible," he said in a press statement.

India’s largest business process and technology management company Genpact has acquired High Performance Partners, LLC (HPP) and its Quantum Mortgage Technology for undisclosed sum, the company said in a statement today. Post this deal, Genpact will own 100 per cent stake in company and will leverage the Quantum software platform to support its mortgage business process as a service (BPaaS) offering, the statement added. Last year in March Genpact had acquired a stake in HPP but had not disclosed the deal amount or how much it has picked. Incorporated in April 2008, High Performance Partners, LLC provides solutions to the mortgage market. HPP has provided consulting and business solutions to the mortgage market, banks, brokerages, insurance companies, and other financial services companies. The Quantum platform helps originators and lenders to automate and streamline major elements of the loan origination process, resulting in a shorter loan lifecycle and a more transparent mortgage asset. Roger Hull, founder and CEO of HPP, will lead the ongoing development of Quantum for Genpact as vice president of Genpact Mortgage Services. “Mortgage lenders are shifting away from document-centered mortgage technology to data-centric processes that will enable significant process streamlining,” Roger Hull, founder and CEO of HPP said. Genpact, which went public in the US in 2007, is backed by private equity firms Oak Hill Capital Management and General Atlantic. Last month Genpact signed a definitive agreement to acquire US-based media and business research EmPower Research for an undisclosed sum. Early this year, the company had also taken over California-based Cloud company Akritiv Technologies for an undisclosed amount. In another large deal, NYSE-listed Genpact Ltd, which saw a change of guards earlier this year with Pramod Bhasin stepping down as CEO and giving the reins to NV ‘Tiger’ Tyagarajan, also acquired Headstrong Corporation, an IT consulting and services company, for a cash consideration of $550 million.

Recruitment by Indian IT companies witnessed a slowdown in the month of August, owing to the crisis in the US and Europe region, but the overall hiring mood in the country is upbeat, says a survey. It might take 2-3 months for recruitment activities in the IT sector to gain momentum, according to recruitment tendering platform MyHiringClub.com, which said that hiring activity saw a 49 per cent drop in the IT and ITes sectors in August vis-a-vis the previous month. The US accounts for almost 60 per cent of the revenues of the USD 60 billion Indian IT industry. In contrast, other industries such as FMCG, banking, telecom and automobiles saw 14 per cent more recruitment in August, compared to July. "This data shows the strong impact of the US and Euro crisis in Indian IT sector hiring. We had seen the overall hiring trend was healthy in the previous month, except the IT and ITeS sectors," MyHiringClub.com CEO Rajesh Kumar said. "When discussed with some employers, they indicated it will take 2-3 more months for hiring from these sectors," he added. A city-wise analysis shows that most cities experienced a lull in hiring activity in the IT and ITes sectors in August, 2011. The IT hub of Bangalore saw a 29 per cent decline in hiring vis-a-vis the previous month. Among the metros, the Delhi/NCR region saw a 19 per cent drop in hiring in August compared to the preceding month, while Chennai witnessed a fall of 15 per cent. Mumbai and Hyderabad saw a drop of 13 per cent and 8 per cent, respectively, in August. The survey was conducted among 353 employers, including 127 employers from the IT and ITeS sectors.

IT services company MphasiS has entered into an agreement to acquire Wyde Corp, an international software vendor and creator of insurance policy administration solution Wynsure in an all cash deal. Ganesh Ayyar the CEO of MphasiS the company paid 2-4.5 times of sales to acquire Wyde. Wyde had revenue of USD 30 million with EBITDA (earnings before interest, taxes, depreciation and amortization) at 18% in 2010. Wyde acquisition will be EBITDA accretive and MphasiS hopes to close the deal in the next 30 days, he added. "Wyde caters to a robust customer base, which include Tier I as well as mid-market insurers across the US, France and Canada...The acquisition of Wyde will extend MphasiS’ insurance footprint in Life and Annuities and strengthen its existing capability in the property and casualty segment," MphasiS said Monday. Wyde is headquartered in Minneapolis, USA and has a research and development centre in Paris, France. MphasiS said it intends to continue with and strengthen the Paris R&D facility of Wyde. The current management team lead by Jean-Rene Lyon, the CEO of Wyde will continue to drive and grow the business post acquisition, MphasiS said. MphasiS shares rose over 1.7% at Rs 456.10 on NSE post the announcement in morning trade. It however, is uncertain if the rally will last long, given that it is a small acquisition and the stock has taken a beating this year over lower disclosure issues, poor earnings and disappointing outlook by parent HP. The shares also saw a sell-off earlier this month after its UK-based client Santander stopped outsourcing services from MphasiS and shifted call centres back home on adverse customer feedback.

India may no longer be the preferred destination for call centre work from the United Kingdom as a trend to shift back work by UK companies to their home country is gaining momentum. A high UK jobless rate and a need to better connect with their customers, coupled with rising costs in India, are driving firms such as Aviva, BT and Santander to move work back home. Last week, another UK-based telecom firm New Call Telecom decided to move its call centre back to Lancashire from Mumbai. On Tuesday, shares of Mphasis fell over 6% as banking group, Santander, moved its retail banking-related call centre services from the Indian vendor back to the UK. For many, having a UK customer call centre has also become a differentiator in commoditised markets such as voice telephony services, say experts. It is also viewed as 'patriotic'. "In the current economic climate, it is very good PR to be investing in the UK economy at a time of real economic hardship and high unemployment. To be seen to be 'putting something back in', rather than to be 'taking something out' is likely to be a strong selling point for a brand," said John O'Brien, research director at TechMarketView, in a note. In the retail banking and mobile telecom sectors, UK-only call centres have become a real differentiator, he added. UK bank NatWest used this as the punchline for an ad campaign some time back. "With UK call centres, it's also easy to manage your bank account" a line on UK bank NatWest's website said. UK insurer Aviva moved back some jobs from its Indian BPO partner WNS to Norwich, UK, earlier this year. Although it did not give a reason, people familiar with the matter said it was facing quality issues. UK BPO giants Serco and Capita have also been actively acquiring UK-based and predominantly onshore call centre capability in recent months, according to TechMarketView, which added, "They clearly know the way the tide is turning." Indian outsourcers, HCL Technologies and Firstsource Solutions , already use onshore capability for voice-based customer-facing roles in UK. Santander is expected to create 500 new jobs in the UK while New Call Telecom will create about 100. Although these numbers seem small in comparison to the over 2 million people employed by the Indian IT-BPO sector, it is a fairly significant number in the UK. "The whole issue around accents just became really big in the UK, for some reason it was never seen as a problem in the US. It just got highlighted a lot in the UK and then some companies started using it as marketing tool too," said Pramod Bhasin, ex-CEO and non- executive vicechairman of the country's largest BPO firm Genpact . "It will continue to happen from time to time, due to customer services issues, but given the amount of work that happens in India, it will not be a problem," he said. A lot of voice-based work, mostly to US-based clients, have moved to Philippines given its cultural affinity to the US and similarity in accent.

Genpact Limited is assuming the management of Nissan Human Information Service (NHIS), Nissan's shared services center for human resources (HR) operations based in Yokohama, Japan. NHIS has operated as a subsidiary of Nissan Motor Ltd. since 2000 and currently handles HR functions for 54,000+ Nissan employees worldwide. The collaborative relationship also includes a seven-year agreement, under which Genpact will provide payroll, benefits, staffing, training and other key HR services to Nissan. The center, renamed Genpact Japan Service Co., Ltd., will significantly increase Genpact's onshore service delivery capability in Japan.

Telecom New Zealand, the listed telecom, has sold Gen-i, the group's information technology and business sales unit, to Infosys, the India-based group, noted a company release. Infosys and Gen-i today announced a strategic partnership that will create a new choice for Australasian enterprises seeking local expertise and commitment, as well as global best practices and capabilities in IT services including IT consulting, business transformation and cloud-based offerings. The partnership creates a new market proposition for local businesses by helping them to transform for competitive advantage, with new ways to innovate, reduce costs and increase the effectiveness of their people, processes and technology. As near-shore delivery from New Zealand for Australian clients and global delivery headed by local management are among the joint growth strategies planned, the partnership also has significant potential to further grow New Zealand-based technology jobs. Infosys has also acquired Gen-i’s Software Solutions practice and offered positions to its more than 110 employees and contractors, who will continue to be based in Auckland, Wellington and Christchurch. The employees invited to join Infosys — primarily senior developers, technical architects and consultants— will expand Infosys’ New Zealand team to over 150 people, with immediate plans to hire an additional 15-30 people. The partnership will be undertaken by Infosys Australia & New Zealand, the Australasian arm of global technology services and consulting company, Infosys Technologies (Nasdaq: INFY), and Gen-i, the corporate ICT arm of Telecom New Zealand (TEL.NZ). Infosys has announced that the current Software Solutions management team will lead New Zealand delivery for Infosys, with Patrick Kouwenhoven (currently Gen-i’s Head of Software Solutions) appointed to run New Zealand operations under the leadership of Ashok Mysore, Associate Vice President, Infosys. “Since launching our first New Zealand office 18 months ago, we have been studying the market to find the right strategic partner,” said Jackie Korhonen, CEO and Managing Director, Infosys Australia & New Zealand. “Our partnership with Gen-i makes sense because we share core values and complement each other’s strengths to fill some critical gaps in the marketplace. We will be adding our global R&D, business transformation and industry-specific capabilities to an iconic New Zealand brand.” Chris Quin, CEO of Gen-i Australasia, said that the new partnership creates new value for New Zealand and Australian enterprises by combining Gen-i’s local relationships and capability with the global expertise and best practices of Infosys. “There has been a lot of consolidation in the IT services market recently, leaving an opportunity for a strong local partnership which can deliver world class capabilities in hosted and integrated ICT solutions,” Quin said. “Earlier this year we reviewed our Software Solutions practice and decided on the best approach for accelerating growth and strengthening our capability,” said Quin. “Our strategic partnership with Infosys increases the breadth and depth of solutions we can deliver to trans-Tasman clients, and supports our strategy of becoming Australasia’s most preferred ICT hosted services and integrated ICT solutions provider.” “We are looking forward to welcoming new talent to the Infosys team,” added Korhonen. “The synergies of this partnership will provide new career opportunities for these people and other New Zealanders we will hire to support our growing business. About Gen-i Gen-i is at the forefront of helping customers take advantage of the convergence of technology and telecommunications, and the new opportunities this makes possible. Gen-i works alongside its 3,300 corporate, government and business customers to deliver seamless and integrated ICT solutions. A member of the Telecom New Zealand Group, Gen-i achieves this with the support of nearly 3,000 highly skilled people in 17 locations across New Zealand and Australia

EXL has entered into a definitive agreement to acquire Outsource Partners International, Inc. (“OPI”), the largest pure-play finance and accounting (“F&A”) outsourcing firm. OPI is one of the largest providers of complex F&A outsourcing services in the market today with over 3,700 professionals operating out of delivery centers in India, the United States, Malaysia and Bulgaria, and more than 80 clients, approximately half of which are publicly-traded companies. OPI was founded in 2002 and its strength in F&A originated from its big-four accounting heritage. Today, it has grown into one of the largest pure-play providers of F&A outsourcing services, with revenues of $76 million in 2010 and has achieved organic long-term revenue growth in excess of 15 percent. OPI is headquartered in New York, and has offices and delivery centers in Bangalore and Kochi, India; Sofia and Varna, Bulgaria; Kuala Lumpur, Malaysia; London, U.K.; and Dallas, Jersey City, Houston and Washington, D.C. in the U.S.

Large BPO firms are widening their vertical or sectoral expertise to cater to the changing demands of the outsourcing industry. Historically BPOs have been horizontal focused. They offered services like customer interaction and support, finance and accounting, and human resources that are applied across different industry verticals. Industry body Nasscom estimates that horizontal services account for more than 70% of the Indian BPO industry. But with clients now more open to outsourcing sector specific mid- to front-end functions that require deeper domain knowledge, BPOs are enhancing their expertise in such functions. These include areas like mortgage processing, core banking, supply chain and healthcare insurance. For clients, this helps to contain costs and focus on their core business. Deepak Patel, group CEO of Aditya Birla Minacs, said that insurance clients are now outsourcing core processes in underwriting and banking clients want BPOs to analyze risks associated with loans and make decisions on loan disbursements. Aditya Birla Minacs focuses on banking, financial services and insurance ( BFSI), manufacturing, and telecom, media and entertainment verticals. The BPO vertical focus is similar to what IT companies are doing. TJ Singh, research director at Gartner, however said that unlike IT companies, Indian BPOs have not appointed vertical heads or made major managerial changes. BPOs add vertical expertise by either making acquisitions or setting up bases in countries where a particular expertise exists. On May 2, BPO firm EXL Service Holdings acquired finance and accounting outsourcing service provider Outsource Partners International, deepening EXL's expertise in this space. Others like Tech Mahindra , TCS and Aegis are also scouting for acquisitions in different geographies. Some Eastern European countries are excellent for accounting, while the US is good for healthcare experts. BPOs are also appointing domain specialists to improve their verticalized offerings. For instance, banking sector executives are hired to work on actuarial (risk assessment) roles at BPOs. "When clients interact with us, they interact with people with specialized knowledge and work skills from the same industry," said Keshav Murugesh, group CEO of WNS Global Services. WNS has introduced a completely new strategic orientation, by verticalization of the company around six areas including travel, banking and finance, manufacturing and retail. "Our core area of investment now lies in sales and new verticals," Murugesh said. Sameer Dhanranjani, country head of Fidelity National Financial, said that competition from other low-cost geographies is making it necessary for Indian BPOs to offer higher end differentiated services. "Also, verticalization enables BPOs to win longer term sticky deals with better margins," he added. Gartner's Singh however said that Indian BPOs needed to do much more to compete against MNC BPOs like IBM that have very specialized offerings. "Pure play BPOs have the offerings, but they struggle to market them; and IT companies with BPO arms are unsure about the extent of investment to be made in verticalized solutions," he said.

In a surprising move, Pramod Bhasin, who founded Genpact Ltd (GE Capital International Services) in 1997 as a unit within General Electric, will be stepping down from the role of the company’s chief executive and board member. He will continue as a non-executive vice chairman. NV 'Tiger' Tyagarajan will takes his place as the new President and CEO, who will be essentially coming back to this role as he was the CEO between 1999 and 2002 (it's not clear what role was Bhasin occupyuing at that time). Tyagarajan and Bhasin have been compatriots for over a decade. Genpact is currently owned by private equity firms Oak Hill Capital Management and General Atlantic who acquired a 60 per cent stake from General E;lectric in 2003. The company got listed in New York Stock Exchange in 2007. Genpact refrained from explaining the move; though Bhasin said in the official statement released by the company that he was “looking forward to other pursuits.

The world is flat. But more often than not we tend to forget what goes into flattening the world. When a company decides to go global to expand its business, it faces plenty of obstacles in its way. Same is true for Indian IT (Information Technology) firms. In this article, we are going to highlight some of the new challenges that have emerged for the Indian IT companies as they become larger players on the global stage. The challenge lies particularly in terms of the workforce employed by the companies. As they expand their global footprint, companies have to look beyond the borders of India to recruit talent. The first major problem that the Indian IT firms have started to face in recent times is that they are now subject to different legal laws and norms. Each country has its own set of rules. For example not recruiting older employees was fine in India. But they can no longer reject people on the grounds of their age. A case in point is the recent lawsuit filed against Infosys, wherein an individual alleged that the company declined employment to him just on the grounds that he was old. While Infosys has reiterated that they do not discriminate on age, however, they were unable to give a plausible reason for rejection. There are many more such cases that Indian IT companies now face as they expand global operations. Another major problem that has cropped up is the issue of anti-outsourcing. Indian IT industry has thrived on the work outsourced to them particularly by the developed nations. However, as the developed world faces the brunt of the global crisis, they have started raising their voices against the migration of jobs to India. In recent times, many have imposed stricter visa norms and legal fees. For example, US visa rejection rates for Indian techies have doubled from around 4% to over 8% over the past nine months. As a result, sending IT personnel to onsite locations has become increasingly difficult and expensive for the companies. This would start to have an impact on their margins in times to come. Also as Indian IT firms go global they need to develop the optimum mix of employees. A big dilemma that they face is to get the balance correct in terms of recruiting from the local markets or to assign the jobs to Indian counterparts. The decision is critical as the wrong mix could have an adverse impact on employee morale and productivity. It also has a serious impact on the company’s operating costs. Companies like Infosys and TCS have been opening offices in countries outside of India. As a result this problem becomes even more magnified for them. Companies like Wipro who rely more on inorganic growth through acquisitions, also face the same problem. Hence it is clear that Indian IT companies are facing multi faceted problems. Japanese Auto major Toyota too had to face the same issue when it was expanding its business in USA. Indian IT firms will do well to learn from Toyota, which has effectively dealt with such issues. Will there be any material impact of these new challenges on the business of Indian IT firms? Only time can answer this question.

It is official. BPOs are indeed going rural. Growth of rural BPOs is helping firms deliver services at lower cost and generate jobs in villages, noted a recent survey by the National Association of Software and Service Companies (Nasscom). New market studies sponsored by Nasscom show that rural BPOs, powered by trained human resources in Tier-III and Tier-IV cities, are driving the growth of the industry. "Lower cost of operations and better retention of employees are driving growth," said a recent Nasscom survey titled Strategic Review 2011. This means villagers are now getting entry into the core operations of BPOs, after playing supporting roles in housekeeping, catering, security and transport, industry veterans noted. Meanwhile, governments are aiding the entry of BPOs into villages. "There is growth in the rural BPO sector, but it is limited largely to the southern states," said industry observer Harish Bijoor. Over the last two years Karnataka alone has cleared twenty-odd village BPOs across the state. The state is promoting firms that undertook local and offshore work at Srirangapatna in Mandya, Salgame in Hassan, Gundlupet in Chamarajanagar, Shiggaon in Haveri and elsewhere. Karnataka's rural BPO scheme invites voice and databased services of all kind, including finance, accounting, call centre, medical transcription, engineering, data management and medical services. The policy has changed villages like Kaup in Udupi. Kaup, once known for its pristine beaches and three well-known temples, can now boast of a 'BPO. DesiCrew, a pioneering BPO firm, has a centre there. The Kaup centre, along with its counterparts in Tamil Nadu, such as Appakudal in Erode, Ammapalayam in Coimbatore, Thirukuvalai in Nagapattinam and Kollumangudi in Thiruvarur, helps flatten the globe. Young women in silk saris and davanis (half saris), sporting marigold and jasmine on their hair, can be found working on GIS applications that spot places in Africa, translate Wikipedia content or monitor the Website of a global communication and content giant in these centres. Many of these women would have quit their jobs after marriage if the place of employment was a city or would not have ventured out of their villages in the first place, managers said. "Companies are keen to outsource work to villages," said Ashwanth G., who co-founded DesiCrew back in 2007. "People are realising that BPOs need not be fancy places in glass and chrome urban settings. And it is a mistake to limit village jobs to entry level," Ashwanth added. "Knowledge-based tasks are more lucrative, adds value and offers growth potential," Ashwanth said. "Two years ago, at the peak of recession, we had substantial work and did not have to cut down salaries. More opportunities are coming now." The work sources come closer home, too. A little over an hour's drive from Bangalore on the way to Mysore, the silk town of Ramanagaram, Comat, the Karnataka government, in an e-governance effort, bundles up mobile connectivity, basic computer education and personal accident insurance for villagers. Educated rural youth run all the services. "Government, utilities, healthcare and retail present immense growth opportunities," the Nasscom study noted.

Genpact has agreed to buy consulting and IT services provider Headstrong for USD 550 million and expects to close the transaction by May 31, said its president and chief executive officer Pramod Bhasin. The deal, he said, would be EPS accretive and would give the company a competitive edge. "We will operate Headstrong as a separate company. This transaction is a game changer for us," he stated. The operation is a great bet operationally as well as culturally, he added. "Headstrong has 3,700 employees in seven countries and will compliment high growth business for Genpact."

NEW YORK and LONDON, Feb. 22, 2011 /PRNewswire/ -- KPMG LLP (US), KPMG Holdings Limited (UK) and KPMG International today announced the closing of an agreement to acquire the business of advisory firm EquaTerra. The acquisition creates one of the broadest global sourcing and shared services advisory offerings across the Americas, Europe and Asia Pacific. Combining KPMG's practice and EquaTerra, two of the world's top-ranked global sourcing organizations, the transaction is consistent with the KPMG network's growth strategy, focusing on organic and inorganic opportunities in select high-demand market sectors. Terms were not disclosed. As organizations transform their operations to compete in today's complex business environment, EquaTerra's highly experienced professionals, combined with the KPMG network's deep market presence and objective shared services and outsourcing advisory team, will provide clients with a full life-cycle of capabilities – from strategy through to optimization – for companies seeking to reduce costs and improve effectiveness and efficiency. "EquaTerra is an ideal fit for KPMG and we look forward to welcoming the EquaTerra team to the KPMG network family," said Timothy P. Flynn, Chairman, KPMG International. "Through this acquisition, clients of KPMG member firms will benefit from the addition of a market-leading sourcing adviser to help them transform their organizations into more flexible enterprises in a way that meets today's complex market demands." Mark Toon, former Chief Executive Officer of EquaTerra and current KPMG LLP principal, said that the deal adds value for clients of both organizations. "Joining a network with KPMG's capabilities and global scope provides great opportunities for our employees and clients," Toon said. "KPMG's extensive sourcing experience, its Big Four market presence and its reputation for relentless execution is an ideal complement for EquaTerra's business transformation capabilities and highly respected reputation in the shared services and sourcing advisory sector." John Veihmeyer, KPMG LLP (U.S.) Chairman and CEO, noted that the acquisition helps address changing client needs as the outsourcing services market continues to evolve. "EquaTerra's tools and capabilities speak directly to clients' desire to move beyond one-off outsourcing activities and develop comprehensive sourcing strategies that deliver real value across their organizations," Veihmeyer said. "This is part of our strategy of building large-scale transformation capabilities to help organizations as they address the realities of a new global marketplace." The name "EquaTerra" means "level ground," which aligns well with KPMG's philosophy of providing an objective sourcing and shared services advisory approach. This is also consistent with KPMG's focus on bringing clients and service providers together in a collaborative environment to create innovative delivery models and provide sustainable value to the business. John Griffith-Jones, Co-Chairman, KPMG Europe LLP, said the acquisition will allow KPMG member firms to help clients manage large scale, cross-border transformation efforts. "KPMG member firms provide a full suite of services for enterprise executives seeking to optimize their organization. The acquisition of EquaTerra complements these existing capabilities and deepens KPMG member firms' shared services and sourcing expertise, Intellectual Property and services." "The company is also led by a management group with extensive sourcing industry experience supported by a deep bench of global leadership talent. These are invaluable attributes crucial to succeeding in this competitive market segment," added Griffith-Jones. EquaTerra is ranked No. 2 on the International Association of Outsourcing Professionals' recent 2010 list of the World's Best Outsourcing Advisers. It serves clients throughout the Americas, Europe, Middle East, Africa and Asia Pacific, providing deep functional knowledge in Finance and Accounting, HR, IT, Procurement and other critical business processes. This broad geographic and industry-specific footprint will enhance the ability of KPMG professionals to help companies transform their service delivery models and address change management issues, centralize and optimize capabilities, outsource functions, and create a sustainable governance and performance management model.

BANGALORE: US-based iGate on Monday said it has acquired nearly 63 per cent stake in country's sixth largest IT firm Patni Computer Systems for $1. 22 billion. iGate will buy 45.6 per cent of the shares of the three founders of Patni -- Narendra Patni, Gajendra Patni and Ashok Patni-- along with the 17.4 per cent stake of private equity firm General Atlantic, iGate CEO Phaneesh Murthy told reporters here. The transaction is valued at approximately $1.22 billion, including the mandatory 20 per cent open offer to be made to the public shareholders of Patni, he added. The deal is expected to be completed in the first half of 2011, after acquiring all the regulatory approvals. Shares of Patni Computer closed at Rs 463.85, up 0.82 per cent on the Bombay Stock Exchange and Rs 464.10 up 0.80% on the NSE. iGate will pay about $921 million for buying the 63 per cent share at Rs 503.50 a piece. iGate will issue equity to Apax Partners for $270-480 million, depending on the response to the open offer. The US-based company will also raise debt of about $700 million from Jefferies & Company and RBC Capital Markets to fund the acquisition. iGATE has also agreed to sell to Apax Partners $270 million worth of equity (preferred stock convertible into common stock), which may be later increased upto $480 million based on the response to open offer. "We also believe that the combination will help customers get better service, access to more service lines and deeper pools of expertise," Murthy said. The transaction is expected to be accretive by 2012 on a cash earnings per share basis, he added. In accordance with the requirements of the Securities and Exchange Board of India (SEBI), iGATE subsidiaries will make an open offer to the public shareholders to purchase an additional 20.6 per cent stake in Patni. The aggregate price for the shares to be purchased in the open offer assuming full tender is estimated at $301 million. With the completion of the deal, the combined headcount of both the entities will stand at 24,834 globally as on Sep 30, 2010. Patni, a mid-sized IT services company also listed in New York , provides technology outsourcing services to industries such as insurance, telecoms, utilities and retail. Its clients include General Electric Co , Hitachi and Procter & Gamble Co's Gillette brand.

BANGALORE: Infosys continues to face a people challenge, though there are signs that things are improving. The company hired 11,067 employees in the quarter, but 5,756 left the company, so the net addition was 5,311. Net hiring during Q2 was 7,646, and in Q4 of last year, it was 3,589. The attrition rate on an annualized basis has gone up to 17.5% this quarter from 11.6% a year ago, and 17.01% in the preceding quarter. As on December 31, the company had an employee strength of 1,27,779, as against 1,22,468 a quarter ago and 1,09,882 a year ago. Infosys BPO's strength declined to 17,978, from 18,560 at the end of the previous quarter. T V Mohandas Pai, head of HR and training, however pointed out that the number of people leaving Infy has been progressively coming down in the past couple of quarters, and that the annualized attrition figure was high on account of large number of exits in the first quarter. In Q1, 5,411 employees quit, in Q2, that number was 4,233, and in Q3 it was 3,561. "Our employee engagement programme has shown positive results and employee referrals and lateral hiring are at an all time high," he said. Campus hiring is back in a big way. Infosys will be hiring 26,000 freshers from over 200 campuses this fiscal against last year's 20,000. "We have given offer letters to 18,000 people. Some 11,000 people are under training and they will move into production in the next few months," Pai said.

BANGALORE: For serial job hoppers, this is bad news. To counter high attrition rates plaguing them, domestic and MNC technology firms are introducing or returning to a three-month notice regime, mandatory for all exits except for some very senior positions. The one-month regime was a blessing during the days of corporate austerity and retrenchment. But now, markets have improved significantly and abrupt exits have started hurting projects and delivery schedules. A three-month regime also makes the employee ‘buy-out’ option tougher for poachers and rival companies. ‘Buy-out’ refers to the practice of the new organization giving the employee the money required (normally the notice-period basic or full salary) so that he can pay off his current firm and join the new one immediately. IBM changed the ex it policy about six months ago to move to a 3-month notice regime. Capgemini,too, has recently followed suit. Accenture and Cognizant have done it for certain levels. Even mid-sized players like iGate and Infotech Enterprises have moved to a threemonth exit notice regime. Attrition levels in small and medium sized IT companies are now in the range of 25-30%, and for tier-I players, between 14% and 17%. With overseas clients resuming IT spends, companies are in a rush to fill up positions that were allowed to lapse during the recession . Job hopping has become so acute that some companies are finding it hard to include attrition levels in their quarterly performance reports. Under the one-month scheme, an employee can leave and take a new job in a week or even in a couple of days because the resultant salary hike would be good enough to pay off the notice period cost. “Under a three-month regime, there is also greater chance of retaining the employee as HR heads get enough time to convince, cajole or make a counteroffer,” says a senior HR executive of a multinational organization.

Infosys is upbeat about expanding its footprints across sectors. In an interview to CNBC-TV18, S Gopalakrishnan, CEO of the company said they will spend 10% of revenues on acquisition and are actively looking for acquisition across sectors. He also informed that the company is aiming to spend USD 500 million on acquisition. “We are actively looking but you will see us making an acquisition only if we find something which fits into the parameters we have set for ourselves. Typically you will see us looking at an acquisition, potential acquisition of size upto 10% of our revenues,” he explained. However, he is worried about the uncertainties from Europe. He added, “There are still lots of uncertainties. Europe is a concern globally we are seeing some challenges in competition between countries, there is a lot of uncertainty and that is a cause of concern.”

Fidelity National Financial Services India (FNFI), the captive arm of US-based Fidelity National Financial (FNF), the world's largest title insurance company is planning to develop software applications for its proprietary platform and fine-tune the workflow process requirements in-house for its parent company. This is a first of its kind, wherein a captive has decided to develop software applications based on its parent company's proprietary platform. Mostly, captive centers have been mere backoffices to global giants in the financial sector such as Citigroup, UBS, Goldman Sachs, Aviva, British Airways and even the erstwhile Lehman Brothers, mostly or solely doing data processing work. In India, there are more than three hundred captive units of global firms and the majority of these have been sold to software and BPO firms due to nonviable business models. In the case of Fidelity, the company is also looking to set up a unit that would be a backoffice for its legal issues. “For the last six months, we have been working on products centered around Fidelity's IP. Additionally, we are looking to fine-tune workflow processes and come up with a system that consolidate the entire methodology devised by Fidelity National Financial (FNF),” said Sameer Dhanrajani,Country Head, India Operations Unit, FNF. FNF's Indian operations started in 2006 as a backoffice for the parent company. The usual tasks of digitizing handwritten records, title claims and bad loan data of the $20 billion underwritten insurance market were carried out from the Indian center. Some processes had as many as 200 sub-processes that had to be done at all given points of time in order to comply with regulations and FNF asked the Indian center to come up with a solution that would cut down on some processes while at the same time complying with insurance rules. According to Dhanrajani, the products that are being developed by FNFI and workflow management could be at the center of things to come. Seeing this need, FNFI built a software called 'Title Production Systems', which captures data, indexes images and does GIS mapping for all 2,200 counties in which the parent company operates. Further, it assesses all insurance-related parameters pertaining to various states in the US. The company has 90 years of back data and it had to develop a system that would be compatible with its legacy systems. As a captive, FNFI is currently, doing 22% of Fidelity's global work. “FNF is asking us to undertake additional processes and to find ways of doing legal backoffice work from India,” asserted Dhanrajani. He added that FNFI was looking at Cloud computing pilots out of India that would drive its costs further down. Many captive BPOs that set up shop in India as backoffices for their parent companies including Countrywide Financial Services, GE and Barclays decided to change their strategy after the 2001 dot-com bust. Some of them hived off their units as independent companies to capitalize on their market value and to improve the parent firm’s profitability and efficiency. Genpact and WNS Global Services were originally set up to do work only for their parent organization—GE and British Airways respectively. However, some backoffice outfits, despite widespread rumors of selling out due to profitability pressures, chose to ride out the tough times. Others like FNFI have decided to adopt the innovation route and close alignment with the parent company as their success mantra.

New Delhi: The Finance Ministry has begun its maiden investigation into over 100 offshore "financial structuring deals" undertaken by Indian business entities in foreign tax havens to allegedly evade the taxman's net. The multi-pronged probe has been undertaken by the international taxation wing of the Income Tax department and the foreign taxation unit in the Central Board of Direct Taxes (CBDT). A number of investments and deals to the tune of billions of rupees have been already executed in tax havens like the Mauritius, Isle of Mann, Cyprus, British Virgin Islands and Bermuda, amongst others. These deals will be scrutinised by the investigators, who are also travelling to some of these countries to collect additional information. The exercise, dubbed "Lifting Corporate Veil", will look into the overseas deals, including some big ticket ventures, to investigate whether "a chain of overseas takeovers may be part of an exercise for an elaborate treaty shopping or tax evasion exercise." According to sources privy to the investigations, the I-T Department has identified almost seven lakh companies in the British Virgin Island alone that are possible front companies for such investments. Certain Indian entities allegedly invested in companies set up in these offshore tax havens to avoid taxes or pay close to zero tax under the guise of financial restructuring. "Privacy and confidentiality and freedom from all taxes in these havens are guaranteed. Company structures are flexible and the process of incorporation is fast and efficient while doing financial structuring in these places," sources said. The probe is to check the investments 'made' abroad and investments 'made from' abroad through a chain of tax haven countries without paying taxes in either country and causing loss of revenue to the national exchequer, sources said. They said such probes are also expected to throw up some leads related to violation of foreign exchange rules and money laundering to fund illegal ventures, which will be referred to other investigative and enforcement agencies like the CBI and Enforcement Directorate (ED) for follow-up action. The Finance Ministry is already working to finalise Tax Information Exchange Agreements (TIEAs) with countries like the United Arab Emirates, Kuwait, Oman, Saudi Arabia, Qatar, Jordan, Syria, China, Indonesia, Israel, Japan, Malaysia, Mongolia, South Korea and Vietnam. Furthermore, Double Taxation Avoidance Agreements (DTAAs) with more than 70 countries are being fine-tuned. The I-T department is also looking into evasion of Tax Deducted at Source (TDS) by some companies while making payments to purchase overseas shares, but sources declined to name the entities involved. The government recently announced in the Winter Session of Parliament that it is probing a few more cross-border merger and acquisition cases for possible tax evasion, shortly after slapping a Rs 11,000 crore tax notice on Vodafone for its buyout of Hutchison's stake in telecom JV Hutchison Essar. "A few cases relating to cross-border merger and acquisition deals have been identified for further examination by the (Income Tax) Department. These deals are being examined for possible tax implications," Finance Minister Pranab Mukherjee had said. The deals under the Finance Ministry scanner include Sanofi Pasteur Holding's agreement with Merieux Alliance, Groupe Industriel Marcel Dassault's acquisition of Shantha Biotechnics, the agreement of New Cingular Wireless Services Inc with AT&T Mauritius for acquiring Idea Cellular, the transfer of stake in GE Capital International Services/Genpact India and SKR BPO Services' deal with Barclays, Mauritius, for acquiring Intelnet Global Services.

MUMBAI: The Essar Group-owned back-office firm, Aegis, has acquired Actionline, one of the largest BPO firms in Argentina. The acquisition will give Aegis a 5,000-people strong facility and a presence in the Latin America region, in addition to Spanish-speaking capability that can be leveraged for US and European markets. Actionline is 51% owned by Y&R Inversiones Publicitárias, part of Martin Sorell’s WPP group and 49% by a local advertising entrepreneur. Actionline also has operations in Chile and Brazil, which are not part of the transaction. Aegis said the current senior management in Argentina led by CEO Fernando Padron would continue to lead the business. Aegis MD & CEO, Aparup Sengupta, said Actionline was profitable and the deal would be revenue accretive for Aegis but did not disclose the deal value. This is Aegis’ 16th acquisition in the past five years. The deal takes Aegis’ total staff strength to around 45,000, with about half of them being non-Indian. “Studies have shown that Latin America is one of the fastest-growing markets globally. It is consumption-led growth and that is where there is lot of opportunity for customer lifecycle management,” Mr Sengupta said. Actionline is focused on the domestic market and has 14 clients, which include the first and second-largest banks in the country, mobile service providers and a landline provider. About 60% of the revenues are from telecom clients, and the rest from financial services and retail, said Sandip Sen, president (Americas)and chief marketing officer.The Aegis management also intends to use Actionline’s centres to service US and European markets. “Argentina has a 1-3 hour time difference with New York and 2-4 hours with major European cities. Its multi-lingual workforce can be leveraged for non-English speaking markets in Europe,” said Mr Sengupta. He said Aegis plans to expand its business in Europe and Latin America.

LONDON: Scotland's First Minister Alex Salmond has announced that 200 jobs are to be created at Indian-owned calls centres in the country during the next year. The Hero Group will recruit the new staff during the next 12 months to work in call centres in Larbert, near Falkirk, and in Kilmarnock, East Ayrshire. The firm already has seven call centres in Scotland, employing more than 1,600 people, and has been awarded 850,000 pounds to significantly extend its European trade operation, The Scotsman reports. HEROtsc, which is part of the Hero Group, has expanded its operations into other areas including training, offshore call centres, IT, financial services and insurance. Staff taking up the jobs will field calls about services and products for key clients of the Indian firm, such as Sky TV and Vodafone. Salmond, who is in India to attend the Commonwealth Games, met chairman of Hero Group Sunil Munjal and president of Hero Management Services Rohit Chanana. Salmond said: "The Scottish Government continues to work hard to attract jobs and investment to Scotland and I am delighted that HEROtsc is expanding operations by creating 200 new jobs." "This announcement demonstrates the skills and expertise of the workforce in Scotland which will enable HEROtsc to significantly extend its reach across European markets," he said. Salmond said that 11 Indian companies had made investments totalling 700 million pounds in Scotland during the past five years, employing more than 3,200 people.

NEW DELHI: In one of the first offshoring deals from a West Asian bank, India’s third-largest BPO, WNS Global Services, has secured a back-office contract from Mashreq, one of the largest banks in the United Arab Emirates. Technology deals from West Asia and Asia-Pacific are becoming important for the $60-billion Indian IT-BPO industry as it tries to hedge against a slow recovery in Europe and growing conservatism in the US vis-a-vis offshoring. However, a WNS spokeswoman denied to comment on the value of the deal citing client confidentiality. Though IT services companies like Wipro and TCS have had a presence in the Middle East for some time, BPO firms like Genpact and EXL are yet to make inroads into this growing market. Recently, Noida-based HCL Technologies bagged a seven-year IT services deal from Saudi Arabia’s Al Majdouie group, which has interests ranging from transportation and auto components to logistics. Since the execution of the contract will require Arabic-speaking people at its centres in Gurgaon and Mumbai, WNS has already hired Arabic-language specialists in India, an industry source told ET. Listed on the Dubai Financial Market, had total assets of about Arab Emirate Dhiram (AED) 94.2 billion (roughly $25 billion). It clocked a net profit of AED 1 billion ($270 million) in the last financial year. The back-office provider will serve Mashreq’s clients across product lines over five years. The first phase of migration has already taken place and in the second phase, WNS may replicate banking best practices for Mashreq, an industry source told ET. The 20,000-employee strong earns over 60% of its revenues from Europe, which is going through a financial crisis. WNS has clients like British Airways, Travelocity, Liverpool Victoria Insurance and Aviva in the UK as its top customers. This is pushing it to look at other geographies. “We have created separate hunting, farming and client-engagement teams, across our verticals and horizontals,” said Keshav Murugesh, CEO of WNS, in an earlier interview. WNS clocked profits of $3.7 million on sales of $585 million last year. The WNS stock closed at $9.04 on NYSE on Friday with peers Genpact trading at $17 and EXL Service at $20 on the last close. The WNS stock had taken a beating last year, on reports of a stake sale by Warburg Pincus, which could not reach a conclusion due to valuation issues.

The $8-million Pipal Research has three research centres in India. Credit rating agency CRISIL has acquired knowledge process outsourcing firm Pipal Research Corporation in a $12.75-million (Rs 58.25 crore) deal. Pipal is majority owned by BPO services major Firstsource Solutions, which picked up a 51% stake in the firm in 2004. Chicago-headquartered Pipal has three research centres in India in Gurgaon, Noida and Bangalore. The company reported revenue of $8.1 million in the financial year ended March 31, 2010. The company provides business and investment research services with clients in sectors like technology, telecommunications, consumer packaged goods, industrials sector besides financial services. CRISIL, owned by Standard & Poor's, operates a KPO division called Irevna. "Pipal's services, clients and delivery locations are complementary to Irevna's, enabling the combination to strenghten the position in the KPO industry," said CRISIL in a staement. Irevna provides services like equity research, credit research, derivatives support, quantitative rearch, among others. It has centers in Chennai, Mumbai, Buenos Aires, Wroclaw (Poland) and another coming up in China. Irevna claims to have five of the world's top 10 investment banks as its clients.

Vertex, operating across a wide range of market sectors and geographies, has announced a joint venture with Shell Transource Ltd, one of India’s largest integrated domestic BPO. The Vertex majority-owned joint venture will emerge as a significant CMO/BPO in India to deliver integrated services across voice, non-voice and fulfillment solutions to customers in over 350 locations in India. Vertex will strengthen Shell Transource Ltd’s offering by integrating world-class CMO capabilities underpinned by bespoke technology and applications. This joint venture will supplement Vertex’s capabilities delivered via its four service lines comprising CMO; IT Applications and Services; Consulting and Transformation; and Decision Sciences. The focus will be on Public Sector, Banking, Financial Services and Insurance (BFSI), Telecom, Utilities and Retail. The combined strength will now be approximately 5,000 employees. Paul Sweeny, CEO, Vertex Group, said, “India is one of the world's most attractive and rapidly growing markets. Today’s announcement shows our commitment to investing in this market and is part of our global strategy of broadening and deepening our CMO capabilities. We recognise a huge untapped opportunity within Shell Transource and their unique business model and have identified a valuable way of extending our CMO/BPO business in India.” Keshav C Gaur, CEO, Vertex India, said, “This joint venture creates one of India’s largest integrated end-to-end solution providers in the customer management outsourcing industry. We are now able to cater to the dynamic market needs of clients, especially in rural India and within Tier II and Tier III cities.”

IT services firm Cognizant Technology Solutions is on the prowl and the country's largest BPO could be on its radar. According to industry sources, the company has been doing due diligence of BPO leader Genpact to acquire a controlling stake for close to a month. If Cognizant ends up acquiring Genpact, it would be one of the largest technology deals in India, redefining the pecking order in India’s IT industry. The Cognizant-Genpact combine could possibly knock off Infosys Technologies from its No.2 position in the industry, or come within striking distance. “Cognizant is carrying out its due diligence of Genpact. The process started a few weeks ago,” “Investors in Genpact may be looking for a 30% premium over its market value,” they said. BPO constitutes about 5% of Cognizant’s revenues and the firm is aggressively looking to plug the gap in its services portfolio. Genpact was in talks with Infosys as well, but the conservative blue chip had reservations on the high valuations as well as the impact on its margins, sources said. Genpact's margins are way below Infy's corporate average. Listed on the New York Stock Exchange, Genpact had revenues of $1.12 billion in 2009 and has a market capitalisation of $3.50 billion. Cognizant, listed on Nasdaq, had revenues of $3.28 billion in 2009 and has issued guidance for $4.46 billion this year. When added to the upper end of Genpact’s forecast of 17% growth in 2010, the combination would yield $5.77 billion in top line. This would be within striking distance of Infosys’ projected revenues of $5.81 billion in FY11. However, industry analysts are unsure unsure how Cognizant could finance the expensive purchase or how much stake it would eye. The firm has $1.40 billion in cash. When contacted, both Cognizant and Genpact said they don’t comment on market speculation. Genpact was founded in 1997 as an India-based captive business process services operation for General Electric Capital Corporation. It began operating as an independent company in 2004, and debuted on NYSE in 2007. GE’s shareholding in the company has now declined to 19.95 million shares or 9.14% after the firm divested its shares in a secondary offering completed in March this year. General Atlantic and Oak Hill Capital hold 89.57 million shares or 41%, while Wells Fargo holds 12.46 million shares or 5.71%.

MUMBAI: Mid-size Indian outsourcing companies face tough choices over the next few quarters as the business environment has become significantly more challenging after the financial meltdown. A majority of them are yet to see a recovery though their larger counterparts are seeing a comeback in demand. If the trend continues, they may have to choose between being acquired and losing their relevance in an increasingly competitive market. There are signs that a few mid-size providers are already recognising this and choosing to sell out to a larger player. Last week, the promoters of Kale Consultants, a mid-size outsourcing services firm, exited their holdings after 24 long years by selling to European back office provider, Accelya. The promoters of another mid-size IT firm Sonata Software are also reported to be exploring an exit. “Mid-tier IT companies will have to think transformational deals to become large,” said PN Sudarshan, senior director at Deloitte Touche, a global consulting firm. He said that mere organic growth will not help these companies anymore. “You may see mid-tier companies buying bigger companies outside India to achieve scale or selling out to MNCs,” he said. Consolidation among mid-size IT firms has been long-anticipated but delayed because of a mismatch in the valuation expectations of the promoters (and in some cases private equity firms holding substantial stake in the firm) and potential buyers. “Indian promoters have been unwilling to give up control. How many mid-size firms consolidations have you seen?” asked a technology analyst. “In fact, few of the more than 300 mid-size firms are growing in double digits and are profitable like their tier one counterparts. During the past 12 to 15 months, overall IT services and business process outsourcing (BPO) exports from India grew by approximately 5.3%. Most of this growth came from top providers like Cognizant and HCL, although a handful of mid-size firms like Persistent Systems and Syntel also did well. Many other mid-size firms such as Hexaware Technologies, Mastek, and Patni witnessed a tough year and shrank in revenue,” said Sudin Apte, principal analyst, Forrester Research. Tech Mahindra, the largest among the mid-size players, saw only a marginal growth revenue in the June 2010 quarter. Patni Computer’s chief marketing and strategy officer, Sunil Chitale said it would acquire companies for access (into a new segment, or geography) or scale (to grow and existing vertical/ service line). However, he said most mid-tier IT services had many service overlaps to consider an acquisition or merger. “Most mid-tier IT services companies are too large in terms of size and valuations and have many service overlaps to consider buying each other out or merging. As a result, companies would rather grow by filling strategic gaps in their portfolio through niche, smaller acquisitions. In case of Patni, we will continue to pursue our innovation led strategy around micro-verticals and global presence,” he said. Given this, most mid-size players do not expect to see an India-to-India transaction such as Tech Mahindra’s acquisition of Satyam Computer Services. Zensar Technologies said it has handed out a mandate to a US-based investment bank to identify a target in US. The company is looking at a deal size of $100 m. Zensar market cap is $150 million.

BANGALORE: The country's lead tech player Tata Consultancy Services has acquired SuperValu Services India, the captive unit of Minneapolis-based grocery retailer SuperValu Inc. As per a multi-year deal, valued over $100 million, over 600 associates of SuperValu working in Bangalore will now become part of TCS. The integration procedure is expected to be completed within a month. The engagement is transformational in nature and will drive operational efficiencies for SuperValu through integration of IT, BPO and infrastructure services, said an official communique. The captive unit was set up in 2007 and focuses on IT infrastructure, applications and business and corporate services for its parent company. The supermarket chain SuperValu is one of the largest players in the US grocery channel with estimated annual sales of $38 billion. It serves customers through a network of 4,270 stores.

Job opportunities in business process outsourcing (BPO) are virtually knocking on the doors of the rural youth of the backward Chickballapur district. After establishing the country's first BPO centre for rural youth at Bagepalli in Chickballapur district, RuralShores has now opened its second centre in the district, the third such unit in Karnataka. The new BPO facility of the RuralShores at Muddenahalli on the outskirts of Chickballapur was formally inaugurated by Union Minister for Law and Justice M. Veerappa Moily during the 150th birth anniversary celebrations of Sir. M. Visvesvaraya on Wednesday. Govinda Reddy, Chief Operations Manager, RuralShores, told us that the company's objective was to “assimilate rural India into the knowledge economy” by introducing rural youth to BPO opportunities and providing employment to them in their villages. “We have plans to setup 500 centres across the country and provide BPO jobs to one lakh rural youth,” he said. The company started its first rural BPO centre at Bagepalli in 2008. Around 140 youth from villages around Bagepalli work at the centre in two shifts. For instance, a group of workers answers customer service e-mail messages for a loyalty card company while another processes claims for an insurance company. Mr. Reddy said that RuralShores plans to recruit 50 youths initially for its new facility at Muddenahalli and subsequently increase the strength to 150. Youths from villages around Muddenahalli would be given jobs. Muddenahalli centre too would mainly handle data processing work.

While anti-outsourcing rhetoric looms large over IT landscape in the United States, European states are vying hard to woo Indian investment into their regions. Taking a cue from this, the Irish government’s inward investment promotion agency - IDA Ireland is offering a warm welcome to corporate India. IDA Ireland Director — India Minakshi Batra said “Indian companies are looking at Europe to spread the business. Ireland with its young educated population can offer a new horizon for India. IT is a strong sector in Ireland and Indian product development is moving up the value chain. There is a great potential for companies from the both the countries to tap.” Indian companies like GTL, Tata Consultancy Services, Patni, Polaris, HCL and SFO Technologies among others have already presence in Ireland. “Ireland is part of European Union and has similar legal system and labour law like India. It is a country with favourable tax structure and can be used as a gateway for companies looking at Europe as a market.” Ireland believes that partnership in education and research is another way of creating excellence. The University of Dublin College has signed a MoU with IIT in Delhi and IISc Bangalore for various research activities. IDA is also in talks with industry bodies like Nasscom and Assocham for partnership. She said “IDA expects more than $100 million investment from India in couple of years out of which 76 per cent will be in the IT and ITeS space.

Genpact, the country’s largest business process outsourcing (BPO) company, is spreading its wings to West Asia. The company is exploring Egypt, Jordan and Lebanon for setting up centres to serve local clients. “We have customers in financial services in West Asia because of our relationship with GE. Though we are servicing these clients from India as of now, we will need a local Arabic speaking delivery centre there. Egypt is a good option because it has an old and great education system, along with a good English, French and Arabic speaking population. Jordan and Lebanon could be the other places,” said N V Tyagarajan, chief operating officer of Genpact. The company has inked a contract with Sabic, a Saudi Arabian chemicals company, to manage its analytics and supply chain services. It has also signed contracts with two clients in the financial services sector in West Asia. Besides West Asia, Genpact is looking at Brazil to set up delivery centres in the next one year. “There is a huge market for both global clients and local Chinese and Indian companies in Brazil. As of now, we have a little presence there, in places where the Brazilian languages are not required. We are looking at Sao Paulo and Tier-II cities in Brazil to set up the centre,” Tyagarajan had earlier said. The investments in these new centres will be part of the company’s plan to spend around five per cent of its revenues on capital expenditure that includes both replacement and new expenditure. The company will start with 50-100 people in these centres and then scale them up. Headcount in these centres will grow like the BPO’s Guatemala centre, which will soon have 1,000 employees, and the Manila centre, where it will have 2,000.

Gets £250-million business for next 6 years Diligenta, the UK subsidiary of India's largest information technology services company, Tata Consultancy Services (TCS), acquired Unisys Insurance Services (UISL) from Unisys Corporation, in lieu of which the company received business worth £250 million (Rs 1,800 crore) for the next six years.With the acquisition, Diligenta won business from Phoenix Group (earlier know as Pearl Group) and Old Mutual International. TCS will take over UISL's operations in Liverpool and Bournemouth. The total employees at both centres are 1,000. Phoenix Group is an existing customer for Diligenta. The new deal the company won extends the contract by an additional six years, till 2018. In 2005, TCS acquired the life and pensions operations from Pearl Group, under a £486-million business process outsourcing (BPO) deal. Diligenta was selected the preferred bidder following a rigorous process by UISL's largest client, Phoenix Group. "TCS set up Diligenta to specialise in the provision of business process outsourcing services for the UK life & pensions industry. These new wins further cement the company's position amongst the largest providers of such services in the UK market. Diligenta has grown from strength to strength since it was set up in 2006 and today marks a further major milestone as we cross the five-million mark for policies under administration," said Phiroz Vandrevala, chairman, Diligenta, and executive firector, TCS. Diligenta now becomes one of the leading providers within the UK's life & pensions BPO market. The number of policies it administers will rise from 3.6 million to over five million. In July, it had completed the consolidation of two million customer policies in the UK from multiple legacy systems on to a single integrated system for the Phoenix Group. The system is based on cloud computing infrastructure. "With this, we have agreed a deal that preserves continuity for our UISL-serviced policyholders, whilst promising a migration to the more modern administration platform already being operated by Diligenta for two million of our policies. Moving to a platform with greater scale and capability will drive down our unit costs over time, which will support our mission to deliver improved returns for our customers and value for our shareholders," said Tony Kassimiotis, managing director, operations, at Phoenix Life.

Tata Consultancy Services (TCS) has become the second-largest insurance business process outsourcing (BPO) provider in the UK, after winning two deals worth £250 million (around Rs1,800 crore). UK-based Capita is the number one player in this space. Diligenta, a subsidiary of TCS, had yesterday announced that it had acquired Unisys Insurance Services (UISL) from Unisys Corporation, in lieu of which the company received business worth £250 million for the next six years. With this, Diligenta won business from Phoenix Group (earlier known as Pearl Group) and Old Mutual International. Phoenix Group is an existing customer of Diligenta. Diligenta is already in talks with a few more insurance players for similar deals. “The cycle time for deals to materialise in case of Diligenta is six months to a year, especially for similar deals. So, in the next 12-18 months, we will have something to share. But winning these deals validates our strategy,” said Phiroz Vandrevala, chairman of Diligenta and executive director at TCS. TCS, the country’s largest information technology (IT) services provider, took almost four years to develop a platform for the insurance segment in the UK. “We did not want to do a lift and drop kind of work in this space, and we wanted to partner in transformational work. It has taken four years to develop the platform. There was skepticism around this platform, but in April this year, we went live with two million policies for Phoenix,” said Vandrevala. For TCS, the UK is an important market, contributing 15 per cent to its revenue. TCS headcount in the UK will touch 2,000. TCS started its journey in the UK insurance space in 2005, when it acquired the life and pension operations of Pearl Group under a 12-year £486-million BPO deal. Diligenta now has three clients — Phoenix Group (additional extension to its earlier contract), Old Mutal International, and National Employee Savings Trust (NEST). In March, TCS had bagged a 10-year £600-million contract from Personal Accounts Delivery Authority (PADA) to administer the NEST scheme, but the deal is under the UK government scanner. Vandrevala said, “So far there is no change. In October, the government will take a final call on the overall IT deals. We will come to know about this only then.” With these deals, TCS is also hopeful that the UK subsidiary will break even by the end of this financial year. “The work on the new contracts starts immediately. We are hopeful that by the end of this fiscal, we will break-even,” said Vandrevala. Diligenta reported a net loss of Rs56 crore in 2009-10 on a turnover of Rs456.2 crore, against a net loss of Rs41 crore on revenues of Rs527 crore in 2008-09.

pain-headquartered business process outsourcing (BPO) company Accelya has acquired a 35.61 per cent stake in Kale Consultants, a Mumbai-based information technology services and solutions company, for around Rs 97 crore. The deal valued each share of Kale Consultants at Rs 172. Accelya bought the stake from the promoters of Kale Consultants. Accelya will announce an open offer to acquire an additional 20 per cent stake in the company. The company will remain listed on the BSE and the National Stock Exchange. Vipul Jain, chief executive officer and managing director of Kale Consultant, will continue to head the company. "The promoters (Narendra Kale and Vipul Jain and family) have exited the company. But I will continue to head the firm. Rather, I will be investing some of the proceeds from the sale into the holding company," said Jain. The deal is expected to help Kale reach a wider market and drive growth faster. "With this, Kale, along with Accelya, becomes the leading player in the airline and aviation sector. Accelya processes 55 per cent of the global tickets sold through agents. For us, this is a strategic move," said Jain. Accelya, a $80-million (around Rs 370 crore) BPO service provider to the airline and travel industry, has delivery centres in Spain, Mexico, South Africa, France, the UK, Tunisia, Portugal and Hungary. In 2009, Accelya had processed over 170 million airline tickets on behalf of the International Air Transport Association in 80 countries, with over 600 employees. Founded in 1986, Kale is one of the few mid-sized Indian IT firms serving customers in the airline, logistics and travel industries. For the June quarter, the company reported a net profit of Rs 5 crore and a revenue of Rs 33.5 crore. For 2009-10, the company had reported a revenue of Rs 165.9 crore and net profit of Rs 26.29 crore. The company has 1,500 employees.

1st BPO firm to get patent; to open 2 more centres 24x7 Customer, an independent third party standalone BPO player backed by Sequoia Capital, aims to take a solution-led approach as it prepares for the next phase of its journey. The first player in the BPO space to win a US patent for its customer contact management system recently, 24/7 Customer derives about 10 per cent of its revenues by using the solutions built at its innovation lab located in Bangalore, and plans to double the same in the near future. “We do about 10 million transactions a day. Some of the products we have developed in our Innovation Lab by mining the historical database and analysing them helps is addressing key problems of the BPO industry. For example, by using a solution developed at our innovation lab, we can predict why a particular person can call in a particular day. This predictive technology helps the contact centre agent prepare himself better before servicing the customer,” said S Nagarajan, co-founder and chief people officer of the company. The company’s innovation lab which presently houses close to 60 people from various backgrounds starting from PhDs in mathematics and statistics, software engineers, analysts to call centre experts. As of today, the company has filed seven patents at the office of the United States Patent and Trademark Office (USPTO). The company which completed its 10th year of operation, employs close to 9,000 people globally including about 3,000 in India and 4,000 in Philippines also plans to hire about 1,500 people for its India delivery centres in the next two quarters. The company’s delivery centres in India are located in Bangalore and Hyderabad. It plans to open two more centres globally, including one each in India and Philippines in the next 6-12 months. Nagarajan said the new centre in Philippines would be located outside Manila, with 500 people to start with. In 2003, Sequoia Capital had invested $22 million in 24/7 Customer for a stake of around 25 per cent. The promoters, including the CEO P V Kannan, and Nagarajan, along with the employees hold a majority stake in the company. In fiscal 2010, the company’s turnover was in the range of $130-150 million. Though the company is known to be evaluating to go in for a public offer for quite some time, Nagarajan said no definite time had been set for the same. “The promoters still hold a majority stake in the company, and we are not under any pressure from investors to go public,” Nagarajan said. He, however, did not rule out a listing on the Nasdaq. Other than India and Philippines, 24/7 Customer’s global delivery centres are located in Guatemala, Nicaragua and China (through partnership with a local company, 800 TeleServices).

1st BPO firm to get patent; to open 2 more centres 24x7 Customer, an independent third party standalone BPO player backed by Sequoia Capital, aims to take a solution-led approach as it prepares for the next phase of its journey. The first player in the BPO space to win a US patent for its customer contact management system recently, 24/7 Customer derives about 10 per cent of its revenues by using the solutions built at its innovation lab located in Bangalore, and plans to double the same in the near future. “We do about 10 million transactions a day. Some of the products we have developed in our Innovation Lab by mining the historical database and analysing them helps is addressing key problems of the BPO industry. For example, by using a solution developed at our innovation lab, we can predict why a particular person can call in a particular day. This predictive technology helps the contact centre agent prepare himself better before servicing the customer,” said S Nagarajan, co-founder and chief people officer of the company. The company’s innovation lab which presently houses close to 60 people from various backgrounds starting from PhDs in mathematics and statistics, software engineers, analysts to call centre experts. As of today, the company has filed seven patents at the office of the United States Patent and Trademark Office (USPTO). The company which completed its 10th year of operation, employs close to 9,000 people globally including about 3,000 in India and 4,000 in Philippines also plans to hire about 1,500 people for its India delivery centres in the next two quarters. The company’s delivery centres in India are located in Bangalore and Hyderabad. It plans to open two more centres globally, including one each in India and Philippines in the next 6-12 months. Nagarajan said the new centre in Philippines would be located outside Manila, with 500 people to start with. In 2003, Sequoia Capital had invested $22 million in 24/7 Customer for a stake of around 25 per cent. The promoters, including the CEO P V Kannan, and Nagarajan, along with the employees hold a majority stake in the company. In fiscal 2010, the company’s turnover was in the range of $130-150 million. Though the company is known to be evaluating to go in for a public offer for quite some time, Nagarajan said no definite time had been set for the same. “The promoters still hold a majority stake in the company, and we are not under any pressure from investors to go public,” Nagarajan said. He, however, did not rule out a listing on the Nasdaq. Other than India and Philippines, 24/7 Customer’s global delivery centres are located in Guatemala, Nicaragua and China (through partnership with a local company, 800 TeleServices).

The automotive industry will start outsourcing 40 per cent of its engineering activities to the engineering service providers by 2015. Nearly 15 per cent of the total outsourced automotive engineering services were catered to by subsidiaries of Indian original equipment manufacturers (OEMs). This is where India needs to concentrate and take advantage by developing domain expertise to cater to the requirements of the OEMs. Advance capabilities India with its natural competitive advantage is likely to play a big role in various segments of the engineering services industry. The Indian engineering industry is rapidly growing as a major outsourcing hub with a compounded annual growth rate (CAGR) of more than 30 per cent. Automotive, telecom and aerospace are the major verticals that spend heavily on outsourcing engineering services. Most companies in India have advanced capabilities and skill-sets, and have invested in technology to take advantage of this opportunity. The growth in engineering services signifies the need for global companies to expand their R&D centres beyond their home countries. Global OEMs are increasing their R&D spend to meet regulatory and customer demands in India. Cost arbitrage along with increasing skill-sets is a major driver in channelising business to India. Engineering services until recently had been aggregated either under information technology services (as research and development services) or under information technology engineering services - business process outsourcing (as engineering BPO). However, the evolution of market demand and increasing maturity of the vendor landscape for engineering services has highlighted the need for examining this as a separate segment.

The Indian arm of global consulting and audit firmPricewaterhouseCoopers (PwC) is ceding control of its prized business process outsourcing (BPO) unit to PwC US, ending years of battle between the Indian partners and other PwC network firms. Because the Indian arm alone cannot anymore support the envisaged growth of the BPO business—or “global delivery service” in PwC’s parlance—over the next few years, it is being transferred to a joint venture with other PwC network firms, according to Ambarish Dasgupta, executive director of PricewaterhouseCoopers Pvt. Ltd, or PwC India. “Using PwC India’s enterprise alone would limit the scope of expansion of this segment,” Dasgupta said, adding that the revenue of this business could grow 15-20 times over the next two years. A new firm—PricewaterhouseCoopers Service Delivery Centre (Kolkata) Pvt. Ltd—has been founded and the BPO business has been transferred to it, PwC announced on Friday. It started operations on 1 July, and is being headed by Sumanth Prakash, partner at PwC Sydney, Australia. The Kolkata-based firm currently has some 650 employees; over the next two years, it will ramp up its workforce to 2,000, PwC said in a statement. The service delivery centre will provide back-office support to firms “across the PwC global network” in areas such as tax and assurance services, PwC said. PwC US owns a controlling 70% stake in the newly-founded firm, according to people familiar with the development, but who did not want to be named. PwC India owns 26%. PwC firms from Canada, the UK and Australia would also have equity interest in the BPO business. Asked if more network firms could buy into the business, Prakash didn’t rule out the possibility. “Such investments, particularly from countries where we do business, would boost client confidence,” Dagupta said. Though PwC refused to comment on the ownership structure of the newly-founded firm, saying that “it was still being worked on”, it said the BPO business would have five directors—one each from the five PwC arms that have equity interest in it. Dasgupta would be a director of the BPO business, but would not have any day-to-day role in it, according to Prakash. The technology outsourcing business under PwC India, which develops enterprise resource planning and business intelligence solutions, would for now work closely with the newly-founded firm, according to Dasgupta. Eventually this division, too, could be merged with it, he said. For years, top executives at PwC India have been resisting this change. Many have quit and joined competing firms such as Deloitte and KPMG. The people cited earlier said audit arm Pricewaterhouse’s inability to detect gross financial irregularities in the erstwhile Satyam Computer Services Ltd’s accounts seriously weakened the Indian partners. “It broke their back,” one of them said. When asked if the Satyam fiasco had in any manner influenced this organization change, both Dasgupta and Prakash refused to comment. Following this restructuring, PwC India would be left with its domestic business only. It offers services such as tax advisory and management consulting, and employs around 5,500 people. “The growth potential of the domestic business is extremely limited though in terms of revenue it is, at present, much bigger,” said a former PwC employee and one of the key persons behind the launch of the BPO business. “Imagine taking away from TCS (Tata Consultancy Services Ltd, India’s biggest IT firm by revenue) its offshore business... What would it be left with?” he asked. What is more, the BPO business is far more profitable than the “rather flat domestic business”, he added. A number of key people, who led the BPO unit till now, have left PwC lately, according to the people cited earlier. Dasgupta denied, saying “attrition at top-level was zero”. Prakash said he did not want to comment on “what happened before 1 July”—the day the new firm started operations. “We are starting afresh,” he said.

Aditya Birla Minacs, the business process outsourcing arm of the Aditya Birla Group, on Wednesday said it has acquired the US-based Bureau of Collections Recovery (BCR), an accounts management firm. With this acquisition, the clients of Minacs would now have access to BCR's team of collections experts and its experienced top management, Aditya Birla Nuvo, the parent firm of Minacs, said in a filing to the Bombay Stock Exchange. However, the company did not disclose the financial details of the acquisition. Post the acquisition, BCR would operate as a subsidiary of Aditya Birla Minacs. BCR has a strong base of clients in banking, financial services and telecom sectors, as well as in pre charge-off, primary and secondary post-charge off collections. The acquisition "demonstrates our commitment to the strategic mission of building new capabilities," Aditya Birla Minacs CEO Deepak Patel said. "With Minacs' global delivery platform, we will leverage our strengths to focus our efforts towards winning larger opportunities in this market place," BCR President & CEO Marty Sarim said. Aditya Birla Minacs is a business solutions company that partners with global corporations in BFSI (banking, financial services and insurance) segment.

CMS Cameron McKenna LLP (CMS), the leading European provider of legal and tax services has signed a 10-year agreement with Integreon, a leading legal and financial outsourcing outfit for what is called a “Middle Office services” outsourcing. This outsourcing contract includes substantial portions of accounting and finance, human resources and training, marketing and communications, learning and development, library and information services, research, information technology, facilities and other services. The total value of the agreement is £585 million ($850 million or Rs. 3,700 crore). This agreement is rumored to be the largest legal outsourcing deal ever. However, interestingly this deal does not include legal outsourcing portions such as document review, litigation support or any other functions of a legal outsourcing company. John Croft, President of Global sales and account management at Integreon speaking from London to Bar & Bench said “One of the reasons why we were chosen was because we are a LPO and although legal services are not a part of the contract, going forward we may look at building this service for CMS. John also said “By outsourcing middle office services, CMS is able to focus solely on the practice of law”. We have 12 global delivery centers across the world in China, India, Philippines, South Africa and onshore centers at Bristol and London from where we can provide on-site support. A combination of low cost centers and on-shore support is a unique proposition from Integreon". John also said that Director of operations at CMS, Tony Wright will be seconded to Integreon to start the due diligence and resource allocation. He said, “A deal of this size cannot be done in a day's time and therefore we have to take the right decisions and set up right processes”. Integreon has been working with Clifford Chance, Osborne Clarke, Simmons & Simmons and Foot Antsey by providing a host of legal services. By outsourcing the entire non-billable tasks to Integreon, CMS can focus on its core competency of providing high-end legal and tax services.

New York-based IT outsourcing firm Sutherland Global Services (Sutherland) has acquired a 100 percent stake in the Mumbai headquartered Adventity Global Services (Adventity) in an all cash deal. Sutherland which specializes in integrated business process outsourcing (BPO) solutions across front and back offices of their clients employs over 25,000 people across the United States, India, Mexico, Philippines and other countries. Adventity focuses on KPO/BPO services to banks and financial services companies and the airline and travel industry. Though the total consideration of the acquisition was not forthcoming, some media reports indicate the deal to valued around Rs. 250 crores (US$55 million). Speaking to the media, Adventity Global Services CEO Kumar Subramanian said “Our global search for the right partner ended with Sutherland, in whom we found a company, who would take the leadership position in the BPO space. In Sutherland we found a true multi-national with a balanced and global delivery approach."

Bank of America announced today it would enter into key human resources partnerships with Hewitt Associates and Plateau Systems with service starting in 2011 and narrow its relationship with Fidelity in a strategic move to deliver the next generation of human resources capabilities. The bank's new service delivery model uses multiple human resources service providers, with one primary provider delivering the core human resources technology platform and operational integration with the other specialists. This model will continue to deliver costs and operational efficiencies as well as provide market-leading human resources technologies to the bank's managers and associates. It will also enable providers to focus on their core competencies and continue to provide a high level of service to associates. As part of a new 5 1/2 year ongoing service contract, Hewitt – a global human resources consulting and outsourcing services company – will support human resources administration, payroll, and health and life management administration; provide enabling technology for timekeeping, recruiting applicant tracking; global talent and performance management and offer core service center support for all U.S. Bank of America associates. The global learning management system, provided by Plateau Systems, will be integrated into the Hewitt platform to manage the administration, delivery and tracking of learning and training across the Bank of America enterprise. U.S. associates will experience a change in tools and customer service support for health and life management benefits, human resources/payroll administration, timekeeping, and recruiting applicant tracking systems starting in 2011 through a phased integration. All associates, including those outside of the U.S., will experience a change to the global learning and talent and performance management human resources tools. Access to all services will be integrated through Hewitt's online portals, including myHR® (human resources and payroll self-service) and Your Benefits Resources™ (benefits self-service). In 2009, Fidelity scaled back and adjusted its investment and growth strategy in the large-client human resources administration/payroll outsourcing business to focus its investment on small- and mid-size markets. Bank of America evaluated options to continue with the current contract but decided to initiate a request for proposal in 2009 with HRO market leaders to define and select the next generation delivery model for the company. Fidelity will continue to administer retirement services for Bank of America associates under the current contract. Retirement services and stock plan administration for Merrill Lynch associates will remain with Bank of America Merrill Lynch Retirement and Philanthropic Services (RPS). Stock plan administration for Bank of America associates will migrate to RPS by year-end 2010.

MUMBAI: As India’s top tech firms chase nearly $15 billion worth of outsourcing contracts to be renewed this year by global customers, they face Latest buzz in IT industry Top acquisitions in BPO space Net users grow Key facts on India's IT industry increased competition from multinational rivals offering price discounts. Around 422 outsourcing contracts worth nearly $15 billion are set to expire this year, providing an opportunity to Tata Consultancy Services (TCS), Infosys and Wipro among other IT firms, according to outsourcing experts. “The time when Indian companies had a price advantage over non-Indian ones is gone,” said Siddharth (Sid) A Pai, partner & managing director, at outsourcing advisory firm TPI India. “Global players have lower operating margin expectation and thus greater flexibility to offer discounts,” he added. Multinational rivals IBM, Accenture, and Capgemini have increased their India presence to offer lower prices to clients by offshoring more projects to the country. At the peak of the economic downturn global majors offered 35-50% discounts on high-end services, and continue to offer 8-10% discount till date, said Arup Roy, senior research analyst at Gartner Inc. Also Read → Genpact cuts deal with Japan’s Hikari Tsushin → UK tax dept taps Capgemini to bring down costs Operating margin, or profitability of Tata Consultancy Services, Infosys, and Wipro are between 17-30%, compared with 11-16% for Accenture and IBM. “Their Indian counterparts have an established reputation, in financial markets, of delivering higher margins, which will make it harder for them to offer lower billing rates, Mr Pai added. TPI estimates that nearly two-thirds of the $15-billion deals are currently with companies from US and Western Europe. Around 89% of renegotiated deals are awarded to the incumbent outsourcing partner, Mr Pai said. As an aftermath of the global, most of the remaining deals will go to larger, established Indian companies. An analyst with a domestic brokerage said India’s top five IT outsourcing companies can easily expect $3.5 billion worth of new deals this year. Large deals are being outsourcing to multiple vendors. Accenture’s percentage of revenue from contracts in which it is the only partner has fallen from 60% to 50% in one year, said an analyst with an MNC brokerage who asked not to be named. Indian companies stand to gain from this, he added. Volume of business outsourced to India, including to MNC operations in the country, is expected to rise to 40% of total outsourcing by the end of 2010 from 23% last year, he said. “Outsourcing revenue from India will double.” Yet these new contracts will come at around 5% lower billing rates, according to an average estimate of five analysts. New business would account for around 20% of total business given faster client addition, affecting realised billing rates by 1% if all else remains constant. Indian companies may also need to forgo some margins as clients aim for better service, which vendors have to commit to at the start of the contract, said Pai of TPI. “Companies will change services mix and billing models to absorb this hit,” the MNC brokerage analyst said. Clients are also beginning to pay a premium for more onsite presence and alternate locations to India for some functions, which puts Indian players at a disadvantage, Mr Pai of TPI that helps clients negotiate outsourcing deals said.

The fast moving consumer goods major Hindustan Unilever today said it exited from BPO firm Capgemini Business Services India by selling its remaining 49 per cent stake to IT consultancy firm Cap Gemini SA for an undisclosed sum. "Hindustan Unilever has now divested its 49 per cent stake in Capgemini Business in favour of Cap Gemini SA," HUL said in a filing to the Bombay Stock Exchange. Capgemini Business, formerly known as Unilever India Shared Services (USSL), was set up as an in-house business process outsourcing unit of the FMCG leader. In September 2006, HUL sold 51 per cent stake in this firm to the France-based Cap Gemini SA, after which USSL was renamed as CGBSL. HUL had earlier said as a part of its normal business process it continuously review its assets, including real estate, and on a case-to-case basis to unlock business value.

MUMBAI: Indian back-office processing firms are planning to expand operations in the US following a fall in real estate prices and labour costs and a rise in anti-outsourcing sentiments there. The industry, which traditionally followed the offshoring model, is now looking to open facilities and hire locals in low-cost locations in the US. Their aim is to woo first time outsourcers and win projects in highly-regulated sectors. As these firms boost their onshore presence and follow the IT services industry in hiring locals, their business model is set to shift from a primarily offshore-revenue model to an onsite-offshore model, companies and experts tracking the sector said. “We see the BPO industry changing. Based on the availability of skill and cost, about 15-20% of work will eventually be done in local geographies,” said Sanjiv Kapur, senior VP and head of BPO at Patni Computer Systems. This shift comes even as the more high-profile IT industry attracts flak for not hiring locally in countries such as US and UK. Last year, a legislation proposed by senators Chuck Grassley and Dick Durban sought to prohibit firms that have over 50% of staff on H-1B and L-1 visas from hiring more people on these two visas. Indian IT firms are the biggest users of H-1B visas but in contrast, their BPO arms have limited use for them because most of their projects are done offshore. But as new opportunities — unlike the traditional outsourcing format — open up, BPO firms find merit in having onshore facilities and hiring locally. Compared with the IT industry, which hires technology workers, BPO firms have more diverse manpower requirements. Knowledge of local regulations in a specific industry or process too would be handy here. A comparatively high jobless rate in the US, hovering at around 10% now, which has driven wages lower and made more manpower available, is helping the BPO firms. According to Keshav Murugesh, who recently took over as CEO of India’s second largest BPO exporter WNS Global Services, real estate prices have dropped nearly 30-40% in places like Scottsdale, Arizona. Cities such as Kansas, Memphis, Detroit, Miami and Omaha offer potentially attractive locations for setting up onsite facilities. Omaha, the home of insurance, for instance, is a low-cost location with many universities, Mr Murugesh added. “In the BPO context, about 95% of the work is done offshore and only 5% onshore. These firms have started thinking about nearshore and onshore delivery centres,” said Arup Roy, a senior technology analyst at research firm Gartner. Last week Patni acquired a BPO delivery centre in El Paso, Texas, following a deal with a healthcare insurance provider. The 150-person centre will mainly do compliance related work for the insurance provider. But it can be leveraged for other deals too.

NEW DELHI: BPO major Genpact today said it will expand its presence in Romania by acquiring a new facility in the city of Cluj-Napoca. Encouraged by the availability of local talent, infrastructure and cost-effective operations, Genpact is now building additional capacity in Cluj-Napoca, Genpact said in a statement. The new Cluj-Napoca facility is expected to be operational by July this year, it added. Genpact started its Romanian operations in 2005 and set up a centre in Cluj-Napoca in 2007, as part of its strategy to invest in tier II cities. "Over the last two and a half years, the service delivery centre in Cluj-Napoca has expanded its capability to cover the entire spectrum of finance and accounting services," Genpact's Site Leader for Cluj, Romania, Ramneesh Mohan said. The expansion positions Genpact well for growth in scope and scale for existing and new clients in Europe, he added. The company is also looking at hiring people, but details were not disclosed. "The employees Genpact will hire in Cluj-Napoca, this year, will include economics graduates, accountants and language professionals," Iulia Nare, Genpact's HR Manager for Cluj, Romania said. Currently, Genpact provides finance and accounting, procurement, IT helpdesk and customer support services from Romania to more than 20 clients from Western Europe and the United States.

Creating a record in its placement history, the Institute of Chartered Accountants of India (ICAI) has placed three of its candidates at a record salary of close to A$180,000 with Singapore-based Olam International. This is the highest ever salary offered to fresh CAs recruited from the ICAI campus, the apex body that conducts the CA examination and places the successful candidates every year. Earlier, a record salary of A$90,000 was offered in 2007. The three candidates who have been offered the record salary, almost double the earlier high, were picked by the agriculture supply chain major from ICAI’s Chennai campus. Olam plans to hire around 8 candidates from ICAI. ICAI started its first phase of placements through five (all metros) out of 15 campuses on March 4. The first day itself saw 320 candidates being picked up. Companies which hired successful CAs on the first day include IOC, ITC, Tolaram, Vedant, S R Batliboy, Yes Bank, GE Capital, REC, L&T, Axis Bank, Morgan Stanley, HCL Technology and Delloite. “We are very happy with the offers we have seen on very first day of our campus recruitment. It suggests that now we are out of the global recession and recruiters are ready to offer right packages to right candidates,” said Subodh Agrawal, chairmen of the Committee for Members in Industry, ICAI, in a reaction to the record offer. “It is a 100% rise from our earlier best,” he added. Explaining the hiring sentiment, Mr Agarwal said: “Now with the upturn, good candidates keen to work within the country. Therefore, companies need to pay a premium to hire them for global positions.” Not just global firms but domestic giants too have aggressively picked up CAs on the first day. Leading private sector bank ICICI emerged as the biggest employer by hiring 100 candidates. “ICICI Bank has been one of the biggest recruiters. However, it did not hire with the same fervour in the last two-three years. This time, they are back,” said an official in the ICAI. While Mumbai campus saw highest placements with 148 CAs getting offers, Delhi saw 65 offers. Kolkata, Chennai and Bangalore campuses saw 42, 22, 44 offers respectively. While the salary offers in Mumbai were in the A$14,000-A$35,000, Delhi saw candidates picked up in the A$12,000-A$ 28,000 salary range. The range was higher in Kolkata where offers were made between the A$18,000-A$ 52,000. Tolaram, a Singapore-based diversified group offered the highest package of A$ 52,000 in Kolkata. Olam International confirmed the A$180,000 offer. ” Michael Joseph who handles global recruitments at the company said: “”We are operating in a recession-free industry. So, there are really no limits now,” he said. Olam which is growing at a 25% rate, is also one of the top recruiters at the IIMs. In the ongoing placement season at the IIMs, the company picked up 12 people from the IIM-A

Most IT companies are likely to see an erosion in their net profitability due to a higher minimum alternate tax rate (MAT). Also, the likely lapse of the STPI scheme after FY11 will increase the sector’s overall tax liability. The impact, though, is short term and varies from company to company. The Union Budget for 2010-11 proposes to hike MAT by 300 basis points (bps) to 18%. MAT is applicable to companies which incur lesser than the normal corporate tax outgo of about 33%. While, the Budget also seeks to reduce tax surcharge by 250 bps to 7.5%, its positive effect will be more than offset by a higher MAT. An analysis of the trailing 12-month data ended December 2009 for 100 big and small-listed IT companies reveals that the top-rung IT players will see a lesser impact than the rest. The analysis is based on the assumption that tax liabilities will remain constant in the near term without considering any tax credits. Among the top five, Infosys is the only player which will not be impacted by the MAT hike. According to its CFO V Balakrishnan, Infosys is already paying taxes at a higher rate than the proposed MAT rate. It had paid tax at a rate of 20% of profit before tax (PBT) for the period mentioned above. For the other top four players, a higher MAT may eat away less than 100 basis points from their net margin. The impact is more pronounced for the next five companies. For instance, MphasiS and Patni Computers may witness a shrinkage of 250-330 bps in net margin, keeping everything else constant. For Oracle Financial Services Software, it could be as much as 550 bps. Since the companies are able to claim MAT credit in future, the exact impact may tend to differ from quarter to quarter. The non-renewal of STPI tax holiday will have a mixed impact. For companies such as Infosys, most of the development centres no longer enjoy the existing scheme. “Only 3-4 of our units now enjoy the tax break under the scheme,” says Mr Balakrishnan. However, the impact will be significant in case of companies with a majority of units still covered under the scheme. MphasiS, for instance, has 11 out of 15 such units. The impact will be short term in most cases as companies have started taking benefit of the SEZ scheme. “We now derive close to 20% of our revenue from SEZ units,” says MphasiS’ CFO Ganesh Murthy. Also, the latest Budget has cleared the anomaly regarding the treatment given to SEZ profits. Unlike before, companies can now claim tax exemption on the entire profit of SEZ units. This will provide some relief to IT exporters. For investors, the impact of the budget proposals is of short-term nature and may be reversed in the long term, given the fact that IT players are keen on improving their operational efficiency.

CHICAGO: Technology giant IBM today said it will acquire Initiate Systems, a company that makes software for sharing data among healthcare and government organisations. IBM, which has signed a definitive agreement to acquire Initiate, expects to close the transaction in the first quarter of 2010 after the customary closing conditions and regulatory clearance. Financial details of the deal were not disclosed. IBM intends to integrate the Initiate organisation with its information management business after the closing. "With the addition of Initiate's software and its industry expertise, IBM will offer clients a comprehensive solution for delivering the information they need to improve the well-being of patients at a lower cost," IBM Information Management general manager Arvind Krishna said in a statement. Initiate's president and CEO Bill Conroy said his company, which has worked with IBM for about five years, found itself getting an increasing number of requests for medical records and electronic medical records globally, including from China, India and Mexico. Initiate's software helps healthcare clients work more efficiently with timely access to patient and clinical data besides enabling governments to share information across multiple agencies, he said, adding that Initiate Systems would complement IBM's health-care portfolio.

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.

NEW DELHI: Intermediate Capital Group (ICG) on Friday bought a 47% stake in legal process outsourcing firm CPA Global, a Channel Island-based firm with over half of its 1,500 employees working out of Gurgaon and Noida in the national capital terrirory. A privately held firm, CPA Global is one of the largest legal services outsourcers in the world with over a billion dollars in revenue . London-based ICG bought the stake in a deal reportedly valued at 440 million pound. Anand Sharma, CFO, Head of management services at India for CPA Global, told ET that the buyout will benefit India operations. “ICG has been a long-term investor , and legal services outsourcing being a core business driven out of India, will get a boost. We plan to increase our India headcount to 1,000 employees by July this year,” he said. The Noida centre of CPA Global has about 400 intellectual property experts, one of the largest IP delivery centres in India . The firm counts Pangea3, Evalueserve and Integreon as its rivals in the business. Out of the India headcount of 650 people, about 300 are lawyers. With this deal, ICG will acquire a representation on the CPA board. The rest of the stake will continue to be held by employees and a few individual shareholders . The company did not disclose the terms of the transaction. “CPA Global is already recognised as a pacesetter in legal outsourcing, working with many major international corporations around the world, and, with ICG we will be even better positioned,” said CPA Global CEO Peter Sewell. Listed on the London Stock Exchange, ICG claims to have almost £8b of third party funds under management. On the other hand, CPA Global has its business spread in four segments - patent renewals , legal services outsourcing, intellectual property and software solutions. Availability of services like litigation document management and contract management at low costs in places like India is driving the LPO boom, and thus high valuations of these companies. There is a direct saving about 40%-50 % by shifting the job offshore . According to ValueNotes, the LPO market in India is estimated to reach at $640 million by 2010 end. Globally, the legal services outsourcing oppurtunity is estimated to be a market oppurtunity worth $24 billion.

BANGALORE: Melanie Carter-Maguire and Robert Hoffman are regulars at Capitol Hill, rubbing shoulders with lawmakers to try and influence events Ms Maguire, who was hired by India’s third-largest software exporter Wipro last week, and Mr Hoffman, who joined as first vice-president of global public policy last year at Cognizant, another top IT company, have been entrusted with pushing their companies’ cases in a key market where the public outcry against outsourcing is getting shriller by the day. India’s $60-billion technology services industry, which has had a largely uninterrupted run in its key market, has recognised that political lobbying is the need of the hour to educate local lawmakers about the economic benefits of outsourcing, after ballooning unemployment has exacerbated the cry against foreign tech companies. The task has been made more difficult by the US jobless rate galloping to double digits. US policymakers are under pressure to tighten immigration norms for protecting local jobs in software programming, call centres and legal paperwork. “For global companies like Cognizant, there is a simple truth: government matters. Whether it’s in New Delhi, Washington, Beijing or Brussels, decisions made by legislators and regulators have a direct bearing on a company’s ability to compete and grow, and provide a unique experience to its customers,” Mr Hoffman said in an interview. The US, along with Europe, accounts for about 80% of Indian software exports and Indian companies are keen to avoid any disruption to their fragile recovery. Indeed, companies such as Wipro that earlier preferred industry lobby National Association of Software Services Companies (Nasscom) to do lobbying for them are now single-handedly toying with the practice. By getting public policy experts on their payroll, these companies are attempting to portray sensitive issues in a high-stakes market in a kinder light. Indian tech firms realise that such efforts will help them break into the largely untapped US healthcare market worth over $20 billion. Reforms in corporate tax, visa and patents to oil their business practices are also on the agenda of the lobbying muscle employed by these companies. Besides Wipro, companies such as Patni and TCS are learnt to have engaged different lobbying firms for their time-bound and specific needs, though Nasscom continues to lobby on behalf of the industry. Barbour Griffith & Rogers (BGR), The Cohen Group and Hill & Knowlton are among the top lobbying firms roped in by the likes of TCS, HCL and Patni Computer Systems to reach out to lawmakers. For instance, Patni paid around $70,000 in 2008 to BGR towards immigration-related work, according to the Lobbying Disclosure Act database. The lobbyist involved was Roberts Walker who, as per the filing made with the database, provided strategic counsel, tactical planning and advocacy with respect to implementation of immigration and visa policies. Nasscom declined to provide its annual lobbying spend, but according to estimates available with lobbying experts in the US and India, it spent nearly $2.7 million in 2008 and another $1.6 million by last October. “The stakes are too high now. We need people who can engage with lawmakers and present our views,” said a senior executive at an Indian tech firm that has hired a lobbyist, adding that Indian companies need to be seen as global, proactively participating in the local thought leadership. Clearly, Indian companies believe that some sophisticated lobbying efforts can break the myth surrounding job losses due to tech offshoring. “This is signalling the kind of importance the industry gives to such issues as we become more globalised,” Som Mittal, president of Nasscom told in a recent interview. “It’s not about influencing opinion but more about ensuring that our perspectives are known,” he added. In times of economic uncertainty and rising unemployment, the impulse for many policymakers is to build barriers, particularly against foreign trade, investment and migration. “Efforts like these tend to have global ramifications, including driving both skilled workers and capital investment to countries with fewer barriers and more inviting economic development policies,” Mr Hoffman said. “In such a situation, policymakers have a critical role to play — use compelling evidence and urge refraining from protectionist measures in the long-term interest of their countries. Sometimes, it can be a hard sell,” he said. US President Barack Obama and his Democratic Party had made outsourcing an election issue, and have repeatedly brought it up since he got elected. The widespread belief is that a direct attack on outsourcing from the White House is on its way. And Indian outsourcing giants, rather than wait and watch, are taking up the issue with lobbyists. Experts such as Rodney Nelsestuen, senior research director of TowerGroup in the US, said companies are realising that a longer Democrat rule would need intense lobbying. The value of lobbying experts may diminish, if the US balance of power between Democrats and Republicans equalises in 2010 and there is a return to high levels of stalemate on every issue. “Still, there is likely to be some type of healthcare reform and outsourcing companies would do well to be on the inside of change given that one way to get more business will be to lead in the compliance and knowledge area of any new developments,” Mr Nelsestuen said. Added Mr Hoffman: “To put it starkly but truthfully, when it comes to public policy, if you’re not at the table, chances are that you are on the menu.”

Patni Computer Systems, Ltd. (NYSE: PTI), (BSE: PATNI COMPUT), (NSE: PATNI), a leading global IT and BPO services provider, today announced expansion of its "Actuarial Center of Excellence" (ACE) to provide consulting, risk management and actuarial services for Insurance and Financial services companies in an onshore and offshore delivery model. ACETM provides proven Actuarial expertise and rich pool of seasoned actuarial consultants in US, India and Europe to provide customers optimized and cost effective solution for improved financial performance. Patni runs one of the largest offshore actuarial operations in India and serves several global insurance companies. ACETM offers a wide range of services from consulting to loss monitoring reserving, pricing, profitability analysis, experience analysis and statutory reporting. Retirement and Pensions actuarial services also include accounting and funding valuation and plan conversion series. These services are available to clients in a third-party or shared services construct. Leveraging a global 24x7 delivery model, Patni is currently helping several companies reduce their operating costs by 40-50 percent by decreasing cost per valuation, augmenting actuarial and modeling capabilities, improving turnaround time, streamlining valuation methodologies and delivering error-free valuations. Featuring a team that has the experience to quickly take on and implement new clients, Patni has also developed numerous solution accelerators that speed time-to-benefit. Sanjiv Kapur, SVP and Head of Patni's Global BPO business said, "Insurance and Financial services companies increasingly need to focus on efficient and transparent risk management while controlling costs. Our end-to-end outsourced actuarial and analytics services on a variable cost basis in an on-shore off-shore delivery model augment clients in-house efforts and resourcing. We enable clients to significantly reduce operating costs while focusing on predictive modeling and other value added analytics that are currently compromised." Mike Fitzgerald, Senior Analyst in Celent's Insurance practice said, "Actuarial BPO will rise as North American firms expand activity in sophisticated pricing methodologies and the scarcity of actuarial talent in North America continues....This will not be a displacement of resources, but additions to capacity and extensions of insurers' teams." As companies look for global actuarial workforce, Patni leverages its ACETM charter members to augment onshore delivery capability. Corwin Zass, Founder of the Actuarial Risk Management and Patni's North American member of Actuarial Center of Excellence (ACETM) said, "The recent events in the past year have led more and more companies to recognize the value of actuarial skills. We expect that these skills will be demanded at a faster pace. We are happy to join forces with Patni -- from the insurance sector to employee benefit matters -- together our aim is to enable companies to mitigate risks across the enterprise in a cost effective manner while delivering long-term value to our clients."

WNS (Holdings) Limited (NYSE: WNS), announced it has been awarded a multi-year contract with Chiquita Brands International, Inc. (NYSE: CQB) to deliver finance and accounting services. Under this multi-year agreement, WNS will provide finance and accounting back office services to Chiquita's business entities in North America, Europe and Latin America. The contract with Chiquita marks WNS's entry into Latin America where the company will look to significantly expand and grow its business. "This agreement with Chiquita not only underscores our deep experience and successful track record in finance and accounting outsourcing, but also represents a significant global expansion for the company into Latin America," said Anup Gupta, Group Chief Operating Officer of WNS Global Services. "We look forward to partnering with Chiquita to help them achieve higher levels of operational efficiencies." Serving Chiquita in both English and Spanish, the scope of the agreement includes General Accounting, Fixed Assets, Data Standards, Credit Management, Billing, Collections, Dispute Management, Cash Application, Accounts Payable and Travel & Expense.

French outsourcer BlueLink's new multilingual contact centre for the Asia Pacific region will be based in Sydney. A subsidiary of Air France KLM, BlueLink will use the new centre to handle its existing Asia Pacific contact centre activities and expand into new business areas. "The contact centre will deal with activities for various clients, including accommodation and air ticket reservations, loyalty program and client relationship management, lost luggage and commercial claims, incoming and outgoing calls,"

The new IBM Analytics Solution Center in Washington, D.C., will draw on the expertise of more than 400 IBM professionals. These will include IBM researchers, experts in advanced software platforms, and consultants with deep industry knowledge in areas such as transportation, social services, public safety, customs and border management, revenue management, defense, logistics, healthcare and education. IBM also plans to add an additional 100 professionals, through retraining or new hiring, as demand grows. The center's staff will work with federal agencies and other clients to apply breakthrough streaming technologies, mathematical algorithms, and modeling. Using these tools, IBM will help clients optimize individual business decisions, processes and even entire business models, as well as manage risk and fraud and, ultimately, improve the delivery of public services. The new center will be located in IBM's Institute for Electronic Government at 1301 K Street, N.W. It will serve as the hub for collaboration with federal agencies, academia, and other institutions in the Washington Metro Area on analytics projects ranging from transportation and social services to defense logistics and homeland security systems. Washington, D.C. was chosen as the location for the new center because of its access to leading thinkers on the future of government systems, innovations taking place within the U.S. federal government, and the dozens of universities in the area. "Just as analytics is being widely adopted in corporate America to help companies achieve their business goals, there are almost limitless opportunities for the public sector to improve efficiency, effectiveness and overall performance through analytics," said Anne Altman, general manager, IBM Global Public Sector. "This center will enable greater collaboration on projects that leverage data in real time to aid in decision making and enhance citizens' lives." Among the analytics projects already underway with government agencies, IBM is working with the U.S. Special Operations Command (USSOCOM) to modernize the planning, programming, budgeting and execution functions within the command. USSOCOM is the combatant command within the Department of Defense that provides fully capable special operations forces to defend the U.S. and its interests. The command also plans and synchronizes operations against terrorist networks. The project consists of the design, development and integration of a Special Operations Resource Business Information System, which speeds access to information for the command. IBM, the U.S. Social Security Administration (SSA) and MedVirginia developed a first-of-a-kind electronic records exchange system to shave the amount of time to receive medical records from weeks to minutes. In addition, IBM worked with SSA to build a predictive model using text analytics to help identify initial disability applications that are likely quick allowances and helped reduce the amount of time for a favorable initial disability determination on these applications from months to weeks. The Washington-based IBM Analytics Solution Center, which specializes in the work of the public sector, is part of IBM's business strategy to expand its business analytics and optimization capabilities and services globally. IBM has opened five other analytics solution centers - in New York, Dallas, Berlin, Beijing and Tokyo - and expects to retrain or hire as many as 4,000 new analytics consultants and professionals globally as part of these centers. Earlier this month, IBM announced a Business Analytics Center of Competency that will support the Analytics Solutions Centers in crafting advanced solutions.

Global technology and consultancy giant Accenture on Monday said it is going to add around 8,000 people in India by the end of next year taking its total employee base in the country to 50,000. "We are 42,000 right now and we imagine we will be about 50,000 by the end of 2010," Accenture Chairman and Chief Executive Officer William D Green told PTI on the sidelines of the India Economic Summit. Indicating a recovery from the global downturn, Green said the company will continue to focus in India, specially in the areas of analytics. Accenture's focus in India is going to be the analytics space, which will help the clients convert information into insights for better yields. Green added, "We believe that analytics is going to be an important trend that our customers are going to demand from us. We think India is going to be a great place for us. we have some core centres of excellence in the analytics space in the country." Accenture, which has annual revenue of $21.58 billion for fiscal 2009, will strengthen its focus on clients in pharmaceutical, telecommunications and energy in the country.

BANGALORE: Infosys Technologies, in association with Oracle, will offer managed services platform that will help companies streamline their human resource (HR) operations and reduce costs. "The platform enables us to offer the next generation of multi-process HR transformational outsourcing to our global clients cost-effectively," the company said in a statement. Built on Oracle's PeopleSoft enterprise human capital management suite, the offering will help companies streamline their HR operations and reduce costs, as it includes hire-to-retire processes and functions such as HR administration, payroll and talent management. "Clients can take advantage of the scalable IT infrastructure to achieve economies of scale, best practices and variable cost models," Infosys vice-president Anantha Radhakrishnan said. "Offshore teams will provide integrated technology, process and language support from multiple offshore and near-shore delivery centers." The global software major has teamed with Oracle to promote the offering in Australia and New Zealand and extend it to Asia, Europe and the Americas. Oracle vice-president Tibor Beles said the combination of Oracle's platform and Infosys' IT and HR capabilities can help global organisations achieve HR process transformation and cost reduction using a "pay-as-you-go" variable pricing model.

NEW DELHI: Nasdaq-listed BPO firm EXL Service Holdings on Friday announced acquisition of American Express’ travel services captive in India for $30 million, and reported a 13.7% rise in revenues at $48.2 million during the third quarter ended September 30, 2009. The company’s net profit during quarter also improved to $4 million, as against a loss of $1.1 million in the same period last year. As part of the transaction, EXL gained around $160 million outsourcing contract spread over eight years. Around 800 professionals currently working with AmEx’s global travel service unit will also move to EXL Service’s payroll. Currently, EXL has around 10,500 people on the rolls. The acquired travel services unit does the global back-office activities, including account reconciliation, airline settlements, customer specific value-added services, such as MI & Analytics. The acquisition, expected to be closed by the first quarter of next year, will help EXL expand its capability in analytics, exception processing and transaction processing. The new unit created for EXL will also do work for third party clients in the travel space. “We experienced strong revenue growth during the third quarter and continued momentum in the market place,” said Rohit Kapoor, president and chief executive of EXL. AmEx was already doing some work with EXL in the analytics space. “Through this transaction, we will deepen our relationship with one of our key clients. This acquisition also adds an experienced management team and an additional delivery centre to EXL,” Mr Kapoor said. EXL, which competes with WNS Holdings and Genpact for related businesses, also revised its full-year revenue forecast to $178-180 million, up from $170-175 million earlier. It added around seven new clients over the past 12 months.

BANGALORE: To focus on the rapidly growing business analytics market place, the IBM today said it would soon set up a new 'Business Analytics Centre of Competency' in the city. The new facility will have more than 200 consultants with advanced analytics skills, IBM said in a statement here. These experts will collaborate with local client teams to craft advanced solution that apply analytics to a company's most complex information based challenges and biggest opportunities. The demand for deep analytical skills has begun to emerge as a strategic imperative as companies seek a competitive advantage in today's transformed global economy. The Centre of Competency will also support IBM's recently announced network of global business analytics solutions centers, it said.

HYDERABAD: Mahindra Satyam on Tuesday said that it won an IT outsourcing contract from Swedish defence and aerospace firm, Saab, to develop its operations for the global defence and security market in India in a deal valued at around $300 million. The contract, which spread over a period of five years encompasses engineering services and technology maintenance, will enable both the companies jointly address the Battlefield Management System (BMS) for the Indian Army, according to a release. Mahindra Satyam said that it has already initiated the setting up of a centre of excellence for network centric warfare (CoE – NCW) which will offer comprehensive skills and a repository of tools, systems, middleware, integration platforms and system showcases in the field of NCW. The company through the CoE hopes to tap the high potential market for nationwide security, for which the Indian government has large investment plans. “This relationship will jumpstart our foray in mission critical areas of defense. Our commitment in the domestic market will be reaffirmed by this collaboration and also set the stage to enter uncharted territories in the global arena,” said C P Gurnani, CEO, Mahindra Satyam. The centre, which will be accessible to both the partners, is for mission critical applications and Command, Control, Communications, Computers, and Intelligence solutions for global opportunities. The capabilities of the centre will also span areas of homeland security to provide end to end security solutions. “We view this relationship with Mahindra Satyam as a strategic meeting of two highly skilled teams believing in technical and engineering excellence,” said Åke Svensson, President and CEO for Saab. Mahindra Satyam, which counts Citigroup, GE, GlaxoSmithKline, Cisco Systems Inc and Nissan among its top five clients, has over 430 clients now. Over the last four months, the company, erstwhile Satyam Computers gained over 32 new customers including some large clients. Satyam was acquired by Pune based IT services firm Tech Mahindra in April, after the firm’s defamed founder B Ramalinga Raju confessed to perpetrating India’s biggest corporate fraud. Customer confidence took a knock after Raju’s confession. The company is attempting to regain contracts and enter into new strategic alliances to turn-around, even as its accounts are in the process of being re-stated.

BANGALORE: India’s top tech firms Tata Consultancy Services (TCS), Wipro and several others are pursuing Target’s captive technology centre for a potential acquisition, in what could be a transaction bundled with a long-term outsourcing contract worth $300-400 million. America’s second-biggest discount retailer Target has around 1,500 staff employed at its Bangalore centre, currently doing software development and maintenance work. “We have been in discussions with them for the past few months and the dialogue is still open,” a senior executive at one of the tech firms exploring this transaction. “There is no conclusion yet about how this transaction can be structured, and it’s very early days,” he added. Both TCS and Wipro count Target as one of their top retail customers. Some of the world’s top retailers, including UK’s Tesco and America’s speciality retailer Home Depot, have been outsourcing projects to Indian third-party service providers, including TCS and Infosys, apart from their own captive centres in order to support their existing IT systems and also develop newer applications. Tesco, for instance, saves over $100 million every year by outsourcing its IT projects to India, and primarily drives projects from its own captive in Bangalore. “Target’s India centre could be doing at least $100 million worth of projects (revenues) every year,” another person familiar with the retailer’s India operations. TCS, Infosys and Wipro also declined to comment. Few years ago, many retailers started with an Indian captive operation as there were not many service providers who could understand their core operations better. Target entered India in 2004 through a JV with ANSRSource, a Texas-based BPO outsourcing company. “Once a particular process becomes commoditised, then any adding of additional resources is not justified as it adds up to the costs.” TCS, one of Target’s Indian suppliers, supports the retailer’s operations from its delivery centres in Uruguay and Chile, apart from India. Target, which competes with Walmart Stores, reported quarterly revenues of $14.6 billion for the second quarter ended August this year.

Cognizant has announced the acquisition of UBS’ Indian Subsidiary for $75 million. The subsidiary carried out Knowledge Process Outsourcing (KPO), Business Process Outsourcing (BPO) and IT Outsourcing (ITO) work utilising 2,000 people in India, and supported UBS divisions across the globe. As part of the deal, Cognizant has signed with UBS a 5 year, $442 million service agreement for the provision of KPO, BPO and ITO services. New UBS Chief Executive Oswald Gruebel stated that UBS has decided to opt for a buy rather than build strategy for its outsourcing needs, to improve efficiency, reduce costs and increase flexibility. This is a “good deal” for Cognizant who have paid to win UBS as a client, and at a good price compared to the $505 million paid by TCS for Citigroup Global Services. Importantly, Cognizant will not be making great margins from the account (receiving $88.4 million a year utilsing 2,000 FTE providing a range of services). However, the client reference, the increased capability – two thirds of FTE are in KPO and BPO, the press coverage and the foothold into Financial Services, makes this a good deal for a firm that has struggled to make its mark in KPO and BPO. Cognizant will need to move away from their ITO heritage, to be taken seriously as a BPO and KPO provider. This deal will be a true success, if Cognizant bring in the right people and the right skills to leverage the BPO and KPO capability

IBM (NYSE: IBM) today announced that its mortgage servicing subsidiary has signed an agreement with Bank of America Corporation (NYSE: BAC) to acquire the core operating assets of Wilshire Credit Corporation, including the Wilshire mortgage servicing platform, and hire Wilshire's approximately 900 employees. Terms of the transaction were not disclosed. The acquisition continues IBM's strategic focus on the mortgage services industry and strengthens its commitment to deliver mortgage business process outsourcing solutions that improve our clients' agility, flexibility and competitiveness as they work to manage their businesses more effectively through dynamic market cycles. "The acquisition of Wilshire's assets further demonstrates IBM's commitment to delivering robust and innovative mortgage solutions during a difficult time for the mortgage industry," said Eric Ray, general manager, Financial Services Sector, IBM Global Technology Services. "It also reinforces IBM's commitment to leveraging the full capabilities and resources of IBM to partner with our financial services clients in solving their most difficult challenges." Wilshire's operating assets will become part of IBM's Lender Business Process Services, Inc. business unit, a wholly-owned subsidiary of the IBM Corporation. Wilshire will work with its clients, IBM and Bank of America to transition its mortgage servicing rights and related assets to Bank of America. The agreement remains subject to customary closing conditions. There are no immediate changes taking place for customers as a result of this announcement.

IBM announced an agreement to acquire the business of RedPill Solutions, a privately-held company headquartered in Singapore. RedPill provides advanced customer analytics services to businesses in industries such as financial services, telecommunications, technology and hospitality. Financial details were not disclosed. RedPill's data models and expertise, developed through the successful execution of multiple analytics projects, will enhance IBM's current work to improve the speed and quality of clients' business decisions. Analytics services are also an integral part of IBM's Smarter Planet strategy, which helps companies turn information into a strategic asset, make smarter business decisions and better understand the outcomes of those decisions. The transaction further enhances IBM's consumer marketing and risk management capabilities in the previously mentioned industries. "Our growth roadmap highlights analytics as a core element of Managed Business Process Services," said Randy Walker, general manager, IBM MBPS, Growth Markets. "RedPill has strong capabilities in research and analytical services in key growth markets that will enhance IBM's analytics services offerings." "Analytics capability is now a necessity when competing in Business Process Outsourcing deals," said Pavan Vaish, chief executive officer for IBM Daksh. "With this acquisition IBM is building an advanced analytics capability that will provide a competitive edge and differentiation - particularly in the areas of financial services and telecommunications." "Becoming a part of IBM will allow RedPill to leverage IBM's reach, technology prowess and resources, and offer its expertise to a wider global market," said Suresh Shankar, chief executive officer, RedPill. "IBM's Smarter Planet agenda has analytics at its core, making it the industry's most comprehensive vision for the future direction of business analytics. We are truly excited to be a part of that vision." The deal is subject to required statutory approvals and regulatory reviews and customary closing conditions. The transaction is expected to close later this year. About RedPill RedPill Solutions is a Singapore-based specialist customer management services firm founded in 2000 by a group of experienced marketing and consulting professionals. RedPill has significant expertise in areas such as churn management, segment propositions, segmentation, risk management and market/opportunity assessment. RedPill has delivered engagements across varied sectors in 17 different countries in Asia Pacific and the Middle East and currently has offices in Thailand, Singapore, Malaysia, Indonesia, India and the United Arab Emirates. During the past eight years, RedPill has transformed the customer strategies of leading global technology companies, including Nokia Siemens Networks and Motorola. It has engaged leading financial service providers and banks such as MasterCard, BCA, DBS, Bank Danamon, ICICI, SAMBA, Abu Dhabi Islamic Bank, Al Rajhi Bank, Siam Commercial Bank, Kasikorn Bank, Standard Chartered Bank, as well as telecom service providers including Tata Indicom, Telekom Malaysia, Celcom, and DTAC.

MUMBAI: The Essar group-promoted BPO firm, Aegis, has acquired 80% stake in Ismart – Timex, a leading BPO services provider in Sri Lanka, for an undisclosed sum. The acquisition has been done through Essar Services Holdings, the holding company of Aegis. This is Aegis' 14th acquisition. “Ismart Timex is one of the largest BPO service providers in Sri Lanka and we expect it to grow exponentially to more than double in voice, back office, especially F&A (finance & accounting) in the next one year. This acquisition adds a new geography in the Aegis spectrum of outsourcing solutions and expands its global footprint to cover Sri Lanka,” said Aparup Sengupta, MD and CEO, Aegis Limited.

MUMBAI: The captive units of multinational companies are being called on to play a new role by their overseas parents. As many overseas companies with captives in India are realising the benefit of outsourcing to third party IT and BPO vendors, they are using the management expertise in their captive units to broker these deals. In many cases, the final contract is between the third party vendor and the Indian captive, rather than with the multinational parent and the third party vendor. This also gives them a price advantage since it is a domestic contract. “There is an increasing understanding that it is better to outsource some tasks to a third-party vendor rather than do it at their own captives because it results in higher levels of efficiency. At the same time, firms want to keep their captives for high-end tasks that are sensitive and typically cannot be outsourced. These firms are also tapping the talent at their captives to ink deals with third party vendors because they have a better understanding of the local market. A top executive with one of the leading Indian IT firms admitted that contracts are now being signed with Indian captive arms. Among the multinational captives in India doing this are JP Morgan, Goldman Sachs and Bank of America. The larger captive units with a staff strength of 5,000-8,000 have enough talent at the top to negotiate such contracts. There are also compelling economic benefits — a contract that is priced at $20-25 an hour can be negotiated at $15-18 an hour if it is a contract originating from India, said a consultant, who tracks the business. The recession has given an impetus to such deals. There has been a rise in such contracts, referred to as I2I contracts or India to India contracts. “Earlier Indian vendors were not very keen on these contracts since there were no tax benefits. That has changed now, with most of the older facilities not being eligible anymore for STPI benefits, which means vendors are more open to taking on these contracts.

MUMBAI: Tata Consultancy on Wednesday opened a global delivery centre in Argentina, increasing its presence in Latin America, a growth area for the software company. Located in Buenos Aires, the centre will provide consulting, advanced IT solutions, business processes outsourcing services and IT product implementations, said TCS in a statement. “Our growing presence in Latin America continues to be of strategic importance to our overall business growth and we remain committed to working in close collaboration with institutions and universities to develop local talent and provide customers with world-class IT solutions from this location,” said TCS managing director S Ramadorai. The company had established its operations in Argentina in 2002 and has clients in the technology, finance, banking, airline and retail sectors. “The new centre will integrate Argentina into the company’s global delivery network and provide our customers here with unparalleled experience,” said TCS head of emerging markets Gabriel Rozman. This is TCS’ eighth centre in Latin America.

MUMBAI: Foreign lender Standard Chartered Bank plans to hire around 2,000 employees in India in the current financial year, a top official said. The bank currently has around 8,000 employees in the country. The banking major has also plans to open an office of its knowledge process outsourcing network -- Scope International-- in Bangalore by October, StanChart's Chief Operating Officer, India and South Asia Sreeram Iyer told reporters here. At present, Scope International has offices in Malaysia, China and Chennai. It employs over 7,000 employees in its Chennai unit.

Bangalore: U.S. bank Morgan Stanley is exploring the opportunities to exit its back-office operations in India. The bank, which was bailed out by the U.S. government, is looking at its options to sell the back-office unit that does IT development as well as finance and accounting-related work. Knowledge Process Outsourcing (KPO), equity research, complex financial modeling and portfolio analysis are among the work done here. According to an investment banker, the potential value of the transaction could be US$150-$200 million, in which the KPO operations have a share of $50 million. These operations employ around 2,000 people, of which 500 are KPO employees. Most of the operations are based out of Mumbai and a small part out of Pune. The value of the deal will also depend on the amount of business the bank will sell. "The annual revenue run rate for Morgan Stanley's captive operations is $70-$80 million. So, the committed business could be around $500 million for five years," said a person with knowledge of the development. Large Indian IT firms are the expected buyers, some of which already do development work for the bank. These include Infosys, Wipro and KPO firm like eClerx, which works for investment banks, travel and retail industry. The need to convert fixed costs to variable costs by moving work done at the captive unit to third party vendors is among the factors which drive the sale of many captive units. When the work is outsourced to third party vendors, there is greater flexibility to increase or decrease work without having to hire a fixed number of employees

NEW DELHI: A slew of big multinationals, including the world’s largest telecom operator, Verizon, and capital equipment maker Applied Materials, are going the British Petroleum (BP) way of pruning the number of technology vendors to cut costs as they look for ways to come out of the worst recession in years. Verizon, Chevron, Applied Materials, Best Buy, Cardinal Health, Home Depot and many other companies that do business with at least 40 IT vendors are set to prune their vendor list drastically, say consultants and analysts. Early this week, BP cut the number of its vendors from 40 to five, in a move that will help it save US$500 million. As many as 60 Fortune 100 companies are expected to follow suit, an analyst said. “The next 12 months will see a fair number of deals triggered by vendor consolidation. Applied Materials, one of the largest suppliers of semiconductor and display manufacturing equipment, has identified opportunities for vendor consolidation in data centre co-location and telecom services, the $9-billion firm’s group vice-president and CIO Ron Kifer said. The US firm’s large vendors include IBM, TCS and Wipro. TCS says it’s in discussion with at least three customers looking to consolidate vendors. “These are Fortune 500 companies in the retail and banking & financial services space,” said S Ramadorai, the CEO of the country’s largest software services company. A Fortune 500 bank is evaluating options to reduce its infrastructure management and data centre partners from 10 to two, while one of the world’s top five retailers is looking at reducing its technology vendors from around 80 to 25-30. A Fortune 50 drugmaker, which presently has about 100 vendors doing tasks like data mining, drug distribution and supply chain management, wants to reduce its vendor list by at least 60%, another person said, requesting anonymity. The move will help these firms get into more strategic relationships with vendors, get better pricing by increasing volume of work to technology suppliers, reduce governance overheads and cut costs by 12-15%. A US$10-billion plus company will have multiple vendors at offshore, onshore and near-shore locations. As the number of vendors increase, compliance and management is a huge task and costs escalate. “Restructuring initiatives like vendor consolidation makes them more agile". Also, too many relationships reduce buying power and increases risks. For instance, banks, which have to ensure there is no data theft, will reduce risks when they cut the number of vendors managing customer information. Similarly, for companies engaged in healthcare, having only a handful of vendors makes it easier to manage relationships and tackle leaks, if any, in the system promptly. Companies doing R&D remotely also try to limit the number of third-party vendors to protect intellectual property and any infringements of patents. For instance, Microsoft, which files for a few hundred patents every year, just has one global vendor, CPA Global, to do the patent filing. “Clients who think they have too many vendors are consolidating. It helps to reduce risks and manage costs better,’’ said V Balakrishnan, CFO of India’s second-largest IT exporter Infosys Technologies. The development spells big gains for large IT services players. R Chandrasekaran, president and MD for global delivery at software firm Cognizant, said deep domain expertise, broader range of services and expanded geographic footprint help large companies to score in vendor consolidation moves. But life will become much more difficult for smaller companies. “The smaller players aren’t able to match the pricing offered by the big vendors. It’s tough for the small services companies". Already hit by the global recession, small vendors may now become easy acquisition targets for the bigger ones. To survive, the obvious lesson for them is to develop expertise in niche fields. As being lean in tough times becomes the norm, it will be the fat boys of offshoring who will gain.

BP has signed a contract with Indian suppliers Tata Consultancy Services (TCS) and Infosys for application development and application maintenance. Over the past 12 months. the energy giant has consolidated the high number of vendors it employed down to a few larger contracts. TCS will handle application development and application maintenance for refining, manufacturing and corporate IT maintenance work. Infosys will handle application development and application maintenance work in the integrated supply and trading, and exploration and production businesses. BP Group chief information officer Dana Deasy said the contracts will help BP to reduce complexity, standardise processes and lower costs. “In awarding Infosys application development work for our Integrated Supply and Trading and Exploration and Production businesses we look to benefit from their knowledge of the oil and gas sector," she said. "Additionally, we see opportunities for TCS to help us deliver IT solutions to enable our upstream and trading businesses.” The energy and utilities vertical of TCS has 30 customers worldwide, including Australian firm AGL Energy. The supplier also works with oil field service operators to help them increase the production and reliability of upstream operations.

Optus has signed an application maintenance and support contract with HP-owned EDS in a deal which sees IBM sideswiped and a bevy of smaller local providers cut off. EDS won the three-year application maintenance and support deal in a tender that commenced in April 2009. Some twenty service providers bid for the deal. The EDS contract came at the expense of IBM, which signed an application management services deal with Optus in 2002 expected to be worth up to $500 million over ten years. IBM and Optus renegotiated that contract for three years starting in 2005. It was set to expire next month. A spokeswoman for Optus told that the carrier would "continue to have a relationship with IBM" on some small projects but "not around application support and maintenance." Optus announced it would also shut its books on up to 14 local software support providers. "Although application support and maintenance services are already provided to Optus on an outsourced basis, we expect to make substantial savings by rationalising the number of suppliers we work with from over twenty today to five going forward, as a result of these new agreements," Optus CIO Lawrie Turner said in a statement released today. Optus was unwilling to divulge the names of those companies cast off as part of this "consolidation". "There are some multinational service providers and smaller software support contracts for specific applications," an Optus spokeswoman said. The carrier confirmed only that its existing contract with Accenture had been renewed, as had deals with troubled Indian outsourcer Mahindra Satyam and parent company SingTel. Since 2006, Accenture had been guiding Project Reitz, in which Optus was reportedly spending between $100 million and $160 million overhauling its legacy billing systems. Optus refused to discuss whether the reviewed application maintenance and support arrangements would see a greater mix of work being done offshore.

BANGALORE/NEW DELHI: UK, one of the top export markets for India’s over $40-billion software industry, is evaluating stricter immigration rules proposed by the Migration Advisory Committee (MAC) after several British trade lobbyists and workers alleged that Indian tech firms are replacing local workers with overseas staff at lower salary levels. Top Indian tech firms including TCS, Infosys, Wipro and Tech Mahindra serve British customers such as BT, British Petroleum and British Airways by sending Indian professionals to the country on short-term project assignments. With more stringent norms, these companies may have to employ more local UK workers instead of sending their Indian staff for onsite projects. Anti-offshoring lobbies including Unite and the Association of Professional Staffing Companies (APSCo) allege that Indian tech firms are misusing the ‘intra-company-transfer’ rules by replacing UK workers at wages lower than prescribed levels in the country. The MAC report submitted by the committee’s chairman Professor David Metcalf to UK’s Home Office on Wednesday has recommended that the threshold salary levels for allowing entry of a graduate skilled worker be raised from around £17,000 currently, making it tougher to earn points needed for allocation of work permits. “We believe that the earnings thresholds should rise in line with earnings inflation. We recommend raising the minimum threshold for gaining 10 points to £24,000 per annum, and raising the minimum threshold for gaining 15 points to £28,000 per annum,” the MAC report added. These figures compare to £20,000 and £22,000, respectively, under the current system. Last year, UK granted around 45,766 work permits to workers coming to the country through intra-company-transfer route, a majority of them awarded to the IT professionals. The majority of intracompany transfers are for Indian nationals, who account for 69% of the permits granted through this route. Almost half (48%) of intra-company transfers are for Indian nationals in just one occupation — software professionals . “Companies are even allowed to pay these workers offshore in foreign currencies, so intra company transfers are potentially very easy to exploit in order to bring cheap foreign labour into the UK,” Ann Swain, chief executive of APSCo said in a recent statement. Nasscom, the Indian software industry lobby, said the recommendations will help fix the loopholes in the system. “There were some cases of abuse Coming to terms with lay-off Crisis time: Keep staff motivated Job-cuts: A blessing in disguise Keep it light at your workplace! reported in the past and the new norms ensure compliance to guidelines and there is a system in place to audit the visa process,” said Som Mittal, president of Nasscom. “The issue of salary — at least £20,000 a year as minimum wage for an employee going to the UK is also acceptable as less than 0.2% of the current ICT employees going to the UK are at a salary less than that. This measure has been put in place to check abuse,” he added. The report also recommends that migrants coming to UK under intracompany-transfer route cannot have a right to permanent residence. “Because the intra-company transfer route exists to facilitate temporary immigration to the UK, we recommend that time spent in the UK under this route does not lead to a right to permanent residence,” the report said. Under the current rules, after five years of working in the UK on the intra-company transfer route or any other route under tier-II, it is possible to be granted permanent residence. Meanwhile, Indian IT workers in UK feel such recommendations are not required. “Tier-II visas without the right to settlement will lead to exploitation of skilled professionals who will have to pay taxes but will not be able to settle in the UK,” said Amit Kapadia, executive director of the Highly Skilled Migrant Programme (HSMP) Forum in UK. “In recommending so we believe the MAC has gone beyond its scope in answering the questions which were raised by the then home secretary Jackie Smith,” he added. Experts such as Bob McDowall, who is the research director with Tower-Group said these allegations are true. “The wages are lower than the UK minimum wage, though there remains a substantial cost of living differential between India and the UK,” he said. The backlash, according to him, is set to gain more momentum because of the rising unemployment. Moreover, IT workers coming to UK for short-term projects will also need to have more work experience. “To ensure that the route allows only people with company-specific expertise to come to the UK, we believe that the qualifying period with the company overseas should be doubled from the current six months to 12 months.” However, MAC’s recommendations are pure advisory and the Home Office may or may not accept them. “We need to remember that these are recommendations at this stage and the government is considering the report before responding formally. No decisions have been taken and it’s too early to speculate on the government’s response ,” Chris Dix, regional director South Asia and the Gulf, UK Border Agency.

NEW YORK: Hewlett-Packard Co is considering selling or shutting parts of its outsourcing business to focus on the higher-margin areas of its technology services offering, people familiar with the matter said. A year after buying Electronic Data Systems for $13 billion, HP executives are discussing the possibility of divesting parts of the outsourcing operations, especially in its business process outsourcing (BPO) arm."The calculation is, can we get more cash for this asset now versus the cash flow the asset is expected to generate in coming years?" said one of the sources who is familiar with HP's plans. HP's India operations or its human resources BPO unit could be among the businesses divested, the source added. Housed within HP's services division, the BPO unit posted $709 million in revenue in the quarter ended April 30, compared with $40 million a year ago. HP got most of its technology outsourcing and BPO business from EDS, a pioneer in the field, which it bought in August 2008. HP may decide not to sell anything if the assets fail to fetch a good price, the sources said. If the assets were to be shopped, outsourcers like TeleTech and Stream Global Services could be interested, a second source said. HP is expected to issue its fiscal third quarter results later on Tuesday.

NEW YORK: IBM said on Thursday that it expects its analytics business to grow at around 10 percent this year and between 15 and 20 percent from 2010 onwards. The analytics business, part of the company's global services business unit, is likely to account for more than $2 billion in sales in 2010, it said. Its annual revenue in 2008 was $103.6 billion. IBM has shifted its focus from hardware to more profitable software and services over the past decade. It has recently positioned the analytics business as a key growth driver as it yields higher margins than the average IBM product or service. IBM combines analytics, which incorporates advanced mathematics, with its software and consulting skills to help clients predict risks and plot trends.

LONDON: Britain has dismissed reports that it is contemplating outsourcing sensitive tax processing work to India, saying it does not have any such plans right now. These services are not permitted to be delivered from outside, said a spokesman for Her Majesty's Revenue and Customs (HMRC). "We currently have no plans to change this. HMRC is constantly looking at how it can provide better value for money to the taxpayer. Project Quantum is specifically focussed on value for money in the IT field," he said. The spokesman was refuting a report in 'Computer Weekly' that Britain's Finance Ministry is considering proposals to contract out sensitive tax processing work to India. The report had claimed that "HMRC ministry and its main IT contractors Capgemini Fujitsu are looking at the potential of outsourcing some tax processing to India."

NEW DELHI: Infosys BPO, the BPO arm of Infosys Technologies, today announced that it has secured a five-year contract with T-Mobile UK Infosys BPO has been engaged by T-Mobile UK to support several core processes for their finance directorate which cover customer finance, commercial finance and accounting (F&A), and procurement operations, Infosys BPO said in a statement. "We are pleased to have been selected by T-Mobile UK. Our strong F&A capabilities combined with our understanding of the telecom industry helps us successfully transform businesses of our clients," Infosys BPO Vice President and Head (Communications, Media and Entertainment (CME)) Gopal Devanahalli said. The deal size was, however, not disclosed. T-Mobile is one of the world's largest mobile operators with more than 125 million customers worldwide and about 16.7 million customers in the UK itself. "We were keen to partner with a company that possessed a good understanding of our requirements and business needs. We are confident of gaining immense value through our partnership with Infosys BPO," T-Mobile UK Head of Customer Finance Tim Spence said.

BEIJING : IBM) today announced the launch of its China Analytics Solution Center, part of a network of global centers addressing the growing demand for advanced analytics capabilities needed to help clients build smarter business systems and drive improved decision-making. The initial China center, located at IBM's China Business Innovation Center in Beijing, will draw on expertise from across the company, including experts and consultants from analytics and optimization, mathematics modeling, software engineering and architecture research and consulting. China was chosen due to its status as a global center of economic development and innovation and world-class skills base. The Beijing center will be staffed initially by up to 300 consultants, software specialists and mathematicians, with plans to retrain or hire an additional 300 as demand grows. The mission of the China Center will support IBM's clients in the Greater China Region to tackle complex business problems by leveraging the full breadth of IBM's capabilities in analytics and optimization, including hardware, software, consulting services and research. It will initially focus on smarter grid, smarter supply chain management and smarter city covering transportation and traffic management, and water management. The China Center will support and accelerate IBM's collaboration with the government, enabling the country's stimulus plan with advanced analytic solutions, helping create high value jobs and nurturing local talent. "Business leaders today need to move beyond intuition to a more predictive capability and certainty about outcomes. It is now possible to see patterns in vast amounts of data to extract critical insights and move to a new level of enterprise intelligence," said D.C. Chien, CEO, IBM Greater China Group. "Not only does the ability to create smarter digital and physical infrastructures herald the ability to improve the quality of life for our citizens, it is fundamental to improving competitive advantage and delivering economic growth." The China Center, IBM's first center in the growth markets, is part of IBM's business strategy recently detailed by IBM as the company expands its capabilities around business analytics. IBM opened its first two analytics solution centers in Berlin and Tokyo in June and July, respectively. The other centers will be located in London, New York City, and Washington, D.C. As part of this initiative, IBM plans to retrain or hire as many as 4,000 new analytics consultants and professionals globally. In these centers IBM will draw upon its vast software information management portfolio, including technologies from IBM Software, mathematicians and advanced analytics experts from IBM research and industry expertise from management consultants in recently launched IBM's Business Analytics and Optimization services practice. IBM has been working with a number of clients in China to improve their business decision making through advanced analytics. For example, COSCO Logistics, one of the world's leading providers of integrated logistics services, has been working with IBM to implement the advanced optimization and simulation models, which help cut more than 20 percent of logistics costs and reduce more than 10,000 tons of carbon dioxide emissions a year. Additional China Analytics Solution Centers will be opened in the future in leading cities across the country, providing high-end service areas and leveraging each city's specific and outstanding competency.

BANGALORE: Infosys Technologies Limited on Tuesday announced it has been awarded a 10 year eBiz project by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India. The project is among the 27 Central, State and Integrated Mission Mode Projects under the National E-Governance Plan (NEGP) of the Government of India, the Bangalore-based company said in a statement, which did not give financial details of the project it bagged. The scope of eBiz work includes designing and developing the eBiz platform, establishing the support IT infrastructure, implementing, maintaining and expanding the eBiz solution and services for the next 10 years. Infosys would also undetake training workshops, promotion and awareness campaigns. Union Minister of Commerce and Industry Anand Sharma was quoted as saying that the eBiz Project is an ambitious one to encourage and develop a conducive business environment in India. Through this project, the DIPP aims at expanding G2B services and enabling a better business experience in India. Through the eBiz project, the Government aims to create a customer-centric environment, providing the business community convenient and speedy access to information and services. This 'single window' approach would cater to the requirements of business for government-to-business services throughout the business life cycle, namely through the pre-establishment, commencement, operations, expansion and when required, closure stages of the business, it said.

NEW DELHI -- Indian software company HCL Technologies Ltd. said Friday its HCL AXON division has bought the SAP operations of South Africa's UCS Group Ltd. for an initial payment $7.7 million in cash. The deal also includes payments to UCS Group over the next two years based on the acquired operations' performance, HCL Technologies said in a statement. The total deal cost could go up to $18.5 million, HCL Technologies's corporate vice president and head of enterprise business, Ram Krishna, said during a conference call.

NEW DELHI: Essar Group's BPO arm Aegis Ltd on Thursday said it has acquired South Africa-based outsourcing firm CCN Group PTY Ltd to expand its presence in the African country. The company will invest $60 million in the next three years in South Africa. "We are putting in significant amount of our overall South Africa planned investment of R 500 million (USD 60 million) into this acquisition," Aegis Global CEO and Managing Director Aparup Sengupta said declining to give the deal size. Sources, however, said that the deal could be around $30 million. The company, however, declined to comment on the deal size. Besides, Aegis plans to hire 4,000 people for the entity in next three years. "CCN is a strategic fit for Aegis and South Africa is an integral part of our growth strategy. We plan to hire another 4,000 people in the next three years in the country, which is a step towards our commitment to creating 5,000 jobs in South Africa over a period of time," Sengupta said. He added that the company plans to service its European clients out of the South Africa centre.

NEW DELHI: BPO firm ExlService Holdings on Wednesday announced acquiring the BPO unit of US-based Schneider Logistics in Czech Republic as a part of a multi-year outsourcing agreement with the logistics firm. "As part of the transaction, EXL has acquired the operations of Schneider Logistics, SRO in Olomouc, Czech Republic with effect from July 3, 2009," EXL said in a statement. The deal size, however, was not disclosed. The facility will serve as EXL's third outsourcing service delivery location outside of India and Philippines, it added. The Czech facility currently provides transaction processing services to Schneider and its clients in Europe and the US. It has about 200 employees, who will be transferred to EXL as part of the transaction, the statement said. EXL now has 12 delivery sites located across India, Philippines and Czech Republic. Headquartered in the US, EXL also has offices in New Jersey, London and Singapore.

NEW DELHI: IT services firm MphasiS on Wednesday said it has partnered with UK-based software vendor Singularity for using the latter's technology for automation of business processes for its clients. Under the agreement, MphasiS will use Singularity's business process management (BPM) technology to automate processes for clients across sectors like financial services, manufacturing, healthcare, communications, transportation, consumer and retail and energy, MphasiS said in a statement. BPM technology eliminates unnecessary steps and reduces manual inputs in a process, increasing the number of activities that can be carried out in parallel, which results in reduced costs and management overhead as well as increased throughput capacity. "This alliance in particular reflects our long-term focus on driving new levels of efficiency in knowledge intensive sectors such as banking, energy and health-care," Singularity Chief Executive Officer Padraig Canavan said.

TOP outsourcing customers such as Bank of America and several local governments in the US are asking vendors such as TCS, Infosys and Wipro to deliver more projects locally. They are also rescinding job offers to foreign workers in an attempt to address anti-offshoring sentiments and cope with legislative requirements of the Troubled Assets Relief P r o g r a m (TARP). Bank of America and other financial services organisations, who have received funds under TARP, need to ensure that they try and employ a local American worker before hiring a foreign worker from companies such as TCS, Infosys and Wipro. During the past few months, at least five new outsourcing contracts had new clauses, which mandated that certain work be delivered onshore. “Bank of America’s Merill Lynch integration projects are being delivered locally because of TARP requirements — on any other day, Infosys could have done a majority of these projects from India and elsewhere,” said a US-based person familiar with the bank’s outsourcing initiatives. Bank of America confirmed that they have c a n c e l l e d around 50 H-1B job offers in order to comply with TARP. A person familiar with these job offers told that several graduates from the University of Michigan are among many potential H-1B workers left stranded in the US. “Recent changes in US legislation made it necessary for Bank of America to rescind job offers it had made to students requiring H-1B sponsorship,” said Kelly E Sapp, a spokeswoman.

BANGALORE: The race to woo recession-hit clients across the world is forcing IT biggies to reduce their client billing rates, sometimes as high as 35-40 %, though most are still managing to control any sharp declines in their topline. In certain projects the billing rates are down to US$16 an hour, which, analysts say are the lowest ever rates. And such rates will continue at least till Q1 next year, they add. “We have seen such sustained decreases in pricing in most projects. I expect this to last until the year end at least,” says Siddhartha Pai, Partner and MD, at the India offices of TPI Inc, a global outsourcing advisory firm. The last month or so has seen unprecedented cut in billing rates even for existing customers. For large testing services, and of services of similar value, US$16-20 is the prevalent rate. This is almost 30-35 % lower than the rates being charged earlier this year and steeper than the 20% cut that British Telecom had demanded from Infosys and Tech Mahindra earlier this year on some old and new projects. Also higher-end projects like SAP have faced pricing cuts of around 25%, which is again more than what it was earlier this year. Top IT firms are offering such rates in the form of introductory discounts for new clients, and for a year or two for existing clients.”Pricing has been reduced substantially for some clients, including higher end projects, specially for long terms strategic clients or those that have been hit quite badly during the recession ,” said a senior executive in Infosys who declined to be named as the company is currently in the silent period. A Wipro spokesperson said the company will not comment on speculation. Another worrying factor for the IT firms is that despite the rate cuts, there has not been a corresponding rise in the volume of deal flow, in either higher value or the lower end services. “The deal flow is still low,” and the situation might not be improving before Q1 or Q2 next year. Good old days are not coming this year for sure. Prices of IT services in outsourcing are anticipated to shrink well up to 2010 due to an uncertain economic climate, IT budget constraints and general market consciousness. These rates are even lesser than what the facilities personnel make per hour in their client’s offices even in eastern European countries, where it varies between US$16- $22 per hour. There is cut throat competition now between the top five IT companies to retain and snap up new clients. The rate cut has been in stages. In November, clients demanded flat rates, by the first quarter of this year they wanted 20% cuts, and now most are demanding 30-35 % cuts for not just new, but also existing contracts.

Even as protectionism gains ground among political hardliners in the UK d US, UK-based Lloyds Bank has initiated the process of replacing most its British IT workers with Indian nationals. Many of the Indian recruits will be from top-rung Indian IT majors like Wipro and TCS, who are also the bank’s vendors, said two industry officials familiar with the development. The bank, which has over 400 employees in its IT department, is learnt to be considering replacing over 80% of its IT workforce with those from India. “We continue to outsource areas of IT work to companies based overseas. At any one time, some of the staff from these companies will be based in the UK to deliver aspects of our IT projects which is standard industry practice, “ said a Lloyds spokeswoman over email. She added that the number of staff from overseas companies working with Lloyds in the UK varied depending on the projects underway and the skills required. TCS declined to comment since it was in the midst of its silent period while Wipro refrained from commenting on “market speculation.” Globally, the economic crisis has resulted in serious cost-cutting measures which includes wage cuts. For example, an Indian IT specialist with over four years of experience, will be paid almost 30% lesser than his British counterpart. “The costs pressures for companies in Europe and US are forcing companies to lay off workers and replace them with more inexpensive labour mostly from India and China,” said a UK-based consultant who advises European banks on outsourcing strategies. Last week, the Lloyds Banking Group’s employee union protested on a move to replace skilled IT workers of British origin with those from India. “Workers from India, who would otherwise have no legal right to work in the UK, are being given work visas and flown into the country to take on jobs that could otherwise be given to the existing UK-based staff. The UK government should be using its 43% ownership in Lloyds to force the bank’s board to act in the best interest of UK jobs and its economy,” the union’s assistant general secretary Steve Tatlow had said last week.

Capgemini, already present in Poland, is expanding its presence in Eastern Europe to meet ongoing client demand for outsourcing services. The new technology center in Iasi, Romania, will perform First Line IT Help Desk Support and Business Continuity work for Capgemini's Outsourcing clients. Iasi is one of the largest university towns in Romania, offering a qualified pool of talented and skilled employees for Capgemini. The language capabilities of the graduates also make it an ideal location to enable Capgemini to meet continued demand from its European outsourcing clients, supplying highly skilled staff fluent in French, German, English, Italian and Spanish.

BANGALORE: Wal-Mart Stores has shortlisted top Indian tech firms, including TCS, Infosys and Wipro, for an outsourcing contract potentially worth up to US$500 million over next few years, as the retailer seeks to award multiple contracts for managing its business applications and other back office activities. At least two people familiar with Wal-Mart’s outsourcing strategy told on conditions of anonymity that the retailer is expected to start outsourcing more to India within six months. “Wal-Mart has been testing the waters by outsourcing smaller projects to companies such as Infosys, TCS and Wipro. Now, the retailer wants to flesh out a more comprehensive outsourcing strategy and has shortlisted these tech vendors,” said a senior executive of one of the tech firms exploring business opportunities with Wal-Mart. He requested anonymity because he is not authorised to speak to media. When contacted, Wal-Mart spokesman John Simley confirmed his company is in discussions with several service providers, but declined to elaborate any further. “Certainly, we feel our company has a lot to offer India and we hope to grow our business there. We are always in discussions with potential service providers, but we have nothing to announce at this time,” he said. However, unlike many other companies seeking to outsource in order to bring down costs, Wal-Mart’s outsourcing is more about globalising its information technology sourcing initiatives. At a time when most companies are struggling to grow their business, Wal-Mart announced US$15 billion share buy-back program earlier this month, as the retailer continues to woo more customers. Officials at Wipro, TCS and Infosys declined to offer any comments about the Wal-Mart contract. Some of the world’s top retailers, including UK’s Tesco and American speciality retailer Home Depot, have been outsourcing projects to Indian third party service providers, including TCS and Infosys, apart from their own captive centres in order to support their existing IT systems and also develop newer applications. Tesco for instance, saves over US$60 million every year by outsourcing its IT projects to India. Wal-Mart, which has, so far, been depending upon its large in-house IT team is now seeking to globalise its IT operations, especially since the retailer is now actively planning to grow its business from emerging markets such as India. With almost US$400 billion in annual revenues, the retailer also continues to look at establishing a captive technology centre in India, however, this could not be confirmed. “Wal-Mart already has a sourcing operation in the country, apart from its Bharti joint venture, it’s natural for the retailer to explore various ways of leveraging its Indian presence,” another person familiar with the company’s sourcing strategy told on conditions of anonymity. Meanwhile, Wal-Mart’s outsourcing of IT and back office projects is not expected to impact local US jobs, as the retailer is very sensitive about rising unemployment in the country. In fact, Wal-Mart said earlier this month that it will add around 22,000 new jobs in the US by adding over 150 new stores to its existing network of around 7,900 retail outlets.

HYDERABAD: BT Group, the biggest customer for Infosys Technologies and Tech Mahindra, has approached these vendors for renegotiating its outsourcing contracts, and is seeking at least 20% lower billing rates for several existing and new projects. Outsourcing customers are using the downturn as an opportunity to question the high margins of Indian service providers. The top five Indian software companies renegotiated contracts worth $1.5 billion since September last year at around 15% lower rates. Britain’s biggest phone firm is currently restructuring its BT Global Services (BTGS) unit, which accounts for almost half of Infosys’ BT revenues. Tech Mahindra derives almost 57% of its revenues from BT. “Having announced over 6,000 job cuts at its services unit few weeks ago, BT is driving cost-saving initiatives very aggressively with its contractors,” said a UK-based outsourcing expert. “Some insiders suggested that BT might have to write off almost $1 billion in its services unit, which will put further pressure on contractors.” Infosys would not comment as it is in a silent period prior to announcing its financial results next week. Infosys’ BT revenues could be down to almost $300 million, from around $380 million last year, the expert added. In a worsening economic environment, customers such as BT are also asking their vendors to give up on the premium rates for some of the niche projects, impacting average billing rates for the total outsourcing contract. If the recession continues and turns into a depression, combined with weaknesses in sterling, some outsourcers might be adversely impacted by shorter-term contracts, for example, development of applications staying on shore. Earlier this year, BT had to write off nearly $500-million contracts signed during the tenure of former CEO Ben Verwaayen. On January 22, 2009, BT announced in its earnings call that BTGS had overstated profits in 17 major contracts, and would be taking £340 million writedowns for 15 of those contracts. “BTGS’ performance could have a significant impact on Infosys’ growth expectations for FY10E. BT, which accounted for almost 9.1% of Infosys’ revenues last year, will contribute around 6.9% of the company’s business this year, down over 2%. Meanwhile, some UK-based customers are also seeking to reduce offshoring because of local sentiments about rising unemployment rate. “UK companies are more sensitive to preserving jobs at a time of increasing unemployment, now over 2 million in the UK and estimated by some forecasters to reach 3 million in 2010. As reported in latest white paper by Mindfields, top Indian tech firms such as TCS, Infosys, Wipro and HCL are signing new outsourcing contracts at 15-20% lower billing rates than last year, as customers including BT, BoA and Citibank renegotiate existing contracts and award new projects at much lower rates.

INDIAN IT companies such as Infosys, Wipro and MindTree are churning out innovative offers to keep their margins intact amid demand from their clients to cut billing prices. Clients of Infosys are demanding price cuts in the range of 5-15%, but Infosys is standing firm. “We are definitely not giving them what they are asking for. We are giving them alternatives such as more offshore work. This is like giving a discount, but not on the prevailing rates,” said Infosys CEO & MD S Gopalakrishnan. “We can also leverage our bench and offer to some very specific clients some work to be done offshore for free. Here, again, the rates are not impacted.” Companies are working with clients to understand what their budgets and constraints are so that they can help offset their costs. However, the willingness to negotiate on price is dependant upon multiple factors. Said MindTree chief operating officer NS Parthasarathy: “The percentage of discounts we are willing to offer to our customers depends on the volume of business done, kind of price arrangements we have with them, and their billing rates.” For example, if a customer has a $5-million contract with the company at low billing rates, the pricing is not negotiable. Even though Wipro’s clients are asking for a 5-10% price cut, the company has its own game plan. “We are talking to them, but the final number could be below 5%. Clients are essentially looking at reduction in their budgets and, therefore, we are discussing various pricing models. Like application and element-based pricing, wherein the client pays by the application he uses and the number of elements he uses and not based on the number of people working on the project,” Wipro chief strategy officer KR Lakshminaraya said. However, the offshoring model is a hot favourite amongst companies. Offshoring work helps clients reduce their costs and increase margins. Infosys has reduced the number of employees working on-site in the past three months. It has no onsite bench now. “We are hiring more locals to work on-site. Clients primarily wanted an on-site presence so they could communicate to people real time, but now we are looking at making our IT staff work in shifts so they can service clients in a synchronised manner,” said Infosys global HR head Nandita Gurjar. This would be for both existing and new clients. Traditionally, only BPO staff worked in night shifts, while the IT staff worked during the day.