Siliconeer: December 2004

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DECEMBER 2004
Volume V • Issue 12

Publisher's Note

We champion the triumphs of science and technology, and revel in the strides India has taken in information technology, and cheer on as we have reported scientists who have thought of innovative ways to bring technology more relevant to the broader masses.

But the terrible Union Carbide gas leak disaster in Bhopal 20 years ago is a sober reminder that at the end of the day, science is only as good—or as bad—as the human hands that guide it.

The disaster and its aftermath are a sorry spectacle of corporate malfeasance, a shocking failure of the Indian government to protect the interests of its own citizens and a cautionary tale of how a failure of accountability can result in technology being the cause of misery rather than an enhancement of the quality of life.

This month, on the 20th anniversary of the gas leak, we mourn the thousands that have died and express our solidarity with the hundreds of thousands who continue to grapple with the mess left behind. We also salute the tenacity, integrity and unflagging commitment of activists in Bhopal who have fought for justice for Bhopal survivors. These are the real heroes, along with the survivors, whether they are serving in a clinic in Bhopal, or organizing a protest in a U.S. campus.

Outsourcing is the new big thing in global economics today, and India has been particularly adept and reaping its benefits. While its future still remains bright, we carry a report this month that points out that China could be a fairly important player pretty soon: In fact, Indian firms are already re-outsourcing work there, and it is entirely possible that China’s growth in outsourcing can happen hand in hand with continuing Indian success.

We take great pleasure in congratulating Dr. Ashok Gadgil, a scientist with the Lawrence Berkeley National Laboratory, who won a $50,000 Tech Award developing UV Waterworks, a quick, low-cost system to disinfect drinking water in poor regions around the world. This month’s issue has details on his work.

As the year comes to an end, we wish all readers happy holidays and a prosperous new year ahead.

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MAIN FEATURE
Bhopal: 20 Years Later: The Misery Continues By Deepal Goyal

Twenty years after the world's largest industrial disaster at the Union Carbide plant in Bhopal, disaster survivors have received a pittance. An Amnesty International report says the world has failed survivors of the murderous gas leak. Meanwhile, a new BBC investigative report says thousands remain at risk from toxics left behind at the plant, writes Deepak Goyal.

Mehboob Bi’s husband, Chand, worked as a mainte-nance worker for Union Carbide. Her youngest child died in her arms on the night of the disaster in 1984. Her son, Imran, died three years after his exposure to the gas and in 1999, she lost her husband after years of illness. She told the BBC she often asks: “Is Allah punishing me?”

Shahid Noor’s father mowed grass at Union Carbide’s Bhopal factory. His parents were both killed by the gas leak, making Shahid an orphan at the age of 9. He still suffers breathlessness and dizziness today.

Swaraj Puri was Bhopal’s chief of police. He wishes Union Carbide’s chairman, Warren Anderson, had lived in Bhopal at the time and had “been through what we’ve been through, seen what we’ve seen and suffered what we did.”

These are but a few of hundreds of thousands lives that have been changed by the greatest industrial disaster in world history.

On Dec. 3, poisonous methyl isocyanate gas escaped Union Carbide’s plant in the Madhya Pradesh capital of Bhopal, 3,000 people died on the night of the leak. At least 15,000 related deaths have happened since and survivors are still suffering chronic respiratory and other illnesses.

In a scathing recent report, human rights organization Amnesty International says the world has failed survivors of the Bhopal gas leak.

That Terrible Night:
Eyewitness Account


I was living with my husband’s family at that time. My daughter Ruby was 3 years old and my son Mohsin was about 8 months old. That night my husband was away from Bhopal on work.

At about 12:30 a.m., I woke to the sound of Ruby coughing badly. The room was not dark but lighted by a street light right outside. In the half light I saw that the room was filled with a white cloud. I heard a lot of people shouting. They were shouting “bhago, bhago.” Then Mohsin started coughing, too, and then I started coughing, with each breath seeming as if we were breathing in fire. Our eyes were burning too. My mother-in-law, who was also coughing badly, came in to the room. She was in a panic and bade us come out. I came out with my children, carrying Mohsin on my lap and holding Ruby’s hand and went in to the kitchen. Meanwhile other members of the family were also coughing and groaning.

People were becoming more and more uncomfortable. A lot of people were coming in. My nephew fell unconscious. Next, my son Mohsin stopped groaning as he, too, fell unconscious. My mother-in-law suggested that all of us should go to the Hamidia hospital. We left the house, me carrying Mohsin and Ruby holding my hand. My sister-in-law was also holding two children and my father-in-law was carrying his favorite grandson, who was five years old.

It was around 1:30 a.m. by then. We did not even lock the house, nothing mattered. Outside it appeared that a large number of people had passed that way. Lots of shoes and shawls and other clothing were strewn about. White clouds had enveloped everything. Streetlights looked like points of light. Our family got split up. I saw lots and lots of people running, screaming for help, vomiting, falling down, unconscious.

Mohsin and my sister-in-law’s daughter were still unconscious. Ruby was holding on to my kurta (she did not leave it once). We walked for another 500 meters and came to Bhopal Talkies crossing. Mohsin was vomiting on my body. Ruby was also vomiting. I was not able to control my bowels. Feces were running down my legs. My mother-in-law was vomiting. Hamidia hospital was still two kilometers away, much of it uphill. We had just one thought in mind and that was to reach Hamidia hospital.

At Bhopal Talkies crossing we all had fallen on the ground. I was two months pregnant at the time. I had a miscarriage right in the middle of the street, my body was covered with blood. There was blood all over. I was unable to control my bowels and the feces ran down my legs, mixing with the blood.

We were not able to talk to each other or even see because our eyes were inflamed. We thought that if we stayed on at Bhopal Talkies crossing we would surely all die because we had seen so many people lying on the ground who appeared to be dead. Trucks overflowing with people were passing on the main road . We took the Saifia College road and walked about half a kilometer. We jumped on to a moving vehicle, a large three wheeler. It was already full. By then I was covered with my own blood and faeces and vomit from my children. I fell on to some man’s lap inside the vehicle. The vehicle gave away at the top of the hill. The engine collapsed because there were too many people. We started walking again towards Hamidia hospital. We reached Hamidia hospital at about 2 – 2:30 a.m.

— An account of the night of Dec. 3, 1984, by Bhopal disaster survivor Aziza Sultan, a community health worker at the Sambhavna Clinic in Bhopal. (Courtesy: www.bhopal.net)

“More than 100,000 people are suffering from chronic or debilitating illnesses,” the report said. “Despite the determined efforts of survivors to secure justice, the large numbers affected have received inadequate compensation and medical assistance,” Amnesty’s 82-page report said.

Amnesty said overall, efforts by survivors to get proper justice through both U.S. and Indian courts had so far been unsuccessful. “The transnational corporations involved... have publicly stated that they have no responsibility for the leak and its consequences or for the pollution from the plant,” the report notes.

Dow Chemical, the current owner of Union Carbide, denies any continuing liability either for the state of the Bhopal site or for the victims’ health. An eight-word statement on its Web site reads: “Dow never owned or operated the Bhopal plant.”

Meanwhile, thousands of Indians around Bhopal remain at risk of poisoning 20 years after the disaster in the city, a BBC investigation has revealed.

Although Union Carbide India Limited was responsible for cleaning up the site after the disaster, thousands of metric tons of toxic waste are still stored inadequately nearby, poisoning the town’s water supply.

“We took a sample of drinking water from a well near the site,” a BBC report says. “It had levels of contamination 500 times higher than the maximum limits recommended by the World Health Organization.

“The local people who drink this water every day are exposing themselves to a substantial chemical hazard associated, over time, with liver and kidney damage.”

Union Carbide disputes the test results. The company says when it handed the site back in 1998 it “found no evidence of groundwater contamination.”

When we presented details of the chemicals we found, it said it was “not aware of any evidence to support such claims.”

But there are still thousands of tons of toxic waste on the abandoned and dilapidated site, lying in piles exposed to the weather, the BBC report said. “We found pools of mercury lying on the ground, skips full of poisonous material and in some sheds, chemical waste in bags that was still highly dangerous.”

It’s not all bad news, though. Activists and protesters around the world are ready to take up the battle for the rights of Bhopal survivors. Students for Bhopal and its allies are coordinating a worldwide protest with students from more than 60 colleges, universities, and high schools worldwide organizing events to mark the 20th anniversary of the Bhopal disaster, and to demand that Dow Chemical resolve its legal and moral responsibilities for the “Hiroshima of the chemical industry.” The events, organized by Students for Bhopal, Association for India’s Development chapters, the Campus Greens and the Environmental Justice Program of the Sierra Student Coalition, represent the first mass student movement Dow has faced since its production of Agent Orange and Napalm during the Vietnam War.

The events, which include several protests at Dow facilities, demonstrations, and educational events, stretch across five continents and on campuses throughout the United States.

In University of Texas, Austin, members of AID-Austin have organized a three-day-long series of events. These include a day-long protest against university involvement with Dow, a hunger strike and candlelight vigil, and a film screening and open discussion about the disaster.

In St. Benedict’s Preparatory High School in Newark, N.J., members of the SBP Environmental Club are planning to reenact the Bhopal tragedy, complete with the Grim Reaper and foaming dry ice.

In Delhi University in India, members of the student group “We for Bhopal,” will release the report of its October 2004 Fact Finding Mission to Bhopal, for which students met with survivors, toured the factory grounds, and interviewed the chief minister of the state government and other officials. The students intend to deliver the report in person to the President and Prime Minister of India, following up on their meeting with the president in March. In addition, “We for Bhopal” is also organizing a massive candlelight vigil to mark the anniversary, and will be judging the results of its college essay competition. “Students are outraged,” said Ryan Bodanyi, the National Coordinator for Students for Bhopal.

“They don’t want their colleges and universities associated with a corporation that maintains its profit margins by poisoning people and blithely standing aside as they die. Dow-Carbide’s callous disregard for the value of human life hasn’t changed much since the Vietnam War, and students aren’t going to be any more forgiving now than they were then. Dow-Carbide should expect these protests to continue and intensify.”

More information of activists for Bhopal gas disaster survivors is available at the following Web site: www.bhopal.net

- Deepak Goyal is a freelance writer. He is based in Kolkata

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INFOTECH INDIA



Tamil Nadu: Bullish on IT ... Intel May Make Chips ... Samsung, LG Dig Deep ... Sex Lawsuit Settled ... Mobile Horoscope ... BSNL, Reliance in Court ... Ambitious WiFi Plans ... Aim for the Moon: Kalam ... Alumina Project ... Laos-India IT CenterHere is the latest on information technology from India

Tamil Nadu: Bullish on IT

With Tamil Nadu growing 20 percent in the software and hardware sector during 2003-04, the state was poised to become the number one state in software exports within two years, the state IT Minister D. Jayakumar, claimed Nov 25.

“Tamil Nadu has clocked 20 percent growth in software and hardware exports at nearly Rs. 8,000 crore for 2003-04, compared to Rs. 6,316 crore in the previous year,” Jayakumar said, while speaking at a seminar on “The Next IT wave, Opportunities and Challenges,” organized by CII in Coimbatore.

Considering the growth, the software exports were likely to touch Rs. 10,000 crore mark during this fiscal and at this scale, the state will become number one exporter within two years, he claimed.

Stating that Chennai and its suburbs continued to be the major software exporting locations in the state, he said exports from these locations stood at Rs. 7,557.64 crore, followed by Coimbatore region at about Rs. 85 crore.

Four major companies — two each from banking and oil sector from the Middle East, have taken space and soon will shift its operations to Chennai, for their large outsourcing needs, particularly in the oil sector, Jayakumar revealed.

The deal was struck during the visit of a delegation, led by himself, recently to Dubai, he said.

The minister said Rs. 7 crore has been released to acquire land for the much awaited IT park in Coimbatore, where major IT companies, like Wipro and TCS, had already shown keen interest.

As a highly progressive state, Tamil Nadu will now utilize the domain expertise to capture the emerging opportunities in the IT and BPO sectors, he said.
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Intel May Make Chips

Intel Corp., the world’s largest maker of computer microchips, is evaluating India as one of the options for setting up a chip manufacturing unit, its chief executive said Nov. 18.

“India is one of the several countries that we are evaluating for setting up a manufacturing facility,” Craig Barrett told reporters. “India is one of the competitors.”

Santa Clara, California-based Intel has a large development centre in Bangalore. The unit designs and develops software to power chips that drive computers and high-end networks for Internet-based applications.

Intel, and global firms such as Motorola Inc., have heavily outsourced high-end functions like chip design to India to benefit from the country’s highly educated but low-cost software pool.

Intel’s venture capital investment arm also has stakes in several Indian software firms such as Subex Systems Ltd.
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Samsung, LG Dig Deep

South Korea’s Samsung and LG, already challenging top handset maker Nokia in the world’s biggest markets, are taking the fight to the fastest-growing market, offering fancy phones and aggressive marketing in India.

Rock bottom tariffs, a room-to-boom phone ownership rate of just four in 100 people and galloping demand have attracted global players such as Nokia, Motorola, Samsung Electronics and LG Electronics to India’s $2.5 billion market.

“The Indian market is growing rapidly and the mobile penetration rate is still low. It’s got great potential,” Song Sauk-hun, a Gartner analyst based in Seoul, told Reuters.

“India is a market that Samsung and LG really care about because of the sheer volume that’s involved.”

About 1.6 million users sign up each month, and the 45-million subscriber base is forecast to more than double by December 2005, with call rates as low as 2 U.S. cents a minute.

Song estimates more than 37 million mobile phones will be sold in India in 2005, with the annual number likely to rise to 50 million by 2008.

Korean firms entered India late, but Samsung quickly built market share with stylish phones and color screens aimed at the high-margin sector, while LG aimed for the low- to middle range.

Nokia’s offerings cross the spectrum, but it has stuck mainly to low- to medium-priced bar phones.
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Sex Lawsuit Settled

Infosys Technologies Ltd said Nov. 24 its former director Phaneesh Murthy has settled a sexual harassment lawsuit filed against him by a former female employee under which $800,000 have been paid.

“Infosys has learnt that the sexual harassment lawsuit filed by Jennifer Griffith, a former employee, against the company and Phaneesh Murthy has been settled by Phaneesh Murthy and Griffith, shortly before the Oct. 29, 2004 date set for the lawsuit’s trial,” chairman and chief mentor of Infosys N.R. Narayana Murthy said in a communiqué to the Bombay Stock Exchange here.

Infosys did not contribute any money to the settlement and was not a signatory to the settlement agreement, he said, adding that the company has learnt from its insurers’ counsel that the settlement releases Infosys from all claims and liabilities alleged in the lawsuit.

Infosys has learnt from its insurers’ counsel that the insurers contributed 50 percent of the total settlement payments.

Phaneesh Murthy paid the remaining 50 percent, since Infosys refused to make any contributions to the settlement.
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Mobile Horoscope

Cellular major Airtel has launched Astro Live, a 24/7 live astrology and career-related services for its customers in Tamil Nadu.

The service enables a customer to hear live personalized predictions by dialing 696 and speaking to any of the renowned astrologers on the panel, or have access to recent and relevant information on careers, Ramgopal Vallath, COO, Bharti Cellular, said in a release said in Coimbatore Nov. 25.

In career-related services on offer on 696, job vacancies, interview tips and best employers’ list were the options that greet the caller once he or she entered the menu.

Vacancies were further classified as regional, national and international, and thereafter, demarcated by profession as IT, customer care, accounts, sales and marketing, etc., he said.

Apart from predictions based on Vedic astrology and career-related information, customers can also access tarot card reading, he said, adding that the interactive consultation mode adopted by the service enabled a customer to ask questions related to education, health, finance, marriage, property and career.

This service on 696 would be available at airtime charges of Rs. 9 per minute.

Besides this, customers can access predictions according to their zodiac sign by typing the first three letters of their sign and SMS it to 8888 at a charge of Rs. 3, Vallath said.
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BSNL, Reliance in Court

The Supreme Court Nov. 25 fixed Dec. 3 as the next date for hearing a petition filed by the BSNL challenging a Delhi High Court interim order restraining the PSU from disconnecting the points of interconnection with Reliance over the issue of passing international calls as local ones.

When the matter was mentioned, a bench headed by Justice N. Santosh Hegde directed the listing for hearing Dec. 3.

BSNL has said the Delhi High Court does not have the jurisdiction to entertain the petition filed by Reliance as the TRAI Act has categorically ousted the jurisdiction of the court to entertain such matters.

The Delhi High Court had asked the BSNL to maintain status quo on the issue of interconnection agreement with Reliance until the court decided on the issue.

The court had directed Reliance to deposit Rs. 400 million with BSNL. Different field units of BSNL have imposed a total of Rs. 2.55 billion on Reliance for passing international calls as local ones, thereby causing revenue losses to the PSU.
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Ambitious WiFi Plans

Microsense, provider of corporate solutions in the field of Wide Area Network, Nov. 22 announced its multi-pronged growth strategy to build over 1,000 WiFi networks for the hospitality sector, enterprises and service providers.

The company has been focusing on providing wireless connectivity to the hospitality industry, public places and enterprises in the four metros, Bangalore and Hyderabad.

Microsense has over 20 premium hotel chains WiFi networked across the country and is also networking over six new hotel properties, besides having plans to implement the networks in six luxury hotels in Sri Lanka through a wholly owned subsidiary.

Microsense is also currently implementing several hundred public hotspots across the country and expects its network to grow to 1,000 locations in the next six months, officials said here.

“With the business models in place and backed by our technology experience we are a full service provider for WiFi network solutions with custom built Operation Support Services including a suite of services such as authorization, authentication, billing, network management, and technology support through a 24 hour call centre,” N.V. Krishna, director, Microsense, told reporters.

According to IDA, India generates the highest average income from each hot spot among Asia Pacific countries, and it estimates 500,000 hotspots in the country by 2010.
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Aim for the Moon: Kalam

Moon should be used as a research platform and a base site for inter-planetary exploration, President A.P.J. Abdul Kalam said Nov. 23 in Udaipur.

“Moon belongs to the humanity and research on it must be based on international cooperation,” he said while delivering an inaugural speech at the sixth international conference on exploration and utilization of the moon.

In a 35-minute slide presentation at the Darbar Hall of city palace here, Kalam advocated greater exchange program among young scientists and building up of a mechanism for getting support of deep space network. He also advised scientists to develop standards for payloads and “piggyback payloads.”

Talking of various developments in space research, he said there was one million metric tons of helium on the surface of the moon. “Only 25 metric tons of helium could provide electricity to people on earth for one year,” he pointed out.

Among others who addressed the inaugural session of the conference, which began scientific sessions Nov. 22, were the Rajasthan Governor Pratibha Patil and Prof. U.S. Rao, former ISRO chairman.

The conference is being organized by the Physical Research Laboratory and ISRO. About 170 scientists, including 70 from abroad, took in the five-day meet.
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Alumina Project

Chennai-based FFE Minerals, a wholly-owned subsidiary of F.L. Smidth Group of Denmark, has clinched orders worth Rs. 3.58 billion from the Vedanta Group for its alumina project in Orissa, managing director and CEO of FFE Minerals, Rudy M. Edge said Nov. 23.

FFE Minerals India has secured five orders, making the company the primary technology supplier for feed preparation, calcinations and product handling at the Lanjigarh site in Kalahandi district of Orissa, he told a news conference here.

The alumina project of Vedanta Group, promoted by Anil Aggarwal, is scheduled to be operational during the first quarter of 2006 and will have a capacity of 5,000 metric tons per day, Edge said.

“The project is unique in that FFE Minerals will provide equipment and systems using all the technologies of group brought in from all over the globe,” he said.

The Vedanta project is an integrated 1.4 million metric tons per annum alumina plant and part of the product is meant for Vedanta Group’s own new aluminum smelter coming up at BALCO, Korba, while the balance alumina quantity will be exported.
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Laos-India IT Center

Indian External Affairs Minister K. Natwar Singh, inaugurating the Laos-India Information Technology Centre in Vientiane Nov. 28, said it symbolized “our commitment to sharing our developmental experience with the friendly people of Laos.”

Recounting that an MoU for the establishment of the centre was signed only two months ago, he said: “The speed with which it was set up would, I hope, provide the benchmark for all collaborative projects between our two countries.”

Natwar Singh expressed the hope that the centre, with emphasis on capacity building and e-governance, will have a “multiplier” effect on development processes in Laos.

The external affairs minister also inaugurated the Laos-India Entrepreneurship Development Centre here this evening. “This centre is part of our commitment to the initiative for ASEAN integration,” he said, adding three more such centers would also be set up in the capital of Cambodia, Myanmar and Vietnam by early next year.

During his visit, Natwar Singh would hold bilateral consultations with his counterparts from various countries currently here for the India-ASEAN summit.
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GLOBALIZATION



Eastern Sunrise: China and Outsourcing - By Siddharth Srivastava

The West may be outsourcing to Indiam but Indians are now eyeing China, writes Siddharth Srivastava.

The outsourcing saga so far has proceeded along the following lines: Jobs in the U.S., mostly related to information technology, software and English-speaking customer support are being performed at lower cost and similar quality in India, which has garnered the bulk of the business. China is considered to be a potential threat with its big pool of cheaper engineers, but the main disadvantage has been the lack of an English speaking population, unlike India, which has a 300-year history of being a British colony, with English the first language of millions after the country’s independence in 1947. With the first mover advantage, Indian IT firms have established themselves in the global arena and are sought to deliver on crucial projects.

However, the dynamics of the way the outsourcing business is being conducted is changing. Faced with rising business from the West, spiraling salaries of high cost employees who constantly hop jobs as well as a predicted shortage of skilled workers, Indian IT firms are doing the next best thing — outsourcing outsourced work from the U.S. to China, with the added advantage to leverage more intra-Asian business from Korea, Japan, Hong Kong and Taiwan.

All the top Indian IT companies that vie for the outsourcing pool, such as Infosys, Tata Consultancy Services, Satyam Computer Services and Wipro have now established bases in China to meet the growing business demands from the West. TCS set up shop in China in 2002 with plans to employ more than 180 people; a year after making a foray into the country, Infosys (Shanghai) has a-staff strength of 200 to cater to clients in Europe, U.S. and Japan; Wipro set up its unit in August this year. Other multinational services firms such as Accenture, BearingPoint, IBM, and Hewlett-Packard have already running units in China. Intel employs some 3,000 people (majority of them engineers) at its R&D and assembly/test facilities in Shanghai while another assembly/test facility is under construction in Chengdu. In India, Intel has less than half the number compared to Shanghai at its R&D facility in Bangalore.

It may be recalled that India has the lion’s share of the outsourcing market. According to research firm Gartner Group, the global IT services market is worth $580 billion, of which only $19 billion is outsourced, but India has 80 percent of this offshore market. The figure for outsourced IT services is expected to grow at a very rapid pace. The IT services market is broadly divided into two sections — the IT/Tech services which requires skilled manpower that China possesses and the business and process outsourcing segment which requires a knowledge of English and thus cannot be further outsourced to China. India garners the bulk of the outsourced BPO business as well.

The one most important reason for IT business being driven to China is the cost advantage — China at the moment has an excess supply of well-trained engineers willing to work at wages lower than in India. Revenue from India’s IT exports was $12.5 billion in the year 2003-4 (March ended), up 30 percent from the previous year, which in turn has resulted in a 10-15 percent annual rise in wages in India’s software and back-office services industry. In turn, software export revenue for China in the year 2003 was just $700 million which leaves an over-eager and hungry-for-work, skilled workforce willing to work at a lower cost than India. This means that on an average an engineer with some experience in Shanghai can to be paid a monthly salary of less than $500 compared to over $700 in India and upwards of $5,000 in the Silicon Valley.

According to estimates, China has 200,000 IT workers — compared with India’s 850,000 — with over 50,000 Chinese software programmers added to this pool annually. Evidence suggests China’s universities churn out upward of 250,000 engineering graduates each year, compared to 150,000 or so in India. There is an Indian connection here, too, with NIIT, India’s top technology training company, set up by the founder of the software exporter HCL Technologies, that opened its first training center in Shanghai in 1998, now having 121 centers in 25 provinces and training 25,000 Chinese annually. A recent study by KPMG study has predicted an acute shortage of IT personnel to the tune of 250,000 by the year 2009 in India. Thus, the numbers and economics works very well for increased forays into China by Indian IT firms.

The impact of Indian IT firms moving to China is that it will still be a while before indigenous Chinese IT firms can really hope to compete with India on the global scale. With a head start of over 10 years Indian IT firms have reached scalability levels that will take a while for the Chinese firms to match. A second-rung Indian software firm employs over 15,000 employees compared to 3,000 employed by just a handful of IT firms in China.

Experts estimate a minimum 3-5 year lag period before China can hope to even provide any competition to India. With Indian IT firms, with deep pockets, setting up shop in China, it will be even more difficult for resident Chinese firms to compete. The main problem remains the lack of knowledge of English and managerial capabilities, which makes it difficult for the Chinese firms to communicate and relate to international clients and push for more business even as competition stiffens. Indeed, with business expanding, the impending shortage of skilled IT workers, spiraling salaries, Indian software companies need an alternative low-cost center with ample supply of engineers to grow further. China is an excellent back-end for India’s IT industry.

But the advantage may not last forever. As South Korea has shown to Japan in the automobile and consumer electronics industry, a nation can come from behind and overtake an advanced nation. With China aggressively promoting massive English literacy, the Indian outsourcing industry would do well to keep its eye on the ball.

- Siddharth Srivastava is the India correspondent for Siliconeer. He is based in New Delhi.

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OUTSOURCING:



Outsourcing Digest:
Siliconeer presents of the latest news from the world of outsourcing.

Carlyle Invests $10 Million... BPO Giant buys UK Firm... ICICI OneSource Buys U.S. Firm...
Wipro, TCS: Move Over, IBM... Firm Gets $15m GM Order... Telstra Ships Jobs Amid Criticism... GM India Call Center... Teleopti Opens Office... Malaysian BPO

Carlyle Invests $10 Million

In what is billed as one of the first venture capital investments in the ePublishing services sector in India, Carlyle Group has invested $10 million in the Chennai-based Newgen Imaging Systems in the first round outside funding for the company. The nine-year-old Newgen Imaging is an integrated services provider addressing end-to-end needs of the ePublishing industry, handling the projects in books, journals, and reference works. Carlyle Group is understood to have picked up a substantial equity stake in the firm, which is estimated to have a top line of $5-6 million with a very high profitability. V. Prabhakar Ram, the core promoter of Newgen Imaging said, “We have not yet officially announced it. The deal is also not fully completed.” However, market sources confirmed the deal was inked a couple of weeks ago.

Carlyle Group is one of the active investors in the IT sector and it earlier invested in companies like Financial Software Solutions, Quest and Usha Telecom. Newgen’s clientele include 12 of the world’s leading publishers across Europe and the U.S. With a combination of traditional typesetting skills and high-end ePublishing technologies, the company offers an attractive outsourcing proposition for the western world from India. It has close to 600 trained publishing professionals. Using fresh funds raised from VC investment, the company’s plan is to expand its operations by doubling its workforce over the next year.
|Back to Outsourcing Digest|
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BPO Giant buys UK Firm

Global business process outsourcing major OfficeTiger, which has operations in Chennai, has acquired U.K.-based Devonshire Group for an undisclosed sum. Devonshire Group is a provider and consultant of outsourced creative, document and staffing solutions to professional service firms in the U.K. and Europe.

Established in London in 1992, Devonshire Group has $20 million in annual revenues and over 200 clients in the financial, legal, consulting, design and pharmaceutical verticals, apart from top 500 corporates.

Devonshire has a team of 250 personnel in London and 40 in its Frankfurt operation, and with the acquisition, OfficeTiger’s total headcount rises to about 2,500 across the world. OfficeTiger has appointed Amanda White, former chief executive officer of Devonshire Group, as its managing director for European operations.

Headquartered in New York City, OfficeTiger has operations in U.K., Germany, India and Sri Lanka.
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ICICI OneSource Buys U.S. Firm

Barely a month after ICICI OneSource acquired Chicago-based research and consulting firm Pipal Research Corporation, it has completed the acquisition of New York based consumer collections agency, Account Solutions Group.

ASG specializes in third party debt collections and its clients include three of the top 10 credit card issuers in the United States. ASG currently operates two centers in Buffalo, New York and has over 500 employees. Its revenues for the year ended Dec. 31, 2003 stood at $25.14 million.

Its proven expertise is backed by a strong management team with more than 50 years of collective experience in the financial/banking industries. The acquisition will add late stage collections capability to ICICI OneSource’s service offering. Collections represent a $16 billion opportunity in the United States alone.

Ananda Mukerji, managing director and CEO, ICICI OneSource, said, “The acquisition is in line with our strategy to aggressively expand our service offering and continuously deliver value to our clients. We have identified collections as a high growth area and this acquisition gives us a platform from which to offer the most complete collections solution to our clients. We can now offer a full suite of collections capabilities: customer acquisition, billing, customer service and collections.”

ASG president and CEO Tony Frisicaro said, “We set up ASG nine years ago and since then our actions have always been dictated by the best interests of our employees, our clients and the long-term interests of our business. Today, we are delighted to become part of the ICICI OneSource family. We have taken ASG to a juncture where it will benefit greatly from ICICI OneSource’s financial strength and expertise. ICICI OneSource’s client relationships with FTSE 100 and Fortune 500 companies will help us grow aggressively from this point on.”

ICICI OneSource announced that Tony Frisicaro will head the collections business for the company globally. There will be no change in the management structure of ASG and all 500 employees will continue with their current jobs. This acquisition is expected to create additional employment opportunities in the U.S., especially in Western New York.
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Wipro, TCS: Move Over, IBM

Even as the cancellation of two major outsourcing deals in the U.S. recently have left the industry worried, new research says traditional players like IBM and EDS will have to make room for new vendors like Infosys, Wipro and Tata Consultancy Services. JP Morgan Chase recently announced it was terminating its seven-year, $5 billion outsourcing contract with IBM, which was followed by the news that UBS Warburg will not to renew its IT infrastructure management deal with Perot Systems.

While the outsourcing industry debates whether these announcements could trigger a trend or amount to just a blip on the radar, research by financial services consulting firm TowerGroup says the answer lies somewhere in the middle.

“Two scrapped deals alone are not proof of a broader anti-outsourcing trend in the financial services industry,” said Virginia Garcia, senior analyst at TowerGroup and author of the research. “But they undoubtedly flash a signal of underlying market dynamics that may shift the balance of some current contracts, rendering them less attractive to the institution than originally envisaged,” she said. “This will help bring positive change, increase competition in the supplier market and yield more efficient sourcing strategies for financial services institutions.”

Traditional outsourcers such as IBM, CSC, and EDS will have to make increasing room for non-traditional offshore vendors such as Infosys, Wipro and Tata Consultancy Services, her study adds. The Boston, Massachusetts-based consultancy says the global financial services industry terminates only four percent of outsourcing contracts above $250 million and mergers are often the culprits. The broader outsourcing market, the study notes, will continue to grow at a healthy clip of 12 percent annually.
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Firm Gets $15m GM Order

General Motors, which is seeking bidders to provide $3 billion a year of IT services this year, is believed to be bullish on India. Even as the bidding process will start later this year, an IT order has already flown to India. Though company officials are tightlipped about the deal, sources say the order from the world’s largest automaker has been bagged by the Noida-based Nucleus Software.

The GM order is to the tune of $15 million (about Rs. 70 crore). It is, however, not yet clear whether Nucleus Software will implement the order on its own or will work jointly with other Indian software companies. The technological details about the order were not immediately available. When contacted, senior executives of Nucleus Software refused to comment on the issue. GM, which is estimated to have an annual IT budget of $3 billion, has been relying on software bigwig EDS for close to two-thirds of its IT requirements. EDS, which was a unit of GM for over a decade till 1996, had a long-term contract which is set to expire in the middle of next year. And GM is believed to open up a bidding process for a 10-year IT contract by the end of this year. Almost all tech bigwigs are vying to get a share of the mega-contract. EDS, which gets about 10 percent of its revenues from GM, is quite confident of keeping a significant portion of the business from its largest customer when that contract is up for rebid in 2006.
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Telstra Ships Jobs Amid Criticism

Australia’s IT and telecom major Telstra has decided to shift about 400 landline billing jobs to India, a move criticized by the trade unions in the island. Defending the move, Telstra chief executive Ziggy Switkowski said: “We have to make decision with our suppliers that leave Telstra cost competitive at the highest possible standards of quality.”

Moreover, there is a worldwide trend towards shifting IT jobs to India, he said, adding, “I am not at all surprised that providers to Telstra are on that path.”

Telstra had announced it had renewed a “global delivery” contract worth up to $100 million with EDS Australia to manage its landline billing systems with the proviso that it transferred 400 jobs to India over the next 15 months. The move is a part of the company’s plans to save $700 million in technology costs. In January, Telstra had come under fire over its plans to move 450 jobs to India.

Lashing out at Telstra for shipping local jobs to India, Community and Public Sector Union assistant national secretary Paul Ingwersen said, “These jobs are in addition to those that went offshore earlier this year.”

“There is no honesty here from Telstra or the federal government, who are a major shareholder. It should have been out in the open that the government supported Telstra shipping jobs offshore. Federal treasurer Peter Costello should have brought Telstra into line on this because it undermines our IT industry,” Ingwersen told daily The Age.

A spokeswoman for Information Technology Minister Helen Coonan said outsourcing was “an operational issue for Telstra based on commercial considerations.” “It is disappointing, and the government does not like to see jobs go offshore, it’s a two-way street,” Coonan said. EDS spokeswoman said Telstra’s wish to streamline services would mean billing services will be provided at EDS offshore in India. She told national daily The Australian that employees had known this has been on the cards for a while and the company would provide them with options of redeployment and training opportunities.
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GM India Call Center

Riding high on record sales of 3,207 cars in September 2004, General Motors India is setting up a call centre to provide hassle-free services. First of its kind by any automaker in the country, the GMI call centre will be integrated with the company’s after sales facility and be available on a unique single number across India from Dec. 1, GMI chief operating officer Rajeev Chaba said in a statement recently.

Starting with the National Capital Region in Oct. 20, the centre will be run by GMI and would not be a select dealer-driven activity. The customer care centre would be the face of GMI, eventually encompassing all facets of in-bound and out-bound relationship servicing and marketing, he said.

Anyone calling 3030-8080 from anywhere in the country would be charged only for a local call with all distance charges being borne by the company. The Indian arm of the world’s biggest carmaker sold 3,207 cars in September, the highest in a month since its inception. It also sold 1,062 units of Chevrolet Optra.
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Teleopti Opens Office

Teleopti announced recently the expansion of its international operations with direct presence in India by opening a new office in New Delhi. Teleopti recently reported the company’s 12th consecutive year of organic growth while maintaining profitability. According to a company release, the official opening was in the presence of Carl Bildt, former prime minister of Sweden. He talked about the development of IT-related business in developed and developing countries and the challenges and opportunities for all in an integrated world.

Sandeep Sudhir, head of the office, is working closely with 3D Networks, a leading solutions integrator and a part of Planet One Ltd. 3D Networks and Teleopti have signed an agreement where 3D Networks will distribute and implement the workforce management solution Teleopti CCC in India.

3D Networks as well as Teleopti have a close relationship with Nortel Networks, company sources added. Teleopti Contact Center Coach is a complete solution for workforce management, including revolutionary tools for a step-by-step approach to customer service driven schedules. The solution includes multi-skill, multi-channel and outbound contacts.
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Malaysian BPO

Malaysian business process outsourcing company Scicom Bhd has launched operations in India with a 120-seater call centre. Its Indian subsidiary, Scicom Contact Centre Services India Ltd, will manage Nokia India Careline, the centre that provides technical support for Nokia’s customers in the country.

Apart from India, Scicom manages customer support for Nokia in the Asia Pacific region. The Indian subsidiary would focus on Nokia’s Indian clients only, said Scicom group executive director and CEO Leo Ariyanayakam. He, however, declined to divulge investment details and specifics on call handling capacity of the Indian centre.

Scicom’s entry into India is in accordance with the framework of Malaysia’s Multimedia Super Corridor.
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APPROPRIATE TECHNOLOGY:
Technology for People: Tech Awards 2004 - A Siliconeer report

Dr. Ashok Gadgil (inset) of the Lawrence Berkeley National Laboratory won a $50,000 Tech Award developing UV Waterworks, a quick, low-cost system to disinfect drinking water in poor regions around the world. A