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|INFOTECH INDIA | Tech Briefs:
IBM Says Sales Growth in India to Stay | India Still Prime Destination for Outsourcing: D&B | India Adds 10 Million Mobile Users in October | SONY ERICSSON: Wooing Developers | NORTEL: Better Telecom | INFOSYS: Bullish on India | WIPRO: Mulling Acquisitions | AMD: Unfair Clauses | SATYAM: IIIT Tie-up | Chipmakers Hurt | E-Government
IBM Says Sales Growth in India to Stay
Computer services provider IBM Corp said India remains one of its fastest growing markets and it expects to maintain double-digit revenue growth in the region despite growing domestic competition, a company official said.
“We are looking at maintaining the double-digit (revenue) growth we are continuing to see on an average basis,” Sandip Patel, managing partner of IBM’s global business services in India and South Asia, said at the Reuters India Investment Summit.
IBM’s revenue from India, where it has been present since 1992, grew 43 percent to about $1 billion in 2007. But growth has been slowing in the past few quarters.
Revenue grew 43 percent in the first quarter of the 2008 financial year, then slowed to 36 percent in the second quarter and about 24 percent in the third quarter ended September 30.
The growth potential offered by India, Asia’s third-largest economy, has led to increased competition from Indian IT companies, Patel said at the summit, held at the Reuters office in Bangalore.
India’s export-driven software services firms like Infosys Technologies and Satyam Computer Services are also vying for a bigger piece of the domestic market, as demand from their key U.S. and European markets slows.
“The pure play firms are starting to selectively look at clients in India and grow in the domestic business,” said Patel, who has been working with IBM for the past 18 years.
But pricing pressure is no worse than what it has always been, he said.
India Still Prime Destination for Outsourcing: D&B
India is expected to remain the prime destination for outsourcing/offshoring, according to a new Dun & Bradstreet study. This is not just because it is extremely competitive when it comes to salary costs, but mostly because Indian outsourcing firms have now matured into truly global companies that can offer the best in service at very competitive prices, notes the study.
The fourth edition of D&B’s India’s Top ITeS and BPO Companies 2008, compares India with leading outsourcing destinations like China, the Philippines, Mexico, Malaysia, Brazil, the Czech Republic and Chile. It indicates that India’s ITes industry still holds a cost advantage, banking on low wage and salary cost, states the report. India has the second lowest ITes/BPO salary base of about $7,500-8,500, just a little above China’s base of $7,000-8,000.
The Philippines, on the other hand, has an average salary of $9,000-10,000. Besides, it has the added advantage of a large pool of ever-increasing technical graduates.
The other positive for India is that it is one of the largest producers of English-speaking graduates, including engineers and management graduates.
A high number of such graduates mean that companies can offer higher value-added services to clients.
Manoj Vaish, president & CEO — India, Dun & Bradstreet said: “While the ITeS-BPO industry is bound to be impacted by the financial crisis, firms have taken measures to mitigate some of that risk. The industry has started providing services to a wider set of verticals, thus reducing their exposure to any one vertical.”
India Adds 10 Million Mobile Users in October
Indian mobile telephone operators signed up a record 10.42 million users in October, the sector regulator said, countering a slowdown in many other sectors of the economy.
Demand has been driven by the availability of cheap handsets for as low as $15 and call rates that start at 1 cent, making India the world’s fastest-growing market for wireless services and the second-largest after China.
The new additions topped the previous record of 10.16 million in March, and compared with 10.07 million signings in September. India had 325.73 million users at the end of October, data from the Telecom Regulatory Authority of India showed.
China has more than 600 million mobile users.
Leading operator Bharti Airtel added 2.72 million users in October, taking its total subscribers to 80.2 million, data showed.
Reliance Communications, the No. 2 operator, signed 1.76 million users, swelling its tally to 57.8 million.
Unlisted Vodafone Essar, controlled by Britain’s Vodafone Plc, had 56.7 million users at the end of October, 2.1 million more than a month earlier.
Other operators include state-run Bharat Sanchar Nigam Ltd, Idea Cellular Ltd and Tata Teleservices.
SONY ERICSSON: Wooing Developers
Sony Ericsson Mobile Communications has launched its Developer World program in India with a contest aimed at attracting Indian developers to create applications and games for its mobile phones.
The launch of the Developer World program in India follows the launch last year of a similar program in China.
Sony Ericsson already has a developer program running in more than 200 countries, but it is focusing on India and China, because these countries are key markets for the company, said Jens Greve, head of Sony Ericsson Developer World.
As Sony Ericsson expands into markets like China and India, accommodating cultural differences and preferences becomes a key concern, and this can be done by partnerships with local content, applications, gaming, and entertainment developers, Greve said. In China, for example, the focus of the developer program has been on generating local content, entertainment and applications, he added.
The Sony Ericsson Developer World site already has about 70,000 visitors from India, consisting both of developers and content providers working in companies, as well as hobbyists, Greve said. India has the second largest number of developers working on software and content for Sony Ericsson phones, but will soon overtake the U.S., which currently has the largest number of developers working on the phones, he added.
The Sony Ericsson Developer World Awards contest, exclusively for developers in India, was launched by the company through a new Web site. A total of six awards will be given in two awards categories, for best application, and best application idea, Greve said. The six winning Indian developers will be part of a 100-day program during which Sony Ericsson and four industry experts will mentor the winners.
NORTEL: Better Telecom
Nortel is teaming with India’s Chhattisgarh state government to modernize its communications infrastructure through a new, high-bandwidth State Wide Area Network — SWAN — which will for the first time connect all the departments of the state.
The Chhattisgarh SWAN — CG SWAN — is a hybrid network with a mix of wireless and wireline access supporting voice, data and video traffic. It will be one of the largest fixed WiMAX deployments in the country for e-government, providing access to 3,000 locations in the state.
The CGSWAN will also serve as the backbone for various state departments to deploy IT-related applications for the general public. Central to the Government of India’s National e-Governance Plan are Common Services Centers set up in easily accessible areas to enable people to conduct all their government-related work.
“With SWAN, we will be able to connect our offices not just at the headquarters level, but right down to the local administration levels even in remote, inaccessible areas,” says Aman Singh, chief executive officer, Chhattisgarh Infotech and Biotech Promotion Society (CHiPS). CHiPS is a division of the Department of Information Technology and Biotechnology, Government of Chhattisgarh.
Nortel’s wireless network ensures faster roll out in the state which has thick forest cover and other inaccessible locations. The network will cover all the locations in the state for the last mile through fewer cell sites which means the rollout will be faster with WiMAX while ensuring lower total cost of ownership.
INFOSYS: Bullish on India
Infosys co-chairman Nandan Nilekani feels India can do a lot better with the use of information technology as it has a vibrant and growing democracy than its most talked about rival China.
“Technology is extremely powerful as a liberal force in its ability to empower citizens and minimize sway of the state. It would strengthen India’s advantage as an open, democratic society and would ensure that information knowledge and services flow unimpeded,” says Nilekani in his book “Imagining India, Ideas for the New Century,” which was released Nov. 24.
Nilekani’s China reference, though not direct, is evident from his frequent use of the world “open society.” He has quoted Thomas Friedman, The New York Times columnist and Pulitzer Prize-winning author, who says, “I don’t think that this century can belong to a country that censors Google.” Friedman was replying to a question if he saw China as the emerging superpower of the century.
Nilekani says this speaks “multitudes of how critical information technologies have become to a country’s economic strength and how India’s particular advantage — its combination of open society and its positive attitudes to IT — can transform our country in the coming years.”
WIPRO: Mulling Acquisitions
Wipro is looking to acquire information technology companies catering to airline and pharmaceutical sectors globally as falling valuations make them attractive targets, a company executive said Nov. 25.
“We have identified some (potential targets) and continue to work on them,” Wipro chief financial officer Suresh Senapaty told the Reuters India Investment Summit.
Wipro, India’s third-biggest software services exporter, held back its interim dividend this year, a move that analysts say could be an indication that the company may make a big acquisition.
Senapaty did not refute the possibility.
“I can’t say I am not looking at it,” he said, when asked if any potential deal could be bigger than its $600 million acquisition of Infocrossing last year.
In August, Wipro co-chief executive Suresh Vaswani told Reuters that the mood at the company was to do something substantial enough to create an impact.
Senapaty cited India and the Middle East as the company’s two growth markets. The company earned 20 percent of its more than $4 billion of IT business revenue from India and the Middle East in the year to March 2008.
But while trends in the Middle East have been good so far, Senapaty said lower oil prices may have some impact on spending, leading to slower growth.
“Expecting double-digit growth (there) will be a stretch,” he said.
AMD: Unfair Clauses
The $6-billion U.S.-based chip maker Advanced Micro Devices has raised concerns over its technical exclusion from one of India’s largest e-governance projects for IT implementation at the Employee State Insurance Corporation.
The estimated Rs 1,600-crore project has attracted interest from global companies like Microsoft, HP, Intel, Juniper, Symantec, EMC and Emerson, besides Indian giants TCS, Wipro, Infosys, HCL and Mastek.
The clauses which peeved AMD the most are related to the desktop processor and chipsets. The processor and chipset specifications mentioned in the tender specified only Intel chipsets and processors, thus excluding AMD completely.
“It is a large tender and we have pointed out the unfair clauses, which were hurting our business interest and creating monopoly. ESIC has taken it into consideration favorably,” says general manager business development at AMD Arvind Chandrasekar.
The five levels of the IT project have been named as Pehchan, Milap, Pashan, Dhanvantri and Pragati. Under Pashan level, in the tender, the desktop processor specifications are mentioned as Core 2 Quad processor or equivalent.
Under the chipset clause, the tender specified support for Intel Q35 Express Chipset on Intel Core 2 Quad Processor or equivalent.
In a response to AMD, ESIC replied that the technical specifications in this request for proposal were indicative as responsibility of integrating the technology lies with the system integrator (SI).
“The SI is free to choose any proven technology / platform/ architecture to meet the ESIC’s business function requirement and SLA’s as required by ESIC,” the corporation replied to AMD.
SATYAM: IIIT Tie-up
IT service provider Satyam Computer Services is planning to partner with the International Institute of Information Technology in Hyderabad for joint research.
The company will collaborate with IIIT’s Centre for Data Engineering to conduct research in data engineering to develop innovative solutions that can address current market needs including understanding buying behavior of customers.
This would be the third tie-up the company is forging with the institute. Satyam and CDE have also been working on service-oriented architecture and testing under the terms of a separate agreement between Satyam QEdge team and IIIT-Hyderabad since May 2008.
Satyam had also set up an applied information systems school on the campus to build a learning environment to enhance the understanding of not only the technology in a networked era, but also its relation and impact on organizations, society and the world.
“Satyam and the CDE are focusing on data mining, especially where it concerns behavioral and psychographic analysis that will give companies insights into the buying behaviors of their customers,” said Swaminathan Srinivasan, an executive with Satyam Computer Services.
According to him, there is a real need for such solutions today, since most companies are sitting on huge volumes of data but cannot utilize it to make meaningful decisions.
As part of the tie-up, Satyam and the CDE will work on the Nurture a Research Area program, which was established to foster collaboration between industry bodies and IIIT to create solutions to problems in areas of mutual interest. The focus will be on open source technologies.
The global economic meltdown is taking its toll on chip-making. Due to slackening global demand from electronics and other chip consumers, semiconductor fab (or chipmaking units’) spending is down by almost 30 percent.
In India, proposed investments to the tune of Rs 90,000 crore in semiconductor-making might get delayed due to slowdown in chip demand.
“The semiconductor industry is increasingly dictated by consumer electronics, which has been impacted by the financial crisis. Globally, there have been layoffs in chip making and designing units. It could affect cash strapped start-ups as they find it difficult to get funding. If the parent company decides to close down a particular product line/business unit globally, then to that extent the captive in India will also be affected,” said Poornima Shenoy, director, India Semiconductor Association.
With most companies in the segment recording losses in the last quarter, fresh investments will get affected. The economic slowdown in developed markets has caused customers to defer or cancel purchases of electronic equipment forcing multinational chip companies to issue profit warnings.
“Even after the semiconductor policy of 2007, nothing much has happened in the manufacturing space. Investments haven’t materialized. Considering the global economic crisis taking its toll on every sector, investments in the semiconductor space will be affected further,” said Ganesh Ramamoorthy, principal research analyst, Gartner India.
India has over 100 semiconductor design companies and these will be impacted by declining demand for chips.
India’s largest software company TCS is ramping its e-governance business nationally. For starters, the company is going for a near 70 percent headcount expansion of its e-governance team from the present 1,800 to 3,000 by December 2009. The e-governance business is projected to generate double-digit revenues for the software giant.
TCS vice president Tanmoy Chakrabarty said: “At present, the e-governance business contributes single-digit revenues to the company’s turnover. But we are stepping up this business significantly so that it can generate double-digit revenues for TCS by 2010-11.”
The company had $5.97 billion turnover in 2007-08. A double-digit contribution of 10 percent from e-governance business would translate in a whopping Rs 3,000 crore of revenue.
TCS has just bagged the Rs 1,000 crore Passport Seva Project contract, entailing digitization of the entire passport services from the government. “This is a huge project for TCS and we require significant manpower for this project alone. This project is expected to hasten the process of issue of new passports to three working days, subject to police verification ,” Chakrabarty explained.
The company is also bidding for a number of government projects across the country. “We have submitted bids for the E-Biz project for which the department of industrial policy & promotion under the Commerce Ministry has floated tenders. All leading IT companies have submitted bids. It is a project aimed at facilitating interaction between the government and corporates through a single portal. We are expecting that the government will announce the name of the final bidder within next the next four to six weeks,” he added..