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INFOTECH INDIA | Round-up:

One in Five IBM Employees is Indian | BPOs Face Growing Health Problems | IT Outsourcers Face Increasing Costs | Gaming, Music | Aussie Deal | High Ranking | For Kids | Eye on Capgemini | Mobile TV | Gemini, Midas | Wizard PCs

One in Five IBM Employees is Indian

Global computer giant IBM Corp has revealed that it now has 73,000 employees in India, almost a 40 percent leap from last year.

IBM did not provide updated figures for its work force in the U.S., which has held steady around 125,000 people in recent years.

Nor did IBM project its total head count. It had 355,766 employees worldwide at the end of 2006.

If the total has risen by the same rate as in 2006, almost one in five IBM workers now is in India, its second-largest center.

Like many other technology providers, IBM has rushed to take advantage of the lower labor costs India offers even for highly skilled workers. IBM’s base in India numbered only 9,000 people in 2003, but it was about 53,000 last year.

IBM has been stressing not only the lower expense of working in India but the potential of the Indian market. IBM executives said that the company expected to see revenue from the Indian market jump to nearly $1 billion this year, from $700 million in 2006.

Armonk, N.Y.-based IBM is also ramping up in other key developing markets. Its chairman and chief executive, Sam Palmisano, recently formed a new organization that will spur IBM’s investment in emerging economies.

The plan is meant to capitalize on the higher growth rates in the so-called “BRIC” countries of Brazil, Russia, India and China. IBM’s revenue from these countries rose 18 percent in the first three quarters of this year, even after discounting the benefit of currency fluctuations.

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BPOs Face Growing Health Problems

Call centers and other outsourced businesses such as software writing, medical transcription and back-office work employ more than 1.6 million young men and women in India, mostly in their 20s and 30s who make much more than their contemporaries in most other professions.

They are, however, facing sleep disorders, heart disease, depression and family discord, according to doctors and several industry surveys. Experts warn the brewing crisis could undermine the success of India’s hugely profitable outsourcing industry that earns billions in dollars annually and has shaped much of the country’s transformation into an emerging economic power, according to a report from the Associated Press.

Heart diseases, strokes and diabetes cost India an estimated $9 billion in lost productivity in 2005. But the losses could grow to a staggering $200 billion over the next 10 years if corrective action is not taken quickly, said a study by New Delhi-based Indian Council for Research on International Economic Relations.

The outsourcing industry would be the hardest hit, it warned.

Reliable estimates on the number of people affected are hard to come by, but government officials and experts agree that it is a growing problem. Health Minister Anbumani Ramadoss wants to enforce a special health policy for employees in the information technology industry.

“After working, they party for the rest of the time... (They) have bad diet, excessive smoking and drinking,” he said at a public meeting last month. “We don’t want these young people to burn out.”

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IT Outsourcers Face Increasing Costs

India’s information technology outsourcing sector is heading for crunch time next year, as a rising currency and increasing wage and real estate costs force the industry to rethink how it does business.

Multinationals continue to view the country as one of the most viable outsourcing destinations, but competitive pressures are making other countries look attractive.

Vineet Nayyar, chief executive of Tech Mahindra, described as “horrible” the impact on IT margins of a 12 percent appreciation of the rupee against the dollar this year

“All your emerging sectors are going to have major problems because of the currency adjustment,” Nayyar said.

India’s IT outsourcing companies have been among the worst performing on the stock market this year. The sector has underperformed the MSCI India index by 47 percent.

Much of the negative sentiment concerns the stronger rupee, which hit Rs. 39.16 against the dollar last month, its strongest level since March 1998.

Indian IT outsourcing companies earn most of their revenue in foreign currencies, particularly dollars, but they incur most of their costs in rupees.

The leading companies, such as Infosys Technologies and Tata Consultancy Services, have so far largely maintained their margins. Measures they have used to keep margins up include moving more work onshore and hiring cheaper graduates from disciplines other than engineering. They have also employed hedging.

Analysts believe, however, that a longer-term shift in strategy is necessary if India’s IT companies are to prevent more work going overseas to emerging centers such as Vietnam, China and Brazil.

Gartner, the research group, in a study of outsourcing destinations, found that India accounted for 28 percent of the estimated workforce available globally for offshore work. That makes the country the largest such labor pool in the world.

But the study also found that costs were rising fast. Salaries are climbing an average 14.5 percent a year, almost double the rate in China and the Philippines, and the rate of attrition is 20 percent to 25 percent.

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Gaming, Music

Mobile handset maker Nokia India is set to launch services such as gaming, music downloads and navigation in the Indian market early next year. The company launched these services in the U.K. under the brand name Ovi in October this year.

“We have always been known as a mobile phone company but this year, we are entering the internet services space. We will launch new initiatives such as music service under a platform called Nokia Music Store, gaming service called N-Gage and a navigation services called Nokia Maps,” said Vineet Taneja, multimedia business director, Nokia. “Ovi is still in the launch phase with only some applications activated in the U.K. India is one of the key countries where we are launching Ovi,” he added, saying the new services will be available from the first quarter of 2008.

The services will be compatible with Nokia’s high-end multimedia handset range, Nseries, which has the necessary technology built into the device. The 15 models in this series are all Internet enabled with music and gaming capability. The latest, N81 and N95, even have navigational capabilities.

“The Nseries handsets have been optimized to access the services under Ovi once they become available,” said Taneja. While these services will be offered free initially, the company will eventually charge a fee as they start generating consumer demand. “Nokia is a leading player and can afford to explore new avenues,” said Arvind Subramanian, partner, Boston Consulting Group. Nokia’s market share by unit sales currently stands at 38.1 percent according to a report by researcher Gartner Inc, while rivals Samsung and Motorola lag behind with 14.5 percent and 13.1 percent, respectively. “Nokia has advantage in India of promoting any type of services and applications since it’s a leader in the country,” says an analyst at market research firm Gartner.

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Aussie Deal

IT giant Tata Consultancy Services has signed a memorandum of understanding with TAFE, New South Wales, to run some of the technical college’s courses in India.

S. Ramadorai, global CEO and managing director of TCS, said the company would promote the TAFE courses in the country and also provide them in local languages.

TAFE NSW is the largest vocational education and training provider in Australia.

“TCS and TAFE are working together on a detailed business plan,” he said.

The alliance would be a first for both parties, and comes after the premier of Australia’s New South Wales state, Morris Iemma, visited India recently. Ramadorai said he and other senior executives had fruitful discussions with Iemma, who led a delegation of 70.

Ramadorai said the company was actively looking to acquire companies in Australia that would improve its portfolio.

Work was also under way to develop an innovation lab in Sydney to showcase next-generation banking technologies, he told The Australian newspaper.

Ramadorai could not reveal investment figures but said the facility would be ready in six to nine months, starting with a core team of 10.

Apart from Sydney, TCS would launch an embedded systems facility in Tokyo in February and a Microsoft centre of excellence in Beijing in the second quarter of 2008, he said.

TCS has 20 innovation labs around the globe. Solutions showcased at the labs are implemented by customers the world over. Australia’s largest retailer Woolworths has been a beneficiary.

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High Ranking

IT services provider Satyam Computer Services Ltd announced Dec. 29 that Forrester Research has named the company as leader in SAP implementation capabilities.

“The Forrester Wave: SAP Implementation Providers, Q4, 2007 (December 2007)” places Satyam in the same category as companies heading “an extremely well qualified pack.”

Earlier, Satyam received similar rating by Gartner.

The report states that “Satyam has a strong overall value proposition in addition to a long track record with SAP. Its client satisfaction scores are high, its pricing is reasonable, and a large number of clients were willing to attest to its value.”

Manish Mehta, business head of Satyam SAP Practice, said in a statement: “The report is especially relevant because demand for SAP services continues to grow globally, as organizations increasingly leverage the ERP provider’s expanding portfolio of offerings. In addition, many existing customers need to upgrade to newer versions of SAP. Companies all over the globe benefit from the skills of our SAP consultants.”

Mehta told Business Line that “the company now has over 5,000 people in SAP practice and of them, about 10 percent are located overseas. We expect to grow this number to 20 percent as the momentum for SAP continues.”

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For Kids

HCL has started manufacturing ClassMate PC, a “kid-proof laptop,” with special software for interactive classroom applications — and a suite of Made-for-India software from Educomp. The platform with a 7-inch screen was almost wholly designed by Intel engineers based in Bangalore.

While the native design was for a Windows operating-environment, HCL has decided to offer it with Linux if required. The price is around Rs.18,000-20,000 but the current thinking is to offer it as a bundle with wireless connectivity for schools which will add a small amount to the fee. This model is likely to work only in private schools for now.

The much-publicized One Laptop Per Child initiative of Professor Nicholas Negroponte’s group at the Massachusetts Institute of Technology has seen its own school computer, now dubbed the XO, being tried out in a few key markets, mostly in Africa and South America.

The fanless, diskless solid-state storage-based laptop is fuelled by an AMD chip and runs Open Source software only. The unit price is closer to $200 than the initially projected $100 — and while the Indian government has not taken an official view on its deployment here, the XO has in fact reached children in a school at Khairat-Dhangarwada in Raigadh district, Maharashtra.

OLPC volunteers were in the school for a fortnight in September-October this year to help the teacher and children use the machines meaningfully.

Ironically, India’s own affordable PC platform for the masses — the Mobilis — developed for the CSIR by Encore Software (one of the two companies which created variants of the Indian handheld device, the Simputer), is yet to be seen on shop shelves. The government, which unveiled the under-Rs.10,000, Linux-based, laptop-desktop hybrid two years ago with much fanfare has seemingly done little to take the design to production.

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Eye on Capgemini

Wipro Ltd, India’s third-biggest software exporter, is expected to bid for France’s Capgemini by the end of January in a deal valuing the French firm at up to $7 billion, a business daily said Dec. 24, citing unnamed sources.

Citigroup and HSBC have been in discussions to finalize a plan before the year-end holidays, it said, citing investment banking sources.

“Details about leveraged buyout financing and other options were discussed,” it quoted a banker close to the deal as saying.

Wipro’s bid for Europe’s largest computer consultancy firm could be close to 48 euros per share, the paper said. The stock closed at 40.71 euros in Paris.

“We would not want to comment on market speculation. Of course, we are interested in larger deals and aggressively looking for inorganic growth options,” Sudip Nandy, chief strategic officer of Wipro, told the paper.

Speculation has persisted for several months about a possible bid by Wipro, as well by larger rival Infosys Technologies. Capgemini said in July it was not planning to sell its IT consulting arm and that it had not been in contact with Infosys.

Indian software firms are looking for overseas acquisitions, especially in Europe, to help offset a stronger rupee and a skills shortage at home and to service clients outside their English-speaking core market.

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Mobile TV

The Telecom Regulatory Authority of India plans to allow mobile phone service firms to offer TV services on the move, using any of the four technologies available, and will suggest to the Union government that it hold an auction for allocating radio spectrum next year for such services.

Telecom and broadcast operators believe India is potentially a big market for such services given it has more than 217 million mobile phone customers and the popularity of cinema and sports here.

The regulator will be issuing its recommendations on mobile TV next week, having received responses from different operators and several telecom experts on its consultation paper published on 18 September.

“It may not be appropriate to regulate the technology for offering mobile TV in India. We would rather leave it for the operators to decide,” said a senior TRAI official who did not wish to be quoted.

“Not taking a call on technology standard is a good step by TRAI, given that mobile TV is yet to make any beginning in the country,” according to a Delhi-based expert on regulatory issues. “In Europe, we are already seeing backlashes against DVB-H—the technology mandated for mobile TV in the region.”

While broadcaster Doordarshan is the only company offering mobile TV services in the country, other players have video download options riding on relatively faster mobile phone technologies. The European Commission has favored the DVB-H standard, a technology which is already the platform for offering mobile TV services in three out of the five biggest countries in the European Union, namely, Italy, France and Spain.

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Gemini, Midas

Gemini Communication Ltd has partnered with Midas Communication Technologies to implement Rs 2.6 billion BSNL project.

According to the memorandum of understanding, Gemini and Midas will implement Enhanced Digital Wireless Access System with broadband Internet access across Tamil Nadu, Karnataka and Haryana. Gemini has bagged the Rs. 2 billion order from Midas for the implementation of the EDWAS project on a turnkey basis, Gemini said in a statement.

The BSNL tender envisages supply, installation and commissioning of 134 base station controllers and 1,340 base station sites in Tamil Nadu, Karnataka and Haryana for the purpose of providing voice and broadband data services.

Midas, Gemini will implement the BSNL project within a period of 150 days. Vijay Kumar, chairman and managing director, GCL, said, “This is the largest order bagged by GCL. We will be deploying senior technology and project management experts as also skilled RF implementation and network engineers for expediting the performance of work.”

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Wizard PCs

IT distribution giant and PC manufacturer eSys Information Technologies Dec. 27 launched its two new models of lifestyle Wizard PC - STP 070901 and 8456 ELL.

The Wizard STP 070901 is equipped with 22-inch TFT display monitor, Pentium processor, 1GB DDR2, 400GB IDE/DVDRW, wireless multimedia media keyboard and wireless optical mouse, eSys said in a statement.

It is bundled with all-in-one card reader, a TV tuner card with remote and eSys Divoom 2.1 speaker system.

The Wizard 8456 ELL features 17-inch flat monitor Intel PD925, 945GCM chipset, 1GB DDR2, 200GB SATA, DVDRW, wireless multi media keyboard, wireless optical mouse, 32-in-1 card reader and eSys Divoom 2.1 speaker system.

Vakul Bhatnagar, general manager, eSys Information Technologies, said, “ eSys Wizard PCs will be competitive not just at the entry level but at high-end market as well.”

eSys Wizard STP 070901 and Wizard 8456 ELL are available for Rs 32, 990.00 and Rs 9, 990.00, respectively, through all eSys authorized dealers in India.

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EMAIL US: info (at) siliconeer.com | SHARE YOUR THOUGHTS ONLINE BELOW

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NEWS DIARY: December
PHOTO ESSAY: 2007: Year in Review
OVERSEAS INDIANS: GOPIO Awards
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SCIENCE: A Close Relationship
ETHNIC ISSUES: Study in Contrasts
SUBCONTINENT: India’s New Boom
TRAVEL: Bear Valley, Calif.
HEALTH: Pregnancy 101
COMMUNITY: News in Brief
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MUSIC: Kal Ki Yaadein Concert
AUTO: 2008 Acura MDX
BOLLYWOOD: Taare Zameen Par
BOLLYWOOD: Guftugu
TAMIL CINEMA: Mirugam
RECIPE: Hot Kachri
HOROSCOPE: 2008 Yearly Forecast

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