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Satyam Made Associate Member of AUTOSAR | WIPRO: Bleak Q3 | TCS: New Models | IT Vulnerable | IBM: Seeks Patent

Satyam Made Associate Member of AUTOSAR

Global consulting and information technology services provider, Satyam Computer Services said that the company has been accepted as an associate member of AUTOSAR, a partnership of automotive original equipment producers, suppliers and tool vendors.

With the participation in AUTOSAR (automotive open system architecture), Satyam will expand its footprint in the outsourced embedded automotive engineering services market, a company release here said.

“AUTOSAR is a prestigious organization and we are enthusiastic to play an active role in its programs,” Satyam senior vice-president Kenneth Taormine stated in the release.

AUTOSAR is an industry-trade group established to create and establish open standards for automotive electronics architectures, which are replacing proprietary standards throughout the industry. 


WIPRO: Bleak Q3

India's third-largest IT services exporter, Wipro, Oct. 22 posted better-than-expected sales and profit for the second quarter, but much of the sheen was clouded by the plunge in client additions, which fell to its lowest in a year-and-a-half and the company's expectation of poor revenue growth in Q3.

Despite recording 8 percent quarter-on-quarter (QoQ) revenue growth in its mainstay, IT services business, Wipro provided flattish guidance for the third quarter.

“The global economic environment has deteriorated significantly over the past couple of months and our outlook is cautious in the near term, given the extent of strain on the global economy,” said Wipro chairman Azim Premji. The Wipro stock fell by 5.79 percent to Rs 279.25 on the BSE, even as the benchmark Sensex declined by 4.81 percent.

In the second quarter, Wipro reported consolidated revenue of Rs 6,507 crore, a year-on-year growth of 36 percent. Its flagship business unit, global IT services, recorded revenue of Rs 4,750 crore, showing a QoQ growth of 7.8 percent and 36 percent in year-on-year (YoY) terms. However, in the third quarter, it expects IT services revenue to be around $1,121 million, just a 0.9 percent QoQ growth.

The performance of Wipro is also a shade below that of its larger rivals, Infosys Technologies and TCS, in terms of revenue growth.


TCS: New Models

Tata Consultancy Services is exploring new business models to sustain growth momentum in the current turbulent economy. The IT giant has pinned its hopes on various business models which include revenue sharing model and multi-year contract which has a longer term than traditional contracts.

TCS CEO N. Chandrasekaran told the Economic Times, “We have got new business models and we are working towards it which will drive our business in future.” However, he refused to divulge the number of deals they have signed on these new business models.

On the new business model lines, the company has signed few deals in various markets across the globe. Moreover, moving away from the usual big clients the company will be focusing its attention on individual clients. Most of the deals are in the range of $1 million and $5 million.

The company’s financials took a beating in the second quarter of current fiscal due to the bad debt provisioning for anticipated defaults from its BFSI clients in the U.S. The company, which derives 40 percent of its revenue from U.S. operations, has suffered a loss of Rs 262 crore in the September quarter due to cross-currency hedging.

“As our key customer base in U.S. is slowing down, we are looking at other markets,” Chandrasekaran said.

He added that the business of TCS in India is most volatile. The IT giant posted a dip in business in India operations at 7.8 percent this quarter compared to 8.7 percent for the previous quarter. “Our focus would be to try and reduce the volatility in the Indian business,” he added. 


IT Vulnerable

The $50-bn IT services industry, which has just got over with a rather flat Q2 performance and muted guidance, has lots to overcome other than merely a global slowdown. In fact, given the prevalence of short-term Time & Material contracts on their order books, the outlook for the sector looks bleak.

T&M contracts are those for which fees are based on time taken and manpower used. Overall, the industry has about 70 percent of contracts as short-term businesses (typically, three to six months’ duration) compared to the fixed price, longer-term contracts.

Companies such as HCL Technologies, Infosys Technologies, Wipro Technologies, Satyam Computer Systems have over 60 percent of their revenue coming from T&M billing contracts and in smaller IT companies this percentage is higher. In good times, over 90 percent contracts resulted in repeat business.

Now with uncertainty in the market, the high percentage of short-term, T&M contracts could prove to be an Achilles’ heel for the IT players.


IBM: Seeks Patent

IT giant IBM has filed a patent application in India for its newly developed portable personal computing environment server.

The company has also applied for the patent of personal computing environment server in some other parts of the globe. The U.S. authorities and World Intellectual Property Organization (has already granted patent license to IBM for it.

Developed by two Indians, Chandrashekhar Narayanswami and T.M. Raghunath, IBM claimed that the “developed server can change the entire computing paradigm.”

Accepting the application, the Controller General of Patents, Designs and Trade Marks, has issued a notice in its recent journal seeking public opinion on the application.

The new portable server is a basically an interface-based equipment, which could enable a user to work on all operating systems without bothering about any licenses, upgrades, security patches and backups etc..



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