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SATYAM: Ramalinga Raju Made Gardeners, Drivers Kings | IT Giants Eye $30 Billion Overseas Outsourcing Deals | IBM: Bank IT Deal | INFOSYS: Power Project Deal | BSNL: Deal Shelved | Local Flavor | Eyeing U.S., Europe | Energy Efficiency

SATYAM: Ramalinga Raju Made Gardeners, Drivers Kings

In disgraced Satyam boss Ramalinga Raju’s land, even gardeners were made maharajas. Several gardeners, truck drivers and others, who were working in the mango gardens and orchards belonging to Raju brothers for meager salaries of Rs 4,000 to Rs 5,000 per month, have been found to possess more than 50 acres of land worth tens of millions of rupees.

These workers were also made directors of several fictitious companies floated by Raju. And a majority of these lands are situated in a single village called Loyapalli of Ibrahimpatnam mandal in Ranga Reddy district.

Records with the Enforcement Directorate show that the Raju brothers had purchased as much as 4,200 acres of land in this village alone in 2006.

Though official records state that the entire land was purchased for a mere Rs 300 million, its actual price is much more and its present value is not less than Rs 42 billion at the rate of Rs 10 million per acre. The ED has so far attached 312 properties acquired by the Raju brothers allegedly with the Satyam scam money.

In 2006, for example, a 54-acre plot in Loyapalli village was purchased for Rs 3.6 million and was registered in the name of Suryanarayana Raju, a gardener working in the mango orchards of Raju brothers at a monthly salary of Rs 5,000. When the ED sleuths quizzed this gardener on his source of income, he revealed that the land was purchased by the Raju brothers through SRSR Holdings company and the sale deeds and other papers were also lying with them.

“They have just used my name and the question of my paying income tax for this amount does not arise because this is not my income and I never filed any IT returns nor do I possess a PAN card,” the gardener told the ED authorities. Interestingly, after this purchase, the Raju brothers made this gardener a director in several of their fictitious companies floated for holding the land.


IT Giants Eye $30 Billion Overseas Outsourcing Deals

As top outsourcing customers in U.S. and Europe seek to renew their computer infrastructure management contracts worth nearly $30 billion next year, Indian tech firms including HCL, Tata Consultancy Services, Wipro and Infosys are bidding against incumbent multinational rivals IBM and HP for their share of the lucrative opportunity.

The top 15 vendors analyzed by research firm Forrester in a recent report provided remote and onsite services for about 16.7 million desktops, 1.7 million servers and 23.4 million users globally. These vendors, including IBM, HP-EDS, CSC and some Indian tech firms including HCL delivered $83.9 billion worth of infrastructure services last year.

By outsourcing the management of their desktops, computer servers, storage and communication infrastructure, customers such as Nokia, Xerox and Citigroup plan to have leaner balance sheets, reduce their operational expenses by up to 40 percent and focus better on their core business.

At least three outsourcing consultants involved with helping customers outsource infrastructure management said nearly $30 billion of such contracts are up for renewal in 2010, and almost quarter of these contracts will go to new suppliers, with the rest to be renewed with incumbents IBM and HP-EDS. “In last two years we have demonstrated our capability to take over from incumbent providers,” said Anant Gupta, president of HCL’s infrastructure services division. “Despite remote infrastructure becoming popular, there were doubts about whether we can provide global support — our recent wins have proved that we can,” he added.

Among large outsourcing contracts for infrastructure management, HCL signed $350 million seven year deal with Readers Digest earlier this year, apart from similar deals with Nokia and Xerox. On its part, domestic rival Wipro acquired Citi Technology Services for around $127 million in December last year, which came with Citigroup’s commitment to outsource all future infrastructure management contracts to Wipro, potentially worth almost $1 billion over six years.


IBM: Bank IT Deal

IT giant IBM India has signed a 10-year information technology services agreement with Sardar Bhiladwala Pardi People's Cooperative Bank in Gujarat, the company said.

“The operational expenditure in the pay-as-you-use model will enable the leading cooperative bank to save up to 50 percent in its capex (capital expenditure) on IT infrastructure,” IBM said in a statement.

As part of the deal, IBM India will provide the 80-year-old bank managed continuity services comprising server management, network and security management and back-up and database management.

“This is a strategic win for us. It will enable us to focus on helping financial services clients,” IBM India director for integrated technology services Neeraj Sharma said.

The company, however, did not specify the value of the deal.

The bank's IT infrastructure requirements will be met remotely from IBM's global management centre in Bangalore.

“The deal with IBM will help us to enhance service offerings to our diverse customers, especially farmers, small traders and artisans,” bank chairman Ajay C. Shah said.

The deal follows IBM's earlier pacts with banks such as Madhav Nagrik Sahakari Cooperative Bank in Rajasthan and Kurmanchal Nagar Sahkari Bank at Nainital in Uttarakhand.

The Pardi People's Cooperative Bank was established Dec 23, 1929 to provide loans with low interest rate to farmers, small traders and artisans. The bank was recognized as a scheduled cooperative bank in 2000 by the central bank.


INFOSYS: Power Project Deal

Infosys Technologies, India's No 2 software exporter, has been selected to implement a $3.87 billion IT project for Karnataka's power distribution utilities, two government officials said.

"We have issued the letter of intent to Infosys," a source at the Bangalore utility said on condition of anonymity as he is not authorized to speak to the media.

"It will cover entire Karnataka," he said.

The project was awarded by all five electricity distribution utilities in the state last week and will cover 100 towns in the state, he said. Infosys outbid 10 other companies, including Tata Consultancy Services, for the contract, the source said.

The projects must be implemented within 36 months, the other source said.

Infosys officials could not be reached for comment.

The project is part of a central government-funded program to use information technology to cap electricity losses in the country.

Tata Consultancy and HCL Infosystems Ltd have won contracts for similar projects in West Bengal and Rajasthan, respectively.


BSNL: Deal Shelved

The decision of state-owned BSNL’s board put its tender for 93 million GSM lines on hold will result in the telco’s $1-billion IT outsourcing contract also being put on hold, an executive with the public sector undertaking said. This is because the $1-billion IT contract is linked to the 93 million GSM lines taking off, this executive added.

The delay will impact IT firm HCL Infosystems, which will be supported by HP and Convergys for the contract and is assured of 50 percent of BSNL’s Rs 20 billion IT deal, as it was the lowest bidder for all the four zones. The project was split into four zones to allow companies to bid separately for each zone.

Other IT giants that will be impacted include TCS which can bag the remaining 50 percent of the contract and the Mahindra Satyam/Spanco combine which stand a chance to win part of the deal.

The BSNL board decided to put the world’s largest ever telecom equipment contract worth about $10 billion on hold after the Central Vigilance Commission launched a fresh probe into the telco as the anti-corruption body’s guidelines forbid post-tender negotiations with successful bidders.

Sweden’s Ericsson had emerged as the lowest bidder in the North and South East zones while China’s Huawei was selected for the South and West Zones. The DoT too had earlier asked BSNL not to renegotiate the price with lowest bidder Ericsson since the move would violate CVC guidelines.


Local Flavor

India's large software service providers are going increasingly local with hiring in overseas markets, part of a drive to position themselves as truly global players and polish their image in advanced economies reeling from job losses.

Beginning with employing foreign nationals for junior and mid-level positions, companies such as Tata Consultancy, Infosys and Wipro – together these three account for about a third of India’s IT exports – now have a number of foreigners in their top echelons.

“There’s a transition in mindset to grow out of the Indian mold and aspire to be like an Oracle , IBM, Accenture, SAP. Also, as Indian companies have gained scale they can tap the best foreign talent; earlier they had to settle for just about anyone,’’ says K. Sudarshan, managing partner at executive search firm EMA Partners International.

In the past year, many of the top positions at Wipro Technologies have been filled by foreigners. American Martha Bejar left Microsoft to join India’s third largest software exporter as president, global sales and operations. Ralf Reich, a former Unisys executive in charge of strategic outsourcing in continental Europe, was appointed head of German operations. And Wipro’s centers in France and Japan are also headed by non-Indians.

Infosys’ German, French and Australian operations are managed by locals. Jackie Korhonen, ex-vice-president of managed business process services for IBM Australia and New Zealand, is now head of Infosys Australia.

“They want to be true multinationals. Besides, if you want to really penetrate a local market, bagging business from not only big companies but also small and medium, you better have a local face,’’ says Diptarup Chakraborti, principal research analyst, Gartner.


Eyeing U.S., Europe

For India’s top tech firms seeking to acquire an existing back office business of a large customer, the next big opportunity is emerging in the markets of the U.S. and Europe as customers seek to sell captive operations in their home countries.

Having divested their captive operations in emerging countries such as India, some companies are now in talks with companies such as Genpact, EXL Service Holdings and Quatrro to sell their assets. Such transactions are lucrative because they can bring niche expertise at deals worth up to $200 million.

“There are few captives on the block and we are open to acquiring them. Such deals help get access to new customers besides product knowledge,” said Pramod Bhasin, chief executive of Genpact, the largest back-office firm.

Indeed, the recent acquisition of American Express’ travel services captive in India by EXL Service Holdings for $30 million not only provided the latter with an experienced management team, but also capabilities set in analytics, exception processing, and transaction processing.

“Several captives in these countries are not only burdened with high cost structure, but also lack capital to build on offshore capabilities. Moreover, their ability to add value is limited,” said Rohit Kapoor, president and chief executive of EXL.

EXL may shortly strike a captive deal in the insurance or banking space in the US or Europe. “We are in advanced talks with a couple of US and Europe based captives and onshore companies for a possible buyout. The deal, if successful, will give us a presence in these markets,” Kapoor said.


Energy Efficiency

From India’s largest IT service providers like TCS, Infosys, Wipro and Patni to large global IT players like HP, Microsoft, Cisco, Agilent and even the big blue IBM, all are turning green. “Becoming green is no longer a choice for firms, governments or individuals,” says Som Mittal, president Nasscom. With its Green IT initiative, Nasscom is encouraging IT companies to adopt green buildings, energy efficient data centers, power efficient computers, shared data centers and e-waste management.

India’s second largest IT company Infosys has started a solid waste management program. One of the 2009 Zero Print Weeks in Infosys Bangalore saw a 37.6 percent reduction in prints, saving over 18,800 sheets of paper. The company has also consolidated 250 data centers to less than 100.

New IT buildings too are going green. Patni’s new Green Knowledge Centre in Noida, for instance saves over 47.5 percent energy. It has also installed light sensors and CO2 sensors. Kozhikode’s first CyberPark that opened this month, is also Green certified. India’s second largest IT company, Wipro has outlined a detailed plan to cut carbon emissions by 20 percent over the next three years.

Despite this, many smaller IT companies still don’t have a concrete emission reduction plan. A Springboard Research survey of 1,200 strategy leaders at enterprises found that less than 10 percent have formally implemented a green strategy.



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