Information technology outsourcing Industry

Information technology outsourcing Industry Growth is back on the agenda for Information technology outsourcing providers, according to a survey by I T research and advisory firm Gartner survey, Inc. Sixty-two per cent of respondents identified growth as the top strategic goal this year, with aggressive marketing plans and investments in cloud, utility and ‘as a service’ offerings, it said in a statement. “It is clear that providers are optimistic despite considerable uncertainty in the global economies,” said RolfJester, v.p. and distinguished analyst at Gartner. “However, we predict the I T outsourcing services market will reach USD 313.2 billion in 2011, a growth of 6.9 % from 2010, and will reach 4.6 % compound annual growth rate through 2015.” Gartner conducted an online survey in the first quarter of 2011 among 47 I T outsourcing providers, accounting for 62 per cent of the total I T outsourcing market. The respondents represented the full range of providers, all major geographies and all types of ITO services including infrastructure (data centre, network, desktop, and storage), applications and cloud computing services. “Many Information technology outsourcing providers are intending to commit serious marketing funds and target new accounts to outgrow the market, He said Mr.BryanBritz, research director at Gartner survey. The survey found at least 50 per cent of outsourcing providers said they would spend two to five per cent revenue on marketing in year of 2011, which is higher than the historical norm for marketing expenditure as a per cent of revenue (which has tended to be one per cent to three per cent for Information technology services providers in india). At the same time, Information technology outsourcing providers continue to invest significantly more in sales than marketing as demonstrated by 2/3 of providers indicating sales expenses are greater than six (6) per cent of revenue”,.

information technology outsourcing

India information technology outsourcing industry For advertising executive MR.GovindNair, working in India's information technology outsourcing industry for a California telecoms firm means burning the candle at both ends for his customers. "They try to be considerate. They know there's a 12-and-a-half-hour time difference between India and San Francisco but we still end up getting up early and going to bed late," MR.GovindNair, 30, says. Such hours are becoming increasingly routine for many young Indian professionals as they liaise with counterparts in the United States, Europe and other Western countries on high-end "smart work" projects. India, known as the world's largest back office with its cheaper, educated English-speaking workforce, is expanding its "knowledge processing information technology outsourcing", offering market research, statistical analysis, legal, health and a host of other services. The sector familiarly known as KPO "is the next wave of global sourcing for India", MR. SomMittal, head of the National Association of Software and Services Companies told an industry conference last week. Performing "value-added tasks" such as writing equity reports and legal work can mean 40 to 50 %higher billing rates than for lower-value jobs in call centers fielding inquiries about bank accounts, industry officials say. KPO revenues have been growing at 26 percent annually according to research house Crisil, outpacing the overall expansion of the flagship information technology outsourcing industry that has helped make India an emerging market powerhouse. The country now has 70 %, or $2 billion, of the $2.9 billion global KPO industry, Crisil says. North America provides 65 % of the sector's revenues, Britain 20 % and continental Europe 10 %.

National Association of Software and Services Companies believes the fresh economic troubles in Europe and the United States may accelerate KPO sector growth as Western firms seek to harness the technical and financial expertise of India's supply of university graduates, lawyers, accountants and MBAs. "India has a tremendous advantage in its technical, analytic and managerial skills," Matthew Vallance, chief executive of one of India's biggest back office companies, Firstsource Solutions, told AFP. The $2 billion is still a fraction of India's overall outsourcing revenues, expected to total $68 to $70 billion this year. But Crisil forecasts in a new report that revenues from outsourcing knowledge-intensive skills will nearly triple to $5.5 billion by the end of 2015. "India is moving up the value chain," said Crisil chief executive RoopaKudva, noting Indian lawyers now research case law and put together arguments to be presented in court in the United States, Britain and elsewhere. Bankers prepare papers for acquisitions, while nurses monitor the condition of housebound patients in the West. Doing value-added work has become increasingly important for India as it seeks to preserve its overall global outsourcing dominance, especially after ceding its crown as the world's leading call centre hub to the Philippines. Last December, the Philippines, which also has a trained, English-speaking workforce with a strong service culture, edged past India to become the largest call centre operator in the world, logging $5.5 billion in annual revenues compared with India's $5.3 billion. "India is still ahead (in total offshoring), although other offshore sites like the Philippines and Indonesia are emerging," said Mr.Tervinder jitSingh, a research director at global consultancy Gartner. "But these countries are still not mature enough in high-level professional work which India can provide," Mr.Tervinder jitSingh said.

Information technology companies

Information technology companies may be putting up a brave front but the slowdown has alarmed them enough to make them cut variable pay of staff. Tata Consultancy Services , which recently evicted Infosys Technologies as the industry bellwether, is said to have made the first move in this regard. Mr. YogeshAggarwal and Mr.VivekGedda, analysts with HSBC, said the largest software services company paid only 25-50% of the total quarterly bonus to employees above the ‘associate consultant’ level in the June quarter. “Companies have already started paying lower percentage of discretionary bonuses,” they wrote in a note on Tuesday. By snipping the variable component of the salary, Tata Consultancy Services is protecting its margins — a common norm in times of slowdown when revenues slip on account of dwindling budgets of tech customers. Mr. YogeshAggarwal and Mr.VivekGedda believe the lower percentage of discretionary bonuses could offer close to 5% ‘margin cushion’ for large local tech services vendors likes Tata Consultancy Services and Infosys, which pay 30-40% of the salaries as discretionary bonuses. Nandita Gurjar, group Human resource head and senior vice-president, Infosys Technologies, said since variable pay is linked to performance, it would naturally constitute a lower percentage of the salary during slowdowns. “Yeah, it (variable pay) comes down when the revenue growth slows down,” she said. Gurjar, however, did not say whether techies at the second largest IT firm would be paid lower variable pay this year.

Infosys is said to have variable pay of near 30% of the total offshore wage bill. This, according to Mr. YogeshAggarwal and Mr.VivekGedda, translated into around 5% of margin cushion. “We ascertain that about 2.6% of margin protection is easier to achieve by cutting variable pay and avoiding significant damage to employee morale and productivity,” they said in their report. RostowRavanan, CFO, Mind-Tree Ltd, said the mid-sized tech company had trimmed variable salaries in 2008 to soften the blow from the last slowdown. He said from this fiscal year the company had introduced a new scheme where variable pay for junior employees was delinked to company’s revenue and tied to their own performance. “However, it (variable pay) will continue to be linked to profits,” said RostowRavanan. Typically, variable pay is lower at junior level constituting of less than three years experience and is split into three parts comprising company performance linked incentive (CPI), variable company performance incentive (VCPI) and individual performance incentive (IPI). Generally, companies avoid tinkering with the CPI component as it is paid on a monthly basis and could dent employee morale and productivity. It is usually the VCPI and IPI that get cut first. “Both VCPI and IPI account for about 50% of the total variable pay and are paid quarterly and provide a margin cushion of around 2.6%,” the HSBC duo said. Tweaks in variable pay have helped companies safeguard margins during rough patches in the past too. But E Balaji, managing director and CEO of MaFoiRandstad, a human resource consultant, said companies touch variable pay only as a last resort. “We get a feeling that companies have become cost conscious and are tightening belt by bringing down expenditures on travel, office parties and others. The natural progression would be to focus on incentives and variable pay,” he said. Mr. SunilGoel, director of executive search firm GlobalHunt, said the snip in the variable pay was a correction in the exorbitant hike that was introduced in it post 2008 downturn.

1st phase of TCS' Guj SEZ by Apr '12

Tata Consultancy Services (TCS), one of India's biggest Information technology companies, has targeted completion of first phase of its Gujarat Special Economic Zone (SEZ) - Garima Park by April 2012. The under-construction IT Park is located behind Infocity, Gandhinagar and is spread over 10.319 hectares. TCS has invested `129 crore in land and building for this project. Garima Park was granted formal approval for setting up IT SEZ on 17-December in 2007 and it got notified on 30 September 2008. Further, TCS was granted first extension of formal approval till December16, 2011 and now, it is seeking a second extension. In its request sent to Board of Approval (BoA) for extension of formal approval, TCS mentioned that "first phase is likely to be completed by March / April. An investment of `128.71 crore has been made in land and building for this project." When contacted, no one was available for comment from Tata Consultancy Services. Earlier, Tata Consultancy Services was sanctioned 10 acres in Infocity but due to a road splitting the plot in two parts, company decided to shift location to other side. Currently, the SEZ is located near National Institute of Fashion Technology (NIFT), Gandhinagar. Foundation stone for Garima Park was laid on February 1, 2006 by then CEO and MD of TCS, S Ramadorai. At that time, Tata Consultancy Services planned to develop the park in one and half years. However, development at the park has begun only now, after five years of inauguration. According to department of commerce, in 2010-11, Tata Consultancy Services exports from their Tamil Nadu SEZ were valued at Rs 4,145 crore.

North American Enterprise Survey

North American Enterprise Survey : Market research firm Infonetics Research today released excerpts from its Security Strategy for On-Premise, Hosted, and Hybrid Solutions: North American Enterprise Survey, which takes an in-depth look at how small, medium, and big organizations plan to protect themselves from electronic threats of all types.

ANALYST NOTE

"The clear and obvious takeaway from this survey is that now is the time for security vendors to address hybrid deployments, and to develop and deliver true hybrid security solutions that are cost effective and seamlessly blend on-premise security with hosted services and SaaS (security-as-a-service)," notes Jeff Wilson, principal analyst for security at Infonetics Research.

SECURITY STRATEGIES SURVEY HIGHLIGHTS

· 61 per cent of the big, small, medium and companies surveyed believe that in the long term they will be operating hybrid environments that mix security products on their premise (CPE) with hosted solutions and SaaS (aka cloud-based security)

· Mobile device threats was named as a key driver for deploying security solutions by 65 per cent of the businesses surveyed

· Cost is the #1 barrier affecting customer deployment of new security solutions

· The combination of the high cost of multi-box solutio ns (or mixed network/hosted solutions) and the current economic environment has driven cost to the top of the list

· Cisco, McAfee, and Symantec were most frequently named a "top-3 vendor" by respondents for every criteria (pricing, security, technology, product roadmap, price-to-performance ratio, management, service and support, financial stability)

· Cisco stands out as the clear leader, with a strong combination of brand recognition, strong enterprise security offering (both products and hosted services), and strong market share position in enterprise security

SURVEY SYNOPSIS

Infonetics Research's 22-page Security Strategy for On Premise, Hybrid, and Hosted Solutions: North American Enterprise Survey provides analysis of organizations deploying content security over the next two years, including trends, drivers, barriers, and deployment plans - particularly with regard to planned product purchases versus SaaS and hosted solutions, and where companies plan to deploy hybrid solutions that blend on-premise security with hosted security. The survey features enterprise ratings of 11 security vendors: Barracuda, Blue Coat, Check Point, Cisco, Fortinet, Symantec, Juniper, McAfee, SonicWALL, WatchGuard, and Websense. Companies named in open-ended questions in addition to those that were rated include AppRiver, F5, Google, HP, IBM, Sourcefire, Trend Micro, zScaler, and others. For this report, Infonetics surveyed 107 small, big, and medium North American security purchase decision makers in last year.

apps developers

Last weekend was hectic for the 95-odd participants who gathered at the ‘Start-up Weekend’ here. Techie youngsters group, guided by various mentors, formed teams and developed mobile or web based applications to solve specific problems or create new experiences for Application users. The Application ranged from a flat finding app, an Application for video tagging to an intra-institution social network app. Three Application won prizes, which included free credits from Amazon WebServices, Zip-Dial, Interview Street and Oz onetel. The winning Application included ‘Park-e-mon Application’, a parking management solution, ‘Opti Rate Application’—a mobile value-added service Application and ‘Desi Karaoke Application’, a game Application for social networks. The Park-e-mon solution comprises two applications a webbased portal Application and a mobile Application suitable for any smart phone. The webbased application is used by office administrators and building managements and would have details about the offices, contact people and vehicles that would be granted parking space. The mobile Application is used by parking attendants to record the entry and the exit details of each vehicle in the Parking Space, and these are updated in the web based database in real time in the Application. The Application does away with two out of three people manning a web based parking system. The web based system can give a snapshot of the overall parking situation in a building at any given moment. It also enables the instant identification of cars parked in wrong slots by checking their registration number against the vehicle database.

Though the web based parking application system is not meant to replace mechanical barriers, it would introduce more efficiency by eliminating logbooks. SudeepDSouza, who led the four-member team that developed the app, says he plans to charge '25,000 a year as installation fee, along with a nominal monthly maintenance fee. A few companies in Hyderabad have expressed willingness to adopt the solution, says SudeepDSouza. The solution is being run on a pilot basis at an office complex in Hyderabad, which has parking capacity of 150 cars and 600 two-wheelers. OptiRate, which won the second prize, is an app for Android phones. The app is designed to recommend the best tariff plan, based on the user’s pattern of usage. It also, through a web interface, enables recharge with a single click on mobile and online system. Mr.RajagopalGrandhi, one of the developers of the application, says his team would introduce it in the market in three months after some fine-tuning. “The users’ first experience of our application should be good, so we would take some time,” RajagopalGrandhi says. The Parking application, when installed in a smartphone, would alert the user about credit expiry, and also suggest the best rate plan offered by the operator that suits the user’s needs by analyzing his call records with application. For recharges, apart from charging a fraction of the recharge value as fee, the developers expect to tap advertisements as well.

The third prize-winning application, Desi Karaoke application, was developed by a young team from the Indian School of Business. MR.AchintParekh, one of the app’s developers, says it was not meant for trouble-shooting, but to add a new experience to social networking sites such as Facebook. The app, currently available only for Android, is free and comes with a few Indian instrumental music tracks. It allows users to record their singing along with the background music, and this can later be shared with friends on social networks and can also be compared with the original. Says MR.AchintParekh, “Games like MR.AchintParekh are popular in India, but karaoke is available only for some English songs. On the other side, games on social networks are changing the whole game experience. Our idea combines these two trends to offer karaoke as a social game.” Desi Karaoke application developers are in talks with T-Series and other music companies for tracks. The Desi Karaoke app is expected to be functional in a few weeks. MR.AchintParekh said the apps developers would consider the project a success if it touches 500 downloads a month.