July 2008 News

  • July 2008
    • Domestic BPOs ready to take off
      While the offshore (international) BPO market faces pressures with economy-wide slowdown in developed markets, the domestic BPO market is getting ready to take off.According Arun Jethmalani, CEO, ValueNotes, “Unlike the overseas business, labor or cost arbitrage does not drive the domestic BPO market. It’s strategic factors such as the need to scale rapidly, focus on core competencies, enhanced productivity and reduced time to market that are driving domestic demand”.
    • MNCs new kings of outsourcing
      The $50-billion IT services industry is in for tough days. And this time, it’s not just a slowdown in spending that’s worrying, but increasing competition from multinational service providers who have ramped up significantly.With a robust low-cost delivery model in place, MNC IT services companies like IBM, Accenture, HP-EDS and CSC have bagged quite a few new offshoring contracts in recent times. New IT deals offshored to India and other low-cost destinations from firms like United Healthcare, Universal Music Group, Hartford Insurance, Bristol Myers Smith, ICAP, BHP Billiton, Bombardier, P&G , Ericsson and Banco Fondo Comun (a Venezuela bank) have gone to MNCs. Incidentally, in many of these contracts—multi-year $50-500-million deals—Indian IT and BPO companies were already providing services for the clients. And in most cases, MNCs bagged the new offshored work beating Indian service providers.
    • How slowdown is changing offshoring
      The slowdown is changing the dynamics of software delivery as it sharpens the focus on reducing costs, and driving higher value for some others.From a bilateral offshoring model, companies are moving towards evaluating different attributes of a location, depending on what their IT and business needs are. For some firms, the need is to cut costs, while for others it is to transform their business, Gartner vice-president, research, Ian Mariott told ET. Mariott has been associated with IT services industry for 26 years.
    • India most mature spot for BPOs
      India has emerged as the most matured location for offshored IT and BPO services, though this dominance might be chipping away given the rising costs. Everest Research Institute in its report “Global Sourcing–Market Vista Q1 2008” said that the cost inflation in Indian cities is exceeding the 2007 levels and this has increased the risk of labour arbitrage closing very rapidly.There has been a constant threat of newer locations such as China, Philippines and Eastern Europe, which are challenging the dominance of India. Everest said that players are continuing to expand and the competitive intensity for talent remains unabated. Further the consumer price at an alltime high since 2004 is potentially creating inflationary pressure on wages.
    • Outsourcing? Tech to blame, says Obama
      The Democratic presidential hopeful Barack Obama has held the revolution in technology and communication in last few decades responsible for outsourcing of jobs to India and China.”Over the last few decades, revolutions in technology and communication have made it so that corporations can send good jobs wherever there’s an Internet connection. Children here in Missouri aren’t just growing up competing for good jobs with children in California or Indiana, but with children in China and India as well,” Senator Obama said at a campaign rally in Springfield, Missouri.
    • Firstsource sees 150-200 bps rise in operating margins
      Back-office firm Firstsource Solutions Ltd sees a 150-200 basis points rise in operating margins in next few quarters on higher productivity and lower expenses, a top official said on Wednesday. “We have initiated and identified places where productivity can be improved.We also see a change in leverage coming in as our revenues grow and our sales, general and administrative expenses as a percentage of revenues come down,” CEO and MD Ananda Mukerji said during a conference call. Its operating margin in the June quarter was 9.4 percent.
    • To sack staff… tech cos get them new jobs!
      An employer who fires attracts bad reputation, and potential recruits may shy away from the company. So, here is a novel retrenching mechanism adopted by tech/BPO firms to get their unwanted staff out, very smartly and discreetly, sans any heartburn or negative media publicity.
    • Lehman BPO shows door to 180
      Lehman Brothers’ captive back-office unit in Mumbai is set to hand pink slips to over one-fourth of its employees. Lehman Brothers Financial Services (India), which employs around 700 people at its captive unit at Powai has asked about 180 employees to leave.“In the second quarter, Lehman Brothers, globally, announced a $2.8-billion net loss due to bad debt. Some processing related to this bad debt was being done at Mumbai, which has been affected. Moreover, it’s expected that Lehman will announce a further write-off of about 2.5-billion in Q3 and declare some assets for sale. All this will have an impact on the Mumbai unit,” said an IT-BPO industry expert.
    • Patni opens green IT-BPO facility
      With the aim to minimise adverse environment impact, IT services provider Patni Computer Systems today inaugurated a 3,500 seater IT-BPO facility here entailing an investment of Rs 175 crores.Developed on Green Architecture, the centre is spread across five acres and has provisions for better utilisation of energy, water and natural resources and is likely to consume 45 per cent less energy, Patni BPO Senior Vice- President and Head Sanjiv Kapur said.
    • Sundaram BPO bags ‘large deal’ opens facility
      City-based Professional Management Consultants (PMC), part of Sundaram Business Services Limited, (SBSL), the BPO arm of Sundaram Finance Limited, has opened a new BPO facility in the city to execute a large deal it bagged from a leading broking firm.This was the fifth delivery centre of Sundaram BPO in the city and could house around 200 people. SBS also has BPO facilities in Mumbai and Madurai, its first in a Tier II city where it plans to hire 500 employees this year, a company release here said. Commenting on the new BPO facility expansion, Mr P S Raghavan, CEO, SBSL said “this expansion has been necessitated by a large domestic BPO deal from a leading broking firm for whom SBS will undertake back office transaction processing work from this dedicated BPO facility.”
    • Bangalore to get Rs 80-cr animation studio
      Film animation buffs will love nothing better than a hi-tech studio on home turf to avoid the high costs of journeying abroad.Their dreams could come true if Bangalore-born Hollywood producer, writer, director Siva Selvaraj executes his plans. Selvaraj, a US resident for the past 20 years, plans to set up a Rs 80-crore animation studio here to help filmmakers get access to state-of-the-art technology.
    • LPO industry eyes Rajasthan – Video
      With Business Process Outsourcing and Knowledge Process Outsourcing already setting up their bases in Rajasthan, it”s the turn of Legal Process Outsourcing to head towards the desert state.The availability of efficient and professional manpower in the state has drawn the LPO industry towards it. The law graduates in Rajasthan’s capital Jaipur are making their presence felt in the American market.
    • New Zealand Bank to send jobs to India
      The New Zealand-based ANZ National bank will soon be outsourcing its 238 backoffice jobs to India.A meeting with the staffs at the bank’s lending services centre in Auckland and customer transaction service centre in Wellington took place on Tuesday, which according to NZPA report is the beginning of a two-week consultation period over the outsourcing of the work to India.
    • More jobs in UK due to outsourcing to India
      According to the experts there are more outsourcing work by British companies to India does not cause job losses but there are more jobs or employment a research by economists at the University of Nottingham.Scores of major UK companies have been involved in offshoring, which has often been opposed by unions. But the research by the Globalization and Economic Policy Centre (GEP) at the University of Nottingham says the efficiencies it has brought has actually boosted business and led to them employing more people in the UK, not less.
    • BPO professionals get their own social networking space
      It’s the era of social networking groups. When everyone is either joining or starting a social networking group on the net these days, how could the young crowd from the Indian BPO sector be left behind? That’s why BPO Voice, a new social networking group for people with a background in the BPO industry, is fast catching up in cyberspace.Formed a few months ago but opened for membership only last month, the group meant exclusively for BPO employees already has over 200 members. ‘‘The idea took shape when I started using some of the BPO communities on other networking sites,” says Amit Saxena, the brain behind the latest online community.
    • Ranbaxy now focussing on IT, ITeS business
      After strengthening their financial services business, Religare Enterprises, the erstwhile Ranbaxy promoters’, Malvinder and Shivender Singh are now set to focus on their IT venture, Fortis Financial Services (FFS), a BSE-listed entity, which will soon be rechristened as Religare Technova.According to sources, the brothers’ are all set to pump in more than Rs 500 crore over the next 18-24 months to organically grow their IT brand domestically as well as internationally. Moreover, as sources within FFS inform ET, the promoters will allocate additional funds for couple of acquisitions in the IT and IT-enabled services spaces that the company is scouting for currently.
    • Allied Digi buys 80% in EnPointe for $24 mn
      Mumbai-based systems integrator Allied Digital Services has acquired 80.5% stake in EnPointe Global Services, a subsidiary of the Nasdaq-listed Enpointe Technologies, for $24 million in a cash-and-stock deal. The deal values the EnPointe Global at $30 million.The deal gives Allied Digital access to a ready customer base for remote infrastructure management services and a base in the US to expand its presence.
    • WNS to service Irish insurance major Hibernian
      BPO company WNS Holdings has gained a foothold in Ireland for the first time, winning the rights to service a leading insurance company in that country as part of a $1-billion purchase deal with Aviva, the world’s fifth largest insurance group.WNS Thursday announced it had acquired the shares of Aviva Global Services (AGS), the offshore BPO arm of Aviva, under an eight-year contract. As part of the terms, all clients of AGS will now be serviced by WNS.One such client is the Irish insurance company, Hibernian, also owned by Aviva.
    • Australian bank to offshore 400 IT jobs to India
      National Australia Bank is expected to send another 400 information technology jobs to India by the end of the year.The bank has shortlisted technology companies Infosys and Oracle to develop its billion-dollar, next-generation platform, which will form the key pillar in the bank’s technology transformation plan, dubbed Program NEOS.
    • Aviva may not absorb vendors’ operations
      Aviva, the UK-based insurer may drop plans of absorbing the outsourcing operations from its existing vendors, including WNS Global Services, EXL Services and 24×7 Services, sources who declined to be identified said. The outsourcing deal is valued at $1 billion over a 10-year period.Aviva’s BPO operations are run by Aviva Global Services on a built-operate-transfer (BOT) basis and managed by WNS Global, EXL and 24×7 Services. The insurer had plans to absorb these operations over a period of time.
    • WNS acquires Aviva BPO for $230 mn
      Warburg Pincus-controlled WNS Holdings on Tuesday acquired Aviva Global Services, the UK-based insurance giant’s captive BPO in India and Sri Lanka, for $230 million. WNS has beaten Aviva’s other vendors EXL and 24/7 Customer to clinch the deal.The deal will also see WNS securing Aviva’s committed $1 billion outsourced work over an eight-year period. ET, in its edition dated June 2, had first reported on the impending transaction. WNS is expected to inform the US Securities Exchange Commission on Thursday.
    • Nasscom pegs 24% IT-BPO growth for FY09
      India’s software-services exports would grow about 21-24% in 2008-09, lower than the previous year, to touch $50 billion, industry Nasscom has projected. Total IT-BPO revenues, including those from domestic market, would be $62-64 billion for the current fiscal, it said. For 2007-08, the IT-BPO industry, including domestic market, grew 28% to touch $52 billion. The industry is well on its way to achieve its target of $60 billion in exports by 2010, the association added.
    • Sub-prime swells coffers of Indian LPOs
      The US sub-prime crisis may have affected the fortunes of Indian IT firms, which have clients with mortgage exposure, but the country’s legal process outsourcing outfits are laughing their way to the bank as American law firms have begun offshoring the credit crisis-related work.
    • Warning bells ring over Bangalore as BPO destination
      Warning bells are ringing on Bangalore’s future as a leading BPO destination. It is not a full-blown crisis yet but the portents are disturbing, according to a cross section of industry, human resource and real estate experts.”From January 2008, only a handful of BPO companies have set up shop in Bangalore, as against an average two or three companies beginning operations every month in 2007,” says a source in a real estate consulting firm.
    • Sutherland ties up with California based Jamba
      Sutherland Global Services, a prominent BPO company, on Monday, July 7, said it has signed a customer and technical support outsourcing agreement with California-based mobile entertainment company Jamba for an undisclosed amount.As part of the agreement, Sutherland will provide usage support, billing queries, contract extensions and technical support to Jamba’s customers, a company release here said.”We are pleased to have the opportunity to leverage our deep domain expertise and global presence to design outsourcing solutions that enhance the competitive position of our clients” Sutherland Global Services Chairman and CEO Dilip Vellodi said.
    • Outsourcing HR may not yield desired results
      Early last month, Unilever delivered a -blow to traditionalist thinking among human resource professionals. The mega corporation that has been respected for its unique HR practices, multi-culture management and well-aligned HR strategy, outsourced most of its HR functions to Accenture on a seven-year contract. If Unilever doesn’t find it valuable to handle its own HR, what about ordinary companies, some ask? Unilever operates in over 150 countries employing over 2,00,000 people. It has nurtured great brands and recorded sales income of about 40 billion euros in 2005.
    • JB Group paves way for Indian BPOs in China
      In a path-breaking move, Hong Kong-based globally diversified $3 billion JB Group is paving the way for Indian BPOs to set up shop in China to leverage the IT strengths of the two Asian giants and enable them to grab a larger share of the global pie.The move has the full backing of the Chinese government that has offered subsidies, the Hong Kong Productivity Council and the Hong Kong Software Outsourcing Association (HKSOA), the JB Group, which traces its root to the Indian diamond city of Surat in Gujarat, said.
    • IT/ITeS to fuel realty growth in 2008
      Demand for office space has traditionally been driven by the IT/ITeS sectors that comprise software development and processing centres. This is expected to be the largest demand driver in 2008 as well. Of the total expected supply of 82.8 million sq.ft.in 2008, IT related developments will garner the largest chunk.IDC India, a leading research firm predicts that the domestic IT / ITeS market revenue will touch Rs1,10,000 crore in 2008 while sustaining the growth of 27% registered in 2007.
    • BPO employees fight for rights on the net
      It is redefining the way employee unions function. This ‘e-union’, that was formed last month on the Internet for BPO employees, does not plan to fight companies and managements the conventional way. That is, through strikes and sloganeering on the streets. Instead, they plan to hit where it hurts the companies most.The e-union plans to talk directly to shareholders so that it affects stock prices. After all, the fear of a downgraded stock price will force companies to set their operations team and its people in order, the union believes.
    • Now, BPOs queue up to book seat in billion dollar club
      The game is fast changing for the Indian business process outsourcing (BPO) industry as for several players, entry into the billion-dollar club may be round the corner.Given the inorganic opportunities, maturity of outsourcing and an appetite to grow scale rapidly, many BPO players may breach the psychological barrier much faster than IT services companies.
    • Tricom acquires US outsourcing firm for $2.25 mn
      Non-voice business process outsourcing company Tricom India on Thursday said it has acquired US-based Pacific Data Centres Inc for $2.25 million (about Rs 9.71 crore).Further, the company said it has also completed the acquisition of health insurance firm Godrej Global Solutions.
    • IBM India Lab develops data security solution for call centres
      The Indian lab of IBM has brought out a next generation solution to protect against theft of sensitive data from call centres, a major concern of the growing Indian outsourcing market.”We have developed a solution that offers advanced data masking technology, which is a speech analytics tool that detects and masks private and sensitive information, both audio and onscreen without disrupting customer services or business operations,” IBM India Research Laboratory Director Guruduth Banavar said.
    • IT, BPO to grow 10-15 pc in next 5 yrs: NASSCOM
      IT and BPO industry is poised to grow 15 to 20 per cent in the next five years and direct employment likely to go up to eight million, a recent survey by NASSCOM has said.The survey has revealed that prospects of the industry growing in 50 cities in the country were bright if the state governments concentrate on developing infrastructure in these cities.
    • Companies moving out of outsourcing business
      Outsourcing vendors could see more and more clients move back customer service work onshore or in-house, according to the Black Book of Outsourcing’s latest report.While telecom firm Orange UK recently announced plans to stop outsourcing call centre work to India, banks like New Zealand’s ANZ National and UK’s Lloyds TSB have in the past said no to offshoring contact centre work.
    • Quatrro BPO Acquires UK-based Gaming Outsourcing Firm Babel Media
      In its sixth and the biggest acquisition till date, Raman Roy-led Quatrro BPO, backed by US-based hedge fund DE Shaw Group, has acquired British firm Babel Media, a provider of specialist outsourced services to gaming and interactive entertainment industry. While the deal size stands undisclosed the deal value is believed to be in the $100-125 million bracket.

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