December 2008 News

  • December 2008
    • Infosys eyes closer integration of tech & BPO biz
      Infosys Technologies is looking at a closer integration between its technology and BPO businesses to beat the slowdown blues. The move is expected to maximise profits for the tech bellweather at a time when billing rates are under pressure and customers want more value for the same price.Many senior executives have also moved from Infosys Tech to the BPO arm facilitating the intergration efforts. For instance, the knowledge services business unit of Infosys BPO is headed by a former Infosys Technologies executive. The vice-president and head of sales of Infosys BPO is also from Infosys Tech. Both communication and finance & accounting business units are also headed by former executives of Infosys Tech.
    • Logistic outsourcing biz to touch $90 mn by ’12: Assocham
      India’s third party logistics business is likely to grow by 55 per cent reaching the $90 million mark by 2012, a study by industry Assocham said on Monday.With globalisation, the demand of third party logistics business, a western concept, is catching up in the country as Indian firms ‘which are eager to expand in new markets’ are turning towards it for better management of their supply chain processes, the chamber said.
    • Legal outsourcing set to boom
      An Indian legal professional who takes home Rs 25,000 a month earns a tiny fraction of the Rs 10,000 an hour that his counterpart in the US earns.But with Indian legal process outsourcing industry poised to increase it’s hiring, amidst a whirlpool of cost cutting measures being embraced aggressively by the US and the European firms, things could change. Mathematically, this translates into 20 per cent rise in salary packages of LPO employees and bonuses of up to 25 per cent to experienced lawyers employed by various outsourcing outfits.
    • BPOs back in demand
      The global economic slowdown is beginning to spell a windfall for some BPO firms. Companies such as WNS, EXL, Steria and Quatrro are finding new opportunities as clients aggressively pursue cost-cutting.“With reality dawning that these are going to be tough times, companies have become more aggressive on outsourcing,” said WNS (Holdings) CEO Neeraj Bhargava.
    • 50,000 emp of IT, BPO will lose jobs in ’09
      Beware, you may be the next techie to lose your job. Reason: A forecast by the Union of IT Enabled Services (UNITES) has warned that over 50,000 IT professionals in the country may lose their jobs due to recession which has sunk deeper. The export driven sector which is facing global meltdown, cant help sacking its employees.
    • 30 IT majors plan to invest in Bhutan
      Around 30 leading IT firms from India held strategy meetings recently to explore investment possibilities in Bhutan.The IT leaders were of the opinion that Bhutan can be a hub for data centres operation, disaster recovery centre, BPOs and software development centre.
    • BPOs thrive as firms take to outsourcing in trying times
      The global economic slowdown is beginning to spell a windfall for some BPO firms. Companies such as WNS, EXL, Steria and Quatrro are finding new opportunities as clients aggressively pursue cost-cutting.“With reality dawning that these are going to be tough times, companies have become more aggressive on outsourcing,” said WNS (Holdings) CEO Neeraj Bhargava. The BPO firm recently renewed its contract with Centrica that includes a new, three-year transformational plan for streamlining the energy firm’s operations. WNS, which is witnessing traction in utilities, telecom and insurance, is in active discussions for 5-6 deals that it expects to close in the next quarter.
    • Cognizant upbeat on Indian market, eyes big-ticket deals
      Cognizant, which derives a major portion of its revenues from North America and Europe, sees major opportunities in the Indian market on the back of significant IT services contracts coming from companies in verticals such as insurance, financial services and manufacturing.The Nasdaq-listed company’s president and managing director R Chandrasekaran said the India focus isn’t a de-risking strategy or an effort to drive up its offshore utilisation rate. But, that, it is part of a broader strategy to focus on emerging markets, which currently accounts for less than five percent of its revenues.
    • Wipro to acquire Citi IT arm for $127 million
      Wipro Technologies on Tuesday said it is buying the IT arm of Citigroup in India for around $127 million. The deal could yield contracts worth up to $1 billion for India’s third-largest software exporter from the global financial services provider.The all-cash deal to acquire Citi Technology Services (Citos) comes with a commitment by Citigroup to outsource all future infrastructure management contracts to Wipro, which will absorb some 2,000 Citos staff in Mumbai and Chennai. As part of the deal, Wipro will deliver infrastructure services and provide application development and maintenance to Citi for six years, assuring the Bangalore-based company of at least $500 million in revenues over the period. “It could be twice as much over the next few years,” said Jagdish Rao, Citi’s global technology head. “As we face these challenges, there will be greater demand for moving more work to offshore locations,” he added.
    • Relocate or quit, MphasiS tells Noida unit BPO employees
      IT services firm MphasiS has asked all 1,300-1,500 employees at its Noida office to either move to a low-cost location or quit. Most of the employees have quit or are in the process of quitting the firm. Only a few have decided to shift to another centre, informed four former employees who quit recently.It set up the Noida centre in 2005 for BPO operations and has over 1,000 BPO employees, besides some IT employees. The four former MphasiS employees ET spoke to said the company had told the BPO employees about three months ago to decide between quitting or relocating to other MphasiS centres such as Indore and Vadodara. All employees were given time till December-end to decide and were not given any reason behind the move.
    • Sourcepilani: Unique rural BPO model
      A team of five young graduates inside the designer office of Sourcepilani are busy generating a database of companies for their recently acquired international client—Wikinvest, Wikipedia’s investment-related offering. The database will be used by the portal to provide financial details of companies to millions of its online users across the world.“The team is very enthusiastic, and is doing its best,” says Manoj Vasudevan, CEO, Sourcepilani, a rural BPO set up in Pilani, Rajasthan. Set up in September 2007, it employs over 55 rural graduates, who work out of a 2,000 sq ft facility to provide back-end services to domestic and international clients.
    • Offshoring and Outsourcing Not a Solution for Economic Downturn
      Enterprise IT executives looking to cut expenses in 2009 will consider outsourcing, but industry watchers argue moving from fixed to variable costs could also result in unreliable services, unpredictable outcomes and financial woes.
    • 6 reasons why Indian BPOs will keep booming
      In recent months articles in The Wall Street Journal and have postulated that outsourcing information technology work to India was losing appeal.They said that high employee turnover in Indian outsourcing companies and rapid growth had reduced work quality and upset Western customers. These same articles argued that salaries in India were rising so quickly that Eastern Europe, British Columbia, and even Oklahoma would soon become competitive with India.
    • In meltdown, 2 big BPO deals cheer India
      Outsourcing fights back and lives to see another day. While every was rushing to write off the industry in the wake of Barack Obama’s election and the global economic slowdown, two major outsourcing deals in the hospitality and the pharma sectors have been signed which should bring hope and cheer for the Indian BPO sector.
    • Outsourcing clients seek upfront savings payments from vendors
      When Tech Mahindra paid $100 million upfront as part of future savings to clinch a multi-year outsourcing contract from British Telecom (BT) earlier this year, it was seen as one of a kind deal. It was not. Many large IT outsourcing customers, particularly in the financial services and telecom sectors, are demanding hefty upfront savings payment from service providers to tide over the global slowdown and credit squeeze.“One large insurance company, currently discussing a contract, demands over $100 million upfront payment as part of the savings promised by a vendor,” said a top executive of a leading tech firm who did not wish to be named. “We find more telecom companies discussing this as part of the deal currently,” he added.
    • Fidelity to sell local tech services arm
      Global financial services behemoth Fidelity Investments has put its 2,000-member captive technology solutions unit on the block, two people involved with the bidding process said. The possible suitors include large Indian IT majors like Infosys, Wipro, Satyam and transnational peers like Accenture and IBM.The successful bidder will acquire the company’s employees and facilities located in Bangalore and Chennai through an upfront cash transaction, but will also walk away with a committed multi-year outsourcing contract from Fidelity, sources added. Citigroup and insurance giant Aviva off-loaded their captive back-office operations in similar deals earlier this year.
    • After Axon, HCL eyes more buyouts
      HCL Technologies , which is going to close the largest acquisition by an Indian IT firm, is already considering more buyouts. The country’s fifth-largest IT services firm is interested in engineering services, remote infrastructure management (RIM) and platform-based BPO firms, its CEO said.HCL will acquire UK-based consultancy Axon Group for £441.1-mn ($655 mn) on Monday. “We will acquire (more companies). This (Axon) is one of the acquisitions. We are homing into a few things,” HCL Technologies CEO Vineet Nayar said.
    • Offshoring by banks under lens
      The Reserve Bank of India has decided to bring offshore outsourcing of financial services by foreign offices of Indian banks under its ambit as a part of its policy on cross-border supervision.In a circular issued this evening, RBI has asked banks to ensure that offshore service providers are a regulated entities.
    • Career in Indian LPO: A Problem of Perception?
      This is despite the fact that 45% of respondents felt that the pay package at an LPO was better as compared to the pay package at law firms. While there has been significant media hype about legal services outsourcing, it was surprising that a large number of students pursuing law were either unaware of offshore legal services (better known as LPO) or they did not consider it as a preferred career choice.
    • Credit Suisse plans to cut down outsourcing to Wipro
      Top Swiss bank Credit Suisse, which announced global layoffs to the tune of 5,300 last week, is significantly reducing work to Wipro, according to sources.With about 1,400 Wipro consultants currently working with Credit Suisse, the IT company may have to shift many of them to other projects or put them on the bench. More layoffs at Credit Suisse are expected, according to industry and market sources, in the next five days.
    • Meltdown: No job loses in BPO sector
      Software and BPO industry Nasscom on Wednesday said the business process outsourcing sector is not in the danger of losing jobs due to the ongoing economic downturn rather a net hirer in the current fiscal.In a statement here Nasscom said, “Media reports suggest that the Indian BPO industry will see 2.5 lakh job losses by the first quarter of 2009, in the wake of downturn in the US and other developed economies.
    • Recession: Impact on Global, Indian and European Outsourcers
      A few weeks ago I was at an offshore group meeting, and a debate started on the impact of recession on outsourcing. Overall verdict was that a recession will not derail offshoring and, in fact, may even significantly increase demand for offshoring. I was still left unsure about it so I thought why not get to the heart of the matter, look at the financial results and outcome from the various categories of offshore outsourcers and then, let everyone decide for themselves about what’s really going on.
    • BPOs to layoff 250,000 jobs
      Reports suggest that India is all set to lose upto 2.5 lakh jobs in Business Process Outsourcing (BPO) sector. Yet another impact of global economic crisis. The layoffs are likely to take place in the first quarter of 2009. The BPO sector is seeking urgent government intervention to the crisis. Also it is seeking a bailout to avert job loss. BPO’s are demanding extension of tax relef from five to ten years.
    • US outsourcing clients seek rate cuts
      US companies like Best Buy, Visa and Conseco have started negotiating rate cuts with their Indian IT outsourcing partners. In what appears to be the first round of renegotiating their outsourcing contracts after a slower economic growth hit their businesses, US firms are seeking rate cuts anywhere in the range of 3-7 %, industry experts in the know of these renegotiations told ETon conditions of anonymity.“New contracts are being doled out at lower rates, along with discounts offered for the existing projects,” an expert said. Also, new projects are being shelved for at least one year by these outsourcing customers as they look to reduce their operational costs. In some instances, customers are asking vendors to do more with same budget. “This is being done by redefining the scope of service-level agreements,” an industry expert said. Best Buy, Visa and Conseco did not respond to a query sent by ET last week.
    • How IT and BPO giants are cutting costsIndian IT companies are becoming more innovative in terms of cutting costs and, interestingly, they are now seeking ideas from their employees!While multi-national companies are on a job-cutting spree, the mantra for Indian companies is ‘cut costs’. From cutting down on snacks, travel, telephone bills, power, stationery bills and even tissue rolls in rest rooms, the going gets tougher for IT professionals.
    • BPOs may lose 2.5 lakh jobs
      Business Process Outsourcing firms are likely to see 2.5 lakh job losses by the first quarter of 2009 in the wake of downturn in the US and other developed economies, BPO industry association said.Though the industry is likely to see thousands of job losses, the silver lining is that the recession would compel more companies in the US and Europe to look at outsourcing as a way to cut costs and improve efficiencies, the Business Process Industry Association of India (BPIAI) President Samir Chopra said.
    • Slowdown to benefit BPO industry
      Indian industry will feel the real impact of the current meltdown in the US and other developed economies in the first quarter of 2009, with the business process industry likely to see job losses of up to a quarter of a million, said Samir Chopra, President, Business Process Industry Association of India (BPIAI).Addressing delegates at a session on ‘Surviving US Recession- Developing & Transforming Policies’, Chopra, however, saw a silver lining in the ongoing recession for the BPO sector, saying that it would compel more companies in the US and Europe to look at outsourcing as a way cut their costs and improve efficiencies.
    • Quatrro BPO may acquire about half-a-dozen companies
      Quatrro BPO Solutions is in ‘fairly advanced’ talks to acquire about half-a-dozen companies, one of them valued at over $300 million, its managing director said on Thursday.“It’s an exciting environment to acquire. Some good companies are available at very good prices,” Quatrro MD Raman Roy said.
    • Attrition in BPO comes down from 40% to 20%Taking a cue from the global slowdown, the Indian IT sector is cutting manpower costs. Top IT firms like Infosys, Wipro, TCS, Polaris and Cognizant are easing their stringent exit policies. These companies are waiving off bonus tie-ins so as to allow automatic sizing up of workforce. On the other hand, some are resorting to increased working hours for existing employees to squeeze out maximum productivity without doling out extra salaries.
    • IT cos with BPO arms to steal show
      Having won more than half of large BPO contracts announced during past one year, leading software services firms with back-office arms are set to become bigger players in the BPO market, according to research firm Datamonitor.Companies such as Tata Consultancy Services (TCS) and Cognizant also accounted for almost 80% of the total value of large BPO contracts awarded in the past one year. According to Datamonitor, 54.3% of all large BPO deals were signed by IT services vendors having BPO arms, and not specialist BPO firms.
    • Meltdown effect: Guj BPOs say ‘work from home’
      Going by the adage ‘necessity is the mother of invention’, business process outsourcing knowledge process outsourcing units in Gujarat keep finding unique ways to cut cost amidst economic slowdown.In order to reduce infrastructure costs and optimise on available resources, these units have been encouraging their employees to work from home or offer flexible working hours.
    • Mumbai terror puts IT, BPO firms on high alert
      The Mumbai terror attacks have once again put Indian IT and business process outsourcing firms on high alert. Over the next four to five weeks, many of these firms plan to meet or video-conference with their clients to update them of the country’s security scenario.
    • Outsourcing costs may creep up
      The Mumbai terror attacks couldn’t have come at a worse time for the $50-billion ITBPO industry. Though many industry honchos feel that the IT-BPO sector may now see a further slowdown in new business and client visits, others feel that clients will now look at setting up disaster recovery centres as an integral part of strategy which will lead to an additional cost burden.Most industry leaders are still unanimous that the perception of India as an outsourcing destination will remain unchanged. There will, however, be a short-term impact. Employee security will also be beefed up further. Experts also add that there will be fewer overseas customer visits, at least in the short term, delaying due diligence process, which will impact new business in the short term.
    • BPO offer to new recruits optional: Wipro
      Wipro said on Monday that offers made by it to some of the campus recruits to join the company’s BPO division is optional and in no way intended to pressure them to join the outsourcing section.”We have categorically stated that the present offer is not mandatory. If any candidate does not want to take this up, he is then free not to join the BPO,” a company spokesperson told Business Standard.
    • IT-BPO lobby to take up layoff issue with Nasscom
      Unites Professionals India, the IT-BPO trade union, plans to take up the issues of layoffs and training for the so-called ‘non-performers’ at its first meeting with apex software and services association, Nasscom, on December 5. Such non-performers are usually asked to leave by the employer.In any IT-BPO company, about 5% of employees come under the category of low or non-performers. “Why don’t we invest in them? They may not be paid their full salaries for some time but their skills, teamwork and other problem areas can be worked on,” UNITES Professionals India general secretary Karthik Shekhar said.
    • Infy to leverage R&D skills to bag big deals
      At a time when several big IT spenders such as Bank of America and Citigroup are reviewing their budgets, Infosys Technologies, India’s second-biggest software exporter, plans to leverage its R&D capabilities to win bigger transformation deals like the British Telecom (BT) outsourcing contract the company won a few years ago.BT, which is now one of the top-three customers for Infosys, has evolved to become a $100-million plus customer for the company, according to an industry expert who requested anonymity.

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