August 2009 News

  • August 2009
    • Offshore Outsourcing: Sending Healthcare Overseas
      Rising medical cost has been helping to foster medical tourism for the same reason companies send code overseas: lower cost.Take the case of Terry, a public school teacher in Texas, who asked that her last name not be used. She went to India in June for cosmetic surgery to remove excess skin after a major weight loss. The cost of this surgery in the U.S. was somewhere between $25,000 and $30,000 and not covered by her insurance carrier.
    • Funds dump WNS; Warburg may have to lower price
      Several buyout funds and some strategic investors have turned their back on WNS Global Services putting the stake sale plans of Warburg Pincus in Inda’s second largest pureplay BPO firm in limbo. Warburg wants to sell its 50.12% controlling stake in the NYSE-listed WNS.Technology buyout fund Silver Lake, Apax Partners and Bain Capital are believed to have lost interest after initial due diligence which kicked off on Aug 10. The country’s largest BPO firm Genpact is interested in a share swap deal and not an all-cash transaction, as favoured by Warburg, multiple banking sources privy to the development told ET.
    • BP deal precursor to other big outsourcing contracts big
      The recent $1.5 billion outsourcing deal by UK-based oil major BP reconfirms that outsourcing will continue to grow, say analysts.While there will be many such deals in the next two to three years, analysts also believe all such deals with be cornered primarily by major players, rather than the smaller ones, leading to vendor consolidation.
    • Indian BPO’s biggest challenge is attrition
      The BPO industry in India has undoubtedly been a very popular field of employment in recent years but one of the biggest challenges it is facing is a phenomenal rise in attrition rate, says a new book.”On its flip side, it (the BPO industry) is characterised by lopsided working hours, high-stress work culture and extremely high attrition rates. Apart from other factors such as recession, currency dynamics and higher wage arbitrage, one of the biggest challenges which will have a lasting impact on the Indian BPO sector is the upswinging attrition rate,” says writer-teacher Shalini Verma in ‘Soft Skills: For the BPO Sector’.
    • Infosys BPO inks alliance with MortgageFlex Systems
      Infosys BPO Ltd., the business process outsourcing subsidiary of Infosys Technologies, announced on Tuesday its alliance with MortgageFlex Systems, Inc.The alliance focuses on the support of US loan servicing loan modification initiatives as defined under the Home Affordable Modification Program or alternative loan modification programs, Bangalore-headquartered Infosys said.
    • TechM bets on Satyam for BPO gains
      Tech Mahindra is banking on subsidiary Mahindra Satyam’s strengths for its BPO business to take off.Earlier this month, Tech Mahindra inaugurated a 1,000-seat BPO in Chandigarh in addition to existing centres in Kolkata, Noida, Pune and Chennai and two overseas centres in Belfast and New Castle.Most of Tech Mahindra’s clients are in the telecom space and many of these clients are deploying business applications such as enterprise resource planning (ERP) and business intelligence (BI).
    • Guj IT gaining momentum, creating more jobs at BPO’s
      After lull of six months, the Information and Technology (IT) sector in Gujarat is regaining momentum, creating more jobs for the youths, especially in the BPO segment, industry experts said.”BPOs are doing extremely well in Gujarat since they are largely focussed on telecom sector. A sector that is doing very well presently,” President Gujarat Electronics and Software Industries Association (GESIA) Nirav Shah said.
    • Remote infra mgmt cos eye big clients to stay ahead of MNCs
      IT services companies in India engaged in remote infrastructure management outsourcing (RIMO) are signing deals with larger buyers to ward off the growing competition from traditional MNC infrastructure outsourcing (IO) players, said a study.Everest Research Institute in its recent study on ‘Remote Infrastructure Management: Impending crisis of genre’ says: “With rising pressure to sustain growth and counter the competition from MNC infrastructure outsourcing suppliers, India’s providers of RIMO services are successfully targeting and signing deals with larger buyers.” Remote infrastructure outsourcing is a subset of the overall tech infrastructure offshore market.
    • BPOs focus on $200 bn European market
      The $200-billion IT services market in Europe is throwing up greener pastures for major Indian software services companies as new geographies show positive traction besides the traditional market of United Kingdom. Hitherto, UK had remained the key market for the Indian IT services majors like TCS, Infosys, Wipro—and even for Cognizant. It is estimated that more than three-fourth of these companies’ revenue in Europe actually comes from UK.
    • HCL: Reader’s Digest Bankruptcy Won’t Affect Contract
      Indian outsourcer HCL Technologies said on Tuesday that its US$350 million outsourcing contract with media company Reader’s Digest Association will be unaffected by the U.S. company’s financial problems.Reader’s Digest said on Monday that it was planning to file for bankruptcy protection. It said it had reached an agreement in principle with a majority of its senior secured lenders on the terms of a restructuring plan that will reduce its debt.
    • Genpact in race for Warburg Pincus’ 50% stake in WNS
      Genpact, the country’s largest pure-play BPO, is in the race for acquiring Warburg Pincus’ 50% stake in WNS Global Services, pitting itself against global private equity (PE) investors such as Blackstone and Bain Capital, said a person privy to the development.The process is still in the early stage with Merrill Lynch believed to be advising Warburg on the sale. It is learnt that Merrill has started selectively approaching IT and BPO firms and PE players.
    • HP could prune outsourcing services
      Hewlett-Packard Co is considering selling or shutting parts of its outsourcing business to focus on the higher-margin areas of its technology services offering, people familiar with the matter said. A year after buying Electronic Data Systems for $13 billion, HP executives are discussing the possibility of divesting parts of the outsourcing operations, especially in its business process outsourcing (BPO) arm, sources told Reuters.
    • Pure-play BPO firms rise in M&A sweepstakes
      A potential sale of back office firm WNS Holdings could trigger consolidation in the business process outsourcing sector as IT services firms, knocked back by the global financial crisis, look to bolster their presence in the growing BPO market.According to a media report last week, private equity firm Warburg Pincus was looking to sell its 50.12 per cent stake in WNS, a move that would entail a change of control at the Mumbai, India based call-center operator. IT services firms have thrived for years by winning contracts from international clients, helped by a large pool of English-speaking engineering workforce and cheaper wages.
    • Cognizant to offer BPO services from Phoenix centre
      IT major Cognizant announced on Monday operational expansion of its Phoenix delivery center and that it has added BPO services to an existing portfolio of application development, application maintenance, testing, and related services.Cognizant’s Phoenix BPO center will initially provide claim processing services for one of the largest healthcare plans in the US, it said in a statement.
    • Big pharma cos join outsourcing queue
      Ahmedabad-based Dishman is a specialist contract manufacturing company. So is Jubilant Organosys. Revenues of both companies from their contract research and manufacturing services (Crams) went up by 29 per cent and 41 per cent, respectively, in the last financial year.That hasn’t escaped the attention of even formulation manufacturers such as Dr Reddy’s Laboratories, Aurobindo, Lupin and Wockhardt. All of them have started giving more focus to securing outsourcing contracts from Big pharma.
    • BPOs eye global footprint to meet customer needs
      The Indian business process outsourcing industry is following in the footsteps of information technology service firms, increasing its global footprint as it eyes bigger and more complex work from clients.The demand for global solutions is pushing Indian BPOs to grow aggressively into global centres, said a senior executive. For instance, in the past 18 months, WNS has expanded its presence in the Philippines, Romania, and now Latin America.
    • Pharma outsourcing to cross $2.3 bn by 2010
      Riding over lower manufacturing cost coupled with availability of quality manpower with technical capabilities, the Indian pharmaceutical outsourcing industry is expected to reach $2.3 billion by the end of 2010, according to a report.The report jointly prepared by global consultancy firm Ernst & Young and industry OPPI said Indian pharmaceutical contract manufacturing industry is growing at thrice the rate of the global outsourcing market, and is expected to reach $2.3 billion dollars from $1.1 billion in 2008.
    • Sequoia Capital India Picks Up 6.8% stake in KPO eClerx
      Sequoia Capital India continues to cherry pick stocks from the open markets. The venture and growth capital investor has picked up a 6.8% stake in eClerx Services Ltd from open markets for around Rs 43 crore. eClerx was one of the first Indian knowledge process outsourcing firms to go for an IPO and was listed in 2007. The company provides data analytics and data process management services to the retail, manufacturing and financial services industries.
    • CIOs Fail to Measure Financial Effect of Outsourcing
      Nearly six in 10 chief information officers have failed to measure the financial impact of their outsourcing, according to research by Warwick Business School.
    • Infosys Looks to China Outsourcing Market for Growth
      When India’s second-largest outsourcer, Infosys Technologies, opened a China office six years ago, it followed the offshoring industry into a country seen as a rising alternative to India. Since then, China has mainly served as an added base from which Infosys can serve global customers, but now the company is now looking to China’s domestic market for continued growth.
    • Tech Mahindra opens BPO centre in Chandigarh
      IT firm Tech Mahindra on Thursday said that it has opened a new centre in Chandigarh with an initial capacity of 1,000 seats.The set up will focus on providing end-to-end customer service delivery to global telecom service providers, Tech Mahindra said in a filing to the Bombay Stock Exchange.Spread across 15 acres, the centre would have about 1,000 seats in the initial ramp up, with 500 seats at start and another 500 by the end of September 2009.
    • Airtel’s $500m outsourcing deal up for grabs
      India’s largest telco Bharti Airtel will outsource the management and maintenance of its 80,000 km-plus inter-city optic fibre cable network in a deal estimated at around $500 million over a five-year period, two executives familiar with the development said.Bharti has sounded out several telecom equipment majors about the contract that will be issued soon, said an executive privy to the development. The deal is in line with the company’s policy of outsourcing non-core activities to save costs and become a telecom marketing company.
    • Good news for IT/BT business in Karnataka
      State’s IT industry – the nation’s biggest – has something to cheer about. Karnataka plans to set up an IT/BT development authority which will function as a ‘true’ single-window to ensure speedier clearance of business proposals. The state cabinet is expected to clear this proposal soon.Ashok Kumar C Manoli, principal secretary, IT/BT/S&T, told TOI that the authority would work as an independent and would have the power to clear investment proposals without delay. This proposal to set up a special for business clearance was in response to industry demand. Asked what according to him are the key issues on the mind of industry leaders, Manoli said: “The industry has been communicating its concern over the delay in clearance of investment proposals. The proposed authority will offer quick solutions to all those industry woes.’’
    • BPOs under pricing strain
      The domestic business process outsourcing (BPO) industry is facing pricing pressure due to slowing economy and entry of new players.Domestic BPO units clocked revenues of Rs 8,900 crore for FY09, recording an yearon-year (YoY) growth of 41%. “There is pricing pressure primarily because of the entry of new players,” said Hinduja Global Solutions CEO Partha De Sarkar. Recently, Genpact, the country’s largest BPO player , announced its entry into the domestic market and has formed a separate business unit to target this segment.
    • WNS in talks with PEs to sell 50% in BPO
      Warburg Pincus has approached its global private equity peers for selling its 50.12% stake in BPO firm WNS Global Services, an indication that the world-wide recession could lead to consolidation among providers of back-office services.NYSE-listed WNS, India’s second largest BPO firm, may fetch a valuation of around $800 million providing Warburg with an exit payout of $400 million, according to investment banking sources. In 2002, Warburg had paid $40 million when it acquired a 64% stake in WNS from British Airways.
    • Outsourcing back in business
      The global outsourcing industry started showing signs of recovery in the second quarter ended June although many companies now prefer captive operations to third-party outsourcing, shows a recent study.Outsourcing transaction volumes increased 10% quarter-on-quarter even as third-party BPOs continued to struggle, according to the study by Everest Research Institute, an independent research and analysis organisation.
    • Vertex BPO hops back into business
      Vertex Customer Services, the Gurgaon-based Indian arm of the UK-headquartered business process outsourcing company, that grew to about 3,000 staff back in 2003 and then almost imploded with key client exits and got reduced to a 400 people operation, is now getting back in business. A new CEO and a new strategy hopes to see the BPO company back on track.It plans to hire over 6,000 staff by 2013. Besides, it’s looking at acquiring an analytics back office company to scale up its India offering from plain vanilla customer service work to analysing customer activity for better market forecasts for customers.
    • Genpact halves ’09 guidance
      Genpact has slashed its revenue growth guidance for 2009, providing evidence that the woes afflicting the wider sector have reached India’s largest BPO firm and casting doubts on the growth prospects of its peers.This is the first time Genpact, which until now appeared to have weathered the global downturn better than most companies, has lowered guidance in its two-year history as a publicly-listed company. Its announcement will put the focus on BPO rivals such as ExlService Holdings and WNS (Holdings), which are set to report their quarterly results this week.
    • Genpact Q2 profit in line with St, revenue trails
      Genpact Ltd posted a quarterly profit in line with expectations on higher global client revenue, but lowered its 2009 revenue growth outlook due to the uncertain economic environment, sending its shares down 7 percent.The business process and technology services provider said while the economy may have reached a bottom, it has not yet demonstrably improved, particularly for its client base.
    • Infosys BPO inks 5-yr pact with T-Mobile UK
      Infosys BPO, the BPO arm of Infosys Technologies, today announced that it has secured a five-year contract with T-Mobile UK.Infosys BPO has been engaged by T-Mobile UK to support several core processes for their finance directorate which cover customer finance, commercial finance and accounting (F&A), and procurement operations, Infosys BPO said in a statement.
    • IT companies eye $1.8 bn engg services market
      At a time when revenues from application development and maintenance are shrinking, Indian tech firms are seeing newer opportunities emerging from engineering services outsourcing market, estimated to be worth around $1.8 billion and expected to reach $50 billion by 2020.Tech companies such as TCS, QuEST Global, Infotech Enterprises and Tata Technologies are finding new opportunities because their top customers, including Airbus, Boeing, Bombardier and EADS, are changing their business models to cut costs with more outsourcing, bring in new risk-sharing partners and get closer to growing markets of India and China.
    • Domestic lack of talent leads US firms to offshore talent
      Despite Obama’s ‘No to Bangalore and Yes to Buffalo’ statement that came months ago, a new study has found that many companies continue to offshore only very few plan to bring back the jobs to America.According to the fifth annual report on offshoring trends, the US companies that offshore to cut costs have doubled over the period of three years.
    • Offshoring by US companies surges: Survey
      US companies are increasingly turning to offshoring their functions to achieve cost savings, and few plan to bring those jobs back to the United States, the Conference Board said Monday.The number of US companies with a corporate offshoring strategy in place more than doubled in the past three years, according to the fifth annual report on offshoring trends, published by Duke University in collaboration with the Conference Board.
    • AmEx looks to sell travel service BPO
      American Express (AmEx) is looking to sell a slice of its back-office operation in India, at least three people with knowledge of the plan said, putting it on track to join a long list of overseas firms which have shed their captive business process outsourcing (BPO) units in the country.A portion of the back-office operation providing travel-related services for its international clients is being hived off and talks have started to sell this piece of the business, one person told ET, but declined to divulge details.

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