Source:www.Inhome.rediff.com

The US slowdown stands to benefit the estimated $8 billion Indian business process outsourcing (BPO) industry, at least in the short term.

US companies, hoping to save money during the recessionary phase, are likely to increase outsourcing of information technology services.

However, “outsourcing American jobs to India” can again be an issue during the 2008 US presidential elections. With growing pressure on IT budgets, large outsourcing deals should see a revival in 2007, believes Neeraj Bhargava, CEO, WNS. “The US witnessed a slowdown of up to 5 per cent in 2005-06 because of slowing numbers in outsourcing deals, but this time around we should see a renewed push from the US to seek more business offshore.”

During a slowdown, projects on the periphery get cancelled and Indian outsourcing industry, has over the years proved itself, invested in resources and skills and moved into the core business areas, adds P K Sridharan, executive director and chief mentor, Hexaware. “What really drives US firms is their bottom line and they will only increase outsourcing to cut on cost as employee cost accounts for around 40 per cent of their operating costs.”

Service tax, a 12.5 per cent tax on leased and rented premises, is being touted as another dampener for BPO players. But they chose to play it down. Says Rohit Kapoor, president and CFO, EXL Services: “We will not take a huge dent on the bottom line with the levied service tax, may be an additional 1 per cent of our revenues. But there is ample scope for us to maximise our operating costs and returns per employee.” WNS, which already claims to run maximum number of shifts, is working towards adding more shifts “to utilise the infrastructure capacities better”.

The Indian IT-BPO sector (including the domestic and exports segments), is growing at an estimated 28 per cent with revenues expected to exceed $47.8 billion in 2007. Recent Nasscom-McKinsey report suggested that the total addressable market for global offshoring is approximately $300 billion, of which $110 billion will be offshored by 2010.

The report further says that India has the potential to capture over 50 per cent of this opportunity and generate export revenues of approximately $60 billion by growing at 25 per cent year-on-year till 2010.

Kiran Karnik, President, Nasscom, remains upbeat about the Indian outsourcing industry but highlights, “The lack of any announcement regarding continuation of tax incentives (as part of the Software Technology Parks in India (STPI) scheme) is particularly disappointing at a time when other countries are going all-out to provide a host of inducements.” He says this may lead both Indian companies and MNCs to locate a growing proportion of their incremental growth in other countries.On the issue of the US elec tions, Karnik said: “The outcome will not really matter. Positive trade with the US is bound to continue. It is line with economic compulsions of a competitive global economy.”

Industry experts, who wish not to be named, say that it’s the run-up to the elections that generates more rhetoric rather than the election outcome.

Meanwhile, hunting for delivery centres in cheaper outsourcing destinations like the Phillipines, South Africa and even Europe is on the industry’s to-do list too. “Service-line expansion is aiding service providers to take on larger and more complex deals and is driving up the average ticket size of contracts awarded to Indian firms,” says the Nasscom Strategic Review 2007. The domestic market is also picking up, feel companies like EXL. Total size of the domestic market crossed $15.9 billion in 2006-07, and although this segment has been led by MNCs in the past few years, Indian firms are gradually gaining ground. Overtime, this segment could become a larger SME play, as the mid-sized firms increase their levels of IT adoption.

Source:www.Hindustan Times.com

THE WORLD may be flat for India’s exploding tech industry, but the next global ambition — being shaped on a spindle-shaped island in the Bay of Bengal — depends firmly on the earth’s curvature.

At Sriharikota, India’s sole spacesport, international orders for satellites are mounting, and with them the country’s global ambitions. That is why the Indian Space Research Organisation (ISRO) is preparing to throw open its once closely guarded rocket programme to the private industry.

“To start with, we’ll outsource non-critical applications that constitute 50 per cent of the rocket programme to the private sector,” Dr M. Annamalai, director, Satish Dhawan Space Centre, Sriharikota Range, told HT. “For certain operations, we’ve invited tenders from the industry. We’ll give you the names (of industries) once the formalities are completed.”

HT has learnt that five companies have submitted bids: Tatas, Mahindras, Godrej, L&T and the Bangalore-based Aversala.

“This is a big opportunity for the private sector in India,” said Godrej spokesman S.N. Vaidya. Another company spokesman said much of the West’s space engineering was done by the private sector. He said NASA was now outsourcing even major research, focusing increasingly on concepts.

It’s estimated India could build 15 to 20 satellites each year (the current capacity is eight) as the country offers its satellite-building and -launch services to other nations.

In April, the space agency offered outsourcing of satellite systems and satellites to private companies, based on ISRO designs. It has projected a demand for at least 10 satellites — from private telecom companies as well as international customers.

ISRO now plans to outsource a chunk of the work in the manufacture of indigenous rockets — the Polar Satellite Launch Vehicle (PSLV) and the Geosynchronous Satellite Launch Vehicle (GSLV) — to the industry. It intends to hand-hold companies through the manufacturing process. Quality control too will rest with ISRO.

The long-term objective is to free ISRO engineers and scientists to focus on research and new technologies.

Outsourcing would also help ISRO become a serious contender in the global satellite-launch market. “Our launch costs are 30-35 per cent cheaper than foreign launches,” Dr Annamalai said.

A beginning was made when ISRO invited Ranchi-based PSU Mecon to construct the second launch pad at this spaceport at a cost of Rs 400 crore on a turnkey basis. Mecon then outsourced some work to other public and private industries.

The new launch pad will be used during the GSLV’s blast-off in July to place the INSAT 4C satellite in orbit.

Companies like L&T and Walchand Nagar Industries have already played a role in manufacture of systems and components for launch vehicles in recent years.

Also, HAL has supplied four strap-on boosters for GSLV, while Andhra Sugars Ltd produces liquid propellants that power the rocket.

Source: www.business-standard.com

Lake Systems Pvt. Ltd. (LSPL), a Bangalore-based healthcare business process outsourcing (BPO) major, is setting up its first unit in Nashik.  Initially, it will employ-100 professionals, and this will be LSPL’s first BPO unit in the Indian state of Maharashtra and it’s second in India.  Located in the Satpur area of Maharashtra Industrial Development Corporation (MIDC), it is expected to begin operating by end-April 2007.

Pratibha Nakil, a director in LSPL confirms that as a part of the firm’s expansion plans, a healthcare BPO unit is being set up at Nashik, where a 3,500-sq. ft. property has been leased in the Satpur MIDC area of Nashik.  Operations will being with 100-cmployees, gradually increasing the strength of its workforce.  With a major focus on medical transcription (MT), LSPL has most of its clients in the US and Australia.

According to Nakil, the business volume of the global MT industry is around $22-billion of which, 20% comes from India, and the size of business generated by the MT industry annually in India is estimated at $5-billion.  While, Bangalore, Hyderabad and Delhi are the prominent MT industry centres in India, however, the business is beginning to see a shifting to smaller cities, such as, Pune, Kochi, Coimbatore and Nashik.

Currently, LSPL with a BPO unit in Bangalore employing 150-people, is a leading national outsourcer offering data transcription and document management services to hospitals, multi-specialty clinics and individual physicians in the UK, the US, Germany, and Australia.

This, even as IT firms see potential in the healthcare and pharma business, due to the global healthcare industry being under pressure to reduce research and administrative costs and meet tighter compliance and security mandates, both in Europe and the USA.  As margins remain under pressure, pharma companies, health insurance players and health maintenance organisations (HMOs) are looking at alternatives to cut costs and meet the US Food and Drug Administration (FDA) rule mandates.  K. Muralikrishna, Managing Director of Helios & Matheson, a Chennai-based information technology firm says: “Healthcare organisations outsource less than 10% of their IT budget.”  Thus, this market has begun to represent great outsourcing opportunities for players in the IT industry.

“The global healthcare IT outsourcing market is estimated at around $80-billion and growing by 12% every year,” according to Murlikrishan, adding: “Automation in the industry is extremely low.  As pressure from consumers’ increases, players will need to outsource an increasing share of their IT budget.  With costs six to seven times lower than in the US, Indian IT firms stand to benefit from this opportunity.”

The pharmaceutical and healthcare industries in the US are experiencing a turbulent patch, as the struggle ensues to replace the traditional blockbuster model of drug development with one that enables development of safer, more efficacious drugs.  This means the industry is struggling to cope with rapidly rising costs, inconsistent delivery and inadequate access in many countries.

These pressures have led the two industries in to working closely together, to realise the value of information collected and to provide better products and services.  However, it is new technologies like common data standards and security-rich systems that may well play a major role in enabling this convergence.

And, all this while, Helios & Matheson has been building a strong customer base, making four acquisitions in the last five years, and adding to their list of customers, which notably now includes Pfizer, only the world’s largest pharma company and Delta Healthcare.  Murlikrishan says: “We hope to be able to improve margins by farming out activities to India.”

Not to be left out of a share in the pharma off-shoring / outsourcing pie, other Indian firms have begun to gear up to the IT outsourcing opportunity in the healthcare industry.  Only last month, GlaxoSmithKline (GSK) and Tata Consultancy Services (TCS) announced a new agreement for establishing a global drug development support centre in Mumbai to help meet the demands of a growing GSK pipeline.  Under a multi-year, multi-million dollar contract, TCS will provide a variety of services in clinical research, including clinical data management and clinical submissions support.