Source: www.business-standard.com

The $1.4-billion IT service major, Cognizant Technology Solutions has major plans for beefing up its presence in Kolkata, as in India. In the next 18-months, Cognizant will be investing $46-million (Rs. 188-crore) on building its new 5-lakh sq. ft. facility at its proposed campus in Kolkata’s Bantala SEZ, on the eastern fringes of the city.

To be developed in phases, the 20-acre Bantala campus according to R. Chandrasekaran, President & Managing Director - Cognizant will seat 12,000-people.

As well, Cognizant plans to raise its sub-continental headcount and its forth-coming recruitment plan includes the hiring of 7,700-people, 65% of who will be fresh graduates, and a 1,000 of its planned increase in staff will be for its new Kolkata facility. Short-term wise, the American firm’s national headcount will increase from 34,000 to 43,000 people by December 2007.

As well, the IT major plans to spend $200-million by 2008-end on a phased building new fully-owned techno-complexes across Chennai, Coimbatore, Hyderabad and Kolkata, of which Kolkata’s $46-million (Rs. 188-crore) techno-complex for accommodating 4,000-employees is the first.

A low-cost software development service provider, Cognizant faces increasing competition from bigger firms like International Business Machines Corp. (IBM), Electronic Data Systems (EDS) and Accenture, all busy expanding their presence in India. As well, it also faces competition from Indian IT majors, such as, Infosys Technologies, Wipro and Tata Consultancy Services.

This has compelled Nasdaq-listed IT major Cognizant Technology Solutions to scout for acquisitions, in order to expand into new geographies or new technology platforms, especially in Europe, where it hopes to build domain expertise and expand its customer base in the region. Ideally, Cognizant is targeting a firm comprising of 80 - 100-people and whose total valuation is not more than $35 – 40-milion.

“We are looking at acquiring companies, especially in Europe in the range of $50-100-million. While, we are strong in the financial services and healthcare segments, we need to build our retail and manufacturing businesses. So, the acquisition could be to scale our expertise in one of these areas,” says Lakshmi Narayanan, Vice-Chairman, Cognizant Technology Solutions.

However, declining to give any names or a timeline for an acquisition, the first quarter of FY-2007 revealed 14% of Cognizant’s total revenue of $460.3-million came from Europe.

Head-quartered in the USA, with a majority of its employees based in India, Cognizant has been successful in making quite a few acquisitions in the past. It’s largest so far, Chicago-based Fathom Solutions bought for $35-million in 2005. Other acquisitions include Massachusetts-based AimNet Solutions, a managed infrastructure and professional services firm in 2006 and Ygyan Consulting, a Pune-based SAP services provider in 2004. The $50-100 million range indicates Cognizant is looking for potentially bigger acquisitions, as is Wipro, its Indian peer.

Looking to build on its service lines introduced in the last two years, Narayanan confirms: “The new service lines like remote infrastructure management, testing services, transformation through SOA, data warehousing, business intelligence etc have seen good growth. We are now looking to scale them up.”

Source:www.forbes.com

MUMBAI - Indian cities like Bangalore and Mumbai could be eclipsed as outsourcing centers by Chinese competition by 2011, according to a new study.

While the Indian outsourcing industry struggles with infrastructure problems and rising wages, China is making massive investments in infrastructure, English-language training, Internet connectivity and technical skills, says market research company IDC, making it attractive to companies looking for alternatives for offshoring back-office functions.

“Chinese cities are on the rise and nipping at India’s heels,” IDC said. “IDC forecasts that Chinese cities will overtake Indian cities by 2011 due to massive investments made which are favorable towards offshoring.”

For now, Bangalore leads IDC’s list of the Top 10 cities best suited to be offshore services centers, followed by Manila, New Delhi and Mumbai.

The Chinese cities of Dalian, Shanghai and Beijing, Australia’s Sydney and Brisbane, and New Zealand’s Auckland round out the list, in that order.

IDC’s list is based on cost of labor, rent, turnover rates and language skills, as well as political risk and future plans for infrastructure improvements.

While there is little doubt that China is becoming a strong contender to India, other analysts expressed skepticism over whether it will surpass India anytime soon.

Both India and China churn out hundreds of thousands of college graduates every year, ready grist for the workforces of tech companies. But India produces around double the number of English-speaking graduates, about 450,000 annually.

And though China is working to equip an increasing number of graduates with English skills, a recent Gartner note on India and China’s IT strategies concludes, “In terms of English language comprehension and proficiency, China will remain a challenger, not the global leader.”

India increasingly appears to be a victim of its success. Rates of attrition and wages are rising as companies fight for talent. In the fiscal year through March, wages grew at an average of 12% to 15%, and wages are expected to rise another 20% in the present fiscal year. The Gartner report said India was witnessing a shortage of skilled resources at “all levels” of the tech personnel chain.

China is also on stronger ground when it comes to infrastructure and the relative ease in setting up operations in the country. India’s government has promised to spend $350 billion to improve infrastructure, but companies are often plagued by problems like erratic power supply and congested roads and airports that make travelling from one city to another — or even within cities — a tough task.

Indian companies themselves are setting up bases in China, both at the request of Western clients as well as for the potential to win outsourcing work from local companies. In recent months, Infosys (nasdaq: INFY - news - people ), Tata Consultancy and Wipro (nyse: WIT - news - people ) have announced plans to ramp up China operations.

But China’s software services market is presently only a fraction of India’s. In the fiscal year to March, India clocked revenues of $39.6 billion; China’s software service exports stood at around $1.5 billion in 2006. China hopes to raise that number to $10 billion by 2010. India has a goal of $50 billion for this year.

A Forrester report in May titled “China’s Diminishing Offshore Role” concluded that the country’s offshoring market had not taken off as expected and had a way to go before emerging as an alternative to India. China also faces similar problems of India like attrition, increasing wages and lack of experienced managers and technical leads, according to the report, authored by John McCarthy.

“While there continues to be demand from Japan and multinationals with operations in China, the offshore business from the U.S. and Europe has been slow to materialize,” McCarthy said.

“The consensus among interviewees was that China still has not overcome clients’ concerns about limited English skills, attrition, and weak intellectual property protection,” McCarthy said.

Forrester quoted an executive who “went so far as to say that China had to be 20% cheaper than India to be viable, and it’s roughly at par in terms of rates currently.”

But even the Forrester report acknowledged that in the local tech market, services for local clients and multinational corporations with operations in China are growing significantly.

Source:news.com

Affordable rent, low-cost labor and population literacy are the main reasons why companies still prefer to set up their delivery centers in Indian cities such as Mumbai and Bangalore. But this offshoring trend is likely to change in the near future, according to an IDC study.

The analyst group forecast that Chinese cities will soon overtake their Indian counterparts as top destinations for offshore global delivery by 2011, based on the results acquired from its Global Delivery Index.

The GDI compares 35 cities in the Asia-Pacific region as potential offshore delivery centers based on a set of criteria such as labor and rental costs, language skills and turnover rate. Cities covered by the index include Adelaide, Bangalore, Dalian, Hanoi, and Kuala Lumpur.

According to Conrad Chang, IDC’s research manager for Asia-Pacific business process outsourcing research, what differentiates the leading cities from the rest is “the focus on deal-clinching factors” such as agent skills and political risk.

“There are different risk factors to consider when evaluating outsourcing, offshoring, onshoring and nearshoring,” Chang explained in a statement Tuesday. “Some factors are obviously more critical than others.”

Chang also noted that while Indian cities scored high on the criteria set by the GDI, the picture could well be different four years from now.

Although the top-ranked Chinese cities–Beijing, Shanghai and Dalian–trail their Indian counterparts in the GDI this year, they are expected to overtake the competition by 2011.

IDC attributed this to China’s massive investments in areas favorable to offshoring, including infrastructure development, technical skills and Internet connectivity.