Source: www.business-standard.com

Having short-listed three bidders for its Business Process Outsourcing (BPO) unit after the first bidding round, the sale of the BPO business, run by Citigroup Global Services (formerly e-Serve), is expected to fetch around Rs. 3,200-crore for the group, which will make it the largest deal in the domestic BPO space.

While IBM, Automatic Data Processing (ADS), Infosys, EDS, Capgemini and private equity players, such as, Blackstone and General Atlantic, all expressed interest they are no longer in the race. It has now been left to FirstSource, WNS and Genpact to battle it out, sources close to the development confirm.

While Citigroup’s spokesperson declined to comment, investment bankers say Citigroup might not sell its entire 100% stake in the BPO business, a non-core area, in one go. In all probability, it will sell 80% to one of the successful bidders, while selling the remaining 20% at the company’s listing.

Changing its name to e-Serve last November, Citigroup Global Services employs close to 8,000-people in Mumbai and Chennai, and consolidated its holdings in the BPO firm from 44.4% to 92.26%, three years ago. Currently, it is a wholly-owned subsidiary of Citigroup.

So far, the largest deal in the BPO space was the recent sale of Intelnet by Barclays and HDFC to Blackstone for Rs. 840-crore.

Source: Economic Times

Pipping global software major CapGemini and IBM to the post, Infosys will be taking over three captive BPO units of Royal Philips Electronics, a Netherlands-based consumer electronics major for Rs. 114.8-crore ($28-million). Infosys’ second inorganic move, it acquired Australian Expert Information Services in December 2003 for $22.9-million in another cash deal.

With this, Infosys Technologies has taken another step towards increasing its footprint in Europe, by signing a $250-million outsourcing contract with Dutch Royal Philips Electronics (RPE). The 7-year contract will see Infosys BPO shouldering the responsibility of providing finance and accounting (F&A) services, including the processing of purchase orders worth $250-million. As well, 1,400-employees that are a part of Infosys’ Bangalore unit, will handle administration, patent research and product development work on a global scale for Philips.

In addition, Infosys BPO takes over Philip’s shared service centres in Chennai, Thailand and Poland that have a total staff count of 1,400-employees, after making an upfront cash payment of $28-million. TV Mohandas Pai, Chairman of Infosys BPO explains: “The cash payment is, because Philips had invested in setting up the centres, IP and processes.”

Not an acquisition, the deal is more like Infosys taking over a business that has an assured stream of revenue, after paying a relatively small amount of cash for Philips captive operations. A big client win, it is said to be amongst the largest F&A contracts bagged by any Indian BPO firm.

“For the first year, the three centres will exclusively service the global operations of Philips. After that they will start acquiring clients outside of the company,” says TV Mohandas Pai, Head (Education & Training) in Infosys.

This is the first time that Infosys, like its Indian counterparts TCS and HCL, is taking over a sizeable number of people, as Pai says: “Now that we have grown into a sizeable entity, this is the way forward for us to expand our business.”

Infosys’ second largest European deal, after its Euro 100-million deal with ABN Ambro in 2005, the Philips deal will help it expand its global network, including strengthening its European operations and catapulting Philips amongst Infosys’ Top 5 customers list.

Acceding to Philps demand, Infosys has demonstrated a willingness to invest in people with the assistance of a strong HR process, better solution quality, ability to leverage end-to-end process improvements, a robust risk mitigation and transition plan.

With the Philips takeover, Infosys BPO’s 2007 - 08 revenues are expected to touch $17-million. During 2006 – 07, Infosys BPO revenues grew over 70% - $148-million, while its client base increased by over one-third. Chasing a target of $250-million for this fiscal, its first quarter revenues of $50-million could well see it achieve its goal.

Infosys’ Background

1. Infosys BPO set up Progeon in April 2002.
2. Current staff count = 11,200, with Philips bringing in another 1,400.
3. 2006 – 07 revenue = $148-million (Rs. 600-crore).
4. Infosys is ranked 9th in NASSCOM’s list of India’s biggest third party BPOs.
5. Infosys has established its footprint in India, Philippines, Czech Republic, China, and Philips will bring in Poland and Thailand.

One may well ask, what the big deal is about? Well, it will help Infosys fight off competition from TCS, CapGemini and other European majors, including pushing Infosys among the finance segment’s Top 5. As well, it will get assured revenues of Rs. 1.025-crores.

Taking a leaf out of TCS’ book e.g. when TCS bought out UK-based Pearl Group in 2005, including bagging a 12-year contract valued at Rs. 3,810-crore (Pounds 486-million), the deal has received a positive response from stock markets and credit rating agencies, with Infosys’ share price closing high at Rs. 1,989 on the Bombay Stock Exchange. It has led analysts to predict that the Royal Philips deal could be the window to many new outsourcing contracts.

Source: Business Standard

Expressing confidence in India’s economic and business climate, Japanese IT major Fujitsu, plans on expanding its Indian operations, while hoping to grow rapidly over the next five years. Sensing India’s huge potential, it is confident that it can rely not only on application development and software services, but hardware product development, as well. And, the confidence is not misplaced, as Fujitsu India and Fujitsu Consulting India’s consolidated revenue for financial year 2006-07 stood at $35-million (around Rs. 140-crore).

Chiaki Ito, Corporate Senior Executive Vice President and Representative Director for Next-generation Technology Strategy and R&D for Fujitsu, on his first visit to India told Business Standard: “The Indian IT market will grow by nearly 20% annually and I expect more growth from the operations in India.” Re-establishing its IT business in India with a new focus on management, Fujitsu intends to strengthen its distributors, system integrators and partner relationships, enhancing their support capabilities at the same time.

As well, the Japanese firm plans to set up its business process outsourcing (BPO) operations in India, for which purpose, it recently ended its JV with RPG Enterprise by selling its 29.5% stake in Zensar. Industry. Sources confirm Fujitsu is already looking for acquisitions in this space. “It is no doubt that we should enhance our BPO capability on a global scale, since software and services business is our dominant business. India has excellent know-how and resources for BPO,” Ito says. Adding that his firm does not expect low-cost labour and simple software development like coding from India. However, Fujitsu will not build its R&D centre in a hurry, as it is important that it ensures the R&D centre is created based on Fujitsu’s global mid / long term strategy.

Currently, Fujitsu is catering to its US operations from global delivery centres in Pune, Noida and Hyderabad, where 1,400-employees work for its consulting and products segment.

Source: Economic Times

Xerox, the $15.9-billion document management firm’s division, Xerox’s Global Services (XGS) is gearing up for an expansion overdrive in India, by improving its focus on its services business in the sub-continent, even while it hopes to double its XGS workforce in India.

“We are looking to increase the firm’s headcount from the existing team of 600-people to nearly 1,200 by 2010,” says Ravi Venkatraman, Director - Xerox Global Services, confirming his firm’s strategy, while stating that XGS hopes to double its headcount, simultaneously doubling client acquisitions, including doubling revenues by 2010. At present, XGS has nearly 70-clients in India, which accounts for nearly one-third of Xerox’s global revenue from its services business in India.

Further, Mr. Venkataraman affirms XGS will build specialist teams for focusing on a variety of verticals in India, such as, cashing in on the ITeS, education and telecom sectors, adding: “Take the case for the telecom space. According to TRAI estimates, there are 214-million subscribers in India, which means that the documentation required by the service provider firms is immense. They have the customer application forms, address verification database to look after. The physical database for telecom firms is increasingly becoming a problem for operators. This presents a huge opportunity for XGS to step in and offer to manage the entire document consumption by these firms.” Already, providing Airtel with such services, XGS according to Venkataraman plans to come out with a complete packaged content management software, aimed specifically at education institutions in India. “With this offering, we would look to store all the departmental information in e-form, meaning less dependence on paper,” he claims.

Geographically, the firm’s focus will be mainly big metros, such as, Mumbai, Delhi and Chennai, in addition to Tier II cities, such as, Hyderabad and Pune, and has identified six Indian cities, it will scout for client acquisitions. With global clients, such as, Nokia, HSBC, CitiGlobal, XGS has aggressive plans to capture the Indian market, with Karnataka High court already implementing parts of its document management services solution, earlier this year. “We are also targeting the judiciary and healthcare segments besides ITeS and telecom,” states Venkataraman.

Expounding on document outsourcing opportunities in India, he claims Indian corporates translate into 4.7-trillion documents to manage in the document outsourcing space. “We are looking at gaining a market share in a market that is already valued at $36.6-million,” says he. “Moreover, documents tend to consume as much as 50% of the IT budgets within Indian firms and this represented an enormous opportunity for XGS in India.” Apart from XGS, there are other players in the market, such as, Canon and Hewlett Packard (HP), who both outsource printing requirements, and could therefore become potential clients.

According to IDC, a research firm maintains, global executives on an average, spend 45% of their time working with documents, while 90% of the firms do not know how much is spent on document production and maintenance each year. Further, IDC states the volume of document output in offices across the globe are increasing by, as much as, 21% per annum, due to changes ushered in by new technologies, such as, ERP systems, the Internet, Intranets and others.

As the Indian Rupee appreciates against the dollar, and Indian BPO / ITeS/ KPO firms suffer from high attrition, with research Pundits predicting that India will face a talent crunch, thereby unable to retain its position as a global outsourcing hub, reality paints a different picture as, despite rumours and research studies, the corporate and financial world remains bullish on India! Ground reality and experience tells them that India is capable of overcoming the odds and meeting the challenges thrown up in its face!

Already, the likes of IT majors Infosys, TCS, Wipro, apart from setting up overseas centres, have also set up finishing schools on their respective campuses to fine hone the skills of the young graduates they recruit. As new outsourcing frontiers open up, Indian firms are in there first, raring for first go!

Source: Economic Times

As India’s R&D sector begins to shine, it brings to mind lyrics of a Rolling Stones song that goes something like this: ‘May the good Lord shine a light on you, Warm like the evening sun!’ And, that exactly is what is happening to India, as global firms hone in on it, making the sub-continent their R&D hub, as Indian researchers innovate, coming into their own, aglow from the warmth of the evening sun!

Case in point, Adobe System, the US-based desktop publishing major, whose Indian R&D centre has come out with two new products for the global market. Recently, Adobe India, its Indian subsidiary, released FrameMaker 8.0, a publishing tool and Captivate 3.0, e-learning software, both of which were developed and designed entirely out of its Indian labs.

“Two teams of about 30 and 65-people worked on FrameMaker and Captivate simultaneously, for several months to roll out the products. FrameMaker 8.0 will be priced at $899 (for a new licence) and $229 for an upgrade. On the other hand, Captivate 3.0 will be priced at $699 (new licence) and $299 for an upgrade,” states Naresh Gupta, Managing Director – Adobe India.

In common use in various industries, like IT, aviation, telecom, banking, etc., FrameMaker is used for technical documentation purposes, and it has about half a million dedicated users, with Boeing, Apple and Cadence being the major patrons of FrameMaker. “In fact, the Apple i-phone’s manual was designed using FrameMaker,” says Mr. Gupta.

It’s time for that someone viciously dreamt up the term cyber coolies, at a time Indian techies had begun to take the outsourcing world by storm, to eat humble pie. From cyber coolies to cutting edge research and development, India’s outsourcing sector has come a long way!

And, so shrugging off the complex, centuries of western domination has instilled in Asian minds, Indians no longer are afraid of being laughed at, as they draw on their country’s ancient knowledge to solve the problems of the world! One only has to decipher ancient Indian manuscripts to find, our knowledge is not half as much of what the ancients knew! While, we pride ourselves on our cutting edge technology, we are no where near achieving technology used in the Mahabharata war, in what was the world’s First World War.

Even Robert Oppenheimer, father of the atomic bomb, found inspiration from the Bhagvada Gita, going so far as to quote from it, when describing the effect of the bomb: “If, the radiance of a thousand suns were to burst at once into the sky that would be like the splendour of the Mighty One…”

However, my vision and hope is Indians will refrain from research and development, whose outcome is horrific inventions, such as, the atom bomb. Rather, I hope what comes out of India’s R& D labs makes life better for their global family. And, so on that note, let’s end with the Robbie Robertson’s ‘Shine Your Light”.