Source: economictimes.indiatimes.com

MUMBAI: Worries over the impact of a firmer rupee have taken a backseat in the minds of investors, but the threat of a cut in IT budgets by US companies has assumed more importance, driving software stocks down, analysts said.

Concerns over a slowdown was rekindled earlier this month, when tech majors such as IBM and Cisco cautioned investors of a possible softening in demand from American businesses. Multi-billion dollar subprime-related losses disclosed by the likes of Citigroup, Merrill Lynch and Barclays have also fuelled the negative sentiment.

“BFSI spends in the next year may be muted. That is why IT stocks are being hammered,” Angel Broking research analyst Harit Shah said, referring to the banking financial services and insurance sector.

Shares of Infosys Technologies, Tata Consultancy Services (TCS) and some other Indian IT majors are trading near their 12-month lows. “At one stage, rupee was the concern. But today, US slowdown is more of a concern. Any US slowdown will affect IT spends,” said Centrum Capital head (equity) Mayank Dalal.

Industry officials said the final word is not yet out on the shape of IT spending in 2008. “Subprime concerns leading to a possible US recession and some kind of a slowdown has seen stock prices fall,” admitted Satyam Computer Services CFO V Srinivas. “But the evidence is still non-conclusive. We have not received any indications of demand slowdown from our customers. The US could escape with a soft landing.

Only if the US economy goes for crash landing, could there be problems,” he added. Srinivas said that even in the case of a recession, cost-cutting by US firms would lead to higher outsourcing, benefiting Indian IT providers. “If there is a softening in demand, it does not mean bad things are in store for Indian IT firms. The fears are overdone,” concurred a senior analyst at a brokerage firm.

The negative trend is also reflected in ADRs of Indian firms listed on overseas stock exchanges. ADRs of Infosys and Satyam are trading at $41.11 and $13.29 respectively, close to their 52-week lows of $40.01 and $12.49.

ADRs of Wipro, which recently acquired Infocrossing — a non-discretionary IT spend — have fallen to a lesser extent and are at $25.49, compared to its 52-week low of $19.35. The ADRs of business process outsourcing (BPO) providers have also fallen, but to a lesser extent. IT budgets of US companies are decided in the December-January period.

Source: www.business-standard.com

The Indian pharmaceutical industry is set to grow by 13.5% in the next three years and the booming Indian pharmaceutical outsourcing market is expected to see a compound annual growth rate (CAGR) of 37.5%, according to a new study released by US-based research firm Boston Analytics.

The study also forecasts the domestic market to reach $10.3 billion by 2010. Factors crucial to the growth will be internal demand for drugs due the country’s increasing population, an ever-expanding consumer base in the middle and upper income brackets, the need for improved healthcare infrastructure and Indian companies’ reverse-engineering skills.

India also possesses 75 FDA-approved pharmaceutical plants – the largest number located in any country outside the United States. The report, titled “An Introduction to the Indian Pharmaceutical Industry, “estimates India’s pharmaceutical outsourcing market will hit $3.3 billion in the next two years, said the report.

“In the last few years, a lot of attention has been paid to the rapid growth of the software and manufacturing sectors in India. However, other industries are taking off in the region,” said Rashid Bilimoria, CEO & co-founder, Boston Analytics.

A recent CII-KPMG report had estimated the Indian industry to grow at a CAGR of 16% over 2007-11. According to a McKinsey report, the Indian pharmaceutical market is set to grow from $6.3 billion in 2005 to $20 billion by 2015, with a growth rate of 12.3%.

Source: www.indiaenews.com

The National Australia Bank (NAB), one of Australia’s leading banks, is considering outsourcing more IT jobs to India, causing much ire among its IT workforce here.

According to a report in the Sydney Morning Herald Tuesday, NAB is considering proposals that threaten the jobs of about 400 IT employees, causing angst throughout the bank’s 2,700-strong IT workforce.

In recent months, the IT outsourcing bandwagon has lost its momentum, but the SMH said that internal documents show earlier this year NAB hired TPI, a leading global advisory firm for helping organisations optimise their business operations through best combinations of outsourcing, to ask IT providers to suggest options for three of its IT units.

Infosys, Satyam, IBM and Accenture all submitted proposals, which are now under consideration. A high-level NAB team visited the three companies in India last month, the SMH report said.

NAB’s spokeswoman Kerrina Lawrence told IANS: ‘NAB like many Australian companies regularly reviews its business. In order to become more efficient, there are a number of options that NAB considers, including off-shoring and outsourcing to local and international suppliers.’

Jobs for offshore outsourcing include enterprise information management and software development, which employ about 400 people. It has caused concern among the staff because SMH reported that another internal document says every IT position could be ‘assessed over time’.

Lawrence told IANS, ‘The internal communique is to keep staff up to date that NAB has a request for proposal in the marketplace. It has sought to outline to staff, if there is any change, it will impact their role.’

In the past two years, NAB has sent 374 back-office jobs overseas and a good proportion of them are in India. During this period, the bank has added about 900 jobs to its Australian regional workforce.

Earlier, the Finance Sector Union warned NAB customers to be concerned as their personal details may be going offshore.

But Lawrence told IANS, ‘Currently, NAB is not outsourcing customer roles. We have outsourced credit card and personal loan jobs, and some finance and accounting jobs to Accenture in Bangalore.

‘NAB wants to be very clear that any work, whether it is carried out locally or overseas by NAB suppliers, must comply with Australia’s strict privacy, security and privacy requirements,’ she added. NAB has 55,000 global suppliers.

Other Australian banks that have outsourced IT jobs to India include ANZ, Westpac, St George and the Commonwealth Bank.