Source: www.heraldtribune.com

Toni Whitt : General Atlantic LLC, the company that has taken a 9.5 percent stake in local human resources outsourcing company Gevity, also is a majority stakeholder in San Francisco-based TriNet Group, a similar company on an aggressive growth campaign.

TriNet has acquired several other professional employer organizations across the country, signing an agreement last month to acquire LMC Resources Inc. in Denver. In 2006-07, TriNet took over two human resources companies in California.

Now, with the same private equity investor involved in both companies, speculation is running high that a Gevity-TriNet merger could be in the offing.

The combination of Gevity and TriNet might represent the largest PEO in the country. TriNet’s clients have about 35,000 employees, while Gevity’s have about 107,000. PEOs provide payroll administration, benefits administration and workers’ compensation insurance to client companies and their workers.

Gevity, which has 850 employees, already is among the largest PEOs, said Milan P. Yager, executive vice president of the National Association of Professional Employer Organizations. TriNet is in the top 20, possibly near the top 10, he said.

A merger “would make it one of the biggest PEOs in the world,” Yager said. “If you put the two of them together, it would clearly make them a significant player. It would be a big deal.”

Gevity’s shares, which trade on the Nasdaq, posted a 12.5 percent gain Wednesday as word of the General Atlantic stock purchases became known. The shares were selling for $7.32 at the close of regular trading Thursday, down 8 cents, or about 1 percent.

While Gevity has been involved in a reorganization over the past year, TriNet, with 435 employees, has continued its growth. Since 2002, the company has acquired a total of six human resources groups, mostly on the West Coast. At the same time, it has opened offices in Chicago, Boston and the Washington, D.C., area. TriNet will open offices in Houston and New Jersey in coming weeks.

Burton M. Goldfield, TriNet’s president and chief executive officer, said the company is “absolutely” looking to expand its business in the Southeast. Goldfield, who joined TriNet two weeks ago, said he already has been to Florida to get a look at the market and to meet with one of the company’s directors.

TriNet’s founder and chairman Martin Babinec said: “There is a vast and accelerating market opportunity in front of us, and Burton is the right person to lead TriNet into our next 20 years.”

Patrick Lee, director of investor and media relations for Gevity, said that General Atlantic’s interest in his company is a positive sign.

“We’re being viewed as a valuable investment in the market,” Lee said, adding that it was premature to comment “on any kind of merger or anything of that nature.”

Last summer, Gevity laid off 50 employees and began changing the focus of its mission. In the first quarter, the company reported a loss of $1.6 million, or 7 cents per share, driven largely by that exit from a line of business to focus on human resources outsourcing. The loss compared with a profit of $2.5 million, or 10 cents per share, in the same period a year ago.

The company also moved to appoint a new management team. In October, Gevity’s board appointed Michael Lavington as chairman and CEO designate. Lavington, a British citizen, is still waiting for his work authorization. He has been a director of Gevity since September 2006.

Both the management and business philosophy changes have been “perceived very positively and viewed very positively throughout the organization and among our stakeholders,” Lee said.

Gevity already has a presence in California, but TriNet is the dominant company there, Lee said.

The Lakewood Ranch company, founded as Staff Leasing, started in Bradenton, something of the Silicon Valley of the PEO industry.

TriNet formed later in San Francisco, catering to small technology and biotech companies that were growing quickly and needed support. Its growth has been consistent — 30 percent a year on average.

“Gevity has always been a dominant player historically, even when they were Staff Leasing,” said Yager, the PEO association official.

“In recent years they have undergone a couple of reorganizations to gain greater profitability. TriNet has been on a more consistent path.”

General Atlantic’s investment has helped fuel that growth, Goldfield said.”General Atlantic has been a great partner to TriNet prior to my arrival and continues to be a great partner,” Goldfield said. “My vision is about a base of customers throughout the country and beyond.”

Source:computerworld.com.sg

India’s tech companies, interested in capitalizing on their success in drawing IT outsourcing business from U.S. and other Western companies, are examining what they need to do to capture a broader range of the engineering services business.

The National Association of Software and Service Companies in Delhi, India’s leading IT trade group, commissioned a study by Booz Allen Hamilton, the McLean, Va.-based consulting firm, to examine the country’s potential to gain a larger share of the offshore engineering services business, going beyond software engineering to a swath of industries, including automotive, aerospace, utilities, construction and industrial.

The Booz Allen report is almost breathless in describing India’s potential to provide engineering services, but it also details two problems the country has to address to make it happen: the quality of its infrastructure, including ports, roads, airports and telecom, and the quality of its education.

“A new window of opportunity is opening now for India,” wrote Booz Allen, of the engineering services market.

Worldwide, about US$750 billion is spent on engineering services, the report said, and the figure is expected to reach $1 trillion by 2020. Of the amount now spent on engineering services, only $10 billion to $15 billion is done by offshore vendors, with India getting about 12% of that offshored work, according to the report.

Today, about 35,000 engineers in India work in engineering services, but by 2020, the country may need as many as 250,000 to reach its potential as an engineering services provider, the report said.

Vikas Sehgal, a partner at Booz Allen in Chicago, said the need for offshore engineering services in India will be driven by demand for people with these skills. In Europe, and in Germany and France, in particular, aging workers and attrition are creating a gap in available engineering skills, he said. This is happening at the same time that companies need more engineers to build products, even as productivity tools improve, he said.

For instance, Sehgal said it takes more engineering time today then it did a decade go to build a car because of increasing complexity and electronics, pointing out there are “more electronics in a toy car today than a reasonably good car had in the 1990s.”

Although India and China, for that matter, are often said to be outproducing the U.S. in engineering talent, the up-close picture produces a different set of results. The Booz Allen report points out that “although India has almost 1,400 engineering schools, only a handful of schools are recognized as providing a world-class education.” Moreover, “interviews with vendors suggest that recruiters consider candidates from only a fraction of these schools.”

Although India was producing 220,000 engineers with bachelor degrees in 2005-06 compared with 129,000 in the same year in the U.S., a recent study in the Journal of Engineering Education found it is not an apples-to-apples comparison when the quality of the graduates are considered.

Similar to the point raised by Booz Allen, the journal notes that despite the higher numbers of engineering graduates in India, “many large companies complain of difficulty in finding qualified graduates.”

Although the number of Indian engineering graduates is on the rise, “many large companies complain of difficulty in finding qualified graduates.” (The study, which appeared in the January issue of the journal is Getting the Numbers Right: International Engineering Education in the United States, China and India , was written by Duke University faculty members, Gary Gereffi, Vivek Wadhwa, Ben Rissing and Ryan Ong).

The journal Foreign Affairs , in its May/June issue, published an essay adapted from The Post-American World , a book by Newsweek International editor Fareed Zakaria, that looks for similarities in Britain’s decline as a world power with the problems facing the U.S. today. It also looks at engineering education.

“The best and brightest in China and India — those who, for example, excel at India’s famous engineering academies, the Indian Institutes of Technology (5,000 out of 300,000 applicants make it past the entrance exams) — would do well in any educational system. But once you get beyond such elite institutions — which graduate under 10,000 students a year — the quality of higher education in China and India remains extremely poor, which is why so many students leave those countries to get trained abroad,” writes Zakaria.

The threat to the U.S. comes from its own educational priorities, Sehgal said. If students reject engineering and math as career paths, the U.S. won’t have enough engineers and its future will be less bright, he said. As far as India’s need to improve its own educational system, while schools in India don’t have enough laboratories, tools and other things needed today, the demand for these skills is there, and engineering remains a very desirable career path, he said.

“People want to be engineers” in India, said Sehgal, adding that he believes the country’s quality issues will be fixed over time.

Source:economictimes.indiatimes.com

LONDON: A leading business services firm in Scotland has announced that it is relocating more than 300 of its jobs to India.

Capita said that it had already circulated a formal notice among its staff, intimating that their jobs were at risk of redundancy.

The company, however, expressed confidence that many of the workers would be redeployed, and that their staff could apply for new jobs in the company.

However, that would mean a transfer to Glosgow from England.

It said that its site in Wythall, Birmingham, was being closed, and, as a result, about 375 positions were expected to be moved to Glasgow, where a call centre and centre of excellence would be set up.

Consequently, said a spokeswoman for Capita, the current 302 administrative positions in Glasgow would have to be relocated to Mumbai in India.

“In January, Capita advised all 375 roles in the Wythall site would be relocated either to Glasgow, Mumbai, or another Capita site. Further consideration has been given to the roles currently operating from the Glasgow site to create accommodation to accept the transferring work from Wythall,” the Scotsman quoted her as saying.

Source: www.business-standard.com

UK-based GlobalLogic, a leading offshore software development company, plans to acquire two to three companies in the outsourcing product development (OPD) space in emerging markets like India and China as well as established markets. The company is particularly exploring an acquisition in south India.

The acquisitions are expected to enhance its technical capabilities in telecom, mobile, business and consumer internet, and embedded technology domains. The company received around Rs 120 crore in February as venture capital from Seqouia, NEA and New Atlantic Ventures. It plans to use this funding to fuel its inorganic growth plans.

Rohit Sharma, director (marketing), GlobalLogic told Business Standard: “We will look at inorganic growth in terms of acquisitions in both India and overseas to help us in offshoring, nearshoring and outsourcing.”

Globallogic has already expanded its reach in China and North Asia by acquiring Dalian 3CIS, a software product development company with roots in China. The company had global revenues of $100-150 million last financial year.

This year, GlobalLogic plans to enter Latin America, where it is eyeing an acquisition. “With the Dalian acquision, we will add 75 Chinese engineers. The acquisition will expand sales. Many of our clients are looking to us for guidance in entering China and the North Asia markets, which can be hard for outsiders to navigate,” said Kirk Tang, GlobalLogic’s vice-president and general manager of China operations. The addition of Dalian strengthens our ties in both the domestic Japanese and Chinese markets, while expanding our engineering skill sets,” Sharma added.

Source: businessweek.com

Negotiations with Microsoft and Google are taking place behind the scenes, writes BW’s Gene Marcial. A deal of some kind is imminent, according to his sources

Yahoo! finally looks ready to do a deal, according to people familiar with the situation. Pressure from large shareholders has persuaded Yahoo to work out a transaction with Microsoft, or alternatively, with Google. “Something will definitely happen soon” says one of the people involved in solving Yahoo’s conundrum.

“As it now stands, Microsoft is no longer expected to meet fierce opposition from Yahoo’s top decision makers on its initial bid to buy Yahoo, albeit at a price slightly better than its initial offer of $44 billion, or $31 a share, on Jan. 31,” says one of the people acquainted with the behind-the-scenes negotiations involving Yahoo (YHOO), Microsoft (MSFT), and Google (GOOG). Microsoft abruptly backed out of talks with Yahoo on May 3, after withdrawing its latest offer of $33 a share, or $47.5 billion.
Search-ad plans

Sources familiar with the situation say that Microsoft is still very interested in buying Yahoo outright. Spokespersons for Yahoo and Microsoft declined to comment on any negotiations. Several big shareholders are in on the talks. Microsoft said on May 18 that it is talking with Yahoo about a “transaction” that would be short of a full buyout, which sources say involves a purchase of Yahoo’s search-ad operation.

But if Microsoft and Yahoo can’t agree on a full buyout, Yahoo is prepared to go ahead with an alternative deal with Google that is also favored by some of the big investors: a nonexclusive outsourcing partnership on Yahoo’s search-ad business. As described by one of the people involved in the talks, Yahoo is expected to save close to $1 billion in costs and, at the same time, increase revenues from search ads.

Other sources close to the situation describe a possible Google deal differently. They say the search giant would participate in an open auction for Yahoo’s search ads, the proceeds of which could be worth hundreds of millions for Yahoo. But the deal would not involve all of Yahoo’s search ads, they say, and Yahoo would retain much of its search and search-ad infrastructure, lessening its savings.
Icahn effect

Among the big shareholders that are said to have applied heavy pressure on Yahoo to work out a deal are Robert Lovelace, chairman of Capital Research Global Investors, which owns a nearly 10% stake; Carl Icahn, who owns a 4.3% stake; hedge fund Paulson & Co., with 3.6%; T. Boone Pickens, who recently purchased 0.73%; and Steven Cohen’s S.A.C. Capital Advisors, with 0.6%. “There has been a lot of headway in talks about a deal because of strong pressure from some of the large stakeholders,” according to a source familiar with the situation. They declined comment.

Since Icahn announced his purchase of Yahoo shares on May 15, at an average price of $25 to $26 a share, the stock has climbed to more than $27. Icahn has threatened to wage a proxy fight to oust board members and formed a slate of 10 nominees of his own to replace them. Yahoo has delayed its annual meeting from July 3 to the end of July.

“We believe the push-back of the meeting will allow Yahoo to continue negotiations related to potential corporate transactions, and possibly preempt or minimize unpleasant developments that could come to a head at the meeting,” says Scott Kessler of Standard & Poor’s. Kessler has a price target of $33, which he explains is “equal to the last proposed offer Microsoft made to acquire the company, and the amount on which Carl Icahn indicated he is focused on.” He believes Microsoft continues to be interested in acquiring Yahoo and that Icahn will ultimately be successful in bringing the parties together and helping consummate a deal.
Second time is the charm

Mark May of investment firm Needham upgraded Yahoo to buy from hold, based on his belief that “significant positive change is more likely to happen at Yahoo” because of actions and statements by Icahn, Microsoft, Yahoo, and others over the past few days. “We believe a Microsoft acquisition is the most likely outcome, with an assumed 50% probability of an acquisition, either at $33, $35, or $37 per share,” says May. In Needham’s analysis, “we give greater weight to a compromise price,” he adds.

The second most likely outcome, according to May, is a search-outsourcing agreement with Google, Microsoft, or both. But he believes that an outsourcing-search agreement would be the “wrong long-term strategic move for Yahoo.”

From how it looks right now, Icahn may not get the chance to wage a proxy fight. Although a deal is never a deal unless it is formally approved and signed by all the parties concerned, it appears that Microsoft is closer to buying Yahoo than at any time since it first made its unsolicited buyout bid in January. Meanwhile, Google is anxiously waiting in the wings, still hoping it can get a slice of Yahoo’s search-ad business.