28^th February 2005

MINDTREE PLANS TO HIKE INDIA HEADCOUNT
The Hindu Business Line  / Deccan Herald  / The Economic Times  

MindTree Consulting plans to ramp up its India headcount by over 3,000 in a couple of years.

The company, which recently opened a new campus at an investment of Rs 85 crore, said it would pump in a total of Rs 200 crore to develop its Bangalore West campus to provide facilities for about 5,000 people, said Ashok Soota, Chairman and Managing Director.

With markets expanding in the US, Europe, ASEAN and West Asia for IT and R&D services, the company is on track to achieve revenues of $230 million by 2007-08, Soota said. He added that MindTree would consider acquiring companies with specific capabilities to diversify its offerings in the market.

OUTSOURCING IS AN ISSUE, SAYS HILLARY
The Times of India

India-US trade may be flourishing but the trade deficit, which is overwhelmingly in India's favour, needs to be addressed to ensure a more equitable relationship between the two countries, Hillary Clinton said.

"This, added to the outsourcing debate in my country, could raise questions about the nature of our relations."

Hillary observed that US policy makers needed to address the fact that Americans were steadily losing jobs. The way to address this, she added, was to maintain the scientific and research edge that the US has enjoyed thus far.

Last year, Hillary authored legislation in the senate that demanded information and data protection for outsourced jobs.

She was unapologetic about the controversy it caused in India because it was close to the hearts of Americans whose medical records and income taxes were being computed in far away India.

GECIS THINKS SMALL TOWNS, WARNS BPO BACKLASH
The Indian Express

GECIS Global, India’s BPO base station has small towns, consolidation and blimps on the backlash radar on its mind. Less than two months after it divested 60 per cent to General Atlantic Partners and Oak Hill Capital Partners, the company has re-jigged its expansion plans.

With small-town Gurgaon now on dartboards in global boardrooms, Gecis is eyeing Hyderabad, Jaipur, Bangalore and Kolkata for fresh revenues and talent. The spread-out megalith is counting on 10 to 15 per cent yearly growth in India. And, it plans to inject most of its ramp-up adrenaline into chaperoning that growth.

“We’ll move strongly in Gurgaon, but also in Hyderabad, Bangalore and Kolkata, before we get into a bigger manpower crunch with big cities. Attrition and real estate cost a lot more in huge metros. Besides, we move people from smaller towns and train them here. Many such employees say they’d love to work from back home,” Pramod Bhasin, president and CEO, Gecis, said.

Plans are, Kolkata will pick up around 2,000 people this year, while a Delhi centre becomes operational this year and Gurgaon picks up 400 people a day. Gecis has set a target of a 25 per cent revenue rise for 2005.

“My concern is, the small things will be magnified and stretched. Partly as India’s is still an immature BPO destination, partly because less than $3 bn of the world’s $300 bn BPO business is here. But mostly because there is competition to India,” said Bhasin.

TPI APPOINTS SIDDHARTH PAI AS INDIA HEAD
The Financial Express

TPI Inc., global sourcing advisors, has appointed Siddharth A. Pai as partner and managing director of its recently opened India operations. Pai would be part of the Global Service Delivery group within TPI and would be responsible for leading TPI’s push into the Indian market.

Pai brings to TPI vast experience and expertise in sourcing solutions for back office, middle office and customer facing processes aimed at process improvement and cost optimisation with a special focus on offshore operations.

BROKERAGES HARDSELL INDIA STORY ABROAD
Business Standard
http://www.business-standard.com/bsonline/storypage.php?&autono=181976

Broking firms — both domestic as well as foreign — seem busy hardselling the India story to institutional investors. Many of them are conducting investor conferences in India and abroad, showcasing the country’s potential.

Falguni Nayar, executive director, Kotak Institutional Equities, said, “Institutional investor interest was visible across the universe of Indian companies, as more than 300 one-on-one meetings took place with senior representatives from India Inc during the 3-day conference. India is becoming key investment destination and exposure to India equity is becoming important for funds to raise money from their global investors.”

An ICICI Securities’ do kicks off on March 7, 2005 in Singapore. Devesh Kumar, head of equity, ICICI Securities, said, “ This is the fourth year we are having an investor conference overseas. The idea is to showcase India’s potential that will unleash over a period of time.”

More than 50 corporates and over 200 investors are expected to participate in the conference, he added.

The first two days of the event focusses on non-information technology companies, while the last day was dedicated to IT offshoring.

ONTRACK TO FOCUS ON OVERSEAS BUSINESS
The Telegraph

Calcutta-based Ontrack Systems is planning to expand its operations and is eyeing the merger and acquisition route to tap the overseas market. “We are already in the process of finalising a deal with a UK-based company as well as a Dutch firm for BPO business in the area of technical services,” says B. Hari, managing director of Ontrack. The company is also exploring possibilities of international collaboration with leading IT companies in the Asean region for its flagship portal for e tendering.

`BUILDING RELATIONSHIPS IS OUR BIGGEST CHALLENGE'
The Hindu Business Line

As yet another robust year is set to unfold for the software services industry, Tata Consultancy Services (TCS), whose revenues are slated to cross $2 billion in 2004-05, is well positioned to ride the offshoring wave. Several variables that continue to inspire confidence in TCS are: Seven of the US Fortune Top 10 are its clients; healthy mix of revenues across geographies, with global development centres in five overseas locations; strong breakthrough into new service lines such as remote infrastructure and process consulting; and a share in excess of 50 per cent of revenues for fixed- price projects.

Phiroz Vandrevala, Executive Vice-President shared his views on the trends dictating the top-tier players in the software market.

Excerpts from the interview:

Do you think that there is a slow, but steady shift in the perspective of Indian frontline companies towards newer service lines away from the core activity of application development and maintenance?

I think the important issue is that every frontline company needs to create an area of excitement, as far as its both internal and external stakeholders are concerned. Also, from a long-term point of view, evolving new service lines and looking at value chain is an integral part of any strategic planning process.

Having said that, revenues from the so-called bread and butter application development and maintenance may be actually moving north So, every organization will have to keep its eye on the ball as far as the core area is concerned and at the same time strategically drive the new services, which will obviously pay dividends, going forward.

Do you think that at least the lower end of the value-chain — especially maintenance — is getting commoditised?

Today, we are also presenting different pricing and value norms to our customer. Five years ago, the concept of having a fixed price for a maintenance contract did not exist.

Today, if we have a customer spending $100 on maintenance activity, we can make a value proposition to the customer, in which in year 1, I will make $100 into 90 and in year five it will be $70. Through this, we have changed the traditional time and material model, with the application of our tools, technologies, certain continuity of staff and other soft processes to incentivise people.

Now we have the ability to meet the $70 target and probably go for $50 over a five-year period. There again, though the activity may be mundane, the project management skills and use of tools and applications also provide a reasonable challenge.

The ability to make maintenance look good and provide a challenge also exists. The key factor also is that maintenance continues to remain a huge market.

In your view, is the application development and management market maturing to a large extent for the Fortune 100 clients?

Look at the Fortune 100 customers. How many $50 million clients does the Indian IT industry have at present? Maybe 8 or 10 put together. Take Deutsche Bank or any telecom company, it will probably an IT budget of anywhere between $1-3 billion. What is our share?

Also, look at this whole area of application development and maintenance, and you will see they still run on legacy systems. As an industry we are not anywhere close to saturation.

Given that deep relationships and domain expertise are the biggest strength of the multinationals such as IBM and Accenture, how will the frontline companies negotiate this challenge?

Building relationships is our biggest challenge. Accenture today gets 67 per cent of its business without bidding. It is single-source. We have not reached that stage yet. But within some of our relationships, we are getting to that situation.

Do you think that strategy of increasing the deal sizes from $1 million to $10 million to eventually $50 million or more, is a sustainable way in which the industry is likely to grow?

This is exactly the base that gives us the confidence that the growth rates we saw this year will be maintained at 30 per cent plus.

The ability of all of us in the industry, from the top five to top 200 is to leverage the existing relationships and use the revenue milestones to make it happen. And also look at most of us, 92-95 per cent of our revenues come from repeat orders in our existing customer list.

Do you think that selling and marketing expenses will go up sharply as new service lines and geographies such as Europe come into the picture?

Not really. The project-oriented business from the customers is declining steadily. The relationships with customers are getting more strategic than transaction based, at least certainly among the bigger companies. And a large part of the transactional market, I think, is going to the medium and smaller companies.

Three years ago, we would have 100 to 200 customers where we were during 10 or 20 man-years kind of project.

Do you think that inorganic moves by frontline companies can make a difference in Europe?

In Europe, considering the social scenario, for an Indian company to grow out of the box, they will have to make an acquisition. If you want to go from 1,500 people to 4,000 people, I think an acquisition is the answer.

Traditionally, they have had businesses that have developed huge IT shops in-house. Look at Lufthansa, ABB, SAS, Ericsson are all the big names; they have all had 400 to 2,000 people IT departments in-house.

Now, looking at the global scenario, they have come to the conclusion that they have to focus on their core business, and IT is not their core. The great acquisition opportunities are these IT shops because they come with a low risk.

OVERSEAS HIRING: NEW TRENDS AND CHALLENGES
The Financial Express

Global recruitment trends for Indian IT companies are witnessing interesting developments. While they are now matching the pay packet of American or European companies, other issues continue to pose challenges.

Finding and retaining the right talent is a challenge. Tougher still, is a hiring process thousands of miles away in a totally different cultural environment. For Indian IT companies, with aggressive overseas expansion plans, this is a complicated process-selection options become narrower, Indian firms find few takers, and conducting background checks on candidates is a difficult task.

It is not uncommon for well-established Indian IT companies to lose out on good candidates to smaller American or European companies because they are wary of working with an Indian firm. The situation is slowly but surely changing, with IT majors such as Infosys, Wipro and TCS, attracting foreign nationals not just because of branding but also a capacity to offer competitive salaries.

SCREEN YOUR CALLS OR LEARN TO SAY NO
The Financial Express

The recent PIL filed in the Supreme Court to protect the privacy of citizens from unwanted cell phone calls is an interesting step in the history of wireless telecommunications in this country. And while the ’90s saw tremendous growth in the number of cell phone users, this PIL, along with the recent MMS scandal, suggests that the ’00s might well be a time when people take a hard look at the value the mobile phone brings to their lives.

The plaintiff states that such calls are an “invasion of privacy and violation of the right to live a peaceful life”. I haven’t read the constitution, but I doubt that it lists “peaceful living” as a fundamental right of citizens, in the same category as free speech or freedom of religion. If that were the case, we would have no more loud ‘baraat’, midnight ‘jagran’ or even the occasional boombox played by your neighbour’s teenage son. So is this case really worthy of the Supreme Court’s consideration? Or is it an issue with which citizens can deal with themselves?

A few years ago, a similar situation in the US resulted in a ‘Do Not Call’ list, by which citizens who did not wish to get unsolicited calls could register their phone numbers on a website. Of course, the telemarketers fought tooth and nail to retain their “right” to market their products to the public.

After much deliberation, the list was finally set up with over 50 million phone numbers . There were, however, a few significant loopholes-the first among them being that companies that already had a relationship with the consumer were exempt. For example, if you had an account with XYZ bank, they would be still allowed to call you and offer mortgages, life insurance and car loans. Similar exemptions were in place for political organisations, religious organisations, certain other charities etc. And last, but not the least, there was a cutoff date for joining the list.

ATSA OPENS CHAPTER IN BANGALORE
The Hindu Business Line

The American Tele-Service Association (ATSA), a body representing call centres, consultants and suppliers, plans to offer Indian service providers advice and information on complying with the US federal and State laws for the industry.

The association, which recently opened a South-East chapter in Bangalore, is looking to give members services through seminars on best practices in the industry, information on US laws and regulation as well as the services of a lobby in Washington DC that will work on behalf of the members and their interests.

Tim Searcy, CEO, American Tele-Services Association, said the association would help Indian companies that have not invested in compliance processes.

And since each State in the US has similar but not identical laws on customers and information, "it is important for the ITES industry and for outsourcing that Indian companies learn about laws such as frequency of updating the `do not call' list, abandoning calls and caller identification," he said.

The association's members include US companies with Indian operations, such as Avaya Global Connect, QAI, Effective Teleservices as well as companies such as ICICI OneSource and KPMG.

A MISSED CALL
The Hindu Business Line

Jason James Clemens, a British national, had what seemed quite reasonable as a request when he approached the Authority for Advance Rulings (AAR) for some relief on the service tax front. He wanted to set up an international call centre in India in collaboration with Gemini Pacific Group LLC, an American company. The call centre's main business activity was to be the sale of various foreign products to "potential customers throughout Europe and Asia excluding India".

As explained in the text of the AAR's order, the centre was to respond to telephonic enquiries of potential customers from outside India, procure orders, and forward the same to producers/sellers of goods in foreign countries, who in turn would directly dispatch goods to customers. Jason was to receive service charges on orders so booked and executed, "remitted in India in convertible foreign currencies". As averred in the application before the AAR, the services provided would constitute export of services, and be exempt from the levy of service tax.

The Central Government's Notification No. 8/2003 dated June 20, 2003 conferred such a benefit. It gave service tax exemption to taxable services provided by a call centre or a medical transcription centre. There, `call centre' was defined as a commercial concern that provides assistance, help or information, through telephone, on behalf of another person. And `medical transcription centre' meant a commercial concern that transcribes medical history, treatment, medical observations and such.

While that was fine, Jason foresaw the need for secondary services, such as from local telephone operators, and consultants/ engineers. His worry was that the providers of secondary services would raise bills including service tax. As an exporter of services, and as a primary service provider, Jason was of the view that the secondary services that he consumed in the process of business would "ultimately get consumed/merged with the services being exported". And, so there should not be any service tax on such secondary services, he prayed.

To support his stand, Jason cited Circular No. 56/5/2003 dated April 25, 2003, issued by the Central Board of Excise and Customs (CBEC). This had reiterated that service tax is destination-based consumption tax and so it was not applicable on export of services. It clarified that no credit of service tax can be availed of or reimbursed at present for service consumed/provided in India in the manufacture of goods that are ultimately exported, "as inter-sectoral tax credit between services and goods is not allowed".

Yet, there was a benign paragraph in the Circular to assist Jason's wish; it said that no service tax would be leviable on secondary services that ultimately got consumed/merged with the services that are being exported. To get this benefit, however, both primary and secondary service providers should maintain "the records deemed fit by them to identify the secondary services with services that are being exported".

What about cases where secondary services got consumed in part or toto for providing service in India? In such instances, there would be service tax on the secondary service provider, according to the Circular. Armed with such a compassionate communiqué, it would be logical to think that Jason's problem is an open-and-shut case; but that was not to be.

The AAR studied Jason's query and did an introspection to first assess its own jurisdiction to pronounce advance ruling. This is circumscribed by Section 96C(2) of the Finance Act, 1994 where there's a list of questions that can be posed to the Authority. Jason had banked upon Clauses (d) and (e) of this provision, which were about questions on applicability of notifications issued, and admissibility of credit of service tax.

Next, the AAR noted that the subject of secondary services getting consumed/merged in the primary services exported by an international call centre was discussed in the April 2003 Circular. The July 2003 Notification was "not relevant to the issue". Then came an apparently innocuous reasoning by the AAR that was to set the case onto a different trajectory: "It needs no elaborate reasoning to conclude that the Circular issued by the Board cannot be termed as a Notification."

For starters, the AAR observed that the power to issue notifications has been conferred on the Central Government only, and that of issuing circulars is conferred on the Board. "The Legislature chose to prescribe only notifications and not circulars in Section 96C(2)(d) of the Finance Act, 1994," the Authority said, shattering a support that Jason depended on.

As a result, the AAR was of the view that the questions raised by Jason were not covered under Section 96C(2), which meant that the posers simply didn't fall within the ambit of the Authority. "Thus, the stage of pronouncing an advance ruling is not reached in the instant case," reads the order, before adding, "the application is rejected".

MONEY-SPINNERS ALL
The Hindu Business Line

Indian women have one more male-dominated bastion to conquer — mobile usage. While women account for 48 per cent of the country's population, they account for only 18 per cent of the country's subscriber base when it comes to mobile phone usage.

Though the statistics look dismal, mobile operators are looking at it as an opportunity to get women to use mobile phones, thereby increasing their sales numbers.

>From charting out strategies and rollout plans to tap the potential in rural India, mobile operators are now looking at new frontiers — to bridge the demographic digital divide not just between women and men, but also between youngsters and adult consumers.

According to a survey done by Airtel, mobile penetration is really low not just among women but also among the youth and senior citizens. While mobile penetration among the age group 15-19 is only 3 per cent, it's as high as 10 per cent in the 30-39 years category.

And when it comes to senior citizens over 60 years, the story is dismal with just 1 per cent penetration.

Compare this to the US, where about 25.7 million kids between the ages of 5 and 19 are cell-phone users. That's 40 per cent of the population in that age range. In Finland, 80 per cent of women in the age group 25-30 own a mobile phone compared to 70 per cent men in the same age group.

But more than wooing the ladies, it seems the action is happening on catching the subscribers young. Idea Cellular has launched a special pre-paid card for the youth called the I-Card. The card allows youngsters to send short messages at 25 paise compared to the average rate of Rs 1.50 per SMS. It also gives discounted tariffs for STD calls and for two local numbers.

Says Vikram Mehmi, Chief Executive Officer, IDEA Cellular Ltd, "IDEA has many product offerings that are targeted towards youth and a large section of customers already belong to the prepaid segment comprising the young college-going crowd.

One for the BPO crowd

As if that was not enough, some operators are creating sub categories for niche users. BPL Cellular has, in fact, launched a scheme specifically for youngsters working in BPOs. "Youngsters like to talk a lot and since they are working in BPOs they do most of their talking in the night. That's also the time when our network is the least used. So we offer these niche users special discounts to talk through the night," says Ramteke. BPL has bagged four big BPOs in Mumbai as its clients since the launch of the scheme.

26^th February 2005

SERVION TOOL FOR CALL CENTRES
The Hindu Business Line  / The Hindu  

Servion Global Solutions, a Chennai-based provider of contact optimisation solutions, has announced the availability of CallBack Manager.

Customers who reach a contact centre using Servion CallBack Manager may choose to wait in queue or request a call back. This call back can be scheduled as soon as possible or at a specified date and time.

Contact centres will be able to respond to callers during less busy times - balancing call volumes and improving customer satisfaction, according to a company release.

SURGICAL INFOSYSTEMS TO CONSOLIDATE INDIAN OPERATIONS
The Hindu Business Line

Surgical Information Systems (SIS) to consolidate its Indian operations based at Hyderabad and signs up with new clients globally to be supported from its India development cum support centre.

The SIS India Head, Himanshu Ubale, in a statement said the Indian development centre would continue to focus on software development and quality assurance for SIS's over 200 customers globally. SIS India is our strategic product development centre.

The new wins include Catholic Health East, which chose SIS as a solution partner for automated intelligence in surgery. Catholic Health East is one of the largest healthcare services provider.

EMC TO INVEST $150 MILLION MORE
The Hindu Business Line  / The Times of India / Hindustan Times / Business Standard  

Information storage and management company EMC Corporation today announced an additional investment of $150 million in India, taking its total commitment to $250 million by 2007.

"The increased investment will fortify EMC's market leadership position in India and contribute to its technology leadership in the information storage and management space worldwide. We are pleased with the infrastructure and resources that exist in the country, and the investment will flow into research and development, customer support and sales and marketing activities," William J. Teuber Jr, EMC's Executive Vice-President and Chief Financial Officer, told reporters after a meeting with the Union IT and Communications Minister, Dayanidhi Maran, in New Delhi.

EMC currently has 400 people in India and plans to scale up its headcount to 1,000 by the end of this year.

"With 60 percent of IT spending coming from outside the US and only 42 percent of EMC's total revenues for 2004 coming from the international markets, we are focused on increasing our international business to represent half of our revenues over the next few years. This growth requires investments in countries that will support our strategy to better compete on the world stage," he added.

`INDIAN MID-CAP FIRMS MOST RESILIENT TO CHINESE COMPETITION'
The Hindu Business Line

Indian mid-sized firms have weathered the Chinese onslaught better, as opposed to their counterpart in the Asia-Pacific region.

According to Grant Thornton's International Business Owners Survey (IBOS) 2005, in which a section was devoted to the response of mid-sized companies across the Asia-Pacific region to China, only two percent of the Indian companies included in the survey said they had witnessed a fall in business due to China's economic boom.

While 58 percent of the Indian businesses reported that they have had no impact, 15 percent actually said they had seen increased business as a result of the Chinese economic boom.

A majority of the mid-sized companies also do not see increased opportunities for outsourcing "back-office" services to China. Over 50 percent of the mid-sized companies in Japan, Australia, the Philippines and Taiwan said they do not envisage China as a potential base for "back-office" operations.

INDIAN RAYON
Deccan Chronicle

Indian Rayon, an Aditya Birla group company, is well-diversified and operates in textiles, garments, carbon black, viscose staple fibre and insurance (through its 74 percent subsidiary, Birla Sun Life Insurance). The company has forayed into the BPO business with the acquisition of 100 percent stake in TransWorks in 2003. Garments, insurance and BPO are expected to be the company’s growth drivers going forward and is a good buy at current levels.

INTEGREON OPENS UNIT IN POWAI
Business Standard

Integreon Managed Solutions Inc, a BPO company that specialises in enterprise information solutions, has set up a facility in Mumbai.

According to a company release, Integreon has grown by 100 percent annually in the past four years and currently has a staff strength of around 1,000. The new facility will accommodate three new customer contracts. The centre is located at the Hiranandani Business Park, in Powai.

“The new facility allows us to continue expanding and improving the services we deliver to our customers,” said Integreon chief executive officer Liam Brown in the release.

“While we’re pleased with our headcount growth, we see quality of service and value added as more important measures of our growth,” he added.

Among Integreon’s customers are six of the 10 largest global investment banks, one of the five largest global law firms, two of the five largest global management-consulting companies and four of the 10 largest global media and publishing companies.

Founded in 1990, the company is located in New York, London, Los Angeles, and Mumbai. Integreon specialises in enterprise information, analytics, content and document solutions.

SYNYGY LINES UP RS 50 CRORE EXPANSION
Business Standard

Synygy Inc, provider of enterprise incentive management (EIM) solutions and supplier of software and services, is planning to invest Rs 50 crore for its expansion activities in India.

The company in a press release said the investment would be deployed in doubling the current infrastructure set up in Pune as well doubling the employee count to 300 by 2005-end.

Mark A Stiffler, Synygy’s founder, president, and CEO, who was recently on a visit to the company’s Pune office, in the release said, “Our employees here in India are part of the global Synygy organisation, serving all clients in all countries. Over the last year, operations in India have become fully self-sufficient, able to lead and deliver on any kind of task or project globally. We’ve even had people in India train new employees in the US. Our Pune office is not just a back-end operation or an R&D centre for Synygy but within a year it has become Synygy’s Asian headquarters, serving clients across India, Southeast Asia, and Australia.”

Synygy in Pune has grown from 11 employees in January 2004 to over 150 people by December 2004.

An integral part of Synygy, operations in India are part of the global effort to speed up the delivery of new software products and enhance service to global clients through faster software implementations and 24-hour managed services, said the release.

NASSCOM STUDY OUTLINES OUTSOURCING CHALLENGES AHEAD
The Financial Express

The Indian IT Enabled Services (ITES) and Business Process Outsourcing (BPO) companies face important challenges such as privacy, rising interest rates, supplier risks, regulations and technology convergence, says the National Association of Software and Services Companies (Nasscom).

In its recent study on ‘Outsourcing challenges in 2005’ for the ITES/BPO sector, the apex body of the software industry found that while there will be an escalation of outsourcing by companies worldwide and the ramping up of existing operations, the year 2005 will also witness few developments including consolidation of outsourced work, the rise of the captives, apart from the above challenges.

According to the study, privacy is expected to be a key issue for both customers and suppliers, which will come to the fore in 2005. Quoting analysts, NASSCOM said that privacy laws will impact outsourcing in a very direct way.

Currently those companies in the US and non-US countries are expected to face problems in synthesizing those laws with the laws of countries from which the private information originates, the study pointed out.

IN TOP FORM
The Hindu Business Line

A job can mean so many things — an identity, a paycheque, friends, interesting colleagues and, of course, new challenges. Yet, as the days go by and acquired skills improve on the job, a growth in confidence can nudge employees to not necessarily move on, but certainly move to positions where their capabilities are better realised. A `growth' in stature and added responsibilities are among the most effective signs of a healthy career. In India, the booming ITES (information technology enabled services) sector employs a large number of people drawn from varied academic backgrounds. Predictions for growth remain an optimistic high. But negotiating promotions will pose challenges unique to the business.

Expansion options

Rajul Garg, COO, Induslogic, says that the very nature of the ITES sector is such that "people should focus more upon the role and remuneration than on the designation, as this means different things in different organisations."

The scenario for promotions seems quite bright, as Laxmi Bhan, General Manager - Operations, ICICI OneSource, explains: "At the entry level, a promotion would signify change of responsibility, especially at an agent level. There is immense scope to grow horizontally in functions such as training, HR, quality, preparation of MIS reports, or progressing vertically to become a team leader or subject matter expert (SME)."

In such a setting, how early can one ask for a promotion? Says John Winchester, Vice President - Engineering, Impetus Technologies, "There is no hard and fast rule. But it is essential to prove your capabilities to your seniors and be convinced that you deserve it,"

Bhan of ICICI OneSource says, "One has to constantly prove oneself and consistently improve performance to deserve recognition and responsibility. The earliest would be after a year."

Discussing the intrinsic qualities of the BPO space, Rajiv Parashar, Vice President -HR, eMR Technology Ventures, says, "Intense competition, abundant opportunities, high attrition levels and high cost of attrition, along with a high degree of organic growth characterise this business. All of these provide an excellent backdrop for negotiating promotions. A competent person would never hesitate to present his case, but would ensure it is a win-win for both sides."

The importance of mentoring in career advancement is a proven fact. Das says, "People generally find mentors among the seniors they deal with in the organisation. The mentor should show enough interest in you and your work at a professional level, and understand enough to give useful advice. If the mentor is to be used for career advancement, pick a person who has excellent internal equity in the organisation to push you through the various ceilings, or ride piggy-back on his success."

ONTRACK
The Statesman

On track System Limited is planning to acquire BPO units in the UK and Holland for Rs 20 crore and would raise funds overseas to finance the acquisition. The units, based in Holand and the UK, are engaged in delivering technical services, Ontrack Systems’ CEO, B Hari, said here today.

25^th February 2005

BENCHMARKING TEMP SALARIES
Business Standard

Temporary jobs, you thought, are low-paying and are good only for those who desperately want to get a foot in the door with an organisation. This conventional wisdom has now taken a couple of hard knocks.

First, there is hardly any salary difference between a temporary and a permanent worker in Indian companies. And second, temporary jobs of shorter duration (up to five months) even command a small premium over permanent job salaries.

These interesting findings from a study called Temp Salary Primer 2004 — the first of its kind in the country — is significant as worldwide experience so far has shown that temporary jobs typically do not pay well, especially for those without much experience, and only help in allowing freshers to sample options early in their careers.

The survey has been compiled by TeamLease Services, India’s largest staffing solutions company.

The other summary of the findings are:

- Temp jobs have direct dependence factor based on locations and verticals. The best paying region for temp jobs is quite predictably Bangalore, as the best paying companies for temp jobs are in the BPO-IT enabled services sector followed by information technology.
- The fastest growing sectors for temp jobs are expected to be BPO-ITES followed by information technology and financial services.
- There is a direct premium in temp jobs for education in the information technology sector while there is no such premium for jobs in the manufacturing and FMCG sectors.

India has around 1,00,000 temporary workers now, and the market is likely to grow by around 50 per cent annually.

HCL GROWS IN N IRELAND
Business Standard  / The Times of India  / The Economic Times  / The Hindu Business Line  / The Hindu  / Deccan Herald  / The Financial Express  

HCL Technologies has become the single largest business process outsourcing (BPO) operator in Northern Ireland with its acquisition of Answercall Direct contact centre in Northern Ireland for Rs 29.39 crore.

The contact centre was acquired by HCL’s subsidiary in Northern Ireland, HCL Technologies BPO Service Ltd, from receivers, PricewaterhouseCoopers (PWC).

Answercall Direct had gone into receivership because it could not repay its loans.

"The Answercall Direct contact centre is spread over an area of 48,000 square feet. It has 400 seats at present and 400 additional seats can be added," Ranjit Narasimhan, Chief Operating Officer of HCL Technologies' global BPO operations said.

STI BUYS SYMPHONY DATA FOR $8 MILLION
Business Standard  / The Hindu Business Line  / Deccan Chronicle   

Atlanta-based STI Knowledge (STI) on Thursday announced that it has acquired Hyderabad-based Symphony Data, a $3-million business process outsourcing (BPO) company, for between $7 million and $8 million in a cash-stock deal.

STI itself offers BPO services and enterprise support solutions for the healthcare, insurance and commercial enterprises and had revenues of $25 million in the last fiscal.

Satish Sanan, executive chairman and chief executive officer of STI, said that the acquisition was integral to the company's future and would enable STI to offer healthcare administration, claims processing, customer interaction, technical help desk and other vertical industries' knowledge-based services through a blended-shore delivery model.

“This acquisition is a key strategic initiative for STI Knowledge,” Sanan said.

“We are focussed on improving our customers' business performance and profitability. Offering an off-shore option is a significant step in delivering on that vision and helps us proactively meet demand for quality BPO services for the benefit of our growing client base in this increasingly important market place.”

BILLING SUCCESS
The Times of India

As a global leader in integrated billing, employee care, customer care services provided through outsourcing or licensing, Convergys’ presence in India is adequately large. With about 10,000 employees in the contact centre part of the business which is likely to double by the end of this year, it is understandable why Larry S Schwartz, executive vice-president, global operations, information management group, Convergys, is riding high about India. In the Capital to explore options for the side of the business that he handles, Schwartz says India is the place to be in especially if you are on the lookout for software engineers:

Excerpts from an interview:

How do we in India value add so as to be able to climb up the value chain in the IT sector?

The side of the business (information management group) that I am responsible for is little known in India. We are the largest provider of billing software in the world. We have to tap into the brightest workforce for that. India has a talented, hard-working, English-speaking workforce. To be successful in software developing work, you need to have a global work-force as well as be available to clients all the time. Billing systems are very complex so it’s difficult to have one centre of excellence. We are working on cutting-edge techno-logy here. We have 10,000 contact centre agents here and we watch their behaviour and then develop systems.

Which countries would you say are emerging as India’s competitors in the BPO sector?

On the contact centre side, you saturate the available workforce so access to skilled workforce is important. Countries like the Philippines, Costa Rica are possible contenders. There is opportunity for everyone. On the billing side of the business, India has an advantage with software engineers. There aren’t very many countries where so many software engineers graduate every year. We hope to provide great career opportunities to these engineers.

What are the advantages that India has which makes it attractive for a company like Convergys?

In one word education. There are also other factors like we get great support from the government agencies. I am very impressed with the energy, enthusiasm and work ethics of the people here. We look for people with talent, energy, high levels of commitment. That’s the environment we like to foster.

There has been lately a lot of backlash against BPOs in the US. What would you attribute that to?

I think there is a lot of misconception. There is a lot of confusion. Our experience has been that by providing support 24x7 it helps us grow jobs not just in India but also in the US. It’s good for everyone. A lot of concerns were inflated by the politics of the elections. The alternative would be to be less competitive in the US. There is really no alternative.

Convergys has been attacked in the US for cutting jobs especially in your division while focusing on job expansion abroad. Is it correct to say that growth in Asia means growth in the US?

It’s a very dynamic business and we have to continually balance our workforce. In some cases customers have upgraded to other billing systems whether they do it with us or someone else. There are ups and downs in the workforce. In the previous couple of years the telecommunications industry was down so we had to right size. It’s a very emotional and personal issue. People are just as upset if jobs move from Orlando to San Francisco.

People confuse outsourcing with offshoring. Companies which want to be global have no option but to be global in their operations. I think it just comes down to misconceptions. A lot of rhetoric has settled down. We are a global leader in billing. We want to be a vibrant growing company and to be able to do that we have to be competitive.

Has India effectively made a dent in the global IT business?

There is no question about it. It’s not a secret that there is a talented workforce here. We are out there competing for the best and the brightest workforce. India is a strong centre of IT talent. We are very pleased with the way we have grown here. But the top dollar still goes to American companies like yours. When will Indian companies make big bucks in this business? Most of them still are like sweatshops employing cyber coolies.

That will tend to balance out in the long run. A large part has to do with where the markets are. There are untapped opportunities in India. This country has the potential for being a huge market even for Convergys. People tend to go where the money is. Indian IT companies need to scrutinise where their investments are.

CEI INDIA TO HIRE MORE
The Hindu Business Line

CEI India, a wholly owned subsidiary of the US-based Computer Enterprises Inc, plans to recruit around 100 staff for its Chennai development centre this year.

The Chennai centre currently has around 85 employees, according to D. Raja, CEO, Computer Enterprises, which is a $36-million information technology services company.

According to Raja, the Chennai facility would be used to accommodate CEI India's outsourcing project teams currently servicing key clients in the US.

COGNIZANT SEES BIG SCOPE FROM PFIZER
The Economic Times

Indo-American firm Cognizant Technology Solutions sees good scope for scaling up a multi-year business service deal with drug maker Pfizer's Indian unit, its chief executive said yesterday.

The outsourcing deal, announced last month, involves clinical data management and biometrics that combine Cognizant's information technology capabilities with expertise on healthcare in order to lower costs for the client.

"If this is done successfully, there is plenty of opportunity for expansion," Cognizant's CEO Lakshmi Narayanan told a news conference.

Financial details of the deal have not been disclosed.

Some 90 of Cognizant's 200 workers in business process outsourcing (BPO) are working on the Pfizer deal as the company focuses on "vertical BPO" that helps increase profit margins by adding industry expertise to low-cost back-office services.

TRAVEL INDUSTRY SEES DEPARTURE OF RECRUITS
The Times of India

The travel and tourism sector has become the latest casualty of India’s thriving call centre business.

“Call centres lap up fresh graduates, offer them heavy pay packets and a whole gamut of facilities. So there are not enough takers for jobs in the tourism industry,’’ says Subhash Motwani, who conducts training courses certified by the International Air Transport Association (IATA).

In Mumbai alone there are over 350 IATA-approved ticketing agents, thousands of sub-agents and a number of back offices—all of which are struggling to fill about 2,500 to 3,000 vacancies.

As the battle to woo youngsters has begun, HRD pundits in the tourism trade are speaking of multi-level strategies to pull in candidates. These range from raising starting salaries from Rs 4,000 to Rs 7,000, to changing the eligibility criteria to be on par with call centres.

For instance, till two years ago, an IATA/UFTA (United Federation of Travel Agents) qualification was mandatory to getting a job in recognised travel agencies. This meant a graduate had to do at least a sixmonth training course, spending a tuition fee of Rs 15,000 or more, to land a job in an airline ticketing or tour booking office.

“But the latest job ads placed by some travel agencies are much like those placed by call centres. Applications from fresh, articulate graduates were invited. The agency was willing to spend on training candidates,’’ Motwani adds. More is to follow next month. From March 2005 onwards, open book exams will be held for diploma courses in travel and tourism.

MDI GRADS GET AVERAGE SALARY OF RS 8.3 LAKH
The Financial Express

The IT/ITeS sector recruited the maximum number of MBAs as MDI Gurgaon registered 100 percent placements of its 2003-05 batch. The highest salary offering this year was above Rs 11 lakh per annum while the average salary was Rs 8.3 lakh and the median salary Rs 7.93 lakh.

Nearly 32 percent of the batch secured placements with IT/ITes sector, with Wipro, Satyam, IBM, Patni, HP and TCS being the major recruiters. Over 56 companies visited the campus, spanning across sectors and functional areas like marketing, finance, HR and consulting. Banking and finance majors were the next big recruiters with American Express, JP Morgan, HSBC AMC, Deutsche Bank picking up candiatates from MDI for the first time.

Other major recruiters included FMCG majors like Nestle, Reckitt Benckiser, ITC, Cadbury and Godrej, Pharma biggies Ranbaxy and Glenmark besides GE India, Bharti and Star TV.

A large number of lateral placements, for students who have prior work experience, also happened in companies like JP Morgan, GE India, Wipro and Accenture.

EMC INAUGURATES NEW CENTRE
The Asian Age

EMC Corporation has inaugurated the EMC India Software Development and Support Centre in Bangalore.

GECIS EYES ACQUISITIONS
Hindustan Times

The $420 million strong Gecis Global, India's largest BPO operation by far is ready to fly in its new avatar. With 17,300 employees and a global footprint spread across Mexico, Budapest in Hungary, Dalian in China and four cities in India -- Gurgaon, Hyderabad, Bangalore and Jaipur -- it is looking at a mix of inorganic and organic growth over the next two years.

For starters, the Indian end of things is being beefed up considerably. Kolkata which will be up and running over the next six months will house anything between 1,500 to 2,000 seats, while Gecis will kickstart its first Delhi centre in the DCM compound in old Delhi.

Gecis Global president & CEO Pramod Bhasin told the Hindus tan Times: "The Delhi operation is critical to Gecis's business model. It is a major cost-saving exercise as we find that commutes are too long from that part of Delhi to Gurgaon. Further, the metro is coming up quickly in that area and that will change the dynamics of the place." Along with the Indian expansion, Gecis, which has as many as 4,800 employees abroad, is now chugging along nicely internationally.

Bhasin said: "We are now looking at Bucharest in Romania, another centre in China which we will firm up next month, and are in the process of identifying a French-speaking area -- either in Tunisia or Morocco. The key at all times is maintaining our profit margins which are upwards of 20 per cent of our revenues."

TAKING A CALL
The Times of India

Believe it or not – start-up BPOs prefer are manifold. The primary being its proximity to Delhi and low cost of land rent. Power is also a very important factor. The companies get a non-stop special industrial power supply from the administration, be it Noida or Gurgaon.

One of the biggest reasons, however, is the low cost of group housing in Noida. The recently set up BPOs in Noida are Infogain and Birlasoft. The other BPO present in Noida is the multi-million dollar EXI.

Other big companies include US-based CSC (Computer Science Corporation), HCL BPO and E-biz Nucleus Software and i-Energizer started in Noida due to low land cost. And with good infrastructure Noida is also luring big MNCs Siemens and Motorola are coming up in Sector –126.

HEALTHCARE SOLUTIONS FOR THE 21ST CENTURY
The Economic Times

To meet the challenges of providing for India’s healthcare industry and capitalise on global opportunity, pharmaceutical companies need to utilise Information and Communication Technologies (ICTs) more effectively.

Today pharmaceutical companies in India have started adopting customised technology solutions for their backend operations – to coordinate R&D activities in various countries, and to integrate their distribution and logistics networks spanning medical representative, chemists, doctors and patients.

The panel discussed the major issues faced by the pharma sector, and the role of technology in providing effective solutions.

Some pharmaceuticals companies have provided doctors with Patient Management Software (PMS) to monitor patients better and share the information with pharmaceutical companies. Medical practitioners are also using Short Message Service (SMS) to remind patients of their medication schedules.

Under these circumstances, pharma-related BPO operations may enable these companies carry out high-end research activity at far lower costs than in developed countries.

24^th February 2005

EDS TO CLOSE 17 CALL CENTRES IN US, SHIFT WORK TO INDIA
The Financial Express

Electronic Data Systems Corp (EDS), which manages computer systems for other companies, will close 21 call centres in the United States and Europe by the end of 2006 and shift some of the work to India to cut costs, executives said.

Chief financial officer Robert H Swan on Tuesday said that EDS would close 17 of 42 US data centers and four of 12 in Europe that manage software applications for clients. The company operates three centers in India. Swan did not say how many US and European jobs would be affected.

Company spokesman Terry Balluck said any losses would be by attrition and would be part of the 15,000 to 20,000 job eliminations that chairman and chief executive Michael H Jordan suggested last fall. About 30,000 of the company’s 120,000 employees work on software applications, 27 percent of them in India and other “offshore” locations, EDS said. That percentage will grow to about one-third, Balluck said.

EDS executives made the disclosures as they spoke to securities analysts on Tuesday in New York. They stuck to previous forecasts for revenue and profits, but they provided a few new details about a turnaround effort now in its third year.

TCS LAB DIGITISES DE BONO TECHNIQUES
The Hindu Business Line

Tata Consultancy Services has tied up with Dr Edward de Bono — most famous for his `Six Thinking Hat' and `Lateral Thinking' techniques to change the way people think - and de Bono Thinking Systems (dBTS) to offer business transformation solutions to organisations.

The key aspect of this tie-up is the development of a digital version of de Bono's techniques by TCS's Creativity and Innovation Lab.

TCS now owns the IPR for this software, which is called `de Bono Thinking 24x7' (dBT 24x7).

"I have developed tools for lateral thinking and am now working with TCS to turn these into usable digitised versions that can be utilised by all organisations across the globe," said Edward de Bono, at a news conference in Mumbai today.

In a nutshell, the dBT 24x7 solution is an anytime-anywhere one, allowing users to collaborate and apply de Bono's techniques regardless of their location.

The solution will be offered to global customers through the existing distributor network of dBTS, an outfit that supports over 900 certified de Bono instructors in 40 countries.

 ‘NEED FOR IT-BUSINESS STRATEGY ALIGNMENT’
The Financial Express

There is a growing need for alignment of IT and business strategy. Customers require more services that help align IT spending with that of strategic business priorities and needs, said a recent survey conducted by Cognizant. The survey finds more than 50% of the respondents dissatisfied with the current link between IT spending and business priorities.

23^rd February 2005

Roamware Inc, California-based provider of value-added voice and data roaming solutions, plans to expand its development base in India and ramp up headcount to 175 professionals in the next two years.

"Our entire global development work takes place in India and we have about 100 people at present, of which 95 professionals are at the Mumbai centre and rest in Delhi. We now plan to undertake expansion of the Delhi centre as the location has a strong base of engineering professionals," Abraham Punnoose, Director, Marketing & Business Development, Roamware, said in New Delhi.

He did not specify the investments that would go into expansion activities.

The company's clientele in the country includes BSNL, Reliance and MTNL, he said, adding that globally the company worked in 58 countries covering 88 networks.

22^nd February 2005

DEMAND FOR TRAINED BPO STAFF OUTPACES SUPPLY
Business Standard

It’s a known fact that attrition is an issue that continues to haunt the ITeS/BPO sector. But the problem does not end there. The demand for experienced professionals is outpacing the supply in an industry that continues to witness rapid growth.

The IT industry’s apex body Nasscom pointed out that the industry added approximately 73,500 jobs in fiscal 2003-2004 and is expected to double in the current fiscal.

Industry observers feel that the mismatch between demand and supply will become more serious in the future. According to them, the problem persists more at a lower level. For instance, if there is an opening for 100 graduates, only 12-14 people get employed, since not all the 100 would be the best.

Making another point is Saurabh Srivastav, chairman of Xansa, a third-party BPO outfit. He feels the view that, in an industry, which is just five years old, it will be difficult to get people with 10 years of experience.

“Therefore, there is a pressure on recruitment to get people with depth and breadth, Srivastav added.

According to Pramod Bhasin, president of India’s largest third party BPO company— Gecis Global, most players target only a segment of the population that is fluent in English. To curtail this issue, companies have been tapping talents from small towns and different strata of the population.

In fact, Gecis has been experimenting with this recruitment model for some time now.

The company is going to another group of people whose English perhaps isn’t as good as it ought to be and putting them through extensive training and getting them up to speed. “So, we are finding we can cope, but the demand for these services is huge,” Bhasin added.

The scenario could change completely in the future. As Bhasin explains: “Today, the industry is paying for all the training. Tomorrow, like in the software industry and everywhere else, people will need to pay for their own training and come to the industry fully equipped. I think that’s going to enhance the pool but there is a lot of work to be done to get to that point.”

AGERE TO DOUBLE INDIA TEAM
Business Standard  / The Economic Times  

Agere Systems, the $1.8 billion semiconductor software company, has announced plans to double its development team in India to 400 from the current 200.

The corporation was formed after Lucent spun off its Microelectronics Group in 1998, and employs 7,000 professionals globally. The company offers chips and software solutions for wireless data, high-density storage and multi-service networking applications.

Agere, as part of its expansion, has set up its second development centre in Bangalore and with this ramp-up it will become the largest development centre outside the US. The company has so far invested close to Rs 100 crore in the Indian operations and will look at investing further as and when the projects for the Indian operations increase.

Said Madhusudan V Atre, a veteran Bell Lab scientist and MD, Agere India: “Our Bangalore team is increasingly shouldering comprehensive strategic chip design, development and support responsibilities, which necessitated this expansion. The people here are expected to play an increasing strategic role in Agere’s future.”

CALL CENTRES ON AN EXPANSION SPREE
The Financial Express

The market for call centre service providers is expanding fast with 6% of the major outsourcing destinations in Asia planning expansion in the next 12 months, according to a study.

In the coming 12 month, 83% of the call centres in India, China, South Korea and Philippines anticipate some sort of change to their operations with 66% expecting to grow their operations,” the study supported by staffing services provider Kelly Services, Avaya and Witnesssystems showed.

The study found that 64% call centres in India expect growth, while the same figure for China is 50% and Philippines is 53%.

Staff recruitment continues to be a problem for Asian call centres, especially in Philippines and Korea. The concept of “teleworking” or working from home is becoming more popular in call centres in India and China.

The study also found that barring Korea, staff costs are between 40-50% of operating costs for Asian call centres compared to 60-70% in first world environments.

SBI MAY OUTSOURCE CREATION OF BORROWERS’ DATABASE FOR TEN YEARS
The Financial Express

In a bid to meet the Basel II guidelines, recently issued by the Reserve Bank of India (RBI), the State Bank of India (SBI) is examining the possibility of outsourcing the job of creating a database of its borrowers, both retail as well as corporate, spanning a ten year period.

Said RN Ramanathan, deputy managing director, SBI: “As banks focus on their core competencies, and with IT assuming such significance in banking, it will become increasingly important for banks to outsource implementation of technology to specialised technology companies that operate in the banking technology space.”

Ramanathan was talking to reporters on the sidelines of the Banknet India’s CTO summit on Monday. Meanwhile, SBI expects to put about 1,000 branches on the core banking solution (CBS) platform by the end of the current fiscal.

NEW BPO MANTRA: DIAL M-E-N-T-O-R
The Times of India

* Cause: You bloody Indians, you don't know nothin'... You brownie, don't act smart... Why is your mouth stinking, you rat? That's what call-centre execs hear from Western callers.

* Effect: Call centres are hiring shrinks to mentor their staff and that of others in the same business. Delhi Times does a reality check...

Mentoring. That's the latest call-centre-to-call-centre trend. "The mentoring of call centre execs involves counsellors advising them on career, health, mental issues," says Sanjay Salooja, CEO of Empower, a BPO, which plays mentor. "Everything is done anonymously. Call centre execs either call us up or e-mail queries. We then revert back with possible solutions," says Deepak Raheja, a psychiatrist with Empower. Why shrink therapy? "Because call centre execs are young and likely to crumble under work pressure. And if there are abusive calls, they can be totally shattered."

Psychiatrists make execs mentally strong to overcome difficult situations, says Meenakshi Mathur (name changed) of Eserve Solutions, a BPO. Agrees Lalit Tiwari, an exec with Wipro Spectramind, "Since we work 24x7, we need a mental balm; three hours of sleep isn't enough to soothe one's nerves after those calls." Adds Manpreet Kaur of GE Capital: "If all call centres could employ staff to provide mental-relaxation tips to execs, not only would people in the BPO sector last longer, they'd love their jobs too."

BPO REDEFINING RULES OF BUILDING DESIGN IN MUMBAI
The Hindu Business Line

The landscape of suburban Mumbai is undergoing a sea change as business process outsourcing (BPO) companies are redefining the rules of design.

As the demand for buildings with swanky ambience rises, Mumbai's suburbs seem to be getting ready to take the spaces of Gurgaon and Bangalore, head-on.

The decor of these buildings rivals the best in the world. Many of these buildings have carpet area in excess of 50,000 sq ft per floor. High ceiling, structural-column free space, and latest communication infrastructure are a must.

The mandatory specifications include fire-retardant halogen free electrical wires; exit doors with panic bars, alternative power and telecom backup. The workstations are ergonomically designed while the frills include 24X7 cafeterias, gymnasium and relaxation rooms. A minimum 30 sq ft space per person is a given and air-conditioning is such that the employees do not feel too cold.

BPO/call centre is primarily a high stress and labour intensive business that takes a toll on the health of the staff. The attrition rate in this sector is very high and companies constantly think up new strategies to retain employees.

Says Deepak Bhagchandaney, Director, Spanco Telesystems, "In a call centre or a BPO office, all amenities and infrastructure are employee-centric. If employees are not happy in their work place then the quality of work gets affected. It will lead to attrition and high attrition will lead to a downturn in business."

STANCHART SERVICE CENTRE SEES MORE SCOPE
The Hindu Business Line  / The Economic Times  

Scope International, Chennai, one of the global shared service centres of Standard Chartered Group, is contributing a yearly saving of $80 million to the group.

The Chennai centre, which was started in 2000 with 200 employees, today employs around 3,500, which is about 10 per cent of the group's global workforce, according to Sreeram Iyer, Group Head, Global Shared Service Centres.

"This saving will increase year-on-year as we keep adding value to the group. The cost arbitrage of moving to lower cost economy from higher cost economy has paid well for the group," he told newspersons.

The group set up the shared service centres to consolidate all its back office operations. Scope International, Chennai, was one such centre and is a wholly owned subsidiary of Standard Chartered Bank, UK.

The company processes about 75 million transactions a year and services 56 countries. The group has so far invested around $100 million in the centre, he said.

According to Iyer, who was recently promoted to the present post from the Chief Operating Officer, Global Shared Service Centre, the Chennai centre, which has reported a topline revenue of $75 million in 2004, does various operations including human resource services, financial services, IT support and global markets.

For instance, if a customer opens a current account in Dubai, the back-end operations for it are done out of Chennai.

Similarly, if a credit card application processing is done in Hong Kong, Dubai or Singapore, the back-end processing is done in Chennai, he said.

GE TO UP HEADCOUNT AT RESEARCH CENTRE
Deccan Chronicle

The General Electric Co is satisfied with the work being done at the John F Welch Technology Centre in Bangalore. The JFWTC, which was inaugurated in September 2000, currently employs around 2,200 scientists. “We are looking at increasing the number to 2,500 by end-2005,” Dr Surendra U Kulkarni, technical director (chemistry and catalysis), GE India Technology Centre Pvt Ltd said in Hyderabad yesterday.

GE has so far invested $80 million in the centre, Dr Kulkarni said, adding the centre currently has a facility on an area of 24 acre on the outskirts of Bangalore. “We have also acquired 45 acre of land near the existing facility, but don’t have any immediate plans to start work on the new facility,” he told Deccan Chronicle.

The JFWTC is GE’s first and largest integrated, multidisciplinary research and development centre outside the US. “JFWTC conducts research and development in high-impact technology areas to seamlessly provide mission-critical innovations to all of GE’s businesses, with the exception of NBC,” Dr Kulkarni said.

SUCCESS FOR HER IS AN EASY-TO-TOSS HEALTH SALAD
The Economic Times

Success for Daya Kori, Director, Human Performance, Accenture is like an easy-to-toss health salad, replete with a "basic combination of self-belief, vision laced with team work, a strong ESP, loads of hard work and generous doses of never-say-die attitude ".

This post-graduate in mathematics from University of Delhi kickstarted her career at Datapro Information Technology in Mumbai in their training function, realising her college passion of teaching various computer languages and packages as she "enjoyed sharing knowledge with students".

After a fulfilling teaching experience, (thanks to her coming from a very academic-oriented family) Kori, decided to take advantage of the telecom boom that had just hit India in the mid-1990s. And it is a decision, which she has not regretted so far.

"I joined Motorola and spent five very constructive years. From operations, I moved to their quality function. I also went to their university in Chicago to get myself trained and certified in the Six Sigma methodology," Kori, who has headed Motorola's Operations and Quality functions of their service centres across four cities in India, says.

However, instead of settling down into complacency, Kori decided to tune herself in sync with the changing times. And when the BPO space opened up, she knew her calling had come.

"I was one of the first to move into the BPO space in early 2000. I have enjoyed working in the industry as it has kept me on my toes with new challenges every day," she says, her voice brimming with optimism.

Challenges can be heady, especially in a virgin industry. And Kori knows that. Although there have been numerous debates revolving around India's BPO space, she is certain that "India is a clearly recognised and respected brand in the global IT and ITeS industry, courtesy our large available talent pool, and cost competitiveness".

"Outsourcing is becoming strategic for clients rather than being transactional. Specifically on the BPO industry, the opportunity is enormous and the work that's currently happening out of India is exciting," Kori remarks.
Daya Kori is Director, Human Performance, Accenture.

STARENT'S SETS UP B'LORE DEVELOPMENT CENTRE
The Economic Times

US-based Starent Networks, a leader in next generation intelligent mobile infrastructure solutions, yesterday announced opening of a development centre in Bangalore dedicated to provide voice solutions on the company's ST16 Intelligent Mobile Gateway platform.

The company, which competes with the likes of Cisco in the marketplace, already has a development centre in Pune, which is being used extensively for development of new products, client specific solutions and load testing.

Bangalore development centre is starting off with a dozen people, who would be ramped up to 50 soon, President and CEO Ashraf Dahod said.

Pune centre has a current strength of 70-plus with plans to double it in near future, company officials said.

PNB TO RESTRUCTURE BPO OPERATIONS
The Economic Times

Punjab National Bank (PNB) has embarked on a second phase of restructuring. The mandate for preparing a report has been given to Boston Consulting Group. The report, likely to be submitted in a year, will look into a host of issues on PNB's functioning, including centralisation of back office services, integrated risk management and organisational restructuring.

IT'S YOUR CALL
Hindustan Times

According to a survey sponsored by Kelly Services, India not only emerged a star performer in the call centre industry in 2004 but is expected to experience a dramatic growth rate in this segment in the near future

The study revealed that during the last 12 months, all the markets with the exception of the Philippines, spent considerable time and effort developing and upgrading their technology and phone systems.

However, staff recruitment continued to be a problem for Asian call centres, especially in the Philippines and Korea. Said Dhirendra Shantilal, Vice President and Managing Director (Asia) of Kelly Services, "There has been an increase of 20-30% more organisations approaching us for our assistance in staffing call centre positions. It is evident that this industry is still in the growth stage in Asia. When demand exceeds supply due to the fast growth, the scale is tipped towards the workers. As a result, companies have started paying special attention to career planning and ongoing training of their staff as they realise the importance of retention!"

21^st February 2005

OFFSHORING HAS MINIMAL EFFECT ON LAYOFFS: US
Deccan Herald  / The Economic Times  

Contrary to the widespread public perception in the United States, offshore outsourcing accounted for very small fraction of high-tech industry layoffs in 2004, the US Labour Department has said.

A just released report from the Department suggested that offshoring, which is often blamed for layoffs in the high-tech industry, accounted for 16,073 or just about three per cent of extended mass layoffs in the country.

Meanwhile, findings of a study by a job board, Dice, indicated that a possible reason for layoffs would be the new wave of mergers in the tech world. The Labour Department report also showed that the pace of layoffs in the technology industry had slowed down in the last quarter of 2004, CNET News reported.

In the three months ended December 31 of last year, 7,857 workers in the IT industry lost their jobs as part of “extended mass layoffs,” down significantly from 15,318 a year earlier. That compares with 236,637 such layoffs in all sectors, down from 325,333 in the fourth quarter of 2003.

The report supports findings of another study by an employment services company - Challenger, Gray & Christmas -, which said that with 176,113 layoffs in 2004, the high-tech companies recorded 23 per cent fewer job losses than in 2003.

According to the Labour Department, the average number of unemployed workers in nine high-tech categories fell from 210,000 in 2003 to 146,000 in 2004.

TESTING TIME FOR BPO BOYS
The Telegraph  / The Statesman  

The lure of walk-in interviews and a plum back-office job may lose some of its sheen with the industry seriously thinking of setting eligibility criteria for joining this sector.

With only seven out of 100 candidates meeting the required standards, the industry feels there is an immediate need to hone the skills of students in academic and technical institutes to generate skilled human resources for BPO jobs.

Nasscom, the apex body for the software industry, has taken a lead in this matter and will roll out a pilot certification project within two months that will screen BPO-job applicants at the entry level. The apex body will zero in on two locations for the project by March.

Speaking at a seminar on human resource development for the BPO industry, held at the Ramakrishna Mission in Belur today, Nasscom president Kiran Karnik said, “The situation is grim. There is an urgent need to define skills that are specific to the industry. It is also necessary to refine the skills of the existing workers and work out a long-term objective.”

Nasscom, in partnership with Hewitt Associates, has already worked out an industry standard for human resource training certification and assessment of BPO firms.

Software exports

Karnik said the total exports of the infotech industry, including software, hardware and BPO, is set to cross the Rs 100,000-crore mark in the next few days.

BREAKING THE ICE...
The Hindu Business Line

When it comes to outsourcing non-core activities, American companies are ahead of their European counterparts. This is because European companies are conservative by nature. However, increasing competition and the pressure to maintain profit margins are making them warm up to the idea of outsourcing and also off-shoring their functions.

Travel firm TUI UK is among the few European enterprises that have taken the lead to outsource services.

TUI UK is a part of TUI AG, Europe's largest travel group, which owns brands including Thomson Holidays, Britannia Airways and Hapag-Lloyd Express. It employs around 10,000 people, 7,000 of whom work overseas in around 40 holiday destinations around the world.

TUI UK signed multi-million, multi-year deals with two Indian software services vendors, Wipro Technologies and Sonata Software recently.

The engagement with Wipro covers the entire gamut of infrastructure support and management. Sonata is developing e-business solutions for it. It is also looking to provide application management services and helping in the development and implementation of Oracle applications for TUI UK.

Wipro's remote infrastructure service practice will provide support for around 10,000 desktops, 300 servers and level 1 and level 2 help desk, and monitoring and messaging services across 800 locations in the UK for TUI UK.

Keith Newman, IT Director, TUI UK, says his company did a detailed evaluation for over a year before choosing Wipro and Sonata.

"We liked to test initially. Once we got good results from the pilots, we finalised the deal."

"The key for Wipro being chosen as our preferred partner was its experience and execution capability in the IT infrastructure space to manage complex and large projects," he says.

Similarly, Sonata was selected because of technical expertise.Logica CMG is another vendor for Britannia Airways carrying out application development and maintenance work, some of which is executed from its Indian operations.

TUI UK gave outsourcing serious thought as it planned to transform itself by leveraging information technology.

Cost was the key driver to outsource, Newman says, adding "the availability of expertise and high-end skill-sets in India, the delivery capabilities, made us offshore."

The company expects to rationalise and let go some 900 people by mid-2006. It also plans to outsource its back office functions and is currently running a pilot with BPO services provider WNS in Mumbai.

Although UK companies are slightly behind the curve compared to their US counterparts when it comes to outsourcing, the takeoff will be much faster over the next 12-24 months, he says.

`CHIP DESIGN IS MOVING TO ASIA'
The Hindu Business Line

Chip design is increasingly moving to Asia, defying the proposition that highly complex activities mandate physical proximity. Following a recent study, Dr Dieter Ernst, senior fellow at the Honolulu-based East-West Centre, has concluded that Asia's share of international chip design has soared over the last few years. The complexity of Asian chip design projects has also scaled a new high.

Excerpts from an interview with Dr Ernst:

How has Asia's share of chip design increased lately?

The share of non-Japan Asia in the global production of chip designs has increased dramatically: from practically nothing during the mid 1990s to around 30 per cent in 2002. This is still far smaller than North America's share of 60 per cent. But Asia is the fastest growing market for EDA tools, growing 36 per cent in the first quarter of 2004, compared with the 5 per cent growth in North America, 4 per cent in Europe, and -2 per cent in Japan. Taiwan has emerged as a primary new location, followed by Korea. Chip design is rapidly growing in China and India, as well as in Singapore and Malaysia.

Has this relocation of work accompanied specific progress in design complexity?

Substantial progress can be observed in the complexity of Asian chip design projects, in terms of the line-width of process technology measured in nanometers, the use of analogue and mixed-signal design, which are substantially more complex than digital design, the share and type of system-level design, and the number of logic gates used in these designs. A few leading Asian firms from Korea and Taiwan, and also from China and India, are conducting design projects at the technology frontier. The rest of the Asian sample firms are situating themselves at least one generation behind the leading-edge in design complexity as fast, but cheaper followers, which in fact is a big achievement relative to the situation only a few years earlier!

How much of this progress is due to outsourcing of design implementation services?

Outsourcing of design implementation services continues to play an important role. Yet, leading Asian companies have developed a capacity to specify electronics systems and applications, which provides leverage for defining global standards and for innovation rents via premium pricing. Global system companies and IDMs report that their rapidly expanding design centres in Asia perform both design implementation and system specification, mainly for Asian markets.

How do you rate India's progress in chip design vis-à-vis countries like Taiwan, Korea, China, Malaysia and Singapore?

India has attracted substantial investments in chip design by global industry leaders such as TI, IBM, Intel, Motorola, Cisco, STM, AMD, QualCore. Some of these projects involve complex products including microprocessors, analogue devices and embedded processors for telecommunications equipment. But we need research on how India's role in these global design networks is evolving, that is, whether product development or system specification is gaining relative to design implementation services. In 2002, a widely quoted report by Cadence estimated that design services account for roughly 75 per cent of India's total IC design revenues, which, at an estimated $150 million, was still very small. We need research to establish whether this has improved.

So what are India's prospects in graduating from IC design services to product development?

On the positive side, India has developed a few industry leaders such as TCS, Wipro, Infosys, and Moschip, which are on par with their East Asian counterparts. The challenge now is to broaden these achievements, building on India's existing strengths in software engineering and project management. There are huge opportunities. In particular, Indian firms should be able to develop strong positions in embedded processors for networking and communications equipment, and in analogue mixed signal design.

BUILDING ON STRENGTHS
The Financial Express

Mastek charts its growth plans with an eye on the BPO space. Highlights of a chat with Sudhakar Ram, CEO, Mastek.

How are you leveraging on your strengths in the UK geography, the lynchpin of Mastek's revenue growth?

Our strategy is to work with partners. Today we are known because of the London Congestion Charging project and the NHS (National Health Service) project. The fact that one can get reliable service from Mastek is known to all integrators there. Sometimes the customers endorse us directly.

So when Syntegra and BT wanted offshore vendors, they selected Mastek. So, we do expect our profile to increase where customers themselves look at partners who are reliable.

Your US project performances are not measuring up to expectations. Replicating a UK strategy may not work in the US. How are you working on the issue? You also have personally operated there extensively... ?

It's sheer focus. In the US, we have not implemented it as well. It's (a question of) narrowing your focus and being present in a specific segment where you are credible, which is what we are doing now in the BFSI segment. We will focus all our energy there and be highly visible in the marketplace. Over the last 12 months, we have done it. It has started paying dividends. But it takes time for you to register as a small player.

If you look at the top three players, 40 per cent of revenues comes from BFSI, leaving aside Wipro. The pressure and the competition are going to be high...

We are narrowing it down to select areas. Our basic focus there is Life and Health, not overall BFSI. We have the component framework as well as track record in those two areas.

What are you doing to increase your margins? The US business and the Deloitte JV were reasons for sluggish profits. How do you plan to ensure that profits pick up in line with sequential growth in sales?

On a standalone basis, success is already visible. For growth in margins, the largest leverage is sales efficiency right now. Our gross margins are decent — pretty much in the top quartile in our industry. Making sales throughput better is the issue. Our SG&A was close to 28-30 per cent of revenues last year.

That has come down to 20-odd per cent and it will come down a few percentage points this year. The dramatic shift is over. It's visible because of Deloitte JV clouding over part of it and the BPO entity - we were losing money there.

For the JV, it will be a quarter before it steps back up. It's a large world and won't change very fast. It needs another quarter to get back growth momentum. With Capita, we have sold stake. So the impact on the JV will be low. The Carretek investment will remain because we see it as promising. In the course of these six months, we see margins expanding. For, we expect growth in these two quarters. The last part of that growth should fall to the bottom line since SG&A will not go up. Let's see.

SI, by its very nature is a lumpy business. Competitors in the space in India tried their hand at it but moved away. They have taken up infrastructure support, which is a related area. They have been very successful there, but have not looked at SI as core activity thereafter.

The only way to remove lumpiness is through partnerships and creating a steady deal-flow. So you have to improve pipeline and improve levels of deals that come to you. We weren't clear a couple of years ago, whether we would get that kind of deal flow as an SI. Now, it looks like we will. Largely, we also see that the majors are slowly vacating this market. This is becoming more outsourcing than projects. Then, my question is, who's going to do the projects? Someone has to build software as well. So who'll do that?

Can you give us an idea about the NHS deal {ndash} in terms of size, manpower, development vs maintenance... ?

Our deal was about $50 million (or 35 million pounds) over 10 years. The project phase will be shorter and maintenance will be higher {ndash} maintenance will be on for eight years from now. The project phase would get over by mid {ndash} 2005 calendar. Maintenance has already started on what we have delivered. That would be larger because we are taking more scope than originally planned. But we are only doing a small part of the overall program. Spine (project) itself is worth one billion pounds.

Are you beginning to focus more on BFSI (banking, financial services and insurance), with less focus on the government vertical?

It varies by country. In the UK, we focus on the government since the large projects are all there. In the US, our work is limited in the government space but we are there largely in BFSI. It also varies by situation. BFSI has smaller deals but is safe and predictable. It helps you de-risk. With the government, unless you get the 10-year time and you have your order book filled for that period, there will be lumpiness (between two deals). These are such huge projects that typically, when they get over, are difficult to replace.

Any other verticals that show promise for SI where you can step in and build vertical practice?

Right now, it's the government. That's where new systems are getting built. In Insurance, it's a replacement market. So we are looking at the Java-based component framework. We are offering to help customers migrate from their 20-30 year old systems to new technologies. It's not working as well in just migration alone. But, it works if there is some new product they want to introduce because of say, legislative changes. When there is a discontinuity in the market {ndash} strategic new opportunities, change in channels — in those areas, we are able to position this. But if things are running smoothly, then few want to change.

WAKE UP BIG BOYS, BPO ADS ARE HOT
The Economic Times

When you open the appointment section in a newspaper or surf any job website, chances are you will be bombarded with a plethora of ads for openings in business process outsourcing (BPO) companies.

No wonder, the advertising by BPO firms is growing six to ten times faster than the ad industry average. The BPO-led advertising is estimated to be expanding at 60 percent-100 percent rate though the overall ad industry is growing at a normal 10 percent-12 percent.

As per Nasscom, there are more than 425 ITeS-BPO companies in India. >From $2.5 billion in 2002-03 to $3.6 billion in 2003-04, the ITeS-BPO bandwagon is expected to cross $5.1-billion revenue mark this year.

With extremely high growth rate and equally high employee attrition rate, BPO firms are constantly required to keep looking for quality bulk manpower. The BPO market is dominated by big players including WNS Group, Wipro Spectramind, IBM Daksh e-services, Convergys India, HCL Technologies BPO Services, etc.

Each of them invests Rs 3 crore-Rs 5 crore on an average annually in communication activities. Even smaller players like Global Vantedge, Vanguard Info-Solutions and Vertex spend anything between Rs 1 crore-Rs 2 crore in advertising. Between 85 percent and 95 percent of the ad budget goes in recruitment ads in the print media alone.

Till now most of the BPOs were based in and around major metros like Delhi, Mumbai and Bangalore. And the major national English dailies were the main platforms to reach out to the potential candidates for the BPOs. But now BPO firms are expanding their base by moving to places like Jaipur, Chandigarh, Vizag, Kochi, Pune and Ahmedabad.

NASSCOM SEEKS CLARIFICATION ON TAX HOLIDAY NORMS FOR ITES
The Economic Times

Nasscom, the representative body of the Indian software and services industry, has called for clarity in the interpretation of the Section 10A and 10B under the IT Act which bestows a tax holiday on the IT industry up to 2009.

At present even if a small amount of export sale proceeds remain uncollected, there is total denial of deduction.

The software services business which is characterised by staggered payments, wants the government to make amendments to allow deduction “to the extent export sale proceeds are realised in convertible foreign exchange within the prescribed period.”

Another amendment suggested is to consider tax withheld from export sale proceeds in any overseas jurisdiction as “deemed to have been received or brought into India.”

In addition, IT companies want export sale proceeds collected beyond the prescribed period to qualify as part of “export turnover” where the approval sought is pending before the competent authority or where the approval is implied.

Alternatively, it has asked for deduction under Section 10 A and 10B to be allowed in the year in which convertible foreign exchange is received in or brought into India on cash basis.

Nasscom president Kiran Karnik says, “For the past one year, software companies are facing a lot of trouble as these sections are being interpreted in a manner inconsistent with the legislative intent.”

SPARE-TAX CALL FROM BPO MAJORS
The Telegraph

The National Association for Software and Services Companies (Nasscom) has asked the government to amend the information technology (IT) act to ensure that foreign companies outsourcing work to ITeS or BPO units in India will be exempt from tax.

“The government should not tax the parent company which outsources work to an unit in India,” Nasscom president Kiran Karnik said. “The IT act must be amended to identify ITeS and BPO units as handling outsourced work, so that parent company shall not be liable to pay tax in India. Therefore, they will not be required to file tax returns here.”

Nasscom is also of the opinion that the arm’s length price for outsourced activities should be determined only on the basis of activities performed by the Indian BPO unit without attributing any profits to the parent company.

The apex body has also recommended that the government give a thrust to the growth of small and medium enterprises (SME) in the IT industry.

“While a large company can avail of tax benefits, smaller companies do not get the same benefit when they acquire a sub-contract job and have to pay taxes,” said Karnik. “The government should extend tax benefits to all concerned and help create a vibrant ecosystem on the lines of the automobile industry,” he added.

The government should also invest in e-governance projects, which will also give a boost to the SME segment. Projects like land records, smart cards, data digitisation, small-scale software development can be sub-contracted to the SMEs.

Nasscom has suggested 100 per cent tax exemption for these projects and allocation of special funds to meet global standards. Banks must also announce special schemes for lending at reduced interest rates to meet working capital needs.

HURDLE TO HEALTHCARE OUTSOURCING
The Telegraph

Indian business process outsourcing (BPO) companies that focus on medical transcription may find it hard to capture business in the $800-million US healthcare market.

Medical transcription is the process where the prescriptions given by busy doctors in the US are transcribed by call centres in countries like India to save on transcription costs.

Currently, the healthcare organisations in the US outsource functions like customer acquisition and imaging services, claims processing and disease management.

One of the biggest hurdles that BPO companies in India face is the absence of a law on medical transcription. In the absence of data protection law, US hospitals and insurance companies are reluctant to provide work to Indian BPOs. Countries like the Philippines and Luxembourg, on the other hand, have strong legal frameworks for medical transcription.

In addition to the domestic laws, the healthcare outsourcing service providers need to ensure compliance with foreign regulations.

QATAR AIRWAYS, KALE RENEW DEAL
The Hindu Business Line

Kale Consultants has won a renewed contract worth $12 million from Qatar Airways for providing revenue accounting and revenue recovery services.

Qatar Airways has outsourced its revenue accounting service to Kale MPS{trade}, the BPO centre of Kale.

The contract will run for four years and could be worth $20 million-$25 million in this period , given the airline's current growth, said Akbar Al baker, Chief Executive Officer of Qatar Airways, at a news conference in Mumbai.

Al Baker said the airline would soon finalise other outsourcing deals, which are under negotiation.

He said the airline was committed to outsourcing non-aviation jobs to reduce costs.

OUTSOURCING BENEFICIAL TO INDIA: IIM PROFESSOR
The Hindu

India is gaining by the system of outsourcing, which is made possible because of globalisation, according to Vishnuprasad Nagadevara of IIM Bangalore. Delivering a lecture on `Outsourcing - conflicting views' at the concluding session of the `Concours-2005' jointly organised by the Computer Society of India (CSI) and Kakinada Institute of Engineering and Technology (KIET) in Kakinada yesterday, he said that countries like United States were able to reduce their cost of production by outsourcing system.

"Computer engineers need not migrate to other countries for jobs but could effectively secure employment staying in the country itself. The work which costs $60 in the United States could be done in India with our engineers at an expenditure of $6," he remarked.

HOME IS WHERE SOURCE IS FOR US FIRMS
The Statesman

Finally, Uncle Sam has come up with a few ideas to stop the flow of jobs to India. Outsourcing which had been a contentious issue in last year’s Presidential election has now forced US companies to either home source or rural source content writing jobs.

Home sourcing is a relatively new concept, where customer service agents are not 20-something residents of Delhi or Bangalore, with an American drawl, but an American working out of home. Rural sourcing does away with the executives in Gurgaon and transfers the work to remote areas in the USA.

Many American firms which were outsourcing their work to India, are now turning to rural and home sourcing to meet the problems arising from a domestic backlash, market attunement and fake foreign accents.

In just a few months, the USA has got more than 100,000 home- based agents with companies like IntelliCare, Willow, CSN, Alpine Access and Working Solutions taking business away from Indian content writers and giving it back to Americans.

Young graduates in Delhi, who were writing content for American websites and doing homework for American college students, are now thinking of alternative job options. The Capital’s content writers are the first to be hit by the change. These content writing firms admitted that there has been massive reduction in the number of assignments.

“A lot of content writing work, which we used to receive has been given to newly established content writing firms in rural areas of the USA,” said Mr Vishnu Singh, owner of Chocolate City. He has reduced his workforce drastically from the 50 freelancers he used to employ earlier.

Similarly, ASM Infosystems, which used to get a lot of American university assignments outsourced in Delhi, has also been badly hit. “Academic assignments which we used to receive from American universities have nearly halved and content writers working in such firms have started looking for other jobs,” said a content writer at ASM Infosystems, Teena Jain.

Indian firms claim that the Americans’ new love for home and rural sourcing works on the same premise, which led to the growth of back office work in India. Low costs, a huge unemployed population and the depressed American economy are what led to the growth of home and rural sourcing in America. “But our services are better even if the cost differential is not much compared to home sourcing,” said a co-founder of Chocolate City.

ON THE WINGS OF SHIVA
The Indian Express

Shiv Nadar’s HCL Technologies appears to have made a big impression on aviation biggies. The $2 billion software major has been selected by Boeing to become the software development partner for the 787 Dreamliner project (formerly known as the 7E7 programme). The multi-year, million-dollar agreement with Boeing will have to provide services in the areas of both software and hardware development and include verification and validation of the systems provided by its Tier-1 suppliers for the 787 programme.

In fact Nadar’s engineers are already working at a systems requirements definition level for some of the Line Replaceable Units (LRUs) with Boeing’s suppliers for the programme. The Boeing project has further strengthened the company’s reputation as the leading software developer in the aerospace vertical. HCL happens to be the first software developer in India to have received the SAE AS 9100 certification, which is the globally accepted quality system requirement for suppliers to the aerospace industry. Nadar should already be looking at new opportunities in the aviation sector after the Bangalore air show during the month that attracted all the big names from the aviation world and highlighted Indian prowess in the area.

E-BUZZ
The Financial Express

Aviation software solution providers are in demand, due to booming air traffic worldwide and expenditure cuts by loss-making airlines.

Studies put the maintenance, repair and overhaul (MRO) business at $89.5 billion worldwide, including $36 billion for commercial aviation. The segment is estimated to be growing at 5.3 percent to touch $62 billion in eight years.

MRO companies typically spend 2.5 percent of their budget on IT solutions. Companies such as Chennai-based Ramco Systems are looking to bag at least 2 percent of this $2 billion market in the region, says Ramco V-P R Shankar.

The year saw airlines worldwide stagger under $4 billion losses. But players are looking to peg high fuel costs and keep pace with competition, and it is here that IT solutions are of help, an industry expert said.

19^th February 2005

INDIAN UNITS ARE IT MNCS' ZIP DRIVERS
The Economic Times

They don’t have any marketing offices. Neither do they spend on advertising. Some don’t even sell their services or products here.

Though selling in the Indian market may not be important, some global IT giants have nonetheless become dependent on India. Because of outsourcing, a substantial proportion of their workforce is now located here.

The rising trend of offshore outsourcing has strengthened the India connection. The India operations of multinational companies like Accenture, Sapient, Convergys and Perot Systems increasingly play a major role in delivery of their services.

Moreover, while the centres here were earlier regarded as cost-cutting tools, they have now turned into growth drivers. More customers insist on an offshore component for any IT, CRM or even human resource outsourcing deal. This means that for companies like Accenture, Sapient, Convergys and Perot, the size and strength of the Indian centre could clinch a large deal.

Any project involving IT increasingly has an offshore component in it. While in the initial years, these companies could partner an Indian firm for offshore work, these alliances are not working any more.

Accenture’s low-cost delivery capabilities are predominantly located in India. It employs close to 15,000 people in India, the largest number outside the US. India also accounts for over 10 percent of Accenture’s total workforce.

This workforce has started making a difference to the topline and bottomline of Accenture’s business.

In smaller companies, the proportion of the workforce located in India is much higher.

Sapient, for instance, has more than 50 percent of its workforce here. Not only is the company dependent on India for delivery of services, but its growth is dependent on its capabilities here.

WANT A SLICE OF THE BPO PIE? THIS IS THE YEAR
The Economic Times

It’s one of India’s fastest growing industries. And has delivered hefty returns to the private equity and venture capital gang. So far, however, the lack of listed BPOs has prevented ordinary domestic investors from owning a piece of the action.

This could change in ’05 as a number of BPOs are slated to hit the bourses. While Allsec Technologies and Paradyne Infotech have already filed offer documents with the Securities and Exchange Bureau of India (Sebi), industry insiders say many more are waiting in the wings.

Public issues from ICICI OneSource and Intelnet Global Services are in the pipeline, according to primary market database Prime Database.

Other BPOs and ITeS companies, too, are understood to be examining the option of primary market offerings, though they are yet to announce any plans. Third-party BPO Sutherland, for instance, is said to be weighing the IPO option.

Says Ashish Dhawan, senior MD, Chrys Capital, “Six-seven BPO outfits could potentially go in for listing. BPOs with a capacity of 5,000 seats or so are well placed to go in for IPOs.”

Merchant bankers agree. “As industries mature, the IPO route becomes attractive for them. The BPO industry has reached a stage where IPOs make immense sense. We expect several BPOs to be listed during the year,” says a merchant banker.

“We have already filed Allsec with Sebi. We are also working on the Exl Services float on the Nasdaq. There are several other BPOs waiting in the pipeline, but it is premature to talk about them,” says Avdhoot Deshpande, senior manager, investment banking, IL&FS.

Till now, a significant portion of both the growth and expansion capital of several BPOs has been provided by private equity funds. Both domestic and foreign investors have aggressively pursued investment opportunities in this sector.

FUSION TECH PLANS $2-MILLION EXPANSION
The Hindu Business Line

Fusion Technologies Inc, an Edison-based technology services provider, has lined up plans to expand its India development centres located in Hyderabad and Bangalore with investments of about $2 million.

The Chief Executive Officer, Richard G. Napoli, on a maiden visit to India, told Business Line that the investment would be from internal accruals.

FIRST INDIAN CORP OPENS DEVELOPMENT CENTRE
The Hindu Business Line  / Business Standard  / The Financial Express  

First Indian Corporation, a subsidiary of the $6.72-billion First American Group, a Fortune 500 company, having operations in Hyderabad and Bangalore, has opened its software development centre in the country.

Addressing a press conference in Hyderabad yesterday to announce the opening of its centre, the President of First Indian LLC, Peter W. Gorrie, said: "We plan to increase staff from 1,500 to 4,200 in the near term. We are exploring the possibility of another centre in India, possibly Chennai, Mysore or Mangalore.''

ALLIANZ CORNHILL INDIA GETS CMMI LEVEL-3 APPRAISAL
The Financial Express

Allianz Cornhill Information Services (ACIS) became the UK-based insurance major Allianz Cornhill’s first unit to pass the CMMI level three appraisal, an ACIS release in Thiruvananthapuram has said. The 4000-million pound parent company is yet to qualify this level.

CMMI, developed by Carnegie Mellon Software Engineering Institute (SEI), is an internationally recognised measure to determine the level of maturity of software development processes in an organisation. ACIS in Kerala Technopark, in Thiruvananthapuram, is the UK company’s only offshore software subsidiary. The release quotes CMMI lead appraiser Stephen Fletcher as saying, “The efforts by ACIS show willingness to be tested against the best of parameters”.

GOLDSHIELD PLANS DTC ROUTE TO ENTER INDIA
The Economic Times

You can finally have your vitamin delivered to your doorstep with your mail. The British healthcare group – Goldshield – plans to make its initial foray into the Indian market with its direct-to-consumer (DTC) business.

The company will launch its products between April and June this year.

Goldshield has set up a captive BPO at its Mumbai office. The unit has over 400 employees involved in back-office operations for the company’s global business.

According to Ajit Patel, CEO of Goldshield group, the company has shifted about 85 percent of its global operations to India.

The company may acquire some brands in India a year from now. It may also look at entering the generic pharmaceuticals and retail space.

HARYANA HAS MOST JOB AVENUES, SAYS SURVEY
The Statesman

In India, this premier metropolis stands first for employment opportunities but the state of Haryana is first, Tamil Nadu second and Punjab fifth, according to the latest Ma Foi Employment Survey (MEtS).

Though south India continues to lead the rest of the country in terms of employment opportunities, Haryana, Tamil Nadu, Uttar Pradesh, Andhra Pradesh and Punjab are the top five states respectively, for employment, while the top five cities in order are Chennai, Hyderabad, Bangalore, Delhi and Mumbai.

Ma Foi with a strong base in South-East Asia, London, Dubai and India has made huge projections for the January-March quarter and predicts creation of thousands of jobs cutting across all sectors in the country.

The quarterly study, which covered 2,046 employers across 17 sectors, has stated that 74,075 jobs would be created during the quarter. What is more important is that the total number of jobs to be reduced would come down significantly over last quarter.

The report said that more jobs would be created in IT and ITeS, pharmaceuticals, textiles and garments, retail, manufacturing, automobiles and auto ancillaries but added that there would be a down growth in sectors like BFSI and telecom.

Among the top 20 employers who plan to hire, four are from manufacturing, three from IT and textiles and garments, two from ITeS, energy, entertainment and communication, and one each from telecom, pharmaceuticals, infrastructure and retail.

The top 10 sectors in terms of employment are IT and ITeS, education, training and consulting, infrastructure, transportation and logistics, pharmaceuticals, retail trade, healthcare, auto and auto ancillaries and print media and entertainment.

STALLION UAE OFFICE
The Hindu Business Line

Automatic data capture and identification solutions provider Stallion Group has launched operations in West Asia from its base in the UAE.

The Kochi-headquartered company with 16 offices and 50 resellers across India, has started operations by opening its first office in SAIF Zone under the name Stallion Systems FZE.

CELL SHOCKED: BPOS TELL STAFF TO KEEP PHONES OUT
The Economic Times

It is ironical that youth, among the biggest buyers of mobile phones with fancy features like camera and video recorders, will not be able to use them. That is if they are employees of BPO firms and call centres.

To safeguard against possible data leakage, call centres and BPO firms that dot the Indian landscape have banned the use of mobile phones with camera in the work place. Many have gone a step ahead and banned the use of mobile phones — with or without camera — in the work spot.

A vast majority of employees that the fast spreading BPO industry employs are in their early or mid twenties. A significant portion of the attractive salary they earn is spent on clothes, food and electronic gizmos.

Around three lakh people are estimated to work in the Indian IT enabled industry which earned export revenue of $3.6 billion last fiscal.

BPO firms treat protection of client data as top priority. Mobile phones coming with sophisticated image capturing features therefore are perceived as a threat to data confidentiality and security.

Senior managers of BPO firms say banning phones in the work place is not at the insistence of clients, but a pro-active measure to protect from breach of vital information. “Clients are more confident of working with us when we list out the several steps we take to protect their information,” they say.

Raman Roy, chairman, Wipro Spectramind, said company’s security norms are so stringent that its agents (employees) are not allowed to even possess any writing material or equipment in the work spot.

The floppy and CD disk of computers that agents work on are disabled. Printers, photocopiers and any kind of writing devices are banned on the shop floor.

A report on the global mobile phone industry says that in 2005, there would be over 370 million digital cameras sold. More than three-quarters (76.29%) of them would be embedded in mobile phones.

18^th February 2005

THINKSOFT OPTS FOR RECRUITMENTS IN US, COURTESY HIGH ATTRITION RATES IN INDIA
Business Standard

Off shoring is not a one-way street. High attrition rates and employee cost in India have driven an Indian software company to look at recruitment in the US.

Thinksoft Global Services, an independent software testing company expects to recruit 30 to 50 employees in the US by July 2005-06.

Thinksoft has not given up on India though. The company, which concentrates on banking, finance and insurance industry, will also increase its headcount by 200 employees in Mumbai and Chennai in the next six months.

Vanaja Arvind, chief operating officer, Thinksoft Global Services, told Business Standard, “With the US economy recovering, we plan to recruit in the US during the first quarter in 2005-06 for on-site projects as it will be cost competitive on a long-term perspective.”

The employee cost in the Indian IT industry has gone up to 50 per cent as a percentage of total revenue from 30 per cent a few years ago.

One of the major reasons for the growth in Indian software industry has been the low employee cost but it has been increasing. It is cost competitive to recruit in the US for on-site projects, she added.

Arvind said that the Mumbai branch is being expanded. A new facility has been added, and the employee base is to increase from 30 to 85 people.

At present, the headcount of the company is 270 people. Thinksoft will close the current fiscal with a turnover of $5 million. The company plans to achieve a turnover of $15 million in the next fiscal. The company has a presence in New York, London, Singapore, Bangalore, Chennai and Mumbai.

METRICSTREAM TO INVEST RS 45 CRORE ON EXPANSION
Business Standard  / The Hindu Business Line  / Deccan Herald  / The Hindu   

MetricStream, Inc., a US-based company offering solutions to manage processes, regulatory and industry-mandated compliance and corporate governance initiatives, has announced plans to invest Rs 45 crore in Bangalore to expand its operations.

The company has set up a new and larger state-of-the-art facility in Bangalore with a capacity for 150 developers.

This facility, which will be the India corporate office as well as the development centre, will support MetricStream’s rapid growth in India. The entire key product and application development for MetricStream’s global customers will be housed in the facility.

Announcing the inauguration of the facility, Gaurav Kapoor, CFO, MetricStream Inc, said: “MetricStream India is on a high growth path. Our Bangalore centre commenced operations in 2001 with a headcount of 10, which has now risen to over 60. This is expected to double in 2005. The new facility further strengthens our commitment to India and the importance of the India centre for MetricStream globally.”

INFOTECH TO STEP UP PRESENCE IN INDIA, ABROAD
Business Standard

Hyderabad-based Infotech Enterprises Limited, a dominant player in the software space of engineering services and geographical information systems, is looking at expanding its operations to other locations in the country as well as open offices abroad.

BVR Mohan Reddy, chairman and managing director of Infotech Enterprises Limited, said that the company is looking at having operations in New Mumbai and Noida in the country and have offices in China and Australia.

“The company will also be opening a low cost development centre in the US most probably in Maryland,” Reddy added.

According to him, all the new initiatives of the company are expected to come up in 2006. Infotech is also looking at expanding the company’s existing facility in Bangalore.

The company on Wednesday inaugurated its new facility adjacent to the existing one in Madhapur. The 1.2 lakh-sq ft facility will house over 1,000 employees with 710 workstations.

"With the opening of the second facility, the company now has 2.5 lakh sq ft of office space which can house around 4,000 employees," Reddy said. Infotech during the current calendar year is looking at increasing its headcount to around 3,400 from the current 2,400 employees.

RED HAT GLOBAL CENTRE IN PUNE
The Hindu Business Line

Red Hat, provider of open source to the enterprise has inaugurated its global engineering and support centre in Pune.

The India support centre would address the support requirements of the growing domestic customer base while serving the customers in the English speaking markets globally, Matthew Szulik, Chief Executive Officer, Red Hat has said.

He said the investment for the centre was less than $ 3 million and it had in place a contingent of 30 people.

PRATT & WHITNEY EYEING INDIAN AVIATION INDUSTRY
The Hindu Business Line

Pratt & Whitney Corporation, part of United Technologies and a pioneer in flight technology powering the civil aviation industry, has firmed up plans with several Indian airlines including Air Deccan.

The President of Pratt &Whitney, Louis R. Chenevert, said that every second aircraft that lands and takes off is powered by Pratt &Whitney engine and the momentum continues with the growth of the aviation sector in the region.

About 30 aircraft ordered by Air Deccan, both ATRs and others, are powered by Pratt & Whitney engines, along with the likes of Saras, the indigenous 14-seater, passenger aircraft.

"Pratt & Whitney engines also power scores of Defence aircraft such as F15s and F16s and together with Infotech we are working on design of various engines for modern aircraft both civilian and other applications.

"The aviation industry is witnessing tremendous changes and Pratt & Whitney is part of this changing trend. In about three years, we would be able to come out with a hypersonic engine that would be able to fly at five times the speed of sound," Chenevert said.

Chenevert is in India to commission a development centre of Infotech Enterprises Ltd. Together, Pratt & Whitney and Infotech Enterprises, work on complicated engineering design work through a near shore centre.

"With the Indian aviation industry opening up and more players placing orders for modern aircraft, a good number of them would be powered by Pratt & Whitney engines. We have already made up with Indian Airlines and Air Deccan and expect to be part of other airliners planning their expansion in India," he said.

PACKARD TO SET FOOT IN CHANDIGARH
The Economic Times

Chandigarh Technology Park (CTP), the multi crore software hotspot in City Beautiful, has sold its space to Packard for back office operations out of India.

To begin with, Packard plans to take up office space on lease in the incubation centre within the Punjab Engineering College campus run by the Society for Promotion of IT in Chandigarh (SPIC) of the Chandigarh Administration’s IT department, according to IT director Vivek Atray.

In a communication to the IT department the COO of Packard Technologies Sean Motlag has confirmed that Packard Technologies “is very eager to get its operations started and looks forward to a good relationship with the incubation centre as well as establish a growing enterprise in Chandigarh.” With business growing, Packard will eventually take up space in the CTP.

There are already six BPO outfits in operation at the incubation centre, including Net Solutions, Sea Asia Consulting, Global Back office, Trueline Systems, Bebo Technologies and Safaltech Software. Both Trueline and Bebo are US companies.

Packard Technologies is a dotnet technology company dealing in e-books such as Christian readings, dictionaries, classics, history and cookery.

ADVANTAGE BENGAL: NO LONGER LEFT OUT
The Financial Express

When IT czar Azim Premji decided to set up shop in Kolkata last year in April, and asked the state for an even bigger plot of land in an upcoming township in the state’s capital, most began to sit up and take notice of this newcomer in the IT business. Nor is it just Wipro that is planning big moves in the state. IBM also plans to double its operations in the state. The state accounted for a little over three percent of the country’s IT export earnings a year ago, and this is now up to fiver percent, and the state plans to capture 15 percent of the country’s market by 2010 and 20 percent of the ITeS earnings. The state is now setting up IT parks as if there’s no tomorrow and has banned strikes in the IT industry, which has now been given the status of a public utility.

17^th February 2005

UNISYS PLANS RAPID RAMP UP
Business Standard

Unisys Global Services – India, the captive centre of the global IT services and solutions company, has faced some hiccups ever since its launch was announced in April 2004.

But, with the move to new premises just two weeks ago, Mukul Agrawal, managing director of the organisation says everything is on track and that they will be 1,000 strong by the end of 2005.

During its launch, Unisys India had announced that they planned to be 2,000 strong in two year’s time. Agrawal said that they should grow to 4,000 strong in four years time, stating that the expansion need not necessarily take place in Bangalore.

The Bangalore centre will do both software development and BPO work for its parent. Though internal requirements will make up 10 per cent of the work done here, the majority will be for Unisys’ clients.

“Software development will make up around 40 per cent of the work and call centre will account for 30 per cent. Our infrastructure management services will occupy around 10 per cent and work for insurance companies and payment processing will involve the rest,” said Agrawal. He said that BPO work for the healthcare vertical would begin in late 2005.

The software portion, across the categories of system software and application architecture, will cover most verticals the company operates in, including financial services, transportation and telecom. Agrawal expects the Bangalore centre to start filing patents in the next two years.

KERALA MORPHS INTO IT TRAINING TURF
The Economic Times

After attracting tourists by the thousands to its green shores, Kerala is now attracting visitors of a different kind and making them stay a little longer as well.

The state is turning out to be a preferred place for IT companies to train their recruits, and even big-timers like Tata Consultancy Services and NEC Corporation of Japan are homing in on the opportunity.

Sources in Technopark told ET that TCS, which already has a dedicated 57,500 square feet (sq ft) training facility at the Technopark campus that can train up to 600 recruits at a time, is expanding the facility with an additional building.

Civil construction for the new building, which will be roughly six times larger than the existing facility with a proposed 3.5 lakh sq ft area in a 12-acre plot, will commence tomorrow.

The new centre will have the capacity to train about 1,000 recruits at a time, making Thiruvananthapuram a major hub for the company’s training programmes.

Last week, the $ 47 billion NEC Corporation had sent a batch of 30 recruits to be trained at Thiruvananthapuram by Arackal Digital Solutions (ADS), a company based at the Technopark.

MOBILES WITH CAMERAS: NO-NO IN CALL CENTRES
The Economic Times

It is ironical that youth, among the biggest buyers mobile phones with fancy features like camera and video recorders, will not be able to use them. That is if they are employees of BPO and call centres.

To safeguard against possible data leakage, call centres and BPO firms that dot the Indian landscape has banned the use of mobile phones with camera in the work place. Many have gone a step ahead and banned the use of mobile phones — with or without camera — in the work spot.

A vast majority of employees that the fast spreading BPO industry employs are in their early or mid twenties. A significant portion of the attractive salary they earn is spent on clothes, food and electronic gizmos.

Around three lakh people are estimated to work in the Indian IT enabled industry, which earned export revenue of $3.6 billion last fiscal.

BPO firms treat protection of clients data as top priority. Mobile phones coming with sophisticated image capturing features therefore are perceived as a threat to data confidentiality and security.

THE SKY IS THE LIMIT
The Economic Times

From a ripple to a wave, the aerospace outsourcing industry may be able to witness a flood of orders worth as much as $4b in the next few years.

It may still be a ripple but it is capable of turning into a wave soon. The multi-billion dollar global aeronautics industry is sourcing a small share of its needs from India but for the ‘desi’ precision part manufacturers and technology companies, the pie is getting bigger by the day.

If some of the key purchase deals in the commercial and military aviation space come through, along with HAL and perhaps BEL, a host of vendors including Wipro, TCS, Infosys, HCL, Cades, Accord, Ramco, and Vidhyacom would be together looking at $2-4 billion business in the coming years.

The range of services include design, manufacture of precision parts, sub-assemblies, software development, legacy system sustenance, computerisation of training manuals, and even virtual production development.

The biggest break in the coming weeks and months is likely to come from the Indian Airlines and Air India aircraft purchase order estimated at $6-6.5 billion. Apart from the counter-trade regulations, which mandate 30% of the purchase deal value to be outsourced from India, a key driver for India tilt is quality at attractive prices.

COGNIZANT SOLUTION FOR U.S. BANK
The Hindu  / The Hindu Business Line  

Cognizant Technology Solutions has announced that it will be delivering a full range of IT services to the U.S.-based loans and mortgage lenders, IndyMac Bank, F.S.B., the principal subsidiary of IndyMac Bancorp Inc. IndyMac is using many of Cognizant's solutions capabilities for application development, integration and management, infrastructure outsourcing and helpdesk, testing, business and technology consulting, and business analysis. The company is providing support for many of IndyMac's core applications, including loan origination, loan underwriting, PeopleSoft, and Siebel.

ON A DIFFERENT PLANE: INDIA AN OUTSOURCING HUB FOR AERO COS
The Financial Express

India is poised to become a key outsourcing hub for global aerospace and missile companies as it has cheap and skilled engineers on offer.

Director (exports), of France-based MBDA missiles systems, Jean Luc Lamothe said, “India with its skill base and projected economic growth is the preferred partner nation for MBDA due to its unique potential of becoming a defence industrial hub in the region. As such, there are extensive opportunities for collaboration with Indian industry, combining the company’s technology and skills base in weapons design, testing and integration developed over the last 50 years.

The company has recently submitted proposals for potential areas of joint technology research during discussions with Defence Research and Development Organisation (DRDO), said Mati Hindrekus, official spokesman of MBDA.

He added, “on one hand we will benefit from Indian software skills and the country’s lower cost base. On the other India will gain access to the world’s most advanced guided missile technology, which will give the nation a much greater degree of autonomy in developing its current and long term defence capabilities.”

Vincent Gorry, senior national executive of Paris-based engine maker Snecma said the rare combination of a large pool of software engineers and quality suppliers is attracting foreign firms to Bangalore.

“In the aerospace industry, more and more software is increasingly being used. In India you can get both aerospace engineers and the IT guys and there is cost advantage,” he said.

 ‘INDIA HAS OUTSOURCING EDGE OVER LATAM, EASTERN EUROPE’
The Financial Express

In the race for outsourcing business, India has an edge over Latin America and Eastern Europe. Over the next 15-20 years, India would gain from its culture and philosophy.

Grant Thornton director Vaibhav Manek said: “India and China have emerged as upcoming economic superpowers. Brazil and Argentina have been subdued, while Mexico is showing nominal growth rates. Countries like Ukraine have witnessed political instability with low growth rates.”

Latin America is an emerging offshoring destination due to the same time zone as the US and growing Spanish clout.

Yet, consultants feel that the Hindu and Buddhist cultures of India and East Asia have a broader worldview. A consultant with one of the Big Four opined: “India and China are moving with a purpose, while many western countries are struggling for a vision.”

Manek added: “India has a well-regulated corporate law regime. Its companies have increased their foot prints the world over, an extension of our deep-rooted philosophy of entrepreneurship.” An AT Kearney study of 275 MNCs shows a dramatic increase in sourcing of goods and services from low-cost supply markets like India and China. By 2009, 73 percent of North American companies will source from China, while 60 percent will source from India, 52 percent from Brazil, 55 percent from Eastern Europe and 68 percent from Mexico. Among European companies, 54 percent will source from India, 74 percent from eastern Europe, 68 percent from China and 37 percent from Brazil.

Domestic business for Indian IT companies is also expected to rise. A Gartner survey sees IT spending by Indian corporates growing to $22.9 billion in 2005.

 ‘WELFARE MEASURES FOR CALL CENTRE WORKERS BETTER IN INDIA’
The Hindu Business Line

The Communication Workers of America (CWA), Chicago, is open to outsourcing, and has come to India with an open mind to study working conditions in India for such "white-collared professionals," according to Steve Tisza, President, CWA.

The CWA represents about seven lakh men and women employed in telecom, broadcasting and television services, journalism, publishing and electronics in the US.

Addressing a gathering of human resources professionals on Global Trends in Labour Values in Chennai, Tisza, however, cautioned India IT vendors of possible US exploitation of outsourcing options for unduly increasing their bottom line revenues by cutting labour costs.

A press release on deliberations of the meeting was issued by the IT Professionals' Forum.

"We go back with satisfaction that infrastructure here compares with the best in the US. So far all our information about outsourcing and its issues has been from the media. This (visit) has been an eye-opener where we visited and understood the Indian call centre and IT industry hands on," he was quoted in the release.

The delegation, which is visiting call centres and IT firms in Chennai, Mumbai, Bangalore and Hyderabad, said that the system was much better in India. "We are very impressed by the welfare measure for workers here. This includes pick up and drop for employees and healthcare benefits. In the US, about 8 per cent of people in call centres report sick every day. Considering the nature of work at call centres, which is mostly in night hours, health measures are important," Ms Beverly Hicks of CWA said in the release.

MASTEK TO SET UP DEDICATED CENTRE FOR FIDELITY
The Hindu Business Line

Mastek, the Mumbai-based software services company, is setting up a separate offshore development centre for its client, Fidelity Investments, a large asset management company.

Sudhakar Ram, CEO, Mastek said, "They (Fidelity Investments) have given us a clear mandate. We will set up the centre in this quarter." He added that a separate centre was necessary since the client required "special security and specific equipment." The number of people working for this client in Mastek would not change.

Asked how the company plans to leverage this client relationship, Ram said, "This (centre) will give us access to the Fidelity network. Now we can do certain processes we could not have done in the past. There is no guarantee of business. It is just that when you have this centre, one can bid for more business (using this client as a reference)."

Mastek has also been evaluating Chennai as a possible location for its newer development centres.

Asked if the centre dedicated to Fidelity would be located in Chennai, Ram said, "The Fidelity centre needs to be up and running quickly. We have only just acquired land in Chennai. The first operations in Chennai would possibly begin in 18 months from now." Mastek has acquired land in the Mahindra City, near Chennai for its centre. This is the first centre for Mastek outside western India. It has centres in Mumbai and Pune.

16^th February 2005

APOLLO HEALTH PLANS TO SET UP MEDICAL BPO CENTRE IN CHENNAI
Business Standard

Apollo Health Street Limited (AHSL), the business process outsourcing (BPO) arm of the Apollo Hospitals Group, is planning to set up a medical BPO centre in Chennai. At present, the only BPO centre that it runs is in Hyderabad.

Sangeetha Reddy, director (operations), Apollo Hospitals, said, “We were earlier deciding between Colombo and Chennai. But we have now finalised on Chennai as our next destination for the BPO centre. “The centre should be ready in another three months,” she added.

The Apollo Group’s medical BPO business not only provides call-centre services but also billing, coding and claims processing. The day shift is used for billing and the night shift for accounts receivable follow-up and collection.

BPOS, PARENT'S MARKETING FRONTS
Business Standard

Business process outsourcing (BPOs) centres are now becoming marketing fronts for their parent bodies.

Late last month when Prudential Plc launched the new protection cover — Protection Plus — against mortgage, its Indian arm, PPMS, was given the exclusive rights to market and service the product.

So, the next time a Prudential Plc customer calls for a protection product, it will be up to an underwriter sitting in India to decide whether or not to grant the cover. If the cover is to be granted, the 20-member strong Indian team of Prudential Process Management Services (PPMS) will decide the price.

“Underwriting will be done over the phone from here by our 16 tele-underwriters backed by four doctors. We see ourselves as a leadership team and see how better we can help the UK operations,” said R K Ragan, managing director, PPMS.

PPMS expects that with the growth in underwriting business, it will have to grow its 20-member team to 80 by the third quarter of this calendar year, “It will depend on volume growth. It is likely that new products launched will get serviced from India,” added Ragan.

PPMS will expand its domestic operations as it captures Prudential’s business in Asia and the US. “We will start servicing other parts of the world this year, including Asia. As we focus on high-end jobs, it is not expected to cause any concerns overseas,” said Ragan.

Citing the example of Hong Kong, he said management graduates with statistics background are needed for market research jobs.

This is not found among local people of Hong Kong, as expatriates can only do these jobs. PPMS today has 40 employees of its 1,000-strong force who can support actuarial studies and statistics.

PPMS OPTS FOR THE ‘HUMAN TOUCH’
Business Standard

CXA Insurance Plc. Please dial 1 for claims, 2 for complaints, 3 for enquiries, 4....

“Oh it’s that irritating voice service system that insists on my punching one key after and another and then puts me on hold!” protests a policyholder in the UK, serviced by one of the numerous call centres set up in India.

People in the age bracket of 45 and beyond are not very comfortable dealing with interactive voice response (IVR) systems. When it comes to relating the complaints, their preference is for the human touch.

Prudential Process Management Services (PPMS), that servicing Prudential Plc’s UK customers today, will switch to non-IVR. A customer would interact with a human voice directly without having to go through the hassles of IVR.

“This is a business sensitive move to switch over to the human voice. We find that people over the age of 45 do not like to interact with a machine and prefer talking directly with an individual,” said R K Ragan, managing director, PPMS.

Switching to non-IVR will result in a huge training cost for PPMS as individual ‘agents’ servicing the UK clientele will now need to not only learn and understand various products across life, pension and investments, hey will also need to learn all the processes involved when dealing with customer services — right from claims handling to policy enquiries and underwriting skills.

“Our employees will need to be multi-skilled across all product and process segments, and we are confident that we will be able to do it,” said Ragan.

Last month PPMS launched its 2005 business plan — PPMS Plus. The objective is to enhance the financial strength and brand value as well as reduce the risk and improve the service for the customers of Prudential Plc of UK, said Ragan. This is as opposed to most other BPOs in India, whose targets are to enhance productivity, reduce costs and retain staff.

SCOPE E-KNOWLEDGE BETS BIG ON KPO
Business Standard  / The Economic Times  

Expecting knowledge-based outsourcing to become the ‘next big opportunity’, Scope e-Knowledge Centre Private Limited on Tuesday said that it would expand its global footprint and increase workforce.

“Knowledge process outsourcing (KPO) is the next big opportunity. More and more global corporations will be outsourcing processes like data and intellectual property research works. In view of this emerging opportunity, we have decided to enhance our global presence and also the manpower,” Scope e-Knowledge director and CEO R Sivadas said.

“We will double our manpower in London and Brussels, which is acting as a hub for the European market,” he added.

The company would also increase its total manpower to 600 during the year from the current 400.

Scope is also in discussions with a few publishing firms in Germany and hopes to strike a deal in the next couple of months. It is already doing a project for a US company in Germany.

The revenue of the company is expected to be around $3.5 million by the end of this fiscal. “For the next fiscal, we target a revenue of $8 million. We hope to maintain a growth rate of 150 per cent in the next few years,” he added.

Around 65 per cent of the revenue is expected to come from the US and 35 per cent from the UK.

The Chennai-based company, which has its presence in New York, London and Brussels, added 12 key clients in the last two years and the top three clients contribute about 65 per cent of the total revenue.

According to a report, KPO business is expected to reach $25 billion by 2010 from the current $1.3 billion.

DO NOT CALL LIST CANNOT KILL BPO INDUSTRY: ATA
Business Standard

“The Do Not Call list in the US has indeed harmed the industry. But it has not killed it yet and it won’t either,” declared Tim Searcy, CEO of American Teleservices Association (ATA), a non-profit organisation of US-based companies, which outsource.

He added, “I think we can look for superior alternatives to the list. A consumer can choose not to be called by specific companies, can choose not to answer calls. Advertising on TV or radio might irritate me. What do I do? I change channels. Teleservices has been targetted because it is the easiest to legislate.”

He was speaking on the sidelines of a conference on ‘Coming to America: New Reality of Teleservices Compliance and Doing Business in the US’ here on Tuesday.

ATA fought the ‘Do Not Call’ legislation and lost in the US Supreme Court. The ‘do not call’ list had more than 80 million consumers as of April 2004. “But,” Searcy said, “There are still 50 million calls being made everyday and we will move from approximately 52 per cent of BPO work being prospecting calls to about 24 per cent, because there will be growth in other areas like inbound.”

He however warned that though it is a time of world sourcing and everyone knows it, Indian firms have to be extra careful not to make mistakes with compliance, for any small thing could be used by legislators in the US to make rules against them and administer the industry a fatal blow.

The association recently opened its chapters in Bangalore and Mumbai. A third one is planned in Delhi soon. The two chapters have around 25 members now and Searcy says that Indian membership should grow to 150 companies by end of 2005.

THE JOB BOOT IS ON THE NON-ITIAN'S FOOT
The Times of India

After years of playing second-fiddle to IT graduates, resume of professionals without IT qualifications are looking impressive once again with recruiters offering them a level-playing field.

With the job market gathering steam, opportunities for non-IT graduates, particularly with commerce and science specialisation, are on the higher side. "European companies especially from France and Germany have started hiring Indian professionals," says a senior executive of a city-based HR consultancy firm. "This is in addition to opportunities in the US and MNCs in India," he adds.

Within call centres, the proportion of non-voice jobs is growing. This means projects related to back-end processing, particularly accounting and salary processing, have increased.

While voice-jobs accounted for over 90 per cent earlier, now it has come down to 70 per cent. This means the doors have opened for non-IT professionals, who can handle maintenance and scripting work effortlessly, says Javeed Mirza, president, Taj Software Systems, a US-based placement service.

PAK IT INDUSTRY WANTS VISA RULES RELAXED
The Times of India  / The Financial Express  / The Asian Age  

The Pakistani information technology (IT) industry on Tuesday sought a liberal visa regime with India for frequent and easier movement of professionals between the two countries.

A 15-member delegation, representing the Pakistan Software Houses Association (PASHA), told reporters here that restricted visa rules were hindering the movement of IT professionals.

"Though getting visas is not a problem, the process takes about three-four weeks, which is a long time in our industry," PASHA president Jehan Ara said.

"We have to identify even the cities we are visiting. If we are to interact more and do business, we need to have a country visa rather than a city-specific visa," Ara said.

Indian IT professionals visiting Pakistan too face the same problems.

GOOD PAY IN BPOS COMES WITH PERFORMANCE
The Indian Express

Pay packets in software and BPO sectors are shooting up, but so are the criteria to qualify for a raise.

The third Nasscom-Hewitt Associates ‘Total Rewards Study, 2004’ finds that more than 80 per cent attrition-struck IT and IT-enabled services (ITES) companies linked a pay hike with performance.

While the top performers ended up at the top of the salary structure, middlers struggled to get paid more in more than 85 per cent IT and BPO organisations.

Sunil Mehta, vice president, Nasscom said, ‘‘The Indian IT industry employs some 8,20,000 people. It is therefore essential for the sector to devise the right compensation and rewards mix to attract and retain talent.’’

‘‘An increasing number of organisations are using the pay-for-performance philosophy to build a high-performing organisational culture, which then translates into better business and profitability,’’ says Nishchae Suri, business leader, consulting, Asia-Pacific, Hewitt Associates.

The Hewitt study reveals that employee attraction and retention remain a key concern for IT and ITES organisations, which reported attrition at 18 per cent and 32 per cent, respectively, for the financial year 2004.

INDIVIDUAL PERFORMANCE KEY TO SALARY INCREASES IN IT FIRMS, SAYS STUDY
The Hindu

More than 80 percent of Indian IT organisations rate individual performance as the most important criteria for decisions regarding salary increases.

According to the `Nasscom Hewitt Total Rewards Study, 2004' released in Bangalore yesterday, while a majority of organisations position the top performers in the third quartile or above, the average performers, on the other hand, are positioned typically in the second quartile.

The study showed that an increasing number of organisations lay emphasis on variable pay and align rewards to business goals, with more than 85 percent organisations having prevalence of variable pay.

The third successful year of the Nasscom Hewitt Total Rewards study forms a platform to provide deeper insights on Total Rewards to Nasscom member companies in IT and ITES industries.

Sunil Mehta, Vice President, Nasscom, said, "Today, the Indian IT industry employs about 8.20 lakh people and it is therefore essential that companies in the IT sector devise the right compensation and rewards mix in order to attract and retain talent. By undertaking the study with Hewitt, Nasscom as an apex body, has taken a step to establish a benchmark for Indian IT and ITES companies to follow, based on benefits, people practices and rewards and recognition systems.''

OFFICETIGER TO HIRE 1500 IN CHENNAI
The Economic Times

Office-Tiger plans to open a new facility in Chennai to accommodate its expanding manpower.

The business process outsourcing company expects to add 1500 people during this year, a majority of whom would be based in Chennai.

Lonnie F Sapp, Chief Operating Officer, OfficeTiger, said the company might have to add about 50,000 to 75,000 square feet of office space to accommodate its growing numbers.

Currently, OfficeTiger has two facilities in Chennai — one with a floor space of over 40,000 sqft and another, which became operational last year, with over 53,000 sqft. (It had a small 6,600 sqft facility, which was closed down after the second facility came up).

METRIC STREAM EXPANDS B'LORE OPERATIONS
The Economic Times

As compliance with various regulatory norms — such as the Sarbanes Oxley Act — becomes mandatory for the corporate sector in the US, Indian companies are supplying solutions and reaping the benefits of offshore delivery.

While this isn’t exactly like the Y2K opportunity, which helped Indian software firms gain a foothold in the US IT industry, the outcome could be bigger and better.

Says Gaurav Kapoor, chief financial officer, MetricStream, “We have moved most of our marketing efforts to Bangalore while earlier we were doing just support and of course development of solutions. Most sales leads are generated online so it makes sense to have the sales team located here.”

Kapoor gives the examples of two recent, large accounts bagged because of leads generated from Bangalore.

“We won a seven-figure Pfizer deal recently, and another seven-figure deal with Fairchild Semiconductors, sitting here in Bangalore”, he said.

INDIA, PAK IT FIRMS JOINTLY BID FOR PAK BPO DEAL
The Economic Times

An Indian IT training firm and a Pakistan software firm have jointly bid for a contract with the Sindh government in Pakistan to train about 1,000 youth in outsourcing skills in the neighbouring nation, officials said yesterday.

In the first joint collaboration between IT companies of India and Pakistan, Karachi-based Arwen Tech Ltd has roped in New Delhi-based IT and BPO skills trainer Evolve Services to bid for the $1 million contract to train youngsters for working in call centres that serve firms in the UK and the US.

"We have collaborated with Evolve services for the bid and the tenders opened last week will be finalised by this month," Arwen CEO Atiq Rehman told reporters.

The firm is also working with Hewitt India, which has experience in government projects in India, to evolve IT strategy and resources for the Pakistan and Sindh governments.

"If we get through this project, we will form a joint venture for implementing it and more people from India can work in Pakistan for up to six months," Rehman said.

JOB QUOTAS TO SNUB INDIA'S BPO BOOM
The Economic Times

The government’s idea of introducing job reservations in private sector can prick the offshore contracts for IT and IT enabled Services (ITeS) putting question mark over the future of BPO sector in India.

The industry has flagged the government that job reservation in the private sector domain could result in ‘caste quotas’ against Indian companies as a non-tariff barrier in a sector, which is already sensitive to loss of jobs abroad.

In a strategy paper prepared by Confederation of Indian Industries (CII), the industry body has stated that allocation of jobs on the basis of caste or community directly violates many of the work contracts that India’s IT and ITeS companies have entered into with the US and European clients.

The strategy paper follows the proposal for private sector job reservation for the backward classes in the manifesto of Congress before the national elections last year, which was then followed by pressures from coalition partners in the ruling government for affirmative action. The industry has been vociferous on the issue that they are not ready to accept forced reservation.

According to CII, many US and European Fortune 500 companies, who outsource their back office and research work to India, provide contracts on the pre-condition that the vendors will be non-discriminatory in their recruitment.

The view is that if reservations are forced, multi national clients of Indian IT companies could come under pressure from their shareholders to cancel offshoring contracts.

CITYZEN QUARK GETS A NEW HOME
The Economic Times

Let me lead you to a little secret, while you are reading this column. The page on which this is printed, in fact, the whole of this paper, has been designed with a publishing software called QuarkXPress.

Most publications around the world use Quark as a tool to make pages before they are fired into the press.

QuarkXPress first went into commercial use in 1987, a year after an Iran-born American bought into the company founded by a geek named Tim Gill. Today, Denver-based Quark Inc, the company, is entirely owned by Ebrahimi. An Indian, Kamar Aulakh, runs its day-to-day operations.

Very soon, Quark will launch its latest version, QuarkXPress 7, that promises an array of nextgen tools for publishers. The news for all newspapers using Quark: 80% of this software has been developed out of Mohali where 90% of Quark engineers are now employed.

Predictably, Ebrahimi makes millions selling his software. What’s less known is that he’s been pumping those millions into billions worth of real estate across Europe, the US, Japan and now, India.

In India, Ebrahimi will soon start building a dream city in Punjab; spread over 5,000 acres, bringing state-of-the-art construction technology to the country.

Quark City, will boast India’s biggest shopping mall, a host of technology campuses ranging from IT to biotech and the works, and housing apartments each worth a crore. To make things happen, the Punjab government has eased archaic building restrictions. It also plans to give the SEZ status to Quark City.

The package is so attractive that it is already being touted as the Quark Model. And if leaks from the Punjab government are to be believed, a host of Indian IT majors, including TCS, Wipro and Infy are already gunning for similar sops.

If you haven’t already heard of Farhad Ebrahimi and his mega plans for Punjab, I’m sure you’ll wake up to him pretty soon.

SHOULD TELEMARKETING BE BANNED?
Business Standard

Harish Bijoor, CEO, Harish Bijoor Inc: “The equity of the brand is exposed to the risk of being sullied if ill-trained, insensitive and mechanical readers of the telemarketing script continue to irritate the high-net worth consumer in the market.”

HN Sinor, chief executive, Indian Bank’s Association: “Several measures are being considered to handled unsolicited calls from telemarketers. Rather than banning such promotional and marketing calls, use technological solutions to give the consumer the choice of receiving calls.”

A GOOD EXIT OPTION
Business Standard

US credit rating agency Standard & Poor’s conditional open offer for Crisil will be unambiguously positive for both the company and its shareholders

S&P will benefit immensely form the deal, not only because it will give them exposure to a rapidly developing market by also because of the huge opportunities in outsourcing. Crisil analysts can be used for preparing credit ratings a across the world, and this will be yet another example of Indian skilled but comparatively cheap manpower being used to do high-end BPO work. At the same time, Crisil will be able to acquire a global footprint, a strategy that is was trying out with acquisitions in the UK and the Caribbean. S&P will also be able to gain by outsourcing in the IT space, and the setting up and management of global data centres in India becomes a very cost-effective option. Crisil will also be able to attract better talent. Add to that the probability of S&P going order to increase its stake even further, and the stock’s prospects look good.

MURUGAPPA TO MERGE BPO COMPANIES
The Economic Times

Murugappa Group, which entered IT sector by acquiring three companies, Webword, Laserwords and Apex Abstracting and Editing in 2001-02 is now merging them into single entity to consolidate their operations. The group had forayed into the new economy by investing over Rs 25 crore of which Carborundum Universal alone had pumped in over Rs 19 crore. “The merger exercise is just to simplify the structure. Webword is a holding company with 65% stake in Laserwords and 100% stake in Apex Abstracting. We are merging Webword with Laserwords. The merged entity will be called Laserwords, which will be 100% owner of Apex Abstracting,” said a senior official of Murugappa Group.

15^th February 2005

CANADA OUTSOURCES VISA OPERATIONS TO INDIAN FIRM
The Financial Express  / The Economic Times  

Canada has taken a new initiative to appoint VFS (India) Pvt Ltd to outsource operations of its nine new visa application centres in a bid to simplify and streamline procurement of temporary visa and caters to growing number of Indian visitors. VFS (India), a visa facilitating service provider, would operate the nine new visa application centres at New Delhi, Jalandhar, Chandigarh, Mumbai, Ahmedabad, Chennai, Hyderabad, Bangalore and Kolkata from March 9.

Canadian high commissioner Lucie Edwards said roping in VFS India is a pilot model by Canada and it would be replicated elsewhere if successful. She said the secrecy of applicants would be maintained and VFS would not be involved in either clearing or rejecting the visa application.

CALL IN QUESTION
The Times of India

Supreme Court seeks to ensure cellphone users' privacy

Of all the public interest lawsuits filed in recent times, this one is truly in the 'public interest'. Every cellphone user, at some point or the other, has felt like suing a tele-marketer for calling on his cellphone to sell him a credit card, a car loan or an insurance scheme. It doesn't matter if he is in a board meeting or at a funeral, the intrepid salesperson at the other end will continue badgering. It's almost as if the minute you take a cellphone connection you forfeit your privacy and give the service provider the right to use you for commercial gains. But respite is on the horizon, thanks to Harsh Pathak, one among millions of harassed cellphone users who put in a PIL asking for a ban on unsolicited telemarketing calls. The Supreme Court has acted promptly on his petition and issued notices to the government and the law ministry seeking guidelines against harassment by such junk calls. Notices have also been issued to the Telecom Regulatory Authority of India, cellular service providers and banks, said to be guilty of providing subscriber data to telemarketing firms.

Pathak's petition expresses a genuine public grievance that needs quick redressal. Unsolicited calls by tele-marketing firms violate the individual's right to privacy as enshrined in Articles 19 and 21 of the Constitution. Apart from being a nuisance, they also add to the customer's bill if he has roaming facility and is out of town. More importantly, cellphone companies sharing subscribers' personal data with telemarketing firms amounts to unfair trade practice, and is violative of Sections 427 and 513 of the Indian Telegraph Rules, 1951.

`DATA SECURITY VITAL FOR BPO COS'
The Hindu Business Line

Data security could become a crucial issue for companies outsourcing their operations to India, said Ian Marriott, Vice-President and Research Director, Gartner. He warned that data security was a sensitive issue in the West, and could become as volatile as the anti BPO backlash in the run-up to the US elections, in the future.

Marriot, however, added, "India is pretty good in data security." He, said, India's leadership in business process outsourcing was clear and will continue in the foreseeable future.

Marriott was speaking in a panel discussion at the Nasscom conference, in Mumbai.

Sounding an optimistic note about the industry's future he said, "Most countries, like the Philippines, won't have the scale or scalability, which India offers," he said, commenting on the industry's future.

Also commenting on technological changes in the industry he said, "Technology will strip away the need to train 90 per cent people."

Rohit Kapoor, President and CFO of ExlService, an integrated BPO service provider, said India offered advantages as an outsourcing centre for financial management, such as an experienced and stable BPO industry and demonstrated ability to manage complex processes.

Speaking at another panel discussion, Akshaya Bhargava, Managing Director and CEO of Progeon, said that one of the reasons call centres were not spreading to small towns was because mid-level managers not finding it easy to adjust to a small-town lifestyle.

Raman Roy, CEO Of Wipro Spectramind, suggested that the supply of workforce in the industry was a bigger concern than demand. "Only 9 to 10 per cent people get employed (out of the total job applicants to Wipro Spectramind). We have to increase the supply pool," he said.

Later, speaking on the sidelines of the conference, Roy, said, the Indian educational system was not geared to create international quality resources for call centres.

EDS TO SCALE UP INDIA OPERATIONS
The Hindu Business Line

Global IT services giant EDS on Monday said it plans to scale up its headcount in India to 5,000 professionals by January next year, for which it will establish new centres in Chennai and Pune.

"We currently have about 600 professionals in business process outsourcing (BPO) operations, which include helpdesk and contact centre. On the IT services side, the company has 2,300 professionals in application services and infrastructure technology operations. We expect to touch a headcount of 5,000 by January 2006," Abhay Gupte, Managing Director, Electronic Data Systems (India), said in New Delhi.

`MONETARY COMPENSATION NOT ENOUGH FOR EMPLOYEES'
The Hindu Business Line

"It is still tough to get a good HR person as in the past 15 years the industry and economy has undergone a drastic change," according to Raghuram Reddam, Director, HR, Motorola. He was speaking at an HR Conclave hosted by the Rai University, Bangalore Campus. He said that intangibles such as culture, innovation and spirit, when strengthened, can yield good results.

Rajib Ghosh, Corporate HR Manager, Wipro, stressed on linking effective performance to rewards. "Compensation in terms of monetary rewards is not the only thing. Theories of constraints need to be understood, skills, competency or a mix of both needs to be identified. Balancing the three fundamental issues - the controllability problem, the alignment problem and the interdependency problem is an art that every HR person needs to play on." Madan Padaki, CEO, Merit Trac, said, "There is lot more to BPO than call centres. Recruiting the right people is extremely important as there is a definitive requirement of top management or company commitment."

OUTSOURCE FINANCIAL OPS FOR BETTER CONTROL
The Economic Times

Outsourcing finance functions leads to better governance and compliance, says a report released last week by Accenture.

The report was released on the basis of a survey, which involved 203 executives, including CFOs, VPs and finance directors, representing global companies. The objective was to determine whether loss of control remained an issue for executives now that more stringent compliance standards – both mandated and voluntary – have become commonplace.

Many corporates agree that outsourcing their finance functions have helped them achieve greater control over their overall operations. However, there are concerns over governance and compliance issues, with 51 percent respondents saying these are barriers to outsource finance functions.

Outsourcing though has its backers with 43 percent of the executives surveyed reporting an improved quality of governance and compliance after their organisation had outsourced a finance process while 44 percent do not see either an adverse impact or lowering in the quality of governance and compliance.

A whopping 73 percent of respondents, who had already outsourced a finance process, said that offshoring brought in greater clarity and accuracy because of increased rigour of business processes. Moreover, outsourcing providers are better equipped to deal with frequent legal changes and accounting rules. They also add to the clarity of information, say 56 percent of those surveyed.

The establishment of service-level agreements defining core finance processes and compliance requirements found favour amongst 82 percent of the respondents. Other issues finding favour included regular status reports, evolution of control frameworks and coming down on governance and compliance failure.

EUROPE IS NOW WORLD'S BPO CAPITAL
The Economic Times

Indian outsourcing brigade might rely heavily on the US, but Europe clearly emerged the outsourcing capital of the world.

Europe overtook US last year, cornering close to half of the £40 billion offshored business activities while US trailed behind with 44 percent of all the large projects.

In contrast, US cornered 47 percent of the market and Europe had only 41 percent in 2003.

European companies offshored contracts worth £19 billion, more than double the level seen in 2002, according to research from global sourcing firm, TPI.

Meanwhile, India continues to be the on the top of pecking order as the favourite outsourcing destinations.

India is currently home to 228 offshoring projects, followed by Britain’s 187, China’s 132, America’s 123, Canada’s 98, and Singapore’s 95. Behind Singapore are Germany and Ireland with 77 each, Australia with 72, and the Netherlands with 52, according to the data gathered by United Nations Conference on Trade and Development (UNCTAD).

In Europe, UK was the clear leader with 20 percent of the value of the worldwide contracts awarded last year.

JOB QUOTAS TO SNUB INDIA'S BPO BOOM
The Economic Times

The government’s idea of introducing job reservations in private sector can prick the offshore contracts for IT and IT enabled Services (ITeS) putting question mark over the future of BPO sector in India.

The industry has flagged the government that job reservation in the private sector domain could result in ‘caste quotas’ against Indian companies as a non-tariff barrier in a sector, which is already sensitive to loss of jobs abroad.

In a strategy paper prepared by Confederation of Indian Industries (CII), the industry body has stated that allocation of jobs on the basis of caste or community directly violates many of the work contracts that India’s IT and ITeS companies have entered into with the US and European clients.

The strategy paper follows the proposal for private sector job reservation for the backward classes in the manifesto of Congress before the national elections last year, which was then followed by pressures from coalition partners in the ruling government for affirmative action. The industry has been vociferous on the issue that they are not ready to accept forced reservation.

According to CII, many US and European Fortune 500 companies, who outsource their backoffice and research work to India, provide contracts on the pre-condition that the vendors will be non-discriminatory in their recruitment.

The view is that if reservations are forced, multi national clients of Indian IT companies could come under pressure from their shareholders to cancel offshoring contracts.

SHOULD TELEMARKETING BE REGULATED
The Economic Times

The telecom sector in India is facing real bad weather. There are the on-going controversies over FDI, rerouting of calls, the battle between private operators, Telecom Regulatory Authority of India (Trai) and PSU players like BSNL and MTNL and now the latest feud over telemarketing.

Telemarketing has come under the Supreme Court (SC) scanner. The SC has directed the government to formulate laws restricting the misuse of the mobile phone networks for marketing purpose.

Is telemarketing unethical?

Telemarketing is often criticised as being an unethical business practice as some companies do make unsolicited calls and often engage in high-pressure sales techniques. These practices may be subject to regulatory or legislative controls related to consumer privacy and protection. Telemarketing is restricted in the US by the Telephone Consumer Protection Act of 1991.

Some jurisdictions have implemented "Do Not Call" listings, either through industry organisations or legislation, in which consumers can indicate that they do not wish to be called by telemarketers.

The US Federal Trade Commission has now implemented a National Do Not Call Registry in an attempt to reduce intrusive telemarketing on a national basis.

There are several methods to avoid telemarketing calls. Using a caller ID or a privacy manager can allow the targeted subscriber to identify the caller before the call is answered and then decide whether to take the call or not. Answering machines and voicemail can also be used to screen calls, as telemarketers generally do not leave messages.

How effective are privacy laws in India?

Privacy is the power to selectively reveal oneself to the world, the ability of a person to control the availability of information about and exposure of himself, says Eric Hughes, cyberlaw activist and chief technology officer at Simple Access. Now it is a nearly universal concept and considered a basic right of the individual.

Privacy rights guarantee an individual's right to a private life and consumer privacy laws and regulations throughout the world – Universal Declaration of Human Rights 1948, International Covenent of Political and Civil Rights 1966, US Telephone Consumers Act 1991, US Telephone Consumer Fraud and Abuse Prevention Act 1996, Do Not Call Registry, etc. - seek to protect every individual from loss of privacy due to failures or limitations of corporate policies.

According to Harsh Pathak, a senior advocate and consultant, privacy, although not explicitly manifested in our Constitution, is allied to the fundamental rights under article 19 and 21. It has also taken on multifarious meanings so that it no longer conveys one coherent concept.

He adds that the damage done by privacy-loss due to unsolicited calls is typically not measurable, nor can it be undone.

THE SOURCE OF OUTSOURCING
The Economic Times

The B in BPO might be widely identified with Bangalore as a destination, but one of the strongest levers of the tech revolution has been the north region. Virtually every multinational biggie associated with back office jobs ranging from customers service call centres to analytical wings of business processing giants have hoisted their flags in the region.

These days it’s not a remote sight to spot number-tagged sports utility vehicles – used to ferry call centre workers – criss-crossing the length and breadth of the capital and its outskirts.

What started with American Express (Amex) and General Electric (GE) now encompasses operations of virtually every second Fortune 500 companies getting their back office jobs done in India. Major players like Daksh, CSC, EXL, HCL and Convergys have big BPO operations in the region.

Out of the 3.5 lakh white collared jobs estimated in the BPO space currently, as high as 45-50% is accounted for by the northern states led by the Delhi, UP and Haryana. The sector is growing at the rate of 50-70% and the northern region is reflecting similar growth trends.

IT WAS A TRYST WITH DESTINY
The Economic Times

While Delhi’s suburb Gurgaon may be in the spotlight as multinationals set up business process outsourcing centers there, never forget that the national capital region’s tryst with software and IT-enabled services (ITeS) began with Noida almost 20 years ago. The seeds for NCR’s emergence as an IT & BPO hub were sown in the Noida Export Processing Zone. Started in 1985 by the union ministry of commerce, it soon became one of largest exporters of electronics and software services in the country. Over a period of time, however, Gurgaon stole a march over business process outsourcing. One of the reasons being better infrastructure and Gurgaon’s closeness to the airport.

14^th February 2005

KALE TO OFFER REVENUE RECOVERY SERVICES FOR OMAN AVIATION
The Hindu Business Line

Kale Consultants Ltd, a global provider of software products and outsourced services to the aviation and travel industry, has said that Oman Aviation Services has selected Kale MPS (Managed Process Services) for providing revenue recovery services on an outsourced basis.

Kale MPS, using its modern exhaustive audit tools, will provide Oman Air services relating to revenue recovery by identifying revenue leakages arising out of errors in ticketing and incorrect application of fares.

Ashish Malhotra, President, Kale Consultants, said: "Our outsourcing solutions provide value added services that enable airlines to reduce costs and concentrate on their core activities."

ALLSEC FILES IPO DRAFT PROSPECTUS
The Hindu Business Line  / The Hindu  

Allsec Technologies Ltd, the Chennai-based BPO service-provider, has filed its draft prospectus for its initial public offer with the Securities and Exchanges Board of India.

The company proposes to issue 31.412 lakh equity shares of Rs 10 each for cash at a premium to be decided through a book-building process, according to a company press release.

The company has reserved 1.496 lakh equity shares to be allotted to employees. Of the balance shares, 50 per cent has been reserved for allotment to qualified institutional buyers on a discretionary basis, 25 per cent for non-institution investors, and the remaining 25 per cent will be allotted to retail investors on a propionate basis, said the release.

FROM BPO TO KPO
The Financial Express  / Deccan Chronicle  

According to the IT/ITES research major Gartner, Chennai and Hyderabad will soon become the major destination for IT and ITES outsourcing. In its recent report on outsourcing in India, Gartner points out that given the infrastructure, skilled manpower, quality educational institution and active political support, Hyderabad and Chennai will outsmart places like Bangalore and Mumbai in the years to come. Some of the other important drivers include the work culture and work ethic, skills retention, access, cost of living and quality of life.

Says Partha Iyengar, vice-president, Gartner, “Ready availability of skilled labour force with lower attrition rates in cities such as Chennai, Hyderabad and Pune will lead to companies setting up their centres there instead.”

Having said that, the BPO/ITES industry that exists today in Chennai, Bangalore and Hyderabad is witnessing a rapid transformation. The concept of outsourcing is changing. Earlier, the US and some of the European companies used to look at India as a cheap destination. Today, more and more high-end work is being outsourced to India and ‘outsourcing’ as a domain has moved from information technology to the new areas like pharma, aerospace, automotive, engineering, biotechnology, finance and product development.

US-based companies are looking to outsource stem cell research, drug development, clinical trials, clinical reference clinical data management, volumetric imaging analysis for trials and contract research.

Besides this, to address the aerospace vertical, HCL Technologies has created a separate division and is doing some of the high-end work for Boeing, Airbus and other tier I suppliers for aerospace companies. “Earlier, the US and European firms were looking at outsourcing only software testing to some of the Indian companies for cost cutting. Today, this has grown from testing to development stage. We are working with 18-19 aerospace clients,” says Bejoy George, GM-strategic initiative, HCL Technologies.

T G Ramesh, head-BPO, iGate Solutions, says that more and more embedded work will come to India. “Some of the large gadget manufacturers are looking at India for the development of next generation gadgets. In fact, some are looking at moving work from Taiwan to India.”

In Chennai, Knowledge Process Outsourcing (KPO) has become a very big trend. KPO is the highest level of BPO where data is converted into information and the information is then processed by analysts. “KPO is the fourth wave in the BPO industry and a lot of this kind of processing work is happening in the healthcare, market research and financial space,” says Ranjit Pisharoty, vice-president, Lason India.

IS TELEMARKETING AN INVASION OF PRIVACY?
The Times of India

Yes, telephone use is a very private and personal affair, Harsh Pathak, Lawyer, consultant:

Privacy is the power to selectively reveal oneself to the world, the ability of a person to control the availability of information about and exposure of himself. Now it is a nearly universal concept and considered a basic right of the individual.

The use of the telephone is a personal and private affair of the subscriber and any unsolicited intervention amounts to intrusion of the subscriber’s privacy. Since we value our privacy, we are often selective about disclosing our cellphone number — giving it only to close friends, relatives and business associates.

Privacy rights guarantee an individual’s right to a private life and consumer privacy laws and regulations throughout the world — Universal Declaration of Human Rights 1948, International Covenent of Political and Civil Rights 1966, US Telephone Consumers Act 1991, US Telephone Consumer Fraud and Abuse Prevention Act 1996, Do Not Call Registry, etc. — seek to protect every individual from loss of privacy due to failures or limitations of corporate policies.

The damage done by privacy-loss due to unsolicited calls is typically not measurable, nor can it be undone. And most commercial organisations have little or no interest in taking unprofitable measures to protect the privacy of customers — indeed, their motivation is very often quite the opposite, to share data for commercial advantage, and to not officially recognise it as sensitive, so as to avoid legal liability for lapses of security that may occur. Such telemarketing amounts to unfair trade practice.

It’s high time now, that instead of passing the buck to policy makers corporates should refer to global telemarketing standards and translate business ethics into action.

Invasion of privacy? In India? Surely, it’s a joke, Rajiv Desai, CEO, Comma:

Surely, Pathak jests! Privacy in a country that regards the tamasha associated with weddings, jagrans, political rallies and protest marches as a defining part of the culture. We are supposed to get exercised about a bunch of kids making a living of selling loans, insurance policies and credit cards. At least, they are not a public nuisance.

Pathak needs to worry about real legal issues. His PIL against telemarketers stands in the same relationship to authentic public interest litigation as a boil on the derriere stacks up against colonic cancer.

It is true that these telemarketing calls are an irritant but like an offensive TV programme, you can switch it off. Why add to the woes of India’s overburdened legal system. It is a regulatory matter to be handled by TRAI, which can easily transfer the burden to cellular companies. Faced with irate customers, these companies would react swiftly to come up with a solution to the problem.

HELLO, THIS IS INTRUSION OF PRIVACY
Hindustan Times

Years ago, at the height of the dotcom boom, I ran into the head of one of the many new dotcom companies that had suddenly sprung up. His company had yet to start full operations but it had already been valued at several million dollars by the investment bankers.

I told him that I was puzzled by the boom. Of course I could see the potential of the Internet as a reference tool, as a messaging service and as a means of cutting out the middle man when it came to booking hotels, airline seats etc. I saw also that websites served a usual function.

But all the same, I could not see why newly-established sites with no clear revenue model should be worth so much.

With international roaming, I am now accessible to anybody who wants to speak to me (or to text me) at a moment's notice. I can make use of time that would otherwise be dead or wasted -- such as a long car journey or a traffic jam -- to call sources, to organise shoots, articles and interviews or, even, to speak to family and friends.

Moreover, nearly everybody I want to speak to is also immediately accessible. I don't have to leave messages with secretaries (the mobile phone has destroyed the power of the self-important PA to screen calls) and I don't even have to know where the person I am calling is at the moment. All I need to do is to call his mobile and I'll be put through (or at the very least, be connected to his voice mail) no matter where in the world he is.

Because the mobile has so transformed the way I -- and many, many others -- live, I am surprised by how little regulation there is on its usage.

Let's take the most obvious instance because it was the subject of a lawsuit last week: the unsolicited marketing call.

I doubt if there is a single mobile phone user who has not been hounded by tele-marketers. Most times, the pitch is on behalf of some financial services company. On offer are car loans, home loans, credit cards, new accounts, insurance policies and a variety of other financial products.

What is scary -- at least for somebody like me who keeps his mobile number close to his chest -- is how many of these marketers not only have my number but also know where I live and often know when, say, my car insurance is lapsing. Obviously all this information -- which should be kept private and confidential -- is available, at a price, to anybody who wants it.

Then, there are the privacy issues. Because nobody asks a secretary to answer his mobile, anybody who calls on your cell number has direct access to you. It is a complete violation of your right to privacy for this access to be misused by some multinational bank using a call-centre operator to flog you a car loan or a credit card.

And of course, there's the cost factor. If, like me, you have international roaming, then all calls will be forwarded to wherever in the world you may be. Except of course that they will be forwarded at your cost not the callers'. So, last fortnight, when I received three calls from tele-marketers in Paris and London, I was actually paying international phone charges for the dubious privilege of being harassed by a call centre saleswoman.

How can any country allow this to go on? Surely, Parliament owes it to Indian citizens to pass laws that protect our privacy -and our wallets?

Though I am not an expert on the subject, I am told that in many Western countries there are laws that protect citizens from this kind of harassment. In some American states, for instance, you can sign a register to indicate that you do not want to accept such calls and it then becomes illegal for any tele-marketer to harass you. Another solution is to force such companies to use clearly designated exchanges (say, numbers beginning with 888) so that you can recognise a sales call when it comes and choose not to accept it.
(The author, Vir Sanghwi is the editor of Hindustan Times)

SYSTEME LAUER TO SET UP INDIAN ARM SOON
Business Standard

Systeme LAUER, the number two automation company of Germany, plans to set up a subsidiary in India within few months.

Thomas Hartmann, in charge of software development at LAUER told Business Standard that the company was exploring the options of either setting up a wholly-owned subsidiary in India or forming a joint venture with Elecom Software, the company from which it was outsourcing software.

The Indian company would initially take up product support activities and later will market the company’s products in India and the Asian region.

The idea is to convert India into a marketing hub for Asian countries.

“We would be surveying the Indian automation industry soon and we will plan our marketing strategy and the size of the company according to the survey report,” he said.

“If India and the Asian region provides enough opportunity, we may also think of setting up a manufacturing base,” he added.

LAUER is gradually moving all its software development outsourcing to India from countries like Russia and Bulgaria. “We are now outsourcing all new projects software development from India, which has turned out to be the most effective for us,” he added.

HCL TO RAMP UP AEROSPACE OPERATIONS
Business Standard

HCL Technologies’ aerospace division will hire more than 100 software engineers over the next 12 months for upcoming projects that will be outsourced from aviation majors.

The company already has a 700-strong team for the aerospace business. While 200 are floating mainframe specialists, another 300 will be redeployed for the projects.

India currently accounts for 5-10 per cent of the $3 billion market for avionics outsourcing. According to a company executive, HCL’s aerospace product engineering team commands 30-50 per cent of the market at present.

The market in India is expected to grow to 10-15 per cent over the next few years, said executives.

The aerospace division of the company has leading airframe manufacturers, system integrators and Tier 1 suppliers as some of its clients.

Embedded software, hardware design, engineering services, tests solutions and applications management are some of the services offered by HCL Technologies.

The aerospace team at HCL has over 18 clients. While there are immediately no major competitors for HCL, larger companies like Infosys are coming into the fray, say company executives.

SPANCO TELE IN PACT WITH US COMPANY
The Hindu Business Line

Spanco Telesystems and Solutions Ltd has entered into a strategic alliance agreement for its international call centre division/Brand `Respondez' with Aegis Communications Group Inc (Aegis), a worldwide transaction-based business process outsourcing company.

The strategic alliance agreement shall extend the company's reach into important US markets, said the company in a notice to the stock exchanges on Saturday.

The company will be able to provide US customers with a blended on-shore-offshore service capability and disaster recovery options.

Aegis enables clients to make customer contact programmes more profitable and drive efficiency in back office processes.

This alliance provides both companies immediate access to a broader range of support services as well as additional US and India-based capacity, said the notice.

OUTSOURCE REACHES US AEROSPACE
The Telegraph

Several US aerospace companies have offered to outsource projects to Indian defence equipment manufacturers, adding a new dimension to the emerging strategic partnership between the two nations.

The honchos of a dozen US aerospace and consulting companies, part of the US-India Business Council’s Executive Defence Mission, vowed to build a long-term strategic relationship with India.

Listing Boeing’s decision to outsource its flight and test software programmes to HCL Limited and a variety of aeronautical projects undertaken by the Indian Institute of Science, Bangalore, the former diplomat said: “If we get permission from the two governments, we can go ahead with similar programmes in the defence sector.”

On India’s concerns over continuity of supplies, Pickering said: “Reliability is a serious issue. We are interested in assuring our Indian friends that new developments and new relationships with India will help set the tone and pace of reliability of supply.

Lockheed Martin Corporation, in the race for a share of the Indian Air Force’s fleet expansion plans with its F-16 combat jets, said it was in the process of identifying partners to establish manufacturing hubs for products, parts and maintenance.

“Lockheed is in the process of evaluating several Indian organisations for such work. Its technical assistance agreement with HAL (Hindustan Aeronautics Limited) is one such example. As one of the largest employers in the IT industry, it will look for allies and partners. These will include IT companies and Indian aviation companies in public and private sectors,” a company release said.

Denny Plessas, regional vice-president, Lockheed Martin Aeronautics Company, said his company had secured export licence from the US government for marketing the Hercules C-130J transport plane and the P-3C Orion maritime surveillance aircraft to Indian armed forces.

 ‘WHEN WE OPERATE OVERSEAS, WE SHOULD NOT BE SEEN AS COMPANIES WHO SIMPLY TAKE AND NOT GIVE’
The Financial Express

India should play a complimentary role and build strong ties with China in the IT sector to emerge as a force to reckon with not only in Asia, but in many other regions of the globe, says IT veteran Saurabh Srivastava. Srivastava, who has held senior executive positions in IT biggies like IBM and Unisys before becoming an entrepreneur to set up the $800-million IT services firm Xansa, also founded, chaired and is now chairman emeritus of the apex IT industry association, Nasscom. Viewed as a role model for successful entrepreneurship in India, he is the chairman of Indian Venture Capital Association. According to Srivastava, the BPO sector in the country, which is maturing with each passing day, is expected to see significant merger and acquisition activity during the year. Overall, the IT industry will remain robust and register impressive growth rates.

“As we grow in size, especially when we are talking of a $50-60 billion industry by 2008, we must expect some resistance and backlash because there will be different companies and people who will get impacted. The way we can handle this is that we need to be sensitive to this aspect as well.

We should ask ourselves a question as to how many of us are actually global. We also need to recruit foreigners into our companies. So that when we operate overseas we should not be seen as companies who simply take and not give anything in return. In India, we expect multinationals to employ people locally and other global majors to do community work. We expect them to be good corporate citizens of India if they operate in India.

Indian companies operating overseas also need to be good corporate citizens of that country. Our industry has grown so quickly that most of the companies are yet to realise that they are actually global. So the more Indian companies recruit foreigners in their respective countries, the less problems we will have for ourselves,” he says.

SYSTEM SECURITY TO BECOME NEXT TOOL TO RAISE BPO ISSUE
The Financial Express

Indian IT and BPO companies need to watch out. Security could become the next big stick to beat outsourcing to India soon. Interest groups and labour unions are raising the security bogey to frighten customers and put off those wanting to outsource more and more work to India. And Indian companies would do well to plug the holes before disaster strikes.

It does not help that India features among the top 10 in the international piracy list. But the good news is that China tops the list and India, if it positions itself as a secure destination, could make it difficult for China to compete.

Apart from catastrophes, technical breakdowns and errors, an Allianz Global Risk Report published recently, warns of ‘gremlins in the system’ — risks stemming from decisions or actions of individuals or groups.

Risk exposure for corporate data centres is rising, adds the report. It quotes a recent survey of European risk managers done by Marsh Risk Study which places breakdowns in corporate IT infrastructure and electronic systems among the top 10 risks.

According to the Computer Security Institute-FBI Computer Crime Security Survey 2004, insider abuse of IT network access as the most common attack experienced over the last one year. And the biggest losses have been caused by denial of service.

In India, the Nasscom is working on an initiative to sensitise Indian IT companies to the security threats and put in place a strong security framework. Companies will be encouraged to go in for security certifications. “Security is one of the concerns when you start doing R&D activities in Pune. The biggest fear as more critical work gets done is software and database theft,” says Kiran Karnik, president, NASSCOM.

THERE’S A STRONG NEED TO REGULATE TELEMARKETING IN INDIA
The Financial Express

I am sure you won’t find anyone who owns a mobile phone and has not been bothered at some point in time by ‘unwanted’ calls from banks, mobile service providers and others, informing you of a new scheme or free offers available. They can rightly be termed ‘unwanted’ for two basic reason- one, you don’t want them, probably, and second, they come when it’s least wanted. This is irrespective of the fact whether you are in Shanghai or Mumbai and could be paying a good amount for taking that one call.

Almost everyone could relate to the recent Supreme Court case reported in the media and it surely brings hopes that all this pain might just end. One very strong argument given by many is that we Indians help foreign companies outsource their ‘call center’ process to India and handle very stringent regulatory requirements including privacy and data protection. But when it comes to our own country & people, all is thrown out of the window. This ranges from banks selling your identity to these ‘sellers’, intrusion into your privacy and very often you also come across rude behavior. All this surely must end.

But does that mean we ban telemarketing? Not necessarily, I feel. Marketers have been using various innovative means to reach out to their target audience and technology has played a vital role. And what other than telecommunication technology touches more lives and hence rightly qualifies as a very potent medium for ‘sellers’ to use. What I am saying is that telemarketing per se is not wrong. What is completely wrong is implementation of the same.

There is a very strong need for the government and industry to regulate the system with proper legal and relevant guidelines. These guidelines must address any person’s will to receive such calls, ways of handling such calls and a whole set of points related to people factor like sensitisation and appropriate training.

And all this must be handled with speed before this very powerful tool for marketers is ‘written off’ by the buyers as a nuisance value in our society.


The writer is Kapil Dev Singh, country manager, IDC India Ltd

PHONE SALES ARE JUST ANOTHER MODE OF REACHING OUT TO THE CUSTOMER
The Financial Express

Restrictions on telemarketing service will affect millions working in this industry. It will also have an impact on sales across industry. Banking, insurance, travel & hospitality and telecom are expected to bear the brunt the most. It is like telling a company that you can’t advertise an offer for your product or service. Phone sales are just another mode of reaching the customer. Even the government would require telemarketers during the election polls. Didn’t we all get a voice blast on our mobiles last year from the Vajpayee government?

The regulations need to be researched and implemented to strike a balance between the industry and the customer. India could learn from the benefits and pitfalls of the US government in implementing telemarketing rules. Organisations such as American Teleservices Association (ATA), which specialise in training call centers on compliance parameters and how to sell without getting penalised, could be of help.

The ‘do not call’ policy in the US states that sellers may not call, or cause a telemarketer to call a consumer who has requested to receive no more calls from, or on behalf of, the particular goods/services being offered. The rule further requires sellers to maintain ‘do not call’ lists of those consumers who do not wish to be contacted by phone, to develop a written policy implementing this list-keeping requirement, and to train its personnel in these procedures. Enforcement and penalties calling a consumer who has requested not to be called is a rule violation and could result in civil penalties of up to $10,000 per violation....

From a citizen’s viewpoint, there’s a lot of debate on whether telemarketing needs to be restricted. A student may encourage a conversation with a telemarketing operator selling a low-tariff plan, but a busy executive in the middle of a business meeting is bound to get irritated by a pushy call.

The government should ensure a knowledge transfer platform for Indian call centers, which are selling domestically. In that context, training programmes are a must on how to handle customers in different situations, compliance parameters, hours of calling for various categories of market segments, etc.

The writer is Prasad Vanga president, South-East India Chapter, American Teleservices Association

BPOS’ ‘STRATEGIC’ SALE ROUTE RAISES EYEBROWS
The Asian Age

As business process outsourcings or BPOs were being set up about two years back, most of the promoters had indicated that they would take the initial public offering or IPO route to raise resources but till date, not a single BPO has been able to achieve this milestone. NOIDA-based EXL Services was among the more recent ones to talk of an IPO but it does not look like doing one in the short term.

Perhaps, BPO promoters saw more wisdom in concluding strategic sales of their units to IT majors than attracting the scrutiny of investors through the IPO route, encouraged by the unbelievable price that Spectramind fetched for its founders. Transworks and Daksh followed suit by selling to the A V Birla group and IBM respectively.

The question doing the rounds of the finance industry is whether these companies were profitable enough to launch an IPO in the first place. Recruitment consultants, who are among the most entrenched vendors for BPOs, regularly complain of their invoices being delayed and some times, not even paid. This could be as clear an indication as any of the financial health of Indian BPOs.

TIME TO IGNITE ADVERTISING BPO
The Economic Times

The Indian advertising industry is one of the best in the world in terms of talent, but one of the smallest in terms of size. This, combined with the fact that Indians are English-speaking and multicultural, leads to an opportunity of our becoming the creative back office of the world.

We could start advertising BPO industry at the routine end (e.g. printing, processing, TV ad production, market research coding and processing) and move to more complex areas like strategy development and creative.

The Union Budget 2005 could provide export-oriented incentives to kick-start this process. These may be in the form of tax holidays on export earnings, relaxation of transfer price norms and part funding of export promotion drives. Withholding taxes on export earnings could also be looked at.

The government could also help constitute body like Advertising Export Council of India... The main objects of the council would be (a) to promote India as an advertising BPO destination to the rest of the world; (b) coordinate efforts of the advertising industry towards the export goal. The council could be jointly funded by the government and industry members.

The author is Pranesh Misra is President & Chief Operating Officer of Lowe India.

THE BOOMING BUSINESS OF BPO CONSULTING
The Economic Times

Sandeep Bhargava, co-founder & CEO Keane Worldzen feels that part of the business model for companies such as his, in the BPO consulting space, is positioning the outsourcing piece and helping the CEO & CFO to sell it within the company.

Earlier a senior VP with Keane Consulting Group, Keane Worldzen was set up as a optimisation-driven specialised BPO unit.

“We bring together BPO and consulting in three industry verticals of healthcare, insurance and financial services,” he says. The company, which has headquarters in Chicago and offices in Boston and San Francisco, runs its BPO operations out of Gurgaon.

“In Gurgaon our co-location with parent company Keane helps us to achieve economies of scale. We are now planning new operations in Halifax, Canada and a new office in UK. The office in Canada will deal with regulatory and security linked processes, which require travel by clients to our office. Since Halifax is just two hours from the Boston area, executives will not spend too much of time travelling. This way, we hope to combine onshore, offshore and near shore delivery models,” says Bhargava who holds an MBA in marketing and technology strategy from the University of Illinois, Urbana-Champaign and bachelors in aeronautical engineering from IIT-Kanpur.

He has worked extensively with clients in the insurance and consumer products industries.

As a part of a new niche club of BPO consultants, he feels that Indian Americans are at an advantage in this field.

“With the right kind of relationships, Indians are increasingly finding it easy to influence large organisations. In fact, senior Indian executives within large American organisations are making a bigger impact when it comes to lobbying for India in the outsourcing debate, than political groups at Washington DC,” he feels.

PAKISTAN AIMS FOR A SLICE OF BPO PIE
The Economic Times

Spurred by India's giant steps in IT outsourcing, Pakistan is looking to strike it rich by using its English speaking manpower and cost arbitrage to provide tech services to global firms.

Pakistan has launched an aggressive effort to woo global corporations to farm out technology tasks with a view to creating hundreds of thousands of new jobs and rake in billions of dollars in foreign exchange.

The country's IT industry leaders say it has all the strong fundamentals that have turned India into an electronics housekeeper to the world -- a large pool of qualified English speaking manpower and sharply lower cost of operations.

"We are not looking at competing with India but we definitely want to create our own space in the global outsourcing business," said Jehan Ara, president of Pakistan Software Houses Association, the premier IT industry umbrella group.

"The Pakistan government and the IT industry feel that we have the fundamentals to turn the country into a preferred outsourcing destination," Ara, who is visiting India to participate in a business summit, told IANS in an interview.

"Already a lot of investments are happening in the BPO (business process outsourcing) business. Many expatriates are coming back to the country to set up shop. We expect the trend to gather momentum in the years ahead."

Pakistan has nearly 60 companies operating in the BPO space, as compared to over 400 in India that handle a wide range of services for overseas clients such as customer care, finance, administration, content development and payment details.

India's BPO industry is forecast to grow at over 44 percent and touch $5.7 billion by the end of the current fiscal year, a huge figure as compared to Pakistan's nascent industry.

The IT industry in Pakistan employs some 35,000 professionals, while in India over one million people are directly employed in the sector.

 ‘FPGAS WILL OVERTAKE ASICS’
The Financial Express

Xilinx Inc, a San Jose-based $1.4 billion company and the world’s third largest supplier of ASICs, is expanding its design centre in Hyderabad to make it a hub in the Asia-Pacific region. Richard W Sevcik, executive vice-president (Programmable Logic Solutions), Xilinx Inc, says “We are working on a strategy to market our products to the domestic customers in India over time apart from conducting development activities at our centre.”

CALSOFT SETS UP DUBAI OFFICE
The Hindu Business Line

California Software Company (Calsoft) formally launched its operations in the United Arab Emirates by setting up its office in Dubai.

This will help Calsoft, with operations in the US, UK, Japan and Singapore, to address the needs of the West Asian and African markets, according to release in Chennai.

12^th February 2005

HERO MINDMINE TO LAUNCH IT TRAINING PRODUCTS
The Economic Times  / Business Standard  

Outlining its plans to position the company as an integrated learning service provider, Hero Mindmine, part of $2.2 billion Hero Group, yesterday said it would soon launch a slew of IT training products.

"In the next 30 days, we plan to launch a range of training products mainly for the IT sector," business head, Hero Mindmine, Asheesh Gupta told a press conference in Chennai.

Started as provider of training services to call centres and BPO companies, Hero Mindmine has identified enterprise-learning solutions (including corporate training) as one of the focus areas for 2005.

"We see learning outsourcing as a big opportunity in 2005. The corporate training market in India is estimated at about Rs.2500 crore and it is expected to record a growth of 30 percent annually, driven by the services segment, he said.

SOUTH AFRICA TO CHALLENGE INDIAN BPOS
The Economic Times

An initiative supported by the national and provincial governments in South Africa to lure call centres of multinationals to this coastal city could impact on India's huge role in this field.

Marc Spendlove, marketing director of one of the largest call centre companies in Cape Town, The Dialogue Group, said firms were showing a keen interest in the fast developing call centre industry in South Africa.

Spendlove said one of the main reasons that could see South Africa getting an edge over India was the stability of the communication network in South Africa.

He said India sometimes had communication breakdowns that left multinationals with a concern over downtime.

Supported by the Western Cape provincial government as well as the national ministry of trade of industry, the call centre industry here is expected to grow exponentially with the number of jobs created expected to increase to more than 1,000 within the next three months from just 60 two years ago.

TECHSPAN TO INVEST $16 MILLION IN INDIA BY JUNE
The Economic Times  / The Pioneer  / The Hindu  

IT consultancy and services company Techspan India plans to invest $16 million to grow its infrastructure four-fold by June this year.

"We plan to invest $12 million in acquiring buildings and the rest for equipment. By March-end, we plan to double the capacity we had in December and double that by June," Chief Executive Officer of Techspan Arjun Malhotra said yesterday.

"We plan to invest $7 million to buy a 1,000-seat facility in Bangalore. We have already invested $2 million for land in Noida and plan to invest another $3 million to buy additional land there," he said.

The company currently has 1,100 consultants and engineers, most of them in India and Philippines.

"We plan to hire 100 people a month for the next one year of which 75 will be in India, 15 in Manila and 10 in rest of the world," Malhotra said.

COGNIZANT PLANS $76-M EXPANSION
The Hindu Business Line  / The Times of India  

Another round of investment to the tune of $76 million is to be invested by the Cognizant Technology Solutions Corporation for the expansion of techno complexes in Chennai, Pune, Kolkata and Bangalore.

Talking to presspersons, R. Chandrasekaran, Managing Director, Cognizant said this would mean an additional space of 8,30,000 sq ft and an increase in headcount by 9,000 employees. He noted that the investment would also be utilised for the setting up of the Cognizant Academy in Chennai, an exclusive training centre. This is expected to be ready by August this year, he said.

Chandrasekaran said the company was building the second techno complex close to the existing facility in Pune. The estimated cost was about $18 million (approximately Rs 81 crore). He said Cognizant had requested the Maharashtra Government to allot about 40 acres of land for its further developments.

INTRANSA TO DOUBLE INVESTMENT
The Hindu Business Line  / The Economic Times  

Intransa Inc, a US-based storage solutions provider, plans to double its investment in India to about $8 million (Rs 36 crore) this year, according to B. Chandrasekhar, Country Manager, Intransa Inc.

The company, which has a research and development team in Pune, would also double its manpower in India to around 100 by year-end, he told newspersons.

Intransa provides IPSAN (Internet Protocol Storage Area Network) solutions to enable communication between storage devices and computers using Internet protocol, he said.

JP MORGAN MAY RAISE OUTSOURCING TO INDIA
The Economic Times

Adding to the drama is the fact that former Citibanker Dimon, who was forced out of Citi in November 1998, has promised that JP Morgan will “give Citi a run for its money”. Asia is likely to be one of the key regions in the fight for supremacy considering that JP Morgan is already the second-largest bank in the US. Dimon is scheduled to become the CEO in June 2006 while Harrison would continue as the chairman.

In India, JP Morgan is into risk management, trade financing and supporting debt and equity-raising. In November 2004, a senior JP Morgan team had toured India for three days as a part of an Asian visit. The team included JP Morgan Chase chairman & CEO William B Harrison Jr, JP Morgan Chase International president Andrew D Crockett and JP Morgan Asia chairman Ralph X Parks. At that time, the officials had met the Prime Minister Manmohan Singh, finance minister P Chidambaram and RBI governor V Y Reddy.

JP Morgan may also increase its offshoring business in India where it currently employs over 2,500 personnel to outsource tasks from for 35 of the 50 countries it is present in. It was also the first investment bank to open an equity research centre in the country.

It is believed that Dimon’s visit — the first since the acquisition of BankOne by JP Morgan — was a much more low-profile visit and his visit to India was part of Asian tour. The tour is likely to include Stanchart’s strongholds Singapore and Hong Kong in addition to Japan and Australia.

FIN OUTSOURCING TO BE $120-BN INDUSTRY IN 5 YEARS
The Economic Times

We know outsourcing’s getting bigger, and the next big thing in its realm will be financial management outsourcing. But exactly how big will it be?

“About $120 billion worth of investments over the next five years,” says Micheal Linn, senior executive V-P, Ocwen Financial, an outsourcing company.

How much of it will come India’s way?

“I would say about 70-80 percent,” says Linn, citing Deloitte projections.

But don’t start counting just yet. “It’s a niche segment. You won’t see the kind of volumes that other BPOs see,” says Rohit Kapoor, president & CFO, EXL Services, also an outsourcing company. He said it’s a segment that will need highly skilled people, and hence will employ selectively.

Does that mean no fresh graduates? “No. These jobs will need CAs and MBAs at least,” says Kapoor. But then will they pay enough to attract the best financial brains?

“Yes, they will have to, though I can’t put a number to it. But companies will get employees to sign bonds to ensure that staff stay with them,” explains Kapoor. But these contracts will involve big money.

“You can’t make a mistake. You have to be correct every time,” warns Michael Linn. “A slight error can get you sued or leave you with a big loss,” he adds.

What are the challenges for BPOs?

These companies face the FUD rule or Fear, Understanding and Doubt. “They’ll need to have specific business knowledge,” says Linn.

“Clients have to be assured of the safety of their data, most of which is sensitive and very valuable. Loss, or even worse, a leak of such data can be very damaging to a business,” notes Kapoor. Hence, “staff will have to sign confidentiality agreements, which say that they will not pass on the information that they receive due to their work”.

He says many companies disallow camera phones or even normal mobile phones on premises to prohibit leakage of information. “Plus, no paper can get in or out of the premises.”

While these measures seem strict, “they help BPOs earn the trust and respect of their clients in the West”, according to Kapoor. This effectively means more business.

But because of the same reasons, financial management outsourcing sports some big pluses: “One, it can be a very high price / high profit sector. Two, business tends to be ‘sticky’, which means partners prefer to be loyal, due to sensitive and high-value data. Collaborations thus tend to be fairly long-term,” says Kapoor.

BOA TO BPO UNIT IN MUMBAI
The Economic Times / The Times of India  

Encouraged by the quality of work and savings at its initial outsourcing operations in India, Bank of America Corp has announced the opening of a second unit in Mumbai which will work largely for the global corporate and investment banking unit.

Describing the second unit in Mumbai, to be opened in summer, as "the next generation" of work and part of the bank's Continuum Solutions subsidiary, the bank's top official said it will do market research and prepare presentations for bank executives working with corporate clients.

The bank's initial outsourcing operation in Hyderabad has "exceeded expectations," Barbara Desoer, the bank's top technology executive, said.

MANAGING EMPLOYEE ATTRITION BETTER
The Financial Express

In the Business Process Outsourcing (BPO) industry attrition rates of 30 percent or more has become the norm. So, when a BPO company claims that it has an attrition rate under 9 percent, it makes one sit up and take notice. The source of this claim is the Chennai-based BPO company OfficeTiger, a provider of judgement based processing services.

Dilip Srivastava, Vice President, Human Resources, OfficeTiger, says the company right from its early days had made a conscious decision to instil a sense of pride among its workforce.

“In OfficeTiger, we make it a point to build a special bond between the employee and the company and between the employees themselves. An employee should feel proud about his work and the company. We make this possible by converting every project into a challenge which drives away the monotony of work normally found in BPO firms,” he says. Srivastava claims that the work that OfficeTiger does is unique in the sense that it is not the regular back-office processing work.

OfficeTiger relies mainly on walk-in-interviews to recruit its employees “We select candidates based on their communication skills, aptitude, attitude and their learning ability. It is a rigorous recruiting process and we select people on the basis of their personality and not just their knowledge,” he says.

The selected candidates undergo a six to twelve week induction program. It is during this phase that the company identifies the skills of the candidates and encourages them to specialise.

“In the induction program, after the employees specialise, we have a ‘buddy phase’ in which the fresh recruits work on ‘live’ projects with a senior employee. Once the training process is completed, the recruits begin work on ‘live’ projects on a solo basis. In case the candidate is found to be incapable of working on real projects he is sent back to which ever phase of the training period depending on the gap in the skills acquired”.

BOOM TIME AGAIN
The Financial Express

IT seems like employment opportunities are looking up. According to a survey conducted by Ma Foi—the Ma Foi Employment Survey (MEtS)—employment has been pegged to increase by 11.4 percent in temporary staffing. This came through as part of its (MEtS) survey, which covered 2,046 employees across 17 sectors in the product and services category, with an employee base of 22.14 lakh. The Ma Foi Employment Index (MEI), which tracks the pace of recruitment activity, is at 3.35 percent, product MEI is at 3.17 percent and Services MEI at 3.55 percent.

The top 10 sectors for this quarter (Jan-March 2005) remain the same compared to the last quarter, with IT and ITES leading followed by education, training and consulting. The others are infrastructure, transportation and logistics, pharma, retail trade, healthcare, auto and auto ancillaries and print media & entertainment.

Southern India tops the MEI index followed by north, west and eastern regions. Haryana, Tamil Nadu, Uttar Pradesh, Andhra Pradesh and Punjab are the five top states for this quarter and the five top cities are Chennai, Hyderabad, Bangalore, Delhi and Mumbai. As far as the hiring confidence of the country is concerned, the story is sunny.

In fact, the National Hiring Confidence (NHC) level is up at 85 percent. Healthcare is at the top with ITES, and closely followed by IT. The NHC level across industries is 82 percent and across services is 89 percent.

The top 10 segments in the NHC are healthcare (100 percent), ITES (100 percent), IT (98 percent) print media and entertainment (92 percent), pharma (91 percent), education, training & consulting (90 percent), auto and auto ancillaries (88 percent), chemical and allied (84 percent), manufacturing (81 percent), textiles and garments (81 percent).

BPO TO KPO MOVE NEED OF THE HOUR
The Financial Express

India, which has made a name for itself in business process outsourcing (BPO), needs to gradually move towards knowledge process outsourcing (KPO) in order to keep pace with the changing scenario in the IT-enabled services industry.

Speaking at the Nasscom 2005 seminar in a panel discussion on competing on risk in offshoring, in Mumbai, Mphasis director-offshore program management services, Ashok Bhatia said, “We should now also focus on performance arbitrage, apart from just the cost arbitrage.”

KPMG India partner, Pradeep Udhas pointed out the various risks involved in offshoring business including strategic risk in putting all eggs in one basket, financial risk, regulatory risk and operational risk. He added that intellectual property rights (IPRs) is the new important issue.

The risks associated with offshoring have issues related to the parent organisation as well as third party service providers.

11^th February 2005

LOGICACMG TO DOUBLE HEADCOUNT IN INDIA
Business Standard  / The Hindu Business Line  / The Economic Times  / The Hindu  

LogicaCMG, the global IT services company, announced here on Thursday that it will increase its headcount in India by an additional 1,000 people by the end of 2005. This will take the number of employees to 2,200.

According to Martin Read, group chief executive, LogicaCMG, “India will be the fastest growing region in headcount globally. While in the rest of the world we will increase employee count in the high single digits, in India we hope to double the headcount for the next two years.” The growth will make India the third largest operation for LogicaCMG.

Speaking at the launch of their new campus at Technopolis, near Bangalore International Airport, Read said that the company will continue to invest in infrastructural activities in India, though he refused to give exact numbers.

He also stated that the growth would coincide with a change of leadership in Bangalore. Mike Weston, CEO of the offshore services division, who had so long looked after the Bangalore operations will be replaced by Rahul Patwardhan, CEO of application management. Weston will ‘move on’ to higher responsibilities within the company.

Much of the growth in employee headcount will happen in the BPO/call centre as well as the systems integration and project development divisions. Read said that the latter was due to the fact that the company hoped to do more business for Indian customers out of the centre.

BPO IS PASSE, ENTER RPO
Business Standard

BPO is passé. Enter RPO — the next big thing among emerging new-age business opportunities. ‘Recruitment process outsourcing’ (RPO) can be a heaven-sent for companies, which need to do a lot of recruitment but do not have the resources or the inclination to handle the entire recruitment process on their own.

With attrition rates being 14 per cent or more in the IT industry, and some 35 per cent in the BPO sectors, finding right replacements in such large numbers is no easy task.

An RPO not only does an efficient job of handling the entire recruitment process for firms in an industry plagued by high attrition, it also cuts hiring costs 20-30 per cent and a significant reduction in hiring time.

There are further niches within the RPO business also. According to a Gartner study, some 35-40 per cent of the worldwide HR outsourcing market, which will reach $80 billion by 2008 by growing at a compounded annual rate of 12 per cent, will go into competency assessment.

“We need to go in for multi-location outsourcing of the recruitment process and this is where RPOs whose core competency is ‘competency assessment’ helps. They save resources and time,” said Nitin Nidhi, manager-HR, Progeon.

Getting a firm to do just that, finding people best suited for the job, may be the dream of many a CEO in IT. MeriTrac is such a firm, involved solely in ‘competency assessment’ for other firms. MeriTrac is neither into training nor placements. “They have assessed lakhs of candidates,” added Nidhi.

The firm, started in 2000, focussed on the IT sector. But with the BPO boom, MeriTrac diversified its offerings to suit the BPO sector as well.

“An effective RPO standardises recruiting processes, enabling applicant tracking through all the stages with technology and deploying trained resources to run the process on a large scale,” says Madan Padaki, director-business development, MeriTrac Development, MeriTrac.

MS PLANS $25 MN INVESTMENT TO RAMP UP TECHNICAL SUPPORT
Business Standard

Microsoft Corporation plans to invest an additional $25 million to expand its technical support operations from India.

The software major already has invested $25 million at its Global Technology Support Centre in Bangalore since October 2003. The centre currently employs 400 professionals and is part of the global Microsoft Customer Service and Support.

Lori Moore, VP, product support services, Microsoft said: “We are highly satisfied about how things have developed in the Indian support centre and it is on a par with our global support centres. We have so far invested close to $25 million and as we see it, the Indian operations has the potential for a further $25 million on investment over the next couple of years.”

The centre in Bangalore focusses on providing high-level technical resolution services to English-speaking enterprise customers and partners across the globe.

“Our support ranges from Developer and Enterprise Platform to Enterprise Messaging and Enterprise Business Applications Support,” added Manish Sinha, MD (Asia-Pacific), Customer Service & Support, Microsoft.

IT, ITES TO TOUCH $50 BILLION MARK BY '08
The Economic Times

IT and ITeS exports are poised to touch the $50 billion mark by the year 2008, IT and telecom minister Dayanidhi Maran said yesterday.

Electronics and IT sectors have maintained sustained growth over the last few years. India's exports in electronics and computer software in 2003-04 were worth $14.28 billion, out of which software and services accounted for $12.60 billion.

The latest studies reveal that the IT and ITeS sector would be able to earn nearly $50 billion through exports by the year, Maran said.

BROOKS AUTOMATION TO INVEST $15 MILLION
The Hindu Business Line

Brooks Automation of the US will invest $15 million in its India operations over the next three years. About $10 million of that will go towards paying salaries, as the company intends to increase the headcount in its software development centre in Chennai, the company's Senior Vice-President, Jeff Cassis, said at a press conference in Chennai yesterday.

The company now has 62 people on its rolls, which it proposes to raise to 95 in 2005.

ASSOCHAM SEEKS AMENDMENT IN SEZ LEGISLATION
The Hindu Business Line

The Association of Chambers of Commerce wants developers of Special Economic Zones (SEZs) exempted from VAT (value added tax).

In a representation to the Commerce Minister, Kamal Nath, the Assocham President, Mahendra K. Sanghi, said that as SEZ developers are fully exempt from sales tax, they should also be exempted from VAT, its replacement.

On the minimum area requirement for SEZs for ITES/BPO, Sanghi said it should be relaxed to 10 acres.

Sixty-six percent of the area should be utilised for IT/ITES occupants and the remaining set aside for retail, residential and other infrastructure zones, usually created away from the cities.

GOOD JOB, BUT NOT ENOUGH
The Hindu Business Line

In an economy where success stories have been so few and far between, the news that the country's information technology and the IT enabled services sector employ over a million people is without doubt a significant achievement. With the industry growing at 25-30 percent, the prospect of doubling the headcount by 2008, as envisaged in the Nasscom-McKinsey report too, should be well within its scope. The industry and those who pioneered its development can justifiably be proud of the milestone that has been reached. But even as the industry basks in the glow of success it is also the time for reflecting on the challenges ahead. For instance, that the industry needs to rapidly move up the value chain in software services or the fact that the IT enabled services must find innovative ways of sustaining employee motivation and, above all, the challenge of stretching the low-wage cost advantage against competition from countries with similar human resource endowments; these aspects have also been highlighted in policy discussions on the IT sector.

No doubt, the growth of the IT sector has brightened the prospects of employment for engineering graduates churned out by the country's higher technical education system. And to a certain extent it may have also opened up ancillary employment opportunities in a variety of service and manufacturing sectors catering to the needs of those engaged in the IT sector. But given the pronounced export focus, the scope for significant forward and backward linkages to other sectors must of necessity be limited. Thus, any perception that in the IT sector lies the salvation to the country's unemployment problem would seem short-sighted. The scale of the unemployment problem makes this so. The one million additional jobs that may be created in this sector over the next three-four years has to be seen in the context of the current official statistics on unemployment, which is estimated at approximately 30 million. If we take into account the vast numbers engaged in gainful economic activity that offers only an income below the subsistence level, the magnitude of the problem can easily be imagined.

SKYQUEST BEGINS INDIAN OPERATIONS
The Hindu Business Line

SkyQuest.com, a Singapore-based global content vendor of e-learning systems, has commenced its India operations from Bangalore

The company, launched in 1999, broadcasts select seminars organised by its parent company, Success Resources.

Announcing the launch of SkyQuest in Bangalore, Dr Richard Tan, CEO said, "Through this we want to bring world-class seminars at affordable rates to people across the world. Some of the speakers charge something like $1,20,000 per speech and not many can afford the registration fees of $1,200-1,500."

The company delivers live and online video training and e-video conferencing for individuals and corporates. It charges an annual fee of $250 for corporates and $150 for individuals.

'INDIA CAN RAKE IN $16BN FROM OUTSOURCING BY '07'
The Economic Times

The global outsourcing market is witnessing rapid growth and a substantial portion of it will be sent to offshore centres, including companies in India.

Pramod Bhasin, CEO, GECIS said global outsourcing is likely to increase from $172bn in ’03 to $306bn in ’07. The fact that barely $31bn of work was outsourced to low cost destination is an indication of the enormous opportunity for growth here.

India could easily hope to increase its revenues from outsourcing from $3.6bn in ’03 to $16bn by ’07, he added. He also said that India may face stiff competition from China, Russia, Malaysia, and South Africa.

The BPO industry, he said, needs to move up the ladder from mere cost leverage to providing re-engineering and then to being a strategic differentiator.

The BPO industry moves over several stages, said Anurag Jain, VP - business process solutions, Perot Systems.

TECHSPAN TO HIRE 1,000 IITIANS
The Economic Times

IT consulting and services company Techspan India will add about 250 people each quarter in 2005.

“We have sent out 60 appointment letters to IIT freshers this month, of which 40 will definitely join us. The profile we are looking at for 80 percent of our new recruits are IIT and IIM graduates.

But we will also look at hiring bright freshers from the National Institutes of Technology. We plan to hire about 75 people a month for our Indian operations every month in 2005,” said Arjun Malhotra, the California-based CEO & chairman of management & tech consultancy Headstrong with which TechSpan was merged in 2003.

COGNIZANT TO HIRE 7,200 IN '05
The Economic Times  / The Hindu Business Line  

Cognizant has put out a revenue guidance of $845 million for calendar 2005, indicating a 44 percent year-on-year growth. It expects to add 7,200 employees in 2005, taking the total head count to over 22,500 by the end of 2005. Last year, the company added over 6,000 employees increasing the total count to 15,300.

PARADYNE PLANS RS 6.3 CRORE BIZ EXPANSION
The Economic Times

Paradyne Infotech Ltd, a software solutions and IT services provider, yesterday rolled out Rs 6.3 crore business expansion plan to set up a data and call centre and beef up operations of US-based subsidiary.

The company would invest Rs 3.57 crore to establish call and data centre to cater to existing and new clients in the data storage segment, PIL managing director and chief executive officer Annand Sarnaik said in a release yesterday.

INDIAN IT CAN LOOK FORWARD TO $15 BILLION ENGG TECH BIZ
Deccan Herald

India can emerge as the global hub for engineering and design services, which is a multi-billion market, utilising its successful offshore business model. After IT and BPO, engineering technology (ET) services has the potential to become the next big wave and generate revenues up to $4 billion within a couple of years’ time.

Industry personalities and analysts at the Nasscom Summit 2005 in Mumbai on Thursday said India, which has huge engineering talent pool coupled with proven offshore business model, is poised to capitalise the growing global engineering and design services or engineering technology services. The opportunities in ET services are huge in areas of automobile, manufacturing, aerospace, mechanical design, construction engineering and electrical design.

“No doubt, engineering technology services is the next big for us. There is a huge potential for Indian players to tap the global market,” said TCS Vice President (Engineering & Industrial Services) Ravi Gopinath.

TCS, the largest IT company, currently derives about 6-7 percent of its revenues (about $ 100 million) from engineering and design services and is taking steps to generate billion dollars from this space by 2010.

BACKLASH FROM US MAY START
Deccan Herald

If Indian IT industry is under the impression that the backlash against outsourcing has died with the re-election of US President George Bush, it could be wrong.

Former US deputy secretary of State Strobe Talbott has warned that the backlash against outsourcing could haunt the India if the US economy did not sustain or grow in the coming years, reports DHNS from Mumbai.

Delivering a talk on “Global Economic Outlook” at the Nasscom Summit 2005 on Thursday, Talbott said, “Unless the economy in the US and Europe bounce back strongly and there is a creation of employment opportunities, backlash will make a comeback and haunt the political system.”

Talbott said he was “disturbed” by the protectionist measures of the developed nations in certain sectors like textile and steel.

INDUCT TALENT FROM SMALL TOWNS, MAIRA TELLS BPOS
The Financial Express

Business process outsourcing (BPO) companies’ complaint of escalating operating costs in India holds little ground as they are not widening their search for head-hunting, according to Arun Maira, chairman of Boston Consulting Group.

Maira said the increase in salaries is the main reason for rising operating costs of a BPO unit.

“They should look for new talents in small towns. India has huge reserves of talent which can be found everywhere,” Maira said. He added that the availability of knowledge at a low cost is India’s competitive advantage.

Maira, who was shown the door from the Planning Commission recently, observed that the country needs more “alignment” in its path to development.

“Looking back the last 50 years, we can see we haven’t reach the desired level. That means something has to be changed,” said Maira. The Left parties had objected to the presence of foreign experts in the Planning Commission.

“It is necessary that we hear each other. My disappointment is that some people think “foreign” people should not be heard. I am not a foreigner. I care for India as much as they do,” said Maira.

Earlier, he had said that the role of a leader has undergone a lot of change over the years. “A leader has to anticipate what is likely to happen and also keep the people in the organisation together,” Maira said.

10^th February 2005

SIEMENS IN $500M INVESTMENT PLAN
Business Standard / The Times of India / Deccan Herald / The Telegraph / The Hindu  / The Financial Express  / The Hindu Business Line  / The Economic Times  

Siemens India, an industry and infrastructure solutions provider plans to invest $500 million in India in the next three to four years for setting up factories and expanding its existing capacities in the country.

Talking to the media here today, Siemens AG chairman of the supervisory board Heinrich V Pierer said Siemens said the investments would be made primarily through Siemens India.

Siemens AG, if required, will put in funds Siemens will set up more research and development (R&D) centres and it would be adding more software professional in the R&D centre in Bangalore, he said, adding that India is not only a good place for local manufacturing but also an export base.

“Siemens is keen on tapping the pool of engineers available in India,” he added. The company is planning export software solutions, hardware and medium-sized switch gear from India. Siemens India expects a 10 per cent growth from India

Pierer, who came to the city to attend the Nasscom 2005 India Leadership forum said Siemens has 45,000 researchers who work outside of Germany. Over 3,000 software engineers and scientist work out of the company’s facility in Bangalore. The company plans on expanding this number to 4,000 this year.

The employees in India focus on telecom software hospital information systems, call center solutions and automotive electronics.

He says, “India’s contributions here are really impressive and we will keep expanding the use of our Indian operations for worldwide projects. More and more projects in the medical, telecom, automation and automotive field will be handled here.”

VOLATILITY CAUTION
Business Standard

The data clearly show that net FII inflows to the Indian stock market are far out of proportion to the country’s weighting in the Morgan Stanley Capital International (MSCI) index.

Apart from China and Korea, India was the biggest recipient of foreign portfolio inflows in Asia last year. What’s more, the proportion coming India’s way has been rising every year.

Does this indicate the long-awaited de-linking of the Indian market from other emerging markets?

In other words, is the India story getting big enough to stand out from the generic emerging market story? There are a number of straws in the wind that point to such an outcome.

Of course, the BPO and IT services stories continue to showcase India’s capabilities to the rest of the world. So far as portfolio flows are concerned, the latest reports are of Japanese funds coming into the country.

CONVERGYS OPENS ITS FIRST INDIAN R&D CENTRE AT HYD
Business Standard  / Deccan Chronicle  / The Financial Express  / The Hindu Business Line  

Ohio-based Convergys Corporation, a global integrated billing and customer care services company, today inaugurated its first software research and development centre in India at Hyderabad.

In India, the company currently operates out of seven offices, which provide technical help desk services and customer support and the Hyderabad centre is the company’s eighth office.

Addressing a press conference, Larry S Schwartz, executive vice-president, global information management operations, Convergys Corporation, said: "The Hyderabad centre is the third largest location in terms of employees and we will develop it into a centre for excellence in terms of sales effectiveness.”

According to him, apart from the R&D activities, the new centre would also provide professional services and operations’ support for the company’s information management business. “The centre would also be part of the round-the-clock support infrastructure and will be fully integrated into the company’s global telecom network,” Schwartz said.

SATYAM ENABLES SK C&C UNIT GET E-SOURCING CERTIFICATION
Business Standard  / Deccan Chronicle  

Software service provider Satyam Computer Services Limited on Wednesday announced that it has successfully enabled the infrastructure business division of SK C&C, in South Korea, to be certified at eSourcing Capability Model (eSCM), capability level 3.

The infrastructure business unit of SK C&C, which provides data centre services in the fields of mainframe, server and network services, has been certified under the model.

The eSCM provides guidance to IT-enabled sourcing service (ITeS) providers, which includes BPO and IT service providers, to improve their capability to deliver high-quality services consistently.

XANSA INDIA PLANS TO SET UP RS 22CR FACILITY
Business Standard  / The Financial Express  

Xansa India Limited (Xansa), the Chennai-based business process and IT services company, plans on investing Rs 22 crore to set up a new facility in Chennai, in the next six months and add 700 seats.

According to information from a press release, Xansa's new facility will have the potential to grow to a 6,000 people campus. The company already has a 28-acre campus in Chennai.

“Xansa has a little under 3,000 people in India across Noida, Chennai and Pune. We are planning to increase our headcount to 10,000 within the next three to four years. When that happens, more than 50 per cent of Xansa's global workforce will be situated in India, which will be a first for any UK-based or international company,” said Saurabh Srivastava, executive chairman of Xansa.

On Chennai's strengths, Srivastava said, "The state is attracting a growing number of companies in the IT and BPO space due to the existing infrastructure and a talented pool of workforce. We are committed to providing the best facilities for our people and I am sure our new campus at Chennai would prove to be an ideal working environment for our employees."

Xansa is part of the UK-based Xansa Plc and its BPO operations in Chennai are mainly driven by high-value transaction processing in the insurance and finance space.

WIPRO `FAST FOLLOWER` IN EUROPEAN MARKET FOR MANAGED SERVICES
Business Standard

There will be “incresing competition” in the maturing market for managed services in Western Europe between “global trendsetters” and “fast followers”, according to an IDC study for 2004.

Managed services, also called desktop and network management services, bridge the gap between the entry-level services such as hardware support and more complex engagements such as IT outsourcing.

According to IDC, the managed services market in Europe is set to grow from $9.3 billion in 2003 to $13.3 billion in 2008, which represents a compound annual growth rate of 7.3 per cent.

The report also assesses the different vendors offering services in the area on the basis of alignment to market opportunity and ability to gain market share. The grid comprises five major divisions — global trendsetters, fast followers, vendors in transition, local stars and niche players.

While the global trendsetters grid is occupied by players by HP and IBM, with their huge brands and more or less developed managed services offering, homegrown Wipro and Computer Science Corporation (CSC) occupy the fast followers level. Wipro’s Technology Infrastructure Services (TIS) which handles managed services for the company clocked revenues of $20 million in fiscal 2004.

Around 63 per cent came from infrastructure management and 12 per cent from system integration and consulting. A hefty 85 per cent of the infrastructure management revenues came from the UK alone and the practice itself has been growing YOY at 40 per cent.

Capgemini features in vendors in transition while LogicaCMG is included in the list of local stars. Niche stars are players who concentrate only on certain aspects of the managed services segment and include Dimension Data.

With increasing competition and a lessening of significant differentiators between players, there is sign of cost containment among clients leading to demands for more flexible contracts and multi-vendor strategies.

Offshore service provision is becoming increasingly common with almost all the vendors having an offshore set-up. Also, there is more productisisation of managed service offerings as more vendors offer off the shelf solutions along with custom made ones.

With more and more vendors appearing in the growing market, IDC predicts that only vendors who can handle the complexity of a fragmented market, align themselves to business optimisation as opposed to technology focus and build a dynamic relationship between themselves and the business of the client will succeed.

GOOGLE LAUNCHES CODE JAM IN INDIA
Business Standard

In a bid to attract strong technical talent to the Google R&D centre in Bangalore, the global search engine giant announced the launch of Code Jam 2005 in India on Wednesday.

Via CodeJam, which is the annual competition conducted by Google for coders and is being conducted out of India for the first time ever, the company plans to target coders and programmers across South Asia.

According to Lalitesh Katragadda, joint center head for Google’s R&D, “We expect thousands of people to participate in the competition since its online nature makes it easy for people to register and take part. All residents of India, Indonesia, Malaysia, Maldives, Myanmar, Nepal, Singapore and Thailand can register and compete.”

Registrations will be open till February 25. On February 27, contentants will compete online to qualify for the top 500 spots. These 500 will again battle themselves for the 50 final positions.

The finalists thus chosen will be flown to the Google R&D centre here for the championship round on March 26. The winner of Google India CodeJam will receive Rs 3 lakh while additional cash prizes totalling Rs 13 lakh will be distributed among the other finalists.

INDIA EYES GLOBAL AVIATION OUTSOURCING PIE
The Times of India  / The Financial Express   

As global aviation firms eyeing the multi-billion dollar civilian and military market showcase their hardware at the Aero India air show that took off on Wednesday, India invited aerospace companies to leverage its low cost, high talent workforce and infrastructure for building aircraft and systems for the world market.

"We can, together, reduce the development and marketing costs, jointly develop state-of-the-art aviation products and do joint marketing," Defence Minister Pranab Mukherjee said at the fifth edition of the Aero India 2005 at the Yelanhanka air base on city outskirts which has attracted over 352 aerospace firms from India and abroad.

CONVERGYS OPEN TO ACQUIRING GOOD COS TO SCALE UP INDIAN OPERATIONS
The Financial Express

Convergys, an integrated billing, employee and customer care services major, is open to acquiring companies working in the niche area of customer and employee care segment (BPO), in which it is the world leader.

The company, which announced its plans to double its customer/employee care manpower to 20,000 in the next one or two years, is also open to acquiring good companies to scale up its operations in India, said Larry Schwartz, executive vice-president, Global Operations, Information Management Group, Convergys Corporation.

Schwartz said: "Though Convergys continues to grow organically as proposed earlier, however, it is open to acquiring a good customer/employee care companies (BPO) in India."

"We keep acquiring one or two companies annually across the world to grow fast and it will approach in India too," he said. "Everything depends on how we are growing in India as well as from the customers' perspective," he added.

To a specific question, Schwartz said that Convergys, which has seven contact centres in four cities - Delhi, Mumbai, Pune and Bangalore, would consider Hyderabad as the potential destination. "The company found that lack of English accent has been the main reason for delaying the company's presence in Hyderabad. However, we will positively look into it," he added.

Jaswinder Ghumman, vice-president and country manager for Customer Management Group, which controls the contact centres for Convergys across the world, said: "After the major metros, we are looking at second-tier cities like Hyderabad, Chandigarh and other places and we will test market ourselves in these places before get into full-fledged operations."

TCS BEEFING UP CHINESE TEAM
The Financial Express

Tata Consultancy Services (TCS) plans to strengthen its China-based IT facility and expects aerospace related services to be among the growth markets that will be addressed by the Chinese team.

The company, which currently has a 30 strong team in China, will ramp up the headcount to 100 by December 2005, said TCS vice president engineering and industrial services Ravi Gopinath.

TCS will recruit local talent to beef up the Chinese team, which will offer core engineering services for various verticals including aerospace sector such as GE’s aircraft engines division.

Gopinath said, “Manufacturing companies across the globe are expected to look at Asia and we are looking at leveraging the China development centre. This will give us the advantage of being able to provide localised services for our clients, rather than a cost advantage.”

TCS has a 300 strong team in India, focusing on services for the aviation sector.

He said, “Today we have strong engineering and technology capabilities in India. Strengthening the Chinese centre is about seamless presence in the market for TCS.”

NOW, WORK-FROM-HOME BPO JOBS
The Economic Times

People who reach Esther DeJesus when they call Office Depot Inc.'s customer service center have no idea that she's sitting at home in a room decorated with pictures of Garfield and Betty Boop.

The Orlando, Florida, resident, who works on the retailer's account for call center contractor Willow CSN, is one of a new breed of customer service representative.

Rather than commuting to a crowded office, she puts in 37 to 40 hours a week at home and sets her own schedule.

"It is really convenient," said DeJesus, who likes the setup because it allows her to take care of her grandmother. And she shares her home office with her twin daughters, who work part-time for Willow while going to college.

After some unsuccessful attempts to move call centers abroad, U.S. companies are shifting some of that work back to this country -- and into people's homes.

Besides Office Depot, JetBlue Airways Corp., General Electric Co. and Staples Inc. are among the companies that have been using stay-at-home customer service representatives as an alternative to traditional call centers in the United States, India and the Philippines.

Home-based workers are usually happier, which means better service, these companies say. The arrangement also allows employers to schedule people in small part-time slots when call volume is higher, rather than hiring regular call-center workers who get paid whether they are busy or not.

To work at home, employees need a computer that meets certain specifications, such as high-speed Internet access. After taking a training course, they're ready to start answering calls that are routed to their home phone.

Companies are passing on some of the savings they're realizing in rent and office equipment. Stay-at-home customer service representatives generally command $13 to $14 an hour, while the industry rate for call center workers is $8 to $9.

IS THE BPO ICEBERG MELTING UNDER ATTRITION HEAT?
The Economic Times

BPOs all over India are reeling under high attrition rates. According to Nishchae Suri, consulting leader, Hewitt Associates, attrition rates in the industry vary from 24 percent to 40 percent. And the brunt is falling on the young agents who have to sometimes work more than 12 hours a day with only a 30-minute dinner break, often foregoing their weekly offs.

The executives are not alone. HR managers are under intense pressure from international clients to increase and maintain the count on the floor. Says C K Taneja, managing director, Green Field Online, a market research BPO: "Sometimes the executive hired and trained for process A, is shifted to process X, Y or Z at the end of his training. It's highly unethical and unfair to the employees. But reality is cruel."

There is extreme urgency from the client side to maintain the volume of calls, which runs into thousands, sometimes lakhs. An underestimation of the number of agents needed to handle the pressure proves to be disastrous.

At times the agents have to speak for as long as eight hours non-stop. It's not only speech but each call requires intense brain storming, be it fixing problematic PCs or number crunching on the amount of premium a customer has to pay for his car insurance.

On top of that, you are working against nature, at nights, and with an often irate customer who speaks in a different language. And with two or three colleagues in a team on leave, the pressure is transferred on your shoulders.

Attrition has a tremendous impact on the DMoQs (Delivery Model of Quality), which require an agent to pick up a phone within three rings. DMoQs goes down sharply. The C-Sat (Customer Satisfaction) scores also deteriorate.

The AHT (Average Handling Time) shoots up when an entirely new person is kept to handle calls. Says Ian Stern, co-promoter, Holistic Enterprises, a voice and accent training firm: "An executive starts becoming 100 percent productive only after six months of taking calls. And if he is replaced by a new trainee, the productivity levels depreciate suddenly."

Attrition is eating up profit margins for BPOs. Poaching each other's employees with higher salaries is harmful as other countries like Vietnam, China and the Philippines will be able to offer the same services at a lower price.

>From free food, accommodation and transport to parajumping and salsa classes, BPOs are going all out to curb all time high attrition rates.

BPOs are trying to retain employees through 'golden handcuffs' - a term given to interest free home and car loans, so long as the employee stays in the company.

`SELECTIVE SOURCING TO GAIN FAVOUR'
The Economic Times

Selective sourcing (or choosing particular IT projects a few at a time for outsourcing instead of giving a whole bunch out at one go) is the order of the day, according to Robert McNeill, senior analyst, Forrester Research.

In a presentation that dwelt on the top technology trends to watch out for, he said, "In a survey, we discovered technology projects that were selectively outsourced achieved a success rate of 77 percent, while full IT outsourcing projects saw only 38 percent success.''

He also pointed out that selective sourcing of projects helped clients retain better control while reducing risk.

He urged an audience of IT service providers to become coaches to technology users who are now being challenged on what to measure and how to measure it.

According to McNeill, vendor management functions were evolving inside user organisations to help them manage not only processes and technology but also manage IT suppliers.

Vendor management functions now help users align IT with business objectives, he said.

Speaking earlier on the same topic, Matt Thomson of Sun Microsystems said that utility computing would be the order of the day in future. "All industries move from custom-made solutions to utility-based ones. We can now deliver IT as a service.''

He recalled that Sun Microsystems had last week made available one gigabyte of memory per hour and one microprocessing unit per hour at a dollar each.

Thomson also dwelt on the increasing attention that service oriented architecture is getting from IT users.

BOOKS AFTER BPO’S
The Statesman

Talk of BPO’s and the first thing that comes to our minds is a call centre. But in reality Business Process Outsourcing in India goes much beyond call centres. Recently, its latest target is the publishing sector. Dorling Kindersley (DK), an internationally acclaimed publishing house has a publishing team working here in India.

“Creativity and innovation sit at the heart of DK. Here we have a team, which does the job of illustration, content development and page designing,” said Deborah Wright, Dorling Kindersley, UK Managing Director. At present there are around 70 people working for our company and the numbers are expected to rise in the coming years.

Cheap and skilled labour available here, makes India a very attractive destination for the foreign companies. “The main reason why I am here is to understand the market better. India is at the forefront of technology and the people are very skilled and efficient,” said Wright.

INDIA BUY HELPS PEROT
The Hindu Business Line

Perot Systems Corp, a technology services provider founded by former presidential candidate Ross Perot, said on Tuesday that quarterly profit nearly tripled, boosted by an acquisition and increased demand for commercial outsourcing and consulting.

Fourth-quarter profit rose to $27.1 million, or 22 cent a share, from $9.9 million, or 8 cent a share, a year earlier.

Revenue rose 18 percent to $466 million, driven by the acquisition of India-based technology services company TSI.

LOAD OF THE RINGS
The Economic Times

Those who suffer from phonophobia — the fear of receiving unsolicited sales calls on your mobile phone — will give thanks to the Indian Supreme Court for serving notice on those promoting intrusive telemarketing. Contending that such calls are “uncalled for”, a plaintiff had filed a PIL against the “invasion of privacy and violation of the right to live a peaceful life”. While mobile phone operators might find this a bitter PIL to swallow, those who subscribe to the view that a cell of a different sort is precisely where misusers of cellphones belong will concur heartily with the SC’s move. It is indeed a thin line, which separates telephony from telephoney. Phones can be both instruments of oppression and its reverse. Following the palace crackdown on freedom of speech and communications, clandestine satellite phone operators in Nepal have been charging up to Rs 300 a minute for outgoing calls — a king’s ransom, in more ways than one. Will such subversive connections help the silenced Bell of Liberty ring out loud and clear once again in the monarchy? Only air-time will tell.

In the meanwhile, in Ipswich, UK, the long arm of the law has been made even longer, thanks to cellphones. A local cab driver has gone down in the history books, if not the phone books, as being the first person ever to be awarded a judicial sentence via his mobile. Caught in a traffic jam on his way to court where he faced bankruptcy charges, the cabbie was called up by the judge who awarded long-distance sentence — 140 hours of community service, plus £750 costs. Whether these costs included the charge for the judge’s phone call is not known.

ROLLING DOLLAR KEEPS IT COS ON TOES
The Economic Times

Software services companies are struggling with a new problem—managing their forex exposure and investment portfolios. Huge cash reserves, combined with volatile receivables in foreign currency, is increasing the complexity for software services companies. Managing both the reserves and risks is becoming an art among CFOs in software companies used more to managing risks in IT contracts. The rising volatility in currencies, particularly the dollar, is directly affecting the other income of software companies. Other income directly affects the bottom lines of companies.

For instance, Wipro Technologies’ other income was Rs 18.70 crore during the quarter ended December 31, 2004 down 5.56% from Rs 19.80 crore for December 31, 2003. Wipro has covered almost all its revenues with a forex hedge cover of close to $860 million. Other income mostly reflects gains made from trading forex or from investments in capital markets through mutual funds.

The Infosys treasury has performed much better during this quarter as its other income is at Rs 46.77 crore for the third quarter ended December 31, 2004, down marginally on an year-on-year basis by 1.5%, though it is up by more than 54% on a sequential quarter comparison.

Satyam Computers has not been so lucky during the quarter. Satyam’s other income has fallen to Rs 2.59 crore from Rs 23.93 crore in the previous quarter. The sharp fall in the other income has also affected the sequential growth in the net profit to some extent.

Similarly HCL Technologies’ other income has taken a beating for a completely different reason. The company has shifted its investment, about Rs 2,000 crore, in mutual funds, and this has affected its other income.

i-flex Solutions is also facing some challenges in forex management. The company has reported a major difference in its US GAAP and Indian GAAP accounts due to forex management being accounted differently under both systems. The company’s net profit under US GAAP has dipped because of the difference in treating hedging gains/ losses. i-flex does not report any other income in its business.

Patni Computers announced its full year results also showed a marginal dip in its other income to Rs 12.42 crore compared to Rs 13.56 crore in the previous year. Other income for the company has also dipped on a sequential basis in the fourth quarter as compared to the third quarter.

Some of the other software companies, which have reported a year on year drop in their other income are Zensar Technologies, Mphasis BFL, Hughes Software, Mastek and Geometric.

9^th February 2005

TPI IN INDIAN FORAY
Business Standard

TPI Inc, among the world’s largest sourcing advisory firm, has announced its direct presence in India. The company till recently had partnership with Bangalore-based neoIT and has ended its exclusive agreement for its direct presence.

Said Arno Franz, partner & MD, TPI: “Global delivery has become crucial to our clients and integral to larger outsourcing relationships for both IT and business process services. With the contracts in India getting larger and more specific, TPI has decided it was time to enter the Indian market.”

He added that establishing a direct presence in India would give their clients more immediate and accurate information on local market conditions.

EUROPEAN INSURERS OUTSOURCING WORK FACE VAT HURDLE
Business Standard

European insurance companies outsourcing their back-office operations could face a huge tax liability on removal of exemption of value-added tax (VAT).

This will negatively impact the insurance business outsourced to India and the rest of the world. Insurance companies in the European Union (EU) are exempted from paying VAT, as governed by article 13(B)(a) of the Sixth EU Directive.

On January 12, 2005, the advocate general of the European Court of Justice delivered his opinion regarding the Andersen Case (Arthur Andersen), which concerns the VAT status of back office activities provided to Universal Life, an insurance company in the Netherlands.

The advocate general stated that the activities are neither out of scope of VAT, nor qualify as VAT exempted insurance transactions.

“The removal of the exemption would be a major threat, and could become applicable for UK insurance companies since the Netherlands has taken the lead. A VAT of 17.5 per cent in UK, would result in our losing the margin differential,” said R K Ragan, managing director, Prudential Process Management Services (PPMS).

The UK has currently given a fairly wide scope to the VAT exemption to insurance related services, thereby encouraging the trend for UK insurers to outsource such services.

In addition to Prudential Plc, players like Aviva have outsourced operations to India. Standard Life Plc is equally looking at the option today.

The UK-based Prudential Plc is saving 16 million pounds annually following its outsourcing or as its group chief executive, Jonathan Bloomer, said: “it is more an offshore centre for our UK operations”.

INDIAN BPO HAS A LONG WAY TO GO
Business Standard

When the rate of growth in software exports slowed earlier in the decade as a result of the tech bubble bursting and the impact of 9/11 on global business, it was IT-enabled services and business process outsourcing which carried the can.

Now that software exports are rebounding, with leading billion dollar plus companies recording near 50 per cent topline growth and stable, if not slightly improving margins, it is time to look at what BPO is doing.

The short answer is, BPO is doing nicely, thank you. This year (2004-05) BPO exports were slated by Nasscom to grow by over 58 per cent to $5.7 billion, until last year’s figures got revised upwards by $300 million to $3.9 billion.

It is a safe bet that the current year will also eventually clock more than current projections. So it’s all hunky dory? No.

Indian software has arrived, in a way. The global IT market acknowledges it. But the Indian BPO effort is in a different category.

It is still early days for the industry and several key issues need to be addressed before becoming certain that BPO will follow in the footsteps of IT.

The BPO outlook, based on the achieved compound annual growth rate of 50 per cent plus, can be a little rosier than is warranted. Naturally, a lot of it is not the industry’s fault.

Offshoring software services has become mainstream in the minds of global business leaders. BPO is yet to get there. So countries like India need to do a lot for perceptions to change.

And here we come right up to the first thing that needs doing to ensure a bright future for BPO.

For a couple of years now India’s political leaders, notably Arun Shourie, when he was IT minister, have been promising data security legislation but nothing has happened yet.

Without a law on the books, offshoring critical business processes to India will remain handicapped. This is particularly so as the key growth area in offshored services is the financial services sector.

Companies themselves will hesitate and trade unions in the west will make much of the absence of such law when work involving sensitive financial information is sought to be offshored.

The second problem with the Indian BPO industry is the absence of processes for certification of quality. (In fact, the processes themselves are not yet fully standardised.) They are yet to arrive globally.

Newcomers need labels or testimonials to tell the world they are top class. The Indian software industry played this card with finesse. It not only got its quality act together, it became a global leader in acquiring certifications like SEI CMM.

A Nasscom committee has worked on parameters to measure process capabilities, but there is no substitute, if nothing else from the marketing angle, for globally accepted quality certifications.

“The Indian BPO industry is in its early stages, debugging is needed for it to become mainstream,” acknowledges Akshay Bhargava, CEO of Progeon, the BPO subsidiary of Infosys.

The third and perhaps the most significant issue facing the Indian BPO industry, one that is within its own hands to set right, is the way in which it is configured.

It still remains an industry marked by large players, at one end mostly into call handling work, and niche players at the other, doing higher value work involving entire processes, rather than individual tasks.

Industry leaders like Raman Roy, head of Wipro Spectramind, have publicly drawn attention to this. He has lamented the absence of innovators with disruptive ideas.

For his part, he says that Wipro Spectramind has in the last 12 months increased the non-call handling part of its revenues from 7-8 to over 15 per cent.

The company is also looking for acquisitions, which will secure it skills in domains such as HR and insurance.

CALL CENTRE FIRM ALLSEC TECHNOLOGIES PLANS IPO
Business Standard

Allsec Technologies Ltd (Allsec), a call centre services provider, plans to raise Rs 60 crore from an initial public offering (IPO) for its expansion and acquisition plans. This makes it the first third party voice-based Indian company to go for an IPO.

“We will increase the number of employees from 700 to 1,700 in the financial year 2005-06. We are also looking at an acquisition target in the financial BPO services space,” said Adi Saravanan, founder and president, Allsec.

IL&FS and Kotak Mahindra will be the lead book runners for the 100 per cent book building issue. Allsec started as a 100-seat call centre in February 2000.

“There maybe a spread in geography as well in the near future within India,” added Saravanan.

It will file a prospectus with the Securities and Exchange Board of India in two days time-the IPO is expected to hit the market in April, 2005.

ICNET PLANS TO ENTER HEALTHCARE BIZ
Business Standard

ICNET Limited (ICNET), a Chennai-based telecom technology company that had gone bankrupt in 1998, is planning to transform itself into a healthcare product company using a Rs 50-lakh revival package sourced from three of its unsecured creditors.

As part of its effort to bounce back, ICNET has signed an MoU with a US-based company to become its sole selling agent in India of their subscription based electronic medical records service (EMR Plus) which it plans on launching in March, 2005.

The service will provide value additions like assistance in emergency anywhere, in-patient procedure, pre-natal and post-natal guidance, infancy management, general healthcare.

ICNET that had started providing e-mail services in 1992 had gone into liquidation in 1998 after one of the debtors filed a petition in the Madras High Court. This was after it had suffered mounting debts when the Department of Telecom (DoT) had severed its connectivity in 1996. It had then employed 2,000 individuals in 23 offices in India and seven overseas offices.

BOEING, AIRBUS TO SOURCE IT WORK FROM INDIA
The Times of India  / The Asian Age  

This seems to be the second wave of outsourcing jobs to India. In a bid to bring down production costs, aircraft making biggies, Boeing and Airbus, are increasingly offshoring software development and engineering jobs to Indian IT firms.

Boeing on Tuesday announced a multi-year, multi-million dollar agreement with HCL Technologies to develop software for its new 787 Dreamliner. HCL-T will develop a hosting platform for the flight test computing system and provide software services to many of the 787 systems partners, it said.

The Chicago-based Boeing has also signed a strategic deal with Indian Institute of Science in Bangalore for research in aerospace materials, structures and manufacturing technologies.

IT OR BPO? WE`VE BOTH
Business Standard

When MphasiS merged with BFL in 2000, little did anyone expect that a marriage between the losing Bangalore-based BFL Software and the US-based MphasiS would herald the emergence of an integrated service company that software companies both in India and overseas would emulate.

“A presentation called it a marriage between a pizza and curd rice,” chuckles Ravi Ramu, chief financial officer at MphasiS, referring to the merger between a US e-business company and an Indian business process-outsourcing firm.

MphasiS derives nearly 40 per cent of its revenues from its business process outsourcing (BPO) operations and 60 per cent from its other activities, says Ramu.

“We are becoming a more balanced IT and BPO company, perhaps the only one in India, “ adds Ramu.

So far, most Indian IT and BPO companies have been independent outfits that derive much of their revenues from either one of the two businesses.

For instance, companies such as Wipro Technologies and Infosys Technologies derive more than 80 per cent of their revenues from IT operations; their BPO business is marginal to them.

The standalone BPO businesses of General Electric or ABN Amro derive their revenues from call centre operations or bill processing.

That’s changing, though. All the IT service companies are now zeroing in on the MphasiS model and setting up BPO operations.

Infosys created Progeon and others like Wipro resorted to acquisitions, buying Spectramind in mid-2002, something that led to Wipro becoming the biggest third-party BPO company in India.

MphasiS went in the other direction – it acquired two software companies to build its software part of the business. Similarly, banking software product company i-flex Solutions acquired BPO firm Equinox.

CONVERGYS R&D CENTRE IN H’BAD
Deccan Herald  / The Tribune  / The Economic Times  / The Hindu Business Line  

Convergys, one of global IT players specialising in billing and customer care services, is all set to open a new research and development centre at Hyderabad on Wednesday.

“The Hyderabad facility — Convergys’s third development centre and the first one outside the USA and UK – will be a part of its global telecom network. We want to develop it as a centre of excellence for making effective selling software and generating interfaces between billing systems and contact points,” Executive Vice President (Information Management Group) Larry S Schwartz told reporters here on Tuesday.

Initially the company plans to employ 600 professionals at Hyderabad and after infrastructure expansion, it intends to double the headcount within the next 12-18 months. “The second phase of construction is underway and is scheduled to complete in April,” he said.

CALL CLOSURE
The Financial Express

The Supreme Court’s notice to the government, Telecom Regulatory Authority of India (TRAI), telecom service providers, and private and foreign banks on a public interest litigation seeking a ban on unsolicited calls is bound to come as a welcome relief to a long-suffering public. There is no doubt that the vast majority of those at the receiving end of such calls wholeheartedly support such a ban. Which is probably one of the reasons why the Supreme Court acted so promptly on a suit demanding such a ban in public interest. The argument, that a basic right to be let alone is infringed by such calls, is a known one. The PIL argues this right must be extended to all cell phone calls, as a fundamental issue.

Whether one has a fundamental right to not be telephoned is an issue the judges will now be going into. We Indians seem accustomed to seeing issues of daily living — school admissions, the running of hospitals, garbage collection and so on — being decided within the legal system, rather than by elected representatives in a peoples’ legislature. There are legitimate reasons for many citizens preferring such a route, rather than the uncertain and wearisome method of lobbying for support among fellow beings and legislators.

One way forward would be a registry, to which all cell phone firms subscribe, as in the US, of people who wish to not get any tele-marketing calls. Sure, this will push up costs for telemarketers, particularly since penalties will be imposed on all those who violate the rule. This much appears sensible: beyond this, we advise caution in embracing bans.

ALLIANZ CORNHILL TURNS OVER BUSINESS-ALLIES TO INDIAN ARM
The Financial Express

UK’s largest insurer Allianz Cornhill has sent three of its key business-allies at home to its new Indian facility. The visit is likely to open an entirely new business domain of outbound and inbound calls for the Rs 60-crore Indian IT and ITES unit in Kerala Technopark.

Allianz Cornhill’s British visitors giving the Indian operations the once over are David Centeno (Reader’s Digest, UK) Maria Borstnar (The Telegraph Group, UK), and Tony Copeland, who runs an agency called Direct Marketing Bureau (DMB). It was Maria Borstnar who had managed the previous Telegraph Insurance Services franchises (provided first by Lloyds and subsequently by RIAS) and was then involved in the tender process, which resulted in Allianz Cornhill winning the Telegraph Insurance Services business.

Rubbing shoulders with these ‘affinity partners’ could mean more business and recruitment, but fundamentally, the parent firm’s gesture signifies a reassertion of its faith in the customer marketing skills of its new employees, Rakesh Gupta, chief operating officer of the Indian facility told FE. Much would also depend on whether the guests showed the same confidence, he admitted.

SBI’S 24-HOUR CALL CENTRE SOON
The Financial Express

State Bank of India (SBI) is planning to set-up a 24-hour call centre for providing banking-related services for its retail banking customers.

The call centre, which is to be outsourced to begin with, will be operational in the next financial year.

The call centre will have an initial seat capacity of 100-200, and the bank will gradually scale it up, as its business expands, and more number of branches are brought under as CBS widens.

CALL CENTRE WORKERS GET BETTER WELFARE IN INDIA THAN IN US’
The Financial Express  / The Economic Times / The Statesman  

Call centre professionals in India are well taken care of by the employers, compared to the US, where the workers were treated as a “commodity”, said an official of Communication Workers of America (CWA), the largest workers Union in the US.

“The call centre environment in India is much better. In the US, the employers are not considerate about the workers. They treat people as a commodity,” said Steve Tirza, president, CWA, who was here along with other members to have a first-hand understanding of the call centre and IT industry in India.

Taking exception to the argument that many jobs are outsourced to India for cost-cutting purposes, he said that even while doing this, the salaries of CEOs in the US get fatter and fatter, negating the cost advantage.

“When companies cut the jobs by a third, the salaries and perks for CEOs keep on rising. So, where is the question of cost-cutting. The work for the existing employees keeps rising and the top executives get the hike,” said Beverly A Hicks, administrative assistant, CWA.

The delegation from the US, which visited call centres and IT firms in cities such as Chennai, Mumbai, Bangalore and Hyderabad, said the system in India was much better. “We are very much impressed by the welfare measures for the workers here,” she said.

However, the nature of the work in call centres, which is mostly in night-hours, will result in serious health problems. In the US, about 8% of the people in call centres report sick, per day, Hicks said.

BLAME GAME BEGINS ON TELEPHONE NUMBER LEAKS
The Indian Express

Telecom firms said they were not leaking customer’s phone numbers to telemarketing companies, while bank and credit card companies remained silent over notices on unwanted calls that the SC issued on Monday.

But industry watchers said the absence of a law on privacy is a boon for shadowy businesses that feed only on phone numbers. And every single cellphone user bumps into these operators at some time or the other.

‘‘We are not leaking out any numbers or information regarding our customers,’’ said an official of a leading cellular operator in Mumbai. The official might just be right.

Since customers can do nothing but express their resentment against unwanted phone calls, a host of fly-by-night operators have mushroomed, surviving only on vast databases of numbers, names and addresses that they get their hands on to.

‘‘These operators are all heavily networked, some can even be said to operate in mafia-like ways,’’ says Bipin Batra, head of Delhi-based Cellular Phone Users’ Association of India (CUAI).

BETTER TIMES FOR INDIA PREDICTED IN OUTSOURCING
Deccan Chronicle / The Economic Times  

India, already on top of a list of leading outsourcing destination, has the potential to win even bigger offshoring projects, according to CEO briefing, a report by The Economist Intelligence Unit. “India and China are already the leading destinations for off-shoring, and have the potential to win an even bigger share of off-shoring projects if they address remaining weaknesses in their business environments,” said Daniel Franklin, editorial director of The Economist Intelligence Unit.

The report, which includes a new ranking of 60 global off-shoring environments and a survey of 500 senior executives, concludes that companies will redistribute more service functions to Asia and Eastern Europe over the next three years. India tops the new ranking followed by China and Czech Republic. Singapore is in the fourth place followed by Poland, Canada, Hong Kong, Hungary, the Philippines and Thailand. The USA is in the 20th place and the UK, 29th.

The ranking shows India to be by far the most attractive off-shoring destination, owing to a large number of English-speaking graduates, very low labour costs and its developed legal system. China comes second owing to its cheap and plentiful labour supply and fast-improving infrastructure, but lags behind India because of its relative lack of English skills, cultural barriers and a weak legal system.

Overall, Asian companies dominate the rankings, occupying six of the top ten locations. Only a few developed markets emerge as attractive off-shoring locations, with Canada leading the way The Economist Intelligence Unit’s ranking model measures the attractiveness of 60 countries as destinations for off-shoring scoring each country on nine criteria commonly used by companies when deciding where to offshore.

INDIAN BPO TO HELP CHINESE GET UK VISAS
The Economic Times

An Indian company, VFS India, will help the British government issue visas in twelve cities covering the length and breadth of China, beginning next month.

The huge growth in visa applicants all around the world has resulted in visa-related services like accepting applications, pre-scrutiny of the documents and banking activities related to fees, being outsourced to the Indian BPO outfit.

VFS is now carrying out these activities on behalf of seven different governments, at locations as far as Accra in Ghana and Beijing in China.

VFS, a subsidiary of Kuoni India, began with outsourcing of visa services four years ago with the US consulate in Mumbai. “This allows the consulates to focus on their core job of scrutiny and visa issuance. The levels of scrutiny have gone up substantially since the September 11 attacks,” consulate sources said.

XANSA TO UP HEADCOUNT TO 10,000
The Economic Times / The Hindu Business Line  

The UK-based Xansa has announced that it will expand its operations in Chennai by setting up a new facility with an investment of Rs 22 crore.

The proposed facility, expected to be ready in the next six months, is coming up in its 28-acre campus in the Chennai IT Corridor. It will have a capacity of 700 seats.

“With this new facility the company would be doubling its headcount in Chennai to about 1,500,” said Saurabh Srivastava, executive chairman, Xansa India.

SERVION BAGS ORDER FROM HDFC BANK
The Hindu Business Line / The Asian Age  

Servion Global Solutions Ltd yesterday announced that it has bagged a large order from HDFC Bank for upgradation of their contact centre solutions.

"Now with 79 percent of the customers' calls terminating on the IVR (automatic voice response), call load of agents at our call centres has reduced significantly. This has reduced cost and increased productivity," HDFC Bank's IT head, C.N. Ram, said at a conference in New Delhi.

CALL CENTRE, AIR-DASH ARE NOW ENGLISH
The Hindu Business Line

Call centre and offshoring have gained entry into the English language along with Indian coinages ‘air-dash’ and ‘foreign-returned.’

The new edition of the Oxford Advanced Learner’s Dictionary has acknowledged the growing influence of India’s Information Technology worldwide by adding a number of new words.

The word ‘offshoring,’ which has been newly included, even has a reference specifically about India. “The offshoring of call centre jobs to India,” reads the reference for the entry, which means “the practice of a company in one country arranging for people in another country to do work for it.”

MORE POWER TO THE PEOPLE
The Economic Times

My home is my castle, or so everyone thought, before the advent of cellphones. You might give your cellphone number to just a few friends and business associates but soon discover that it is the common property of a host of tele-marketers who access you at home and at work, morning, noon and evening.

Now, respite is on the horizon, thanks to a public interest case and Supreme Court notices to the central government, all cellular operators and certain multinational and private banks, the main ‘mis-users’ of cell-marketing.

The litigant has pleaded for a law akin to the one initiated recently in the United States by the Federal Trade Commission, the Federal Communications Commission and the state-level authorities.

‘The Do-Not-Call’ registry as this mechanism is dubbed in the US enables an individual to register his personal phone number. Once registered, tele-marketers cannot call and disturb her or him on this number, unless they are prepared to cough up steep fines, which could go up to $11,000.

But these rules were not framed overnight, they were a culmination of a comprehensive, three-year review of the Telemarketing Sales Rule (TSR) and numerous workshops to elicit feedback both from the consumers and the industry.

For instance, the US companies today can still make tele-marketing calls on a business-phone number, they can even call your personal phone number if you have lately been a customer — however if you do not wish to entertain such calls you can say so.

Second, it is only cold calls for selling goods and services that are covered, marketing surveys can still be conducted over the phone. Back home, with the number of cellphone subscribers increasing by leaps and bounds, we do need similar laws.

Administration of the mechanism, if introduced, will be another matter altogether. The law can act as a deterrent only if the Indian consumer has the ways and the means to haul the guilty companies for invasion of privacy.

GET THE MESSAGE
Hindustan Times

If there is one example of technology and hard-sell ganging up on the individual, it is the phenomenon of unsolicited calls on mobile phones. The fact that the Supreme Court, responding to a public interest litigation, has addressed the issue and has told the central government, cellular operators and banks to put a stop to the menace of telemarketers calling up mobile users anywhere, anytime to buy their products is a call we were all waiting for. The court has asked the concerned parties to come up with an appropriate law, scheme or regulation to see to it that the personal data given by a subscriber to a mobile company remains confidential.

The mobile phone is an item which connects a caller to the individual. It is this `personalisation' of the cellphone that makes it so vulnerable to misuse by latter-day salesmen who no longer need to get in touch with households -- either by ringing the front door bell or calling on the land line. Instead, armed with a mobile number and other information (which they are not supposed to have in the first place) they are free to harangue uninterested mobile owners.

The banks and companies who are guilty of this misuse must be told firmly that for purposes of business, mobile numbers should be out of bounds for them. Instead, they can take recourse to the telephone directory for the purpose of advertising their products. In the US, the Federal Communications Commission (FCC) enacted the Can-Spam Act 2003. This shields consumers from unsolicited spam mail or calls. Subscribers wishing not to receive calls are told to post their numbers on a `do not call' registry (although this is still thought to be unfeasible by many).

INDIA CAN FOLLOW US MOBILE LAWS
The Times of India

While intrusion by telemarketers on your cell phones is now on the Supreme Court’s radar, other nations such as the US have developed strict regulations that may allow consumers to claim as much as $ 11,000 as compensation.

The US implemented a special law 13 years ago. Several European countries follow the US model to provide a safeguard to consumers from being harassed by cellphone companies and telemarketers.

Legal experts believe that unsolicited calls are an infringement upon the right to liberty of a person and with an increase in the number of cellphone users, strict regulations have to be there to ensure that consumers do not become victims of growing commercialisation.

About 30 states in the US have local registries, which maintain ‘‘do-not-call’’(DNC) registers. If a consumer purchases a new cellphone, he or she has the choice of registering with this authority. Whoever is listed is not expected to receive any calls from telemarketing companies.

Advocate Harsh Pathak, who filed the public interest litigation before the Supreme Court, states this DNC registry came into effect in October 2004. ‘‘Around 56.3 million phone numbers got listed with the registry. The telemarketers are supposed to update their list every three months and studies have shown that unsolicited calls declined in the following months,” Pathak said.

8^th February 2005

BOEING, AIRBUS RAMP UP SOURCING FROM INDIA
Business Standard  / The Pioneer   

Dreamliner to take off on HCL software; EU consortium in talks with HAL for parts.

India seems to be emerging as a hot spot for global aircraft manufacturers, not just as a market but also as a destination to outsource manufacturing and software development.

While the European aircraft maker, Airbus, has started talks with Hindustan Aeronautics Limited (HAL) to develop components for its latest offering, the A380, in India, Boeing has awarded a new deal to the Shiv Nadar-promoted HCL Technologies to develop software for its latest aircraft, the 787 Dreamliner.

According to Boeing’s Senior Vice-President Thomas Pickering: “HCL Technologies will focus its software development services on two aspects of the 787 programme. First, it will provide a hosting platform for the flight test computing system to support the requirements of the 787 global team. Second, the company will be providing software development services to many of the 787 systems partners."

“We have been working with HAL and are in talks for some work for the A-380 also," said David Velupillai, regional press manager, Airbus, which also has industrial relationships with Infosys, HCL Technologies, Midhani, Computervision and Vidhyacom.

It is worth noting that the two aircraft makers are in a bitter battle over many contracts in India, including that of Air-India and a host of private carriers.

Airbus has had an upper hand in recent times, with the majority of the aircraft orders going to it. The most noticeable among them is the order from Indian Airlines to buy 43 aircraft, which went to Airbus.

It has also been pointed out that more work will be outsourced to India as most of the orders from the state-run carriers will be linked to counter-purchase agreements.

EUROPEAN FIRMS BITE OFF MARKETSHARE FROM IT BIG 6
The Economic Times

The Indian IT industry’s desire for a larger slice of the software pie in Europe could run into heavy weather with rising competition from many European players. According to Paul Schmidt, project director-global service delivery for the US-based TPI, the share of the big six firms (like IBM, Accenture and EDS) in Europe has dramatically declined from 68% in 2003 to 52% in 2004.

What is worse is that in case of broad market contracts (with value in excess of $50 million, but less than a billion), the share of the big six is only 36% in 2004 compared with 73% in 2003.

Incidentally, Germany’s share in the outsourcing business has increased significantly and touched 12.5% of the global market.

“The other firms in the race include Capgemini, Siemens and T-systems. There have been changes like relaxation in labour laws. Cost is one of the factors for consideration,” he added.

TPI, which is a leading global sourcing adviser, helps its clients in obtaining information needed to develop, implement and manage a sourcing strategy. Since it’s founding in 1989, TPI has put through 650 sourcing transactions valued at $360 billion.

On the global IT market, Arno Franz, the Sydney-based partner of TPI said that mega deals (deal-size over $1 billion) continued to grow. There were 19 deals valued at a record $31.8 billion. The broader market in 2004 saw deals worth $72 billion being signed.

FIREWORKS HERE FOR CHINESE NEW YEAR
The Economic Times

Till about a year ago, Chinese New Year celebrations and the ensuing long holidays in the Far East were inconsequential to India. But this is no longer the case.

As China, a growing trade partner of India, heralds in Year 4,702 — the Year of the Rooster in the Chinese calendar — from Wednesday, various governments and most companies in China, Hong Kong, Singapore and Taiwan will come to a standstill for well over seven days.

At the same time, many Indians are also enjoying a holiday, especially those employed in trading, shipping, commodities, business process outsourcing (BPO) services related to the Hong Kong, Singapore and Shanghai markets.

Many BPO employees serving Far East clients and shipping companies serving the India-Far East trade will get holidays this week. “Those employees and groups supporting various Far Eastern locations get 2-3 holidays during the week, on rotation,” says a senior official from JP Morgan, which runs a captive BPO in Mumbai.

POLARIS, COGNIZANT MAY BEEF UP TORONTO OPS
The Economic Times / The Hindu Business Line / The Asian Age  

IT majors Cognizant Technology Services and Polaris Software Lab are looking at ramping up their Toronto operations as part of a strategy to use Canada as a near-shore option for clients in the US.

Both Cognizant and Polaris opened their Canadian centre recently to take advantage of "low cost of operations and access to a strong talent pool" in Toronto, officials said.

Polaris Software Lab Canada Inc, a subsidiary of Chennai-based Polaris Software Lab Limited, which has a small presence in Toronto, plans to expand the facility to tap the US markets, besides the huge market for banking software and financial services in Canada, Rahul Petkar, its CEO, said.

"Canada offers us the near-shore option to service the US markets," he said.

TPI BEGINS INDIA OPERATIONS
The Hindu Business Line

Sourcing advisory Technology Partners International has set up its India operations to respond to the increase in IT and BPO outsourcing to India.

Announcing this, Arno Franz, Partner and Managing Director, TPI, said the company found about 40 percent of an outsourcing contract value went offshore - In 2004, over 19 mega deals (greater than $1 billion) were made, amounting to a total of $32 billion in value.

"The traditional `big six' outsourcers are now losing market share for large as well as the smaller deals and many Indian players are now on the consideration list for such mega deals," Franz said.

INTERNAL AUDITORS URGED TO USE IT SERVICES
The Hindu Business Line

The Institute of Internal Auditors has stressed on the need to use information technology to increase efficiency of the corporate sector.

The use of IT can add more value to businesses and create an atmosphere that brings about more efficient delivery of products and services. Internal auditors can play a special role in a business scenario marked by the increasing use of technology, the institute has pointed out.

The technological revolution has had a major impact on the country's economic environment with more companies leveraging tools such as ERP packages to manage their end-to-end business processes.

The local chapter of Institute of Internal Auditors - India, which held its regional conference in Kolkata recently, urged members to focus on internal audit.

"IT enabled services and business process outsourcing companies are rapidly becoming the order of the day," the institute said, adding that information security has already emerged as a significant concept in risk management.

IT NOW EMPLOYS A MILLION — REVENUE PER EMPLOYEE ALSO ON THE RISE
The Hindu Business Line

The IT sector has crossed yet another milestone. The number of knowledge professionals employed in the software services and ITeS sectors has crossed the one-million mark and is expected to close the 2004-05 financial year with a headcount of 10,45,000 people.

But taking more people on board has not dented the bottomline of the IT companies. On the contrary, along with the rising number of employees, the revenue per employee too has increased during the period.

"IT is clearly a career of choice. The IT services segment is amongst the highest paying. Even the Business Process Outsourcing industry has attractive salary levels, with a stronger scope for professional growth compared to other sectors. Also the extent of training in technology, cultural skills, global negotiation skills and opportunity to pursue higher education while working makes the sector more attractive," the Nasscom (National Association of Software and Service Companies) Vice-President, Sunil Mehta, said.

With this, the sector has reached the halfway mark in its pursuit to create two million direct jobs by 2008 as projected by the Nasscom-McKinsey report.

According to Nasscom, the annual revenue per person in the industry is estimated to touch about $35,275 during 2004-05, against $34,390 in the previous year, reflecting a 2.5-per cent increase. In 2002-03, this figure stood at about $34,074.

"The revenue per person is clearly on the rise on account of increased productivity and companies moving up the value chain," the Wipro Chairman, Azim Premji, said.

RED HAT OPENS SUPPORT CENTRE IN PUNE
The Hindu Business Line

Red Hat has inaugurated its global engineering and support centre in Pune yesterday.

The India support centre would address the support requirements of the growing domestic customer base while serving the customers in the English speaking markets globally, according to Matthew Szulik, Chief Executive Officer, Red Hat.

Mathew said the investment for the centre was less than $3 million (Rs 12 crore) and has a contingent of 30 people. The facility can house up to 150 software professionals.

Red Hat now has three support centres — North America, the UK and Australia — addressing support requirements of local customers in North America, Europe and Asia.

SC ORDER TO HIT TELEMARKETERS
The Financial Express

On the face of it, a ban on ‘unsolicited calls’ as per the Supreme Court notice could mean a big blop on the business of the estimated Rs 400 crore telemarketing companies in India. An estimated 300 companies operate in the industry, largely in the unorganised sector.

“Telemarketing has had a free ride till now. But if this becomes a law, it will impact these companies dramatically,” Candid Services CEO Samarjit Singh said. A direct marketing company, Candid, however, outsources telemarketing services for some of its clients.

A fairly unorganised sector, telemarketing companies generally operate as standalone call centres. Banks and financial institutions rely on them heavily as they outsource their services from what are called ‘third party service providers.’

Most, banks, industry sources said, tend to go for the lowest cost producer who tries and gets the largest database. Since they are paid on the basis of per application basis, they go all agog to make as many calls as possible.

Wireless marketing and technology company Active Media executive director Raj Singh sees the SC notice as a wake up call for banks. “Banks will now be liable for the actions of the third party they hire, and will therefore have to have a tighter control on them,” he said.

Interestingly, while the SC notice has sought a ban on ‘unsolicited voice calls’, it is however, silent on ‘unsolicited text messages’.

7^th February 2005

ACCOUNTANTS EYE OUTSOURCING DEALS
Business Standard

India could emerge as one of the preferred destination for accounting and related job outsourcing in one to three years.

Addressing the 26th Regional Conference of the Institute of Internal Auditors of India, Roopen Roy, managing director, PricewaterhouseCoopers Pvt Ltd said, “India had the potential of being one of the most preferred destination for companies looking for accounting job outsourcing to other countries. This could also provide tremendous employment opportunities in India.”

Roy said the popular IT model of outsourcing can also be applied to this segment. Offshoring of accounting to India could also result in huge cost savings to these foreign companies and this could be a better-cost model where accountants in India will be able to audit firms in these countries, he said.

EDUCATION REFORM KEY TO BPO SUCCESS
Business Standard

India had to reconfigure its education system from a generalist orientation to a specialist-knowledge-skill oriented one, Nikhilesh Dholakia, professor of marketing, e-commerce, and international business in the College of Business Administration at the University of Rhode Island (URI) told students of XLRI Jamshedpur recently.

If this was done, India’s emergence as a superpower in business process outsourcing (BPO) would be secure.

India offered skills at lower wages, the fast growth in technology and requisite infrastructure, falling telecom costs and bandwidth bottlenecks and an increasing confidence especially of large MNCs in the reliability and efficiency of the BPO process in India, Dholakia said.

He was speaking on “IT-enabled globalization: Interplay of economics, politics & culture” at the invitation of the marketing association of XLRI (MAXI).

A researcher on IT and globalisation with focus on the current outsourcing phenomenon who is respected worldwide, Dholakia said reorientation of lifestyles of the educated urban youth who want the western “good life” contributed to the rise of BPO culture too.

He warned about the problems facing the Indian BPO industry, like erosion of the cost advantage due to increasing expectation levels from workers upgrading their skills.

However, there was a positive side of the wage increase.

As skills and salaries rise inside India, productivity and hence surplus will rise.

If wages rise too much inside India, the surplus will diminish but as Indian business develops, it in turn will outsource too. This is already the case in China, which has a software sector almost as big as India’s, but most projects are domestic. Domestic outsourcing has started in India also.

If prices for outsourced projects rise in India, foreign and Indian businesses may shift to other countries like Vietnam for outsourcing.

Rising domestic outsourcing would create value, said Dholakia, and would compensate for losses.

He blamed the growing resentment against India in the USA on the BPO issue on the very conspicuous westernised lifestyle that Indian IT professionals lived overseas.

RIGHT PRICE MATTERS FOR BPO BIGWIGS
The Economic Times

After galloping at a fast pace, BPO bigwigs are now taking a break to watch their bottomlines.

The bigger BPO companies are finally putting their foot down and saying no to business if it doesn’t come at the right price or is not big enough. Top management of quite a few big vendors is today busy chalking out what kind of work they should not do; what kind of deals they should not sign and how much commitment in terms of volume or time-period should they insist on.

This is rather unusual for an industry used to an insane price war to prevent even the tiniest piece of business from going to a competitor.

Commercial logic is finally ruling the BPO landscape, where many a vendors have signed unviable deals where chances of making profits are bleak though the business volume and headcount is growing at a break-neck pace. In a virtual race to clock huge growth rates and increase headcount till now, BPO firms are finally looking at making money.

“When you create value and assure them that you’ll consistently outperform their best global centre by 10% of more, then they don’t argue with you for a few cents and dollars.’’ says S Nagarajan, founder and COO, 24x7.

Though no one goes on record, a Delhi-based call centre recently said no to a large American company because it wanted to outsource only for six months and a Bangalore-based company said no to low pricing.

INTELENET TO ADD 3,200 MORE IN '05
The Economic Times

Intelenet Global Services Ltd, a joint venture between HDFC Ltd and Barclays Bank Plc, is planning to recruit an additional 3,200 personnel in the current year for its Mumbai operations, banking on an expected increase in third party processes from US and UK.

“The increase in headcount is due to an expected rise in third party processes from US and UK and a steady business from our major client Barclays,” Intelenet Chief Support Officer and Head (HR) Radhika Balasubramanian said.

Of the new recruits, 30% would be freshers, while the rest could be a mix of alternative profile — experienced, personnel with domain knowledge and people who had opted for VRS — in the age group 18-40, she said.

OUTSOURCING TAKES THE NEXT STEP
The Economic Times

Outsourcing of goods and services to low cost countries (LCC) is an increasingly important tool for companies seeking to retain their competitive edge, globally. Yet, a recent survey has found that these same large corporations are not internally prepared to handle this increased out-sourcing.

AT Kearney, the global management consultants, in its recently released report, Assessment of excellence in procurement 2004: can procurement deliver on its promise?’ has noted that LCCs like China and India could see a sharp rise in out-sourcing. However, this has not been matched by knowledge and understanding of these markets. Which means that they are not effectively evaluating the risks or cultivating the necessary skills associated with overseas sourcing efforts.

“Companies need a sharper understanding of these newer markets,” the report notes, adding, “Waiting too long to craft the best strategy or develop the right skill sets and expertise could mean losing access to scarce, capable resources- and the competitive edge they provide.”

The 2004 AT Kearney report is the fifth in the series since 1992, covering over 275 leading companies whose average revenues were nearly US $10 billion in 03. The companies covered were in 25 industries in the manufacturing, process and service sectors.

The report noted that 72 per cent of companies surveyed would source from China by 2009, from 30 per cent in 1999. India could be the destination for 52 per cent of companies surveyed for this report. In 1999, fewer than 20 per cent global companies sourced from here, rising to just fewer than 40 per cent in 2004.

The report noted that there are additional activities that procurement organisations must attend to. These include employing advanced sourcing approaches, pursuing greater supplier collaboration, deploying e-procurement tools more effectively and developing off shore capabilities. The thrust in all these is greater collaboration with suppliers which will drive advanced sourcing techniques.

ITES COMPANIES SCOUT FOR NEW ADDRESSES
The Economic Times

It’s not just Gurgaon, Noida and Bangalore. IT & ITeS have other new emerging addresses.

After establishing their base in major metros, ITeS companies are now eyeing small towns like Chandigarh, Kochi, Bhubhaneshwar, Jaipur, Nasik and Visakhapatnam. The reasons are simple. In the long term, the corporates are seeking to rationalise operational costs and tap quality manpower.

In the north, companies such as Quark, Infosys and Dell have set up shop in Chandigarh. Kochi and Bhubhaneshwar have lured Wipro, Jaipur has GE and Nasik WNS. Recently, Visakhapatnam saw HSBC move into the city.

According to a study done by real estate consultant company Chesterton Meghraj, a skilled populace, improving infrastructure and proactive state government policies are some of the reasons for their sudden popularity.

Low attrition rates and large tracts of good quality real estate available at lower rates are other factors.

Says Anuj Puri MD, Chesterton Meghraj India: “There is potential for augmenting the infrastructure in these cities. In cities where IT industries are currently based, the infrastructure is heavily overburdened.”

WIPRO PLANS BUYOUT IN BPO SEGMENT
The Economic Times

Wipro Technologies Ltd is considering an acquisition in the transactional process domain, which at present is one of its biggest focus areas.

The transactional process domain consists of all business process outsourcing functions, including activities relating to the back-office process of actual transactions.

The acquisition is expected to help the company notch up the growth rate planned for the next couple of years.

"We are looking at a few specific instances, but are yet to decide on an acquisition," said Bijay Sahoo, vice president for human resource, Wipro.

He said the acquired business should complement Wipro's offerings "and match our cultural environment".

Sahoo said the company was constantly on the lookout for companies that would provide the right fit both culturally and in the transactional process domain.

Talking about Wipro's expansion plans, he said discussions were on with the Punjab government for acquiring around 25 acres in Chandigarh.

At Pune, the company plans to expand its existing operation, while additional land is being sought in Coimbatore too.

THE OWL’S GUIDE TO GOOD HEALTH
The Financial Express

Call centre executives are facing the problem of how to stay healthy despite working in the dead of night. Around 245,500 Indians are currently employed by the 250-odd BPO outfits in the country. And according to a NASSCOM-McKinsey survey, this sector is expected to employ over 1.1 million by the year 2008, a growth rate of 50%.

But beneath this rosy picture lies the stark reality of 20-somethings needing to maintain good health despite frequent graveyard shifts. Says Sandeep Budhiraja, consultant and coordinator, Department of Internal Medicine, Max Healthcare, “Most call centre executives suffer from insomnia. This in turn leads to headaches, depression and other anxiety disorders.”

BPO companies have begun to realise the implications of such health hazards and are taking preventive measures. Says Murali Swaminathan, chief people officer of the BPO company 24/7 Customer, “All our employees take at least two to three breaks in a single shift. We also have a number of stress counsellors who interact with employees round the clock. Our whole objective is to promote fun in the organisation.”

Companies have also adopted a job rotation policy. “In our company, there is a rotation of shift once every fortnight. We also have flexi timings wherein employees can work for six hours instead of the usual eight hours. The whole idea is to keep our staff motivated,” explains Debasish Das, vice president, HR and Training, of BPO outfit Keane Worldzen.

24/7 Customer also changes the food menu every 15 days. The offices of TechBooks, a BPO outfit focusing on the media and publishing is smoke free. “The employees literally have to go outside the compound, on the road, if they need to have a puff. This has acted as a major deterrent,” grins Lopamudra Banerjee, general manager, human resources, TechBooks.

Dr Roy of Fortis says it’s important to get at least six hours of rest everyday. “Though night is the best time to sleep, there’s no harm in sleeping by day. Make sure the room is dark and that you draw all the curtains,” he advises.

ALARM BELLS: IS INDIA LOSING ITS R&D EDGE?
The Financial Express

Ever since US-based Texas Instruments (TI) set up a research and development centre in Bangalore in 1985, multinationals have increasingly realised the benefits of carrying out R&D work in India. While some have established R&D centres as direct subsidiaries, several others have either formed R&D alliances or have contracted research to local firms. The trend is all across—telecom service providers and equipment manufacturers, chip designers, IT hardware companies, engineering design companies, to name a few, says National Association of Software and Service Companies (NASSCOM) president Kiran Karnik.

But, there could be a twist to the India R&D story. Even as Texas Instruments and Intel are said to have hired some 1,000 engineers each in India during the last one year, alarm bells are ringing in industry circles over shortage of skilled manpower. Also, while US-based Intersil Corp, which makes analog solutions, is setting up a centre to develop and design data converters at Bangalore, the industry is apprehensive of India losing out on the big bang R&D opportunity. In the process, other destinations in Asia may stand to gain.

Karnik’s confidence in India is however reassuring. “Looking at the rapid pace with which the IT industry has developed here, India has become the centre for chip design for all the major chip designers,” Karnik says. Motorola, Intel, STMicroelectronics, Cadence, are among the companies which have opted for India destination.

But, argues Magma India managing director Anand Anandkumar that even as India has emerged as a critical factor for almost all the major chip design companies in the world, there’s a huge shortage of people in the EDA (electronic design automation) space.

OPI PLANS $10 M INVESTMENT TO EXPAND INDIA OPERATIONS
The Financial Express

Outsource Partners International (OPI), the US-based financial services BPO, plans to invest $10 million in India, to expand its operations in the country. The investment will take place over the next three years during which the company will ramp up its head count in the country and set up new facilities in Bangalore, said company president and CEO Kishore Mirchandani.

Part of the investment for expansion will come from a recent $4 million funding that OPI received from by Cargill Ventures, while the remaining funds would be sourced internally.

Mirchandani told FE that OPI, which currently has a 300 strong team in Bangalore, planned to be 5,000 strong in the next three years. It will recruit commerce graduates with work experience and CAs to beef up its Indian team.

The company, which is the first third party player handling tax returns as well as offering high end financial services to US customers, expects more business in these sectors over the next three years. “2004 saw a lot of client reluctance to outsource business in Bangalore because of the backlash in the US. In the year 2005, we have a lot of interest and enquiries coming in and we have to expand to meet the requirements,” Mirchandani said. Due to high attrition among Bangalore based BPOs, the company is evaluating cities outside Bangalore to set up its operations. Outside India, the company has nearly 400 employees in facilities in Dallas and Texas.

He said that owing to the cost advantages and high quality labour pool available in India, OPI planned to grow “25 percent in US and 75 percent in India” in the future, while other low cost destinations such as Philippines were also been evaluated.

IT COMPANIES ON THE PROWL ONCE AGAIN; FRESH RECRUITS SET TO RISE BY 30 PERCENT THIS YEAR
The Financial Express

IT and ITES companies are expected to increase their recruitments at the fresher level by close to 30 percent during the year. This comes in the light of these industries performing well and looking to expand.

Monsterindia.com, an online recruitment company, estimates that as compared to 2004, hiring at the entry-level will grow by about 28 percent in 2005. “While engineering graduates can expect opportunities in the traditional manufacturing companies, they will see new opportunities opening up in the areas of R&D and quality control of the IT industry,” said Monster Asia president and managing director Arun Tadanki.

Companies, themselves, remain optimistic on large recruitments during 2005 especially at the fresher level. For Instance, software major Infosys has made offers to hire 6,000 freshers from various colleges in the country for the next financial year. “We have made offers to hire 6,000 freshers through campus recruitment. They will be taken in during the second and third quarter between July and December,” said Infosys vice-president human resources Hema Ravichander. The other major, Tata Consultancy Services (TCS) has already laid down an ambitious figure of employing about 8,000-9,000 people this year. Of this, a significant chunk would comprise fresh graduates.

“The number of IT and ITES professionals employed in India has grown from 2.84 lakh in 1999-2000 to 8.42 lakh in 2003-2004. It is estimated that, by the end of this year, the total recruitments would be to the tune of 10.45 lakh out of which, most of the new recruits would be fresh graduates from various backgrounds,” said NASSCOM President Kiran Karnik.

PROTECTIONISM NOT A SOLUTION TO LOSS OF US JOBS
The Economic Times  / Deccan Chronicle   

Emphasising that protectionism would not solve the problem of loss of US manufacturing jobs, a new market analysis has said the solution lay in stimulating domestic demand, cutting budget deficit and pushing countries with artificially low currencies to allow them to appreciate against the dollar.

"The take-away protectionism won't address the causes of the loss of US manufacturing jobs in recent years," 'McKinsey Quarterly', a magazine specialising in market analysis, said.

Research shows that only 11 per cent of the job losses in manufacturing could be attributed to trade, and even in this instance the real culprit was falling exports, not rising imports, it said.

Offshoring in the services sector destroyed even fewer jobs. The real causes were weak domestic demand, rapid productivity growth, and the dollar's strength, it added.

SCHOOL FOR ITES STUDIES IN THIRUVANANTHAPURAM
The Hindu Business Line

The Chief Minister, Oommen Chandy, will, on Monday, inaugurate the National School of Information Technology Enabled Services in Thiruvananthapuram.

The school will offer specialised training in innovative disciplines related to IT enabled services. It is being promoted as a division of EnterTech, an IT enabled services company based in Technopark and specialising in medical and business transcription, document management and multimedia presentations.

 ‘RIPPLES WILL TOUCH BPO SECTOR'
The Hindu Business Line

The controversy stirred by the arrest of Avnish Bajaj, CEO of Baazee.com, the auction portal, on which the sexually explicit clip was put on sale, has not only generated a great deal of public interest in India and overseas, but has also raised issues relating to the liability of Network Service Providers (including auction sites) that are responsible for hosting third-party data.

Now, as the IT industry awaits the outcome of this case, eWorld sounds out a cyber law expert who feels the ramifications of this case could stretch well beyond the realms of e-commerce.

Advocate Pavan Duggal claims that both the incident, and its outcome, could have far-reaching implications for the Indian business process outsourcing (BPO) industry since these service providers are covered under the definition of Network Service Provider (NSP) in the Information Technology Act 2000.

eWorld caught up with Duggal ahead of his seminar series on BPO law in Bangalore.

What are the legal issues facing the BPO industry?

BPO and IT-enabled services (ITES) are the buzzwords today. A large number of people see them as the platform that would propel India into a super power as also towards the growth of information society.

But one must understand that there are legal issues that need to be understood by various players who operate in the sector.

There is a need to ensure voluntary self-compliance with existing international legal trends relating to outsourcing.

The industry must be in a position to convince the potential client that it has all the necessary means to comply with the legal requirements of the client, and of the jurisdiction in which the client is based.

Thus, the industry needs to adopt standards and procedures that comply with the major laws of the US and Europe.

In addition, the Indian outsourcing industry must comply with the requirements of the Information Technology Act 2000. In this connection, it is important to note that some of the provisions of the IT Act have a bearing on the Indian outsourcing industry as well.

For instance, under Section 79 of the IT Act, BPO companies could fall under the classification of Network Service Providers (NSPs) and therefore these companies are liable for the third-party data or information that they handle.

In your opinion, how is the Baazee.com case significant for the BPO sector?

It is significant as BPO companies can be made liable for all third-party data or information made available by them until they prove exercise of all due diligence. The precedent has been set.

I believe that going forward, we will see BPO companies being made liable for breach of third-party data.

Read with the IT Act, it would mean that for any offence by an employee of a BPO company, the company, as well as its CEO, could be liable.

So the implications of the case will not be limited to e-commerce activities but extend to the BPO sector as well.

According to you, BPO companies fall under the definition of Network Service Providers (NSP) under Section 79 of IT Act. Given this, what issues could BPO companies face going forward?

They could face issues relating to leakage of confidential personal, health, financial or insurance-related data, theft of client's IPR, or misuse of client information by an employee.

Some part of the same is addressed by the IT Act 2000, although the Indian cyber law is not a data-protection law.

Further, the new proposed legislation may take a long time to be legislated and implemented.

Do BPO companies need to take steps to ensure that in case of a breach by an employee, the CEO is not held liable?

There are various steps that BPO companies need to take to prove all due diligence.

The have to ensure compliance with the provisions of the Indian laws, including the Indian Information Technology Act 2000, rules, and regulations made there under etc.

They need to comply with the requirements of the laws of the target jurisdiction where their clients are located.

PAKISTAN BETTER PLACED FOR BPO, SAYS AZIZ
Deccan Chronicle

Claiming that Pakistan’s political environment is stable “now”, Prime Minister Shaukat Aziz has said the country is a better place than India or China as an outsourcing destination for Western companies. “Pakistan now has a stable political environment, and is a better place for Western companies to outsource than India or China,” he said in an interview published in The Sunday Times. “When the world was taking off in the 1980s and 1990s, we were busy with internal politics. This did not provide the continuity that a developing country needs.”

HUNDRED MOVIES IN ONE DVD?
The Hindu Business Line

Well, the technology for packing one hundred movies in one DVD is not there yet, but a Singapore company, listed in Australia but doing development work in Chennai, is almost there. MatrixView Ltd has developed a technology that can compress files some 34 times, without any loss of data in the compress-decompress process. The technology is useful everywhere, but its significant utility lies in areas that deal with a lot of images and large documents in medicine, film special effects and financial services.

CONVERGYS EXPANDING
The Asian Age

The fortunes of US-headquartered third party BPOs operating in India seem to be directly proportional to the people they employ and the locations they straddle. Whereas, Accenture is already located in Mumbai, Bangalore and Hyderabad, Convergys has a presence in Gurgaon, Bangalore and Pune.

Reliable reports suggest that Convergys is now toying with the idea of spreading its tentacles to Kolkata to transform itself into a pan-India company and thereby take advantage of the multi-locational factors that come with the territory i.e. superior spoken English skills in north India, tech ability in South India and low costs in the east.

In sharp contrast, Exult remains Mumbai-bound and Sykes is paying for its concentration in Bangalore with a possible move away from India. The trick is obviously to multi-locate and diversify the human resource base.

However, Indian BPOs like Nipuna and Progeon seem to have chosen a homebound strategy by staying close to its parents in South India.

Could it be a consequence of their recruiting managers not being confident of attracting resources in other parts of India where the parents’ brands are not as potent? Or does it have to do with a parochial alignment to this part of the country?

5^th February 2005

OPI TO HIRE 1,500; PLANS SECOND CENTRE
The Hindu Business Line

Outsource Partners International (OPI) Inc, a BPO services provider in finance and accounting, plans to hire 1,500 people and invest $10 million in expanding the operations of its Indian subsidiary, Business Process Outsourcing Pvt Ltd, over the next two years.

Kishore Mirchandani, President, OPI, said the company was looking at setting up its second delivery centre in the country, outside Bangalore. OPI has over 300 people operating from Bangalore. "We are evaluating other cities to branch out and would be finalising the location soon," he said. However, the company runs a pilot unit in Kochi with 50 people.

"We plan to add between 1,000 and 1,500 - mainly chartered accountants, MBAs and commerce graduates - to expand our operations," Mirchandani said.

In November 2004, OPI raised $4 million from Cargill Ventures in third-round funding. Other investors in OPI include Trident Capital and Winston LP.

WIPRO ANGLES FOR A BUYOUT IN THE BPO SEGMENT
Business Standard

Wipro Technologies Ltd is considering an acquisition in the transactional process domain, which at present is one of its biggest focus areas.

The transactional process domain consists of all business process outsourcing (BPO) functions, including activities relating to the back-office process of actual transactions.

The acquisition is expected to help the company notch up the growth rate planned for the next couple of years.

“We are looking at a few specific instances, but are yet to decide on an acquisition,” said Bijay Sahoo, vice president for human resource, Wipro.

He said the acquired business should complement Wipro’s offerings “and match our cultural environment”.

Sahoo said the company was constantly on the lookout for companies that would provide the right fit both culturally and in the transactional process domain.

Talking about Wipro’s expansion plans, he said discussions were on with the Punjab government for acquiring around 25 acres in Chandigarh.

At Pune, the company plans to expand its existing operation, while additional land is being sought in Coimbatore too.

US JOB LOSS: IMF GIVES CLEAN CHIT TO BPO BIZ
The Economic Times

Fears that the outsourcing of services to India could lead to job losses in the US are unfounded, according to a study by IMF economists Mary Amiti and Shang-Jin Wei.

The economists studied all the sectors of the economy and found that only a small number of jobs are lost as a result of service outsourcing.

In the US, they studied 450 industries, which had a small negative effect on employment.

But there were 100 sectors where there were no job losses associated with service outsourcing.

This, according to them, implies that a worker could lose his/her job due to outsourcing, but may later find a job in another firm within the broader industry classification.

Hence, they conclude that there are no net job losses when there is sufficient job creation in another sector, which indeed seems to be the case.

A study of 78 sectors (69 manufacturing and nine service) in the UK between 1995 and ‘01 found no evidence to support the notion that sectors with a higher growth of service outsourcing would have a slower rate of job growth.

They contend that even if outsourcing leads to some shedding of labour, increased efficiency could lead to higher production and an expansion of employment in other lines of work.

For example, a firm might let some employees go because it imports its information technology services, but as it becomes more efficient, it may decide to expand its research and development department, thereby creating new jobs.

TCS TO HIRE UP TO 9,000 BY MARCH
The Economic Times

India’s largest software services provider, Tata Consultancy Services, will hire about 8,000 to 9,000 people in the year ending March 31, 2005, its chief executive said on Thursday.

"This year, we will certainly hire close to about 8,000-9,000 people," S Ramadorai, told Reuters on the sidelines of a conference.

The Mumbai-based firm, part of the Tata Group, said last month it added a net 2,521 staffers during the quarter ended December 31.

Shares of TCS, which listed in August 2004, ended up 0.31 percent at Rs 1,309.65 on Thursday. The main Mumbai index closed 1.4 percent higher.

 ‘US JOB LOSSES, BPO TO INDIA UNCONNECTED’
The Economic Times

The growing unemployment in the US has no co-relation with offshoring of services from India. Any temptation to apply quick fixes, such as “protectionism,” will not restore employment in the US as the real cause lies in “weak domestic demand, rapid productivity growth, and the dollar’s strength,” says a McKinsey report.

Stating that outsourcing of software and business processes jobs from India is “a drop in the bucket,” the report says: 274,000 jobs (software 134,000 and business-process 140,000) moved to India from 2000 to 2003. “Although the costs were substantial for the displaced employees, a job shift of this size is small compared with the 2.1 million service jobs created every year during the 1990s and minor compared even with the net annual job increase of about 327,000 from 2000 to 2003.” Explaining the real reason for job losses after 2000, the report said; the huge technology boom in the late 1990s, culminating in the surge of employment and investment needed to resolve the Y2K problem were “unsustainable.”

The study highlights the mix of employment within computer occupations in support of its arguments. “The biggest losers were computer programmers and computer support personnel. For the latter group, employment surged from 1999 to 2000, strongly suggesting a Y2K effect; employment in 2003 was still above the 1999 level.” “For computer programmers, however, the decline of 99,090 jobs probably was the result of offshoring to India. We estimate that as many as 134,000 software-related jobs were created in India to serve the United States—roughly equivalent to the number of US software sector jobs lost,” It said.

4^th February 2005

SYMPHONY TO UP HEADCOUNT IN INDIA
Business Standard

Symphony Services India, the offshore captive arm of the US entity, plans to double its market analysis team in India by end of 2005.

“We have around 600 people currently working in Bangalore in the division. This makes us the largest third party market analytics service provider globally. We will be looking to double the team by the end of the year,” said Ajay Kela, president of the India operations.

This is in keeping with the company’s continuing work in the field of market analytics, covering business intelligence and data warehousing, whose outsourced potential has been notched at $1.5-2.5 billion.

“In fact, Gartner predicts that business intelligence and data warehousing services across verticals to be $26.4 billion in 2007 growing at a CAGR of 8.9 per cent. Of these, the three service lines of business consulting, IT consulting and managed services account for 40 per cent of the total with a 15.1 per cent CAGR,” said Mark Nelson, Executive VP of the Analytics Group, Symphony.

FINNISH CO. SEES ROLE IN TRAINING FOR BPO
Business Standard

The Indian accent, which is probably a hurdle to expanding the Indian BPO business, may find a solution in a Finnish corporation. The Sanako Corporation, which is a world leader in language teaching solutions, including e-learning, hopes to play a role in enabling India to meet its manpower needs in the BPO sector, especially call centres.

Hukka Ropponen, CEO, Sanako says, “The expansion of the broadband network will help in a big way to deal with the problems of low literacy rates and poor quality manpower for the BPO sector.”

The language learning solutions of Sanako can help produce more people who can speak good English, hence meeting the growing needs of the call centres. This will help the industry keep growing for much longer.

The company, based in Turku, Finland has sold over 16,000 solutions in over 100 countries. It has seen over 6 million learn in its language labs.

STARTUP SEES MARKET FOR LINUX OFFSHORE SUPPORT
Business Standard  / The Hindu  / The Financial Express  

Slash Support Inc., a five-year-old California and Chennai-based startup, has partnered International Business Machines (IBM) to boost offshore support for enterprise users of Linux in the US, Shiva Ramani, Slash’s chief executive officer said.

IBM’s nascent Linux Competency Centre here will help Slash Support “integrate” the work done by its regional partners in places such as Hyderabad, Cochin and Delhi.

“We like to see ourselves as an advanced technology support team,” Ramani says. If more such support becomes available, large companies will spend more on Linux, which offers them better total cost of ownership of IT, he said.

The bulk of Ramani’s staff is at three centres in Chennai, where he and two colleagues started the firm some five years ago. “We have been profitable for the last two years,” he said, “with gross margins of 60 per cent.”

A Mauritius-based venture fund, Barings Private Equity provided one round of funding to Slash Support four years ago, he said.

MPHASIS CENTRE IN MANGALORE
Business Standard

MphasiS, a software, system integration and IT service provider will open a BPO centre at Mangalore in March this year, Jerry Rao, Chairman and CEO of the company told reporters here on Wednesday.

The centre, which is being set up at Morgans Gate, will directly employ 2,000 people and 1,000 others indirectly, he said. About Rs. 70 crore is being invested in this centre. MmphasiS has BPO centres in Bangalore, Pune and Mexico.

DK PUBLISHING WILL INCREASE OUTSOURCING TO INDIA
The Times of India

Dorling Kindersley (DK) Publishing, part of London-based Pearson Group, has decided to step up its outsourcing activities in India. The company will use India as a back office for developing top-end digital content on emerging platforms with mobile, PDA and other interactive tools.

DK is bullish on India as a publishing market and will enter regional language segment. Pearson, which bought DK in 2000, has a turnover of $150m, and saved substantially from outsourcing to India.

"The publishing business is changing. We have to provide cutting edge solutions and we see India as a huge opportunity for R&D of digitised content and licensing," said Deborah Wright, MD, DK Publishing, UK.

Wright said the firm would expand its 70-member outsourcing team in Delhi. "The economics works well for us," said Wright, who is on a fact-finding mission as to what all can be done from here for children, business, travel, reference guides in 60 languages. Information guides aren't printed in India. However, process of content creation is done, stored in a disc, to be sent to countries like UK, US, Australia, Canada for printing.

ACCENTURE PLANS PERMANENT UNIT IN CHENNAI
The Hindu

Accenture, which is currently working from an incubation centre, will move to a permanent facility in Chennai in six months. The Chennai centre has 500 people.

Chaitanya Kamat, Head, India Delivery Centre Network, said Accenture had four delivery centres, Chennai being the latest.

He reckoned that outsourcing in India was not just about pricing. "It has got to do more with things that were not done in the past," he added.

In his view, customers went by the delivery capability and not bothered about where the service was provided. He said Accenture focussed only on the high-end business. That partly explained why it had not grown the way the other Indian companies had done in the BPO space.

He suggested that Accenture competed only in the big-ticket deals, which involved players like IBM. "All our centres in India are doing high-end and complex outsourcing jobs," he pointed out.

TRICOM TO HIKE CAPACITY
The Telegraph

Tricom India Ltd will invest Rs 20 crore in its expansion programme, which includes setting up of a 600-seat facility in Mumbai and 1,500-2,000-seat facility in Pune. This would result in increasing the company's total capacity to around 3,000 seats, the company said. The Mumbai facility is expected to be operational in two months, while the Pune facility would go live in the next 18 months, it said.

TRANSWORKS DUO TO SET UP BPO FIRM
The Economic Times

In a 100 sq ft office near Mumbai’s Metro theatre, two 30 somethings are tinkering with plans for a new venture.

It’s easy to ignore them as one of the many aspiring entrepreneurs trying their luck in the financial capital of the country.

Yet, if you care take any interest, you will soon realise that the duo — Rizwan Koita, 35 and Jagdish Moorjani, 34 — are the co-founders of TransWorks, a BPO company which is at the core of Aditya Birla group’s game plan for the IT sector.

Sometime at the end of 1998, the two enterprising alumni of IIT, Bombay and Massachusetts Institute of Technology, Boston got together to kick-start a BPO company, much like the budding entrepreneurs of the late 90s and named it TransWorks.

TransWorks today has turned into a $25 million company on an annualised revenue basis with 3,000 employees in Mumbai and Bangalore.

ACCENTURE DOUBLES MANPOWER IN INDIA
The Hindu Business Line

Accenture has more than doubled its manpower in India in a year. For the year ended November 2004, the company's manpower in India increased to around 11,000 as against 4,300 a year before, according to Pankaj Vaish, India BPO Lead, Accenture.

On Accenture's Chennai centre, Vaish said around 500 employees are currently working at an incubation centre, and the company would move in to its own premise by July or August.

Accenture is building a large centre in Chennai, but company officials declined to provide details on the manpower strength to be added in the centre. "We see India as a strategic location for us due to availability of rich talent," he told newspersons.

NASSCOM SEES REVENUE AT $28 B THIS FISCAL
The Hindu Business Line

The Indian IT industry is expected to register a growth of 31 percent to reach revenues of $28.2 billion in the financial year 2004-05, according to a Nasscom analysis.

The industry had registered a growth of 34 percent in the previous fiscal, clocking revenues of $21.5 billion.

Indian software and services exports are likely to witness a growth of 35 percent to reach revenues of $17.3 billion in the current fiscal compared with corresponding figures of 33 percent and $12.8 billion in 2003-04.

The Asia-Pacific region is expected to emerge as a key target region over the next few years.

The financial services sector, which includes IT spending by banks, insurance companies and security firms, accounted for the largest share of Indian software and services exports at around 40 percent in 2003-04. Emerging verticals include healthcare, telecommunications, retail and government, according to the study.

CALLS FOR SPECIAL SKILLS
The Hindu Business Line

G.J. Siddharth, 24, has his mind set on a financial management or market research job. Right now, he has secured employment in the BPO unit of ABN Amro Bank as an executive officer, a job that would "require a bit of an analytical mind". But it has been a long wait for this post-graduate in Economics before he could find this job. The reason: he is disabled. There are around six crore persons with disabilities in India, and about one percent are employable. "But the fact is that not many companies are recruiting us," says Siddharth, who has cerebral palsy.

However, this situation is likely to change soon. Information technology (IT), IT-enabled services (ITES) and business process outsourcing (BPO) firms are seriously considering employing a greater number of disabled people. The reasons include increasing attrition levels in IT (10-25 percent), and ITES/BPO (35-50 percent) firms. Corporate Social Responsibility (CSR) is also driving firms to recruit disabled people.

Some software firms say 5-10 percent of their staff comprises disabled people. At Chennai-based LaserSoft Infosystems, 10 percent of the 500-plus employees are physically challenged. It was no surprise then that at a recent job fair in Chennai for disabled people, over 30 companies screened around 700 candidates. "I think this is the first time that something like this is happening. In fact, there was a bank examination today. I opted to attend this fair in preference to that exam," says Siddharth, who was one of the candidates screened. He had four interviews lined up for the day. "Most software companies are offering only data entry jobs, but I am not interested in that. I prefer aresearch-oriented job in finance management or marketing," he says.

The fair drew good response from the ITES sector, while participation from the IT sector was minuscule — only one company. For Siddharth, the absence of big companies was a huge disappointment.

However, companies are only now waking up to the prospect of employing disabled people, he saysHe has attended many interviews and written many tests. "I have never failed any of the tests, but the minute they see me, the interviewers always said, `we will get back to you'. People only see my body, not my resume," he adds.

Containing attrition rates?

The Indian ITES-BPO sector is expected to touch $20 billion by 2008, and employs around one million people. But the non-availability of talent and high attrition rates are driving companies to discover new sources of talent. One such option is the recruitment of disabled people, say industry experts.

However, software companies deny they are using disabled people as an alternative. "Hiring disabled people is not an alternative but a `must' as part of our CSR and individual responsibility as citizens," says Sushil Tayal, Director - HR, LogicaCMG - Offshore Services, a software firm. He does not agree that attrition should drive the recruitment of disabled people. Their recruitment should be encouraged even in normal times. This also serves to encourage diversity within the organisation, he says.

In large-sized ITES companies (over 1,000 employees), there are about 10-15 physically challenged persons working on mainstream jobs and the number is expected to grow in the future. On the other hand, the numbers are small in IT companies as not many disabled persons are trained for these job. Some ITES companies such as MSource, AOL and HSBC are showing interest in hiring disabled people. Though there has been no exhaustive study, attrition rates are believed to be lower among disabled persons, says Balaji.

US SOFT TO OPEN CHENNAI OFFICE
The Hindu Business Line

Technopark-based US Software has announced the setting up of its Chennai centre.

Announcing this, a company spokesman said in Thiruvananthapuram that the high growth tracked in recent times had encouraged the company to set up a base in Chennai. This would be a precursor to the opening of more centres in other cities in the country.

The Chennai centre expects to employ 500 people to start with, the spokesman said.

WHITE PAPER ON GLOBAL SOURCING
The Hindu Business Line

neoIT, an offshore advisory and management firm, has come out with a new white paper called `Healthcheck on Global Operations', part of a monthly series that addresses timely topics related to the global sourcing industry. The edition examines the issues and criteria for analysing and evaluating offshore operations.

A free copy of the white paper can be obtained at www.neoit.com.

INVENSYS CONSOLIDATING INDIA OPERATIONS
The Hindu Business Line / The Economic Times  

Invensys plc has embarked on a consolidation of its Indian operations that would see it bolstering its manpower and expanding the scope of development work.

The Chief Executive Officer of Invensys, Richard Haythornthwaite, said: "I am on a mission to India to assess the current status of various development centres based in Hyderabad and see how these could be further consolidated to broaden the scope of work.

Though there is no significant growth in terms of manpower addition, India has emerged as a strategic base for software development and product support.

FIVE MORE COS TO SET UP SHOP IN FINLAND SOON
The Hindu Business Line

Five more Indian software companies will be setting up operations in Finland soon, adding to an equal number - including Wipro and TCS - that have been there in the last two years.

Offering its strategic location to tap the North European market and the potential of its software market worth $5.1 billion, Finland is looking to forge partnership with Indian companies to enhance its strength in hardware in different fields, including telecom, medical electronics and meteorological sectors, said Sirkka Aura, CEO of Invest in Finland (InF).

InF is a catalyst organisation funded by the Ministry of Trade and Industry for attracting foreign direct investment in Finland.

Of the total software market, less than one percent has been tapped so far, she added.

SKYQUESTCOM OPENS OFFICE IN BANGALORE
The Hindu Business Line / The Economic Times  

The Singapore-based SkyQuestCom is investing $2 million in product development and marketing in India.

The company has set up base in Bangalore and will launch its e-learning systems.

Dr Richard Tan, CEO, said that the company provides a suite of learning resources and programmes for individuals, companies and Universities.

There are two packages for the Indian market - the basic, priced at Rs 6,700, and the special, priced at Rs 12,800. There will also be an Indian language channel by the second half of the year, he said.

OUTSOURCING NOT A ZERO-SUM GAME: US
The Financial Express

Contrary to domestic apprehensions, the US said on Wednesday outsourcing was not a zero-sum game and it has in fact benefited from other countries' investment by way of job creation and economic growth.

"We have benefited by attracting foreign investment to US. They create jobs for US people too. Last figures I saw (said) there were many more jobs created in the US from foreign investment than that have been lost when US companies invested in other countries," Ambassador David Gross, US coordinator for international communications and information policy in the state department, said in New Delhi.

"Our view is these economic efficiencies have worked to our benefit. We do not see it as a zero sum game", Gross added.

Asked if the outcry over outsourcing had died down with the return of Bush administration, he said, "I don't know what the future will be. I think that these are the sort of issues that are always sensitive to every country.

It is perfectly understandable why they are sensitive. Whenever anybody loses a job, be it in India, US or Europe, there is a political and human dimension."

"The question is what is to be done. The decision the Bush administration has made to date is to stay on the side of economic efficiency as we have found that benefits the US."

US companies that outsource to low-cost countries like India had to face a lot of opposition at home as there was alleged fear of job loss in the home country. The opposition reached its peak during the US presidential election when John Kerry, the Democratic candidate, campaigned against it.

BPOS TOUGHEN UP ON CALL ABUSE
Hindustan Times

For call centre workers in Noida, dealing with abusive callers openly making racist or sexist remarks, is becoming a daily routine.

Women are more affected by these calls, as they are not used to hearing such language, says Nitin, who earlier handled US customers for Compaq. Asmi Arora cannot forget the day she had to deal with an abusive caller. “I endured him as I couldn’t disconnect the call. It left a deep impact on me. For many days I couldn’t forget the voice,” she says.

The reason for such abuse is the underlying contempt for Asians. “They accuse us of stealing their jobs,” says Madhu Sharma, who works at a call centre.

3^rd February 2005

INVENSYS PLANS TO RAMP UP HYDERABAD CENTRE
Business Standard

Invensys Plc, the £3.89-billion automation, control and process solutions company, expects to ramp up its software development centre in Hyderabad.

Invensys, which does not have a manufacturing facility yet in the country, also indicated that it might look at the option of sourcing components for its manufacturing practice from India.

Richard Neil Haythornthwaite, chief executive officer, Invensys Plc said that going forward the company's software development centre in Hyderabad could start looking at new product development.

“It is the next logical stage of evolution. From doing work on process systems, the software development work could expand to cover our controls business also,” Haythornthwaite said.

Invensys, which inherited the Hyderabad development centre courtesy its acquisition of enterprise software provider, BAAN, has grown the centre rapidly. “We have grown the Invensys Development Centre rapidly from 20 people to 220 people in two years. By the end of this year, we expect the centre to have about 300 employees,” Haythornthwaite said.

EDUCOMP TO DESIGN STUDY MATERIALS FOR U.S. CLASSROOMS
The Hindu

Educomp Datamatics, an ISO 9001: 2000 certified company, is gearing to introduce Smart Class computer aided education curriculum in U.S. schools. A pilot project being executed in select schools across California, Texas and Illinois this winter, Vice-President, Educomp, Abhinav Dhar, said.

The Smart Class aims at making the academic curriculum more interesting to children. Computer aided teaching materials would be used along with conventional blackboards.

ASPIRE SYSTEMS TO HIRE 340 ENGINEERS
The Economic Times

Aspire System, an outsourced product development (OPD) company, will hire 340 software engineers to take its staff strength to 500 by March 2006, a top company official said in Chennai.

This was in line with the company's expansion plans to achieve a leadership position in the OPD space in the coming months, Aspire CEO Gowri Subramanian said in Chennai.

Aspire Systems, which employs 160 people at its Chennai facility, would increase the headcount to 500 by March 2006, he said adding the company was expected to end this fiscal with revenues of Rs 14 crore.

"By March 2006, the revenues are expected to touch Rs 35 crore," Subramanian said.

QUALCOMM TO HIRE MORE IN INDIA
The Economic Times

US-based Qualcomm, a pioneer in CDMA-based technology, said yesterday it would invest more in the India and increase hiring in its two R&D centres.

"We are trying to hire for our R&D centres. We have 200 people right now. These centres also need capital investment," Irwin Jacob, CEO, Qualcomm Inc, told newspersons in New Delhi without giving any details about the increase in number of people or investment.

The company has an R&D centre in Hyderabad, a software development centre in Bangalore, and a lab in Mumbai.

MPHASIS TO OPEN BPO UNIT IN MANGALORE
The Hindu Business Line

MphasiS will open its third business process outsourcing (BPO) facility in the country at Mangalore next month.

Addressing presspersons in Mangalore yesterday, the Chairman and Chief Executive Officer of MphasiS, Jerry Rao, said that nearly 3,000 people would be employed in the Mangalore unit over a period of time.

Bhaskar Menon, President of MphasiS BPO Services, said that around Rs 75 crore would be invested in the Mangalore unit.

Stating that establishment of a BPO unit will create huge employment opportunity in the region, he said the company wants to hire around 3,000 people in 18 months time from March. In all, it wants to employ around 12,000 people in its BPO units.

DESI BPO GUYS LOVE PAKISTANIS
The Economic Times

Move over Track II diplomacy and ministerial level talks. Our desi BPOs are putting their best foot forward when it comes to people to people contact between India and Pakistan.

Pakistanis are the best to talk to, echo our desi BPO across the country. "British Indians and Pakistanis regard themselves as one. They consider themselves as natives of the Indian sub-continent. And the binding factor is the language, food, culture and festivals," says Jatin Khurana, a BPO executive with a UK-based process in Daksh.

>From dal makhani and shahi paneer to salwar kameez and embroidered chikankari, there are hundreds of things that bind Indians and Pakistanis. And it becomes a lot easier for Indian BPO execs to establish a rapport with a Pakistani client rather than a Briton or an American.

Language is also a factor connecting hearts across borders. "We are allowed to interact in vernacular so long as the problem is resolved. And with Pakistanis, the calls become all the more gratifying with the dulcet flow of Urdu words from both sides," adds Khurana.

But is there any anything apart from a shared language that brings the unity factor? "Yes, there is a Western and Asian culture polarity. And people from the same land mass do tend to unite when it comes to racist issues," says Khurana.

When it comes to the United States, people from southern states like Texas, Alabama, Arizona, New Mexico and Oklahoma are more courteous. If the call takes too much time, they don't get irritated. "In fact, they address us as Sir/Ma’am, and are quite jovial," says Rekhank Pant, a voice and accent trainer with Wipro Spectramind.

People in North American cities like New York, Boston, Chicago, and Philadelphia are always on the move. They live life in the fast lane. "They are curt, not impolite. They want the problem to be resolved in a flash. These are generally businessmen, bankers, lawyers and IT professionals," adds Pant.

MORE SOFTWARE IN PRINTING
The Economic Times

It is a love affair that Guy Gecht, the CEO of $370-million Nasdaq-listed efi (earlier Electronics For Imaging), loves to remind everybody about. “I came to Kerala to travel with my family and fell in love with this country.” These days, however, it’s business that brings him here more often. Bangalore houses a 100-seat engineering centre, the biggest for efi outside of the US.

“With growing exposure to international printing technologies and increased focus on international customers, print service providers in India have realised that digitalisation is the key to future success. With this in mind, many of efi’s latest products and technology solutions have been developed based on specific requirements of the Indian printing industry,” he revealed.

2^nd February 2005

ABB PLANS MORE R&D CENTRES
Business Standard

ABB, which had recently set up its dedicated engineering and operations centre in Bangalore, is planning to set up similar centres in other parts of the country.

The centre is a vital resource base for ABB units across the world. Its main scope of operations includes the development and execution of system and engineering solutions to support automation activities across the ABB group.

Announcing this, Dinesh Paliwal, a member of ABB’s group executive committee and chairman of ABB India said: “The Bangalore centre has witnessed phenomenal growth in a short period of time and we plan to set up similar centres in other parts of India.”

This centre will enable ABB to further leverage the significant intellectual capital, technical skills and competitive cost structure offered by India, for the combined benefit of the ABB Group.

In addition to these expansion plans, ABB India is awaiting privatisation of the transmission and distributions businesses of the electricity boards.

CAVIUM NETWORKS PLANS TO INVEST $10M IN ITS HYDERABAD CENTRE
Business Standard  / The Hindu Business Line  

California-based Cavium Networks Inc, a supplier of communication semiconductor solutions for IP-based networks, plans to invest $10 million in expanding operations at its India development centre (IDC) located in Hyderabad.

Syed Ali, president and chief executive officer of Cavium Networks Inc, said, “The company wants to expand its operations at its India development centre that develops software solutions for security and multi-core symmetric multi-processor (SMP) applications.”

According to him, the investments would be made over the next three to six years and would mainly go in for increasing the headcount.

“Currently, we have 20 employees in the development centre. We plan to increase it to around 50 by the end of the calendar year, and to 100 by the end of 2006,” Ali said.

“We are also looking at hiring more embedded Linux engineers, security and networking engineers, and quality assurance engineers,” he added. The company also proposes to use part of the investments for providing new lab facilities.

Ali said that apart from developing the software for the company’s processors, the IDC would also be involved in customising software based on the requirements of the customer.

Cavium Networks, which follows a January-to-December financial year, expects a 212 per cent growth in turnover to around $25 million as compared to $8 million last fiscal.

FLEXI FIXING
The Financial Express

According to news reports, the Indian IT and ITES sectors presently employ close to 50,000 temps or temporary workers. They could employ many more, but for our rigid labour laws, that have not kept pace with developments elsewhere. The principal employer, for instance, is defined as the entity where the temp is working, not the temping company itself. Temps cannot be used if the work performed is core to the industry or of a perennial nature. Nor can they be used for more than 240 days at a time. Every time a temping company signs a new client and provides it with at least 20 professionals, a licence has to be had from the state labour commissioner, an absurd requirement in an industry doubling yearly.

The problems relating to hiring and retrenching fulltime employees are familiar. But not the growing one on temporary staffing, ‘temping’ as it is increasingly termed. Big firms from abroad such as Adecco and Vedior have already set up base here, with more than 10,000 temps on their respective rolls; local start-ups began mushrooming earlier. Close to 15 percent of Bharti Televentures’ workforce, to take an example, is made of temps, deployed in key sales and customer-care areas. Since it expects to treble subscriber base over the next three years, their number and scope will only multiply. More than one temp company is set to overtake Tisco as India’s largest private sector employer. Outsourcing, for which India has become a feared name in the west, is one reason: the US alone has more than 2.5 million temps and many of these jobs are now being sent to India. In addition, global temp companies are using Indian talent to satisfy demand for temps overseas. Recently, for instance, Kelly placed 10 Indian biotechnologists on a one-year assignment with companies overseas, on annual salaries of Rs 15-30 lakh.

We’re supposed to have a national consensus on making India a knowledge economy and ensuring every Indian gets to participate, fast, in this global powerhouse. That means flexible hiring rules, responsive education systems and a comprehensive social security net, incorporating a strong retraining and placement component, with close links to industry. None of these is in place.

CATERING BIZ AT A BPO CAN FETCH YOU BIG MONEY
The Economic Times

Are you fond of chhole-bhature, rajma-chawal, idli-sambhar, dal makhani, matar paneer and gulab jamun? And love to serve it too? If yes, then BPOs are hungry for you!

With the BPO boom in India, another industry that’s gathering steam is the food and catering business.

According to Nasscom, India has around 8.13 lakh IT professionals, which amount to at least 8.13 lakh meals per day. Taking Rs 30 as the minimum cost of a thali, you can earn a mouth-watering Rs 244 lakh per day!

With many BPOs serving two square meals a day, 8.13 lakh meals is a much-discounted figure. The delectable dal makhani and palatable paneer can earn you lakhs. Those who smelled this inviting opportunity early on are now earning big money.

Manu Trikha used to supply 80 tiffins a month to offices in Connaught Place. That was way back in 1997, when he used to cook and pack lunch boxes from his home in Laxmi Nagar, East Delhi. Now Trikha supplies over 1,200 meals a day to BPOs like Wipro Spectramind. And with outsourcing booming, the figure is set to rise.

Rajneesh Taneja started with 120 meals for egurucool.com. The site closed down (“not because of the food”, jokes Rajneesh). At present, his Online Dhaba Private Ltd. provides 1,000 meals daily to EXL Services, Bharti Televentures and Bharti Teletech.

He’s also catering to Daksh. “I provide 4,000 meals for Daksh on its annual day,” he says.

Says another food supplier in the National Capital Region: “I started by supplying to a software firm with 50 employees. It’s a word of mouth industry. Due to our excellent quality and service, we got a one-year contract from an international call centre with 4,000 employees. From that time there was no looking back.”

With seven IT and BPO firms on his platter, he supplies over 6,000 meals a day.

GLOBAL REALTY OUTSOURCING TO RECRUIT MORE
The Hindu Business Line

The US-based Global Realty Outsourcing (GRO), a business process outsourcing (BPO) services provider for commercial and residential real estate industries, has doubled its manpower in India to 500 in the last one-year.

The company, which has made cumulative investments of $15 million (around Rs 70 crore) in Indian operations, has added 35,000 sq ft of space in Spencer Plaza, Chennai.

Once this space is ready, GRO will have about 50,000 sq ft in Chennai and capacity to seat 1,250 people, according to V.K. Raman, CEO (India), GRO.

The company plans to recruit 100 more this year. In the US, the company has around 50 employees mostly for front-end operations, he told Business Line.

US BASED TELESERVICES BODY SETS UP TWO CHAPTERS
The Hindu Business Line

American Teleservices Association (ATA), a US non- profit organisation representing call centres, consultants and equipment suppliers, said today it has set up its chapters in Mumbai and Bangalore.

ATA will help the Indian teleservices industry in the United States through creating business networking opportunities, industry research and access to professional education, the association said in a statement in New Delhi.

INDIA BOUND
The Times of India

The UK-based, £34-billion Tesco Plc is amongst the leading global retailers who are beginning to see India as a potentially big sourcing base for varied products. The company, which operates over 2,300 stores across 13 countries, has also set up a large facility in Bangalore for IT applications development and for handling back office processing services. Tesco director (International & IT) Philip A Clarke says, “Advancements in technology are becoming critical to retain and attract customers. Some customers are very loyal to one store or the other. But there are many who shop in more than one store. Retailers are attempting to attract particularly this latter set, and we are trying to use technology in this effort.

The scanning checkout so ubiquitous now is six times faster than a manual one. We are working towards greater automation in the store, so that it frees up time for us to serve the customer better. We have introduced wireless technologies in our stores. We have handheld computers that tell a store employee everything related to the store, including stock levels of each item. We have computers in our stores, which tell a customer which aisle a particular product is in, how many units of that product are on the shelf, how much is in stock. Technology is also being used to improve customer relationships. We have introduced electronic loyalty cards that have all relevant information about customers, their preferences... We can look at all of that and decide, for instance, what to stock in which shop.

Radio frequency identification (RFID) or radio barcodes is becoming a major phenomenon. When you have to move 30 million items a week, as we do, RFID can be a huge benefit. We can track every item and ensure they are moving to the right places. Unlike the current barcode system, RFID does not require line-of-sight to read and write tag data because this data is transmitted and received by radio frequency. RFID systems can also simultaneously capture data from many tags and can read very rapidly. We have begun RFID deployment in the UK. The focus initially is on things where pilfering levels are high, items like razor blades, condoms, DVDs and high value goods.”

BANGALORED, BUT NO BANGALORED
The Economic Times

Fears that outsourcing of services to India could lead to job losses in the US are unfounded, according to study by IMF economists Mary Amiti and Shang-Jin Wei,

The economists studied in detail all the sectors in the economy and found that only a small number of jobs are lost as a result of service outsourcing. In the US, they studied 450 industries, which had a small negative effect on employment. But there were 100 sectors where there were no job losses associated with service outsourcing. This, according to them implies that a worker could lose her job due to outsourcing buy may later find a job in another firm within the broader industry classification.

SATYAM EXPANSION
The Hindu Business Line

Satyam Computer Services Ltd will expand its outsourcing centre in Malaysia and transfer a significant amount of work from its worldwide operations to the facility.

“We are happy with the quality of our initial intake and will be doubling our entry-level recruitment in April,” the Satyam Director (Sales), Pankaj Chawla, was quoted by the Business Times as saying.

1^st February 2005

INDIA POISED TO EMERGE LEADER IN OUTSOURCED TESTING
Business Standard

India is poised to capture a major share of the worldwide software testing market.

This is because of the established and dominant IT service sector, presence of organisations with matured processes and practices, and the versatile IT skill-set of testing professionals, said Arunkumar Khannur, managing director, QSIT (Quality Solutions for Information Technology).

He was speaking at the annual International Conference on Software Testing in Bangalore.

The worldwide testing market is estimated at $13 billion. The global outsourcing testing market opportunity in this year has been estimated at $4.5 billion, of which, nearly $3 billion will be offshored to cheaper destinations.

“India has the potential to corner 70 per cent ($1.82 billion) of the outsourced testing market. The compounded annual growth rate for the independent outsourced testing market is estimated at 56 per cent while the independent offshore testing has been estimated at 92 per cent over the next four years. The size of the testing market in India is estimated to be between Rs 150 crore and Rs 200 crore,” Khannur added.

Software companies, from India and abroad, are investing in establishing ‘centres of excellence’ to effectively tap this growing market.

He added that a survey on the recruitment consultants in IT and ITES sectors conducted recently in Bangalore showed 24 per cent of the recruitment were in software testing — highest after call centres (47 per cent).

It is estimated that Bangalore alone needs about 8,000-10,000 testers and about 16,000 to 18,000 in India.

Zohar Gilad, vice-president — strategy, Mercury, added: “The issue of quality is no longer restricted to mature markets. Therefore the IT challenges faced by an organisation’s transition into a global player is enormous and testing will play a crucial role in the evolution.”

SATYAM COMPUTERS
The Tribune

Software major Satyam Computer Services Ltd will expand its outsourcing centre in Malaysia and transfer a significant amount of work from its worldwide operations to the facility. “We are happy with the quality of our initial intake and will be doubling our entry-level recruitment in April,” Satyam Director (Sales) Pankaj Chawla was quoted by the Business Times as saying. NYSE-listed Satyam, India’s fourth largest software company had set up its Global Solutions Centre in Malaysia’s Cyberjaya in April 2003.

INDIAN TECHIES LAP UP SPECIAL UK VISA
The Times of India

The UK's highly skilled migrant programme (HSMP) is almost three years old, but it's only recently that it has started gathering steam in India.

Over the last few months, immigration lawyers and analysts have pointed to a greater interest in the programme among Indians techies. "The numbers are picking up only recently," says Ajay Sharma, immigration consultant.

Just for Delhi alone, the British High Commission said, issuance of visas in this category had jumped from 15-29 to 115 between 2002 and 2005.

The rest of India would add a considerably larger number to the kitty. The UK has issued 3,721 visas under this category in the last three years.

Introduced in January 2002, HSMP is a points-based immigration visa that allows more people to live and work in the UK, particularly in high tech areas.

In October 2003, the UK made the visa programme more inclusive with some significant additions — bonus points for applicants below 28 years, working or qualified spouses, etc.

OUTSOURCING PLANS AND REALITIES
The Economic Times

Young companies believe that they can enter new segments and grow their business footprints. This optimism ought to be preceded by careful and diligent planning if our BPO industry wants to flourish.

Recently read a quarterly outsourcing newsletter published by an investment banking firm in Mumbai. It’s one of the best newsletters in the market and I was struck by the fact that so many BPO companies in India were announcing their plans to either get into a new BPO segment or offer some new kind of service or redefine their service offerings in a specific area or simply “foray” into some new segment of BPO.

I counted — out of 78 news reports, at least 26 had to do with intentions of BPO companies to expand their service offerings to their customers. Accompanying details were sketchy at best and the general feeling I came away with was that everyone is trying to get into everything.

From one perspective it is wonderful to see the collective innovation at work in the Indian BPO industry and companies constantly seeking to enhance their service offerings. In some ways being in BPO has become like being a doctor — one can be a heart specialist, another can be an orthopaedic surgeon, yet another can be a nephrologist and so on and still there is enough business for everyone!

But just as you aren’t really going to take a heart surgeon offering advice on skin allergies very seriously, the flip side of this exuberance raises many questions. For instance, how will these plans translate into reality? How will publicly stated aspirations to get into a new segment actually cause the company to win that business and then help it deliver against the service commitment? How much of this expansion is a result of deliberate, careful strategy and how much is “me too” sort of behaviour? In any case, should these communications not be focused on customers who will actually award this business instead of on the Indian media?
(The author, Akshaya Bhargava, is CEO, Progeon Ltd)