Information technology (IT) (business): India
(→Market share, change) |
(→Market share; growth/ change) |
||
| Line 114: | Line 114: | ||
Angel Broking's report explains Indian companies' gains saying that although the labour cost advantage for Indian IT had been on a declining trend, there still was a comfortable 20-25% cost saving for clients along with availability of a young workforce. | Angel Broking's report explains Indian companies' gains saying that although the labour cost advantage for Indian IT had been on a declining trend, there still was a comfortable 20-25% cost saving for clients along with availability of a young workforce. | ||
| − | ==Rapid growth after 2006-07== | + | ===Rapid growth after 2006-07=== |
BANGALORE: Indian IT outsourcers have more than doubled their share in total worldwide IT spends since 2006-07, and the bigger Indian IT companies have outpaced their MNC counterparts over this period. | BANGALORE: Indian IT outsourcers have more than doubled their share in total worldwide IT spends since 2006-07, and the bigger Indian IT companies have outpaced their MNC counterparts over this period. | ||
India IT companies accounted for $31 billion, or 4.8%, of the worldwide IT spending of $641 billion in 2006-07. This year, it is estimated to be $77 billion, or 9.8%, of the global spending of $785 billion, according to research by brokerage firm Angel Broking. | India IT companies accounted for $31 billion, or 4.8%, of the worldwide IT spending of $641 billion in 2006-07. This year, it is estimated to be $77 billion, or 9.8%, of the global spending of $785 billion, according to research by brokerage firm Angel Broking. | ||
| − | ==The top global IT outsourcers== | + | ===The top global IT outsourcers=== |
The research also looks at 13 of the top global IT outsourcers - eight MNCs and five Indian - and finds that the Indian outsourcers' share in the total revenues of the 13 companies has risen from 7.7% in fiscal 2007 to 14.3% in fiscal 2012, and that of the MNCs has dipped correspondingly from 92.3% to 85.7%. | The research also looks at 13 of the top global IT outsourcers - eight MNCs and five Indian - and finds that the Indian outsourcers' share in the total revenues of the 13 companies has risen from 7.7% in fiscal 2007 to 14.3% in fiscal 2012, and that of the MNCs has dipped correspondingly from 92.3% to 85.7%. | ||
Angel Broking's report explains Indian companies' gains saying that although the labour cost advantage for Indian IT had been on a declining trend, there still was a comfortable 20-25% cost saving for clients along with availability of a young workforce. | Angel Broking's report explains Indian companies' gains saying that although the labour cost advantage for Indian IT had been on a declining trend, there still was a comfortable 20-25% cost saving for clients along with availability of a young workforce. | ||
| − | ==Moving up the value chain== | + | ===Moving up the value chain=== |
Pradeep Udhas, partner and head of IT/ITeS in consultancy firm KPMG India, said Indian companies had developed people capabilities and moved up the value chain to pitch for bigger contracts. | Pradeep Udhas, partner and head of IT/ITeS in consultancy firm KPMG India, said Indian companies had developed people capabilities and moved up the value chain to pitch for bigger contracts. | ||
Revision as of 21:52, 31 March 2018
This is a newspaper article selected for the excellence of its content. |
Contents |
Banking, financial services and insurance (BFSI)
2014: Wipro joins the league
Wipro breaks into BofA's IT vendor league
Shilpa Phadnis Bangalore:
TCS, Cognizant and Infosys have been major vendors to Bank of America (BofA), one of the world’s biggest IT outsourcers. Now, the trio will have to contend with Wipro too. The Azim Premji promoted company has become an empanelled IT vendor to compete for BofA’s future requests for proposal (RFPs), sources with knowledge of the development said.
Among its peers, Wipro has the lowest revenues (as a proportion of total revenues) coming from the banking, financial services and insurance (BFSI) vertical — it’s 27% compared to TCS and Cognizant’s 42%.
Among all verticals, BFSI is the biggest IT outsourcer.
Wipro is seen to be now trying to expand its BFSI exposure.
It won a $500-million IT deal from Citibank last year, and now will compete for BofA deals. The $89-billion BofA is the second largest bank holding company in the US by assets. Its 2008 acquisition of Merrill Lynch made it the world’s largest wealth management corporation and a major player in the investment banking market.
“Clearly, this (Wipro’s entry) will contribute to increased pricing pressure for incumbents such as Infosys. BofA, like other large banks, is looking to drive further cost savings out of its global services portfolio,” Peter Bendor-Samuel, CEO of USbased research firm Everest Group, said. Multiple sources told TOI that Wipro’s hunting team has been tirelessly pursuing the marquee US bank for the last 20-odd months.
“We have been watching Wipro’s moves and can identify three components of its Bank of America Merrill Lynch (BAML) strategy,” said Pareekh Jain, principal analyst in US-based research firm HfS Research. The first component, he said, is hiring BAML-experienced talent from competitors at all levels. Wipro hired Shaji Farooq from Infosys in 2012. Farooq was the head of financial services for Americas in Infosys and was also the leader of the BAML account team. Balaji Yellavalli, who was head of client servicing for US financial services and insurance with Infosys, joined Wipro in April as the global head of industry consulting and large deals for banking, capital markets and insurance.
Jain said the second component of the strategy was to enhance its BFSI capabilities.“Over the last two-year period, Wipro acquired Opus (a platform-based mortgage solutions provider), and invested in Opera Solutions (a data analytics firm in BFSI), and part nered with SOA Software.
Some of these companies were already working for Bank of America,” he said. The third component is aggressive communication of Wipro’s capabilities in BFSI.
When TOI spoke to Wipro BFSI head Shaji Farooq on whether it was competing for BofA contracts, he said, “I can’t comment on customer-specific things. I don’t think it’s even true.” Farooq said they are constantly looking to expand the customer base in areas where they don’t have a presence.
A BofA spokesperson denied Wipro had been accorded a ‘preferred vendor’ status, but said any vendor could bid for its projects. BofA has several IT services vendors. Last year, it signed a 12-year, $1.4-billion deal with GardaWorld, a global risk management and security services company to manage its cash processing and check imaging services
Information Technology, India and the world
2013: Global rank of India’s biggest IT services providers
TCS joins top 10 global IT services cos club
Shilpa Phadnis, Bangalore:TNN Apr 22 2014 The Times of India
The country's largest IT services provider, Tata Consultancy Services (TCS), has broken into the league of top 10 global IT services companies, moving from the 13th position in 2012 to the 10th spot in 2013. Twelve years ago, when TCS' revenues were about $1 billion, then CEO S Ramadorai had laid out a vision to be among the top 10 by 2010. It's taken a little longer, partly because of the global financial slump of 2008-09, but the company has now got there, and considering the pace at which it is growing compared to its global counterparts, the ranking could get better fairly quickly in the years to come.
“Talk to any incumbent western service provider today , and the one making them all tremble from the sub-continent is TCS,“ writes Jamie Snowdon, executive VP of research operations at HfS Research, the consultancy firm that compiled the ranking.
TCS is estimated to have IT services revenues of $10.1 billion (out of its total revenues of about $12.5 billion). IBM ($54.4 billion), Fujitsu ($32.1 billion), Hewlett-Packard ($29.2 billion) and Accenture ($25.4 billion) lead the list. The research compares IT services, and excludes other areas such as BPO, R&D services and software/hardware products. And it uses figures for the four quarters of calendar year 2013. TCS rose to the 10th spot displacing Montreal-based IT services firm CGI.
India-based companies Cognizant, Infosys, Wipro and HCL are at the 15th, 18th, 20th and 25th positions, respectively , all of them rising by one to three spots compared to 2012. HfS Research believes that Cognizant could be in the top 10 in the next 2-3 years, may be at the expense of US IT company CSC. CSC's revenues last year had dropped compared to the year before.
On TCS, HfS says its aggressive targeting of renewals and new business, particularly in continental Europe, was an im portant factor in driving its assault on the leaders.
TCS, it said, is frequently seen as being the most flexible service provider on pricing and terms, and has a developing reputation for winning any deal anywhere in the world at any price, if it really wants.
“The firm is increasingly being perceived by many today as an alternative provider to the Western Tier 1s, that can come in and fix messy contracts and implementations; it has shown an appetite and willingness pick up a lot of the low-margin, low value work that seemingly every Western Tier 1 wants out of and make the deals profitable and leverageable across clients,“ said Phil Fersht, CEO of HfS. TCS also has an extraordinary profit margin, something that's normally difficult to achieve in conjunction with high revenue growth. TNN
Jobs created in India
Business Process Outsourcing (BPO)
India Today.in , Backroom Badshahs “India Today” 15/12/2016
As more and more universities began producing graduates for what was a relatively small job market till the 1990s, the arrival of Business Process Outsourcing (BPO) led to a louder hum of India's economic engine. With offshore companies handing out their backroom jobs to newly created 'offshore' subsidiaries, services such as these were in high demand. This spawned enterprises like GE Capital International Services-now a distinct entity called Genpact-and many others as well, and offered the burgeoning Indian middle class the kind of secure and aspirational jobs for which they had once relied on the government. The industry has grown rapidly, also leading to the growth of BPO training and recruitment agencies, as well as ancillary service providers such as security and facilities management companies. In recent years, most Indian BPOs, including small- and mid-sized players have been setting up 'onshore' presences in the markets they serve too. The global BPO industry is estimated to be worth about $150 billion, of which the offshore BPO industry is estimated to be some $11.4 billion. Though India has only about a six per cent share of the total industry, it has a commanding 63 per cent share of the offshore component.
2017: a decline in employee count
From: Avik Das & Shilpa Phadnis, Major IT cos reduce employee strength, November 2, 2017: The Times of India
Headcount At Top 6 Industry Leaders Drops By 4,157 In First 6 Mths Of Fiscal
The $156-billion Indian IT industry, often called the biggest job creator in the organised sector, is seeing a tectonic shift in recruitment.
For the first six months of the fiscal, Cognizant, Infosys, Wipro and Tech Mahindra have all seen their employee strength actually decline -quite sharply in Cognizant's case (by over 5,000). TCS and HCL Technologies are the only exceptions among India's top six IT companies, but even TCS' addition is a fraction of what it did in the first six months of the previous fiscal. The headcount of all of the six companies put together dropped by 4,157 in the first six months of this fiscal, compared to an increase of almost 60,000 in the same period last year.
“The industry is standing at a crossroads. The journey toward digitisation and automation provides a plethora of opportunities, but with the same token also a myriad of challenges. Hiring for some of the Indian majors has not only decelerated, but for the first time we have seen a decrease of headcount,“ Tom Reuner, SVP of intelligent automation and IT services at IT consulting firm HfS Research, said.
Several factors are at work. Automation is making thousands of entry-level jobs redundant. Companies are improving their employee-utilisation levels, and keeping fewer people on the bench. In the traditional spaces of application development & maintenance, and infrastructure maintenance, growth is down. And while companies are looking to hire people with specialised skill sets in newer areas such as data science, machine learning, artificial intelligence and internetof-things, the growth rate in these spaces and the nature of the business do not necessitate large-scale hiring. Peter Bendor Samuel of outsourcing research firm Everest Group told TOI, “The employment picture in Indian IT is changing rapidly. The intake of new campus hires in the Indian IT industry is dramatically down and looks to continue to fall. The industry will continue to be a great place for engineers with the right skills in AI, automation, and other digital skills that are in high demand. However, for those individuals who have traditional IT skills, the picture changes dramatically.“
Following Infosys' second quarter results, CFO M D Ranganath said the decline in headcount was because of higher utilisation and productivity improvements.Wipro president and chief human resources officer Saurabh Govil said last month the industry has moved away from headcountlinked growth. “We have improved our utilisation....We are focusing on re-training our existing people,“ he said.
Industry body Nasscom had projected that the industry would add 1.3-1.5 lakh jobs in the current fiscal. Looks like that can at best be a gross hiring figure. Excluding those who voluntarily exit the industry or are asked to go, it appears that if there is some overall increase in headcount in the industry , it will be quite modest.
Jobs created in the USA
Desi IT creates more jobs in US than American peers
Shilpa Phadnis TNN
The Times of India 2013/07/25
Bangalore: Indian IT companies have a better track record of creating jobs in the US over the past several years compared to their American peers like IBM and Accenture, notes a recent report by brokerage firm JP Morgan.
Since 2005-06, Indian IT companies are estimated to have added 30,000-40,000 jobs in the US, excluding green card holders.
Poor job creation by IBM and Accenture
But IBM has reduced its workforce in the US, and Accenture’s addition to its US workforce has been marginal IBM’s US headcount is estimated at 91,000 for 2012, down sharply from 133,789 in 2005, as per data put together by IBM’s employee union Alliance@IBM (the company itself stopped giving a geographic breakup of its employee strength in 2010).
In contrast, IBM added 1 lakh people in the last seven years, but all of it overseas. Its headcount in India rose from 36,000 in 2005 to an estimated 135,000 in 2012. Some believe it might be closer to 150,000 now. “India continues to remain a primary destination for global delivery and it’s not surprising to know that US companies are adding headcount here,” says Siddharth Pai, partner and president of Asia Pacific in advisory firm Information Services Group (ISG). “IBM’s focus seems more on margins in the face of stagnant top-line trends; workforce re-organization towards offshore/ lower-cost markets (such as India) and away from the US is perhaps one way of accomplishing this,” write Viju K George and Amit Sharma of JP Morgan.
Accenture’s US headcount grew from 32,318 in fiscal 2008 to just 38,000 in fiscal 2012. The percentage of the company’s US headcount as part of the total headcount declined from 18.6% to 14.8% during the same period. However, between fiscal 2006 and fiscal 2013, JP Morgan estimates that Indian IT added 38,000 locals to its US workforce.
Indian IT companies double market share in 6 years
Shilpa Phadnis, TNN, Mar 27, 2013
Angel Broking's report explains Indian companies' gains saying that although the labour cost advantage for Indian IT had been on a declining trend, there still was a comfortable 20-25% cost saving for clients along with availability of a young workforce.
Rapid growth after 2006-07
BANGALORE: Indian IT outsourcers have more than doubled their share in total worldwide IT spends since 2006-07, and the bigger Indian IT companies have outpaced their MNC counterparts over this period.
India IT companies accounted for $31 billion, or 4.8%, of the worldwide IT spending of $641 billion in 2006-07. This year, it is estimated to be $77 billion, or 9.8%, of the global spending of $785 billion, according to research by brokerage firm Angel Broking.
The top global IT outsourcers
The research also looks at 13 of the top global IT outsourcers - eight MNCs and five Indian - and finds that the Indian outsourcers' share in the total revenues of the 13 companies has risen from 7.7% in fiscal 2007 to 14.3% in fiscal 2012, and that of the MNCs has dipped correspondingly from 92.3% to 85.7%.
Angel Broking's report explains Indian companies' gains saying that although the labour cost advantage for Indian IT had been on a declining trend, there still was a comfortable 20-25% cost saving for clients along with availability of a young workforce.
Moving up the value chain
Pradeep Udhas, partner and head of IT/ITeS in consultancy firm KPMG India, said Indian companies had developed people capabilities and moved up the value chain to pitch for bigger contracts.
Previously, Indian players were grouped together based on low-cost offerings sans any differentiation. Companies like Accenture and IBM made a positive impact on business issues especially around strategy. But in the last few years, Indian IT companies are able to sell a differentiated proposition, deepening the client relationship," he said.
Siddharth Pai, partner & MD of outsourcing advisory firm ISG, noted that not just Indian, even other regional IT players were steadily winning market share. "Companies like Xchanging and Atos are chipping away market share from MNCs with their specialized offerings," he said.
Angel Broking expects Indian IT companies to continue gaining share "going forward", but Pai strikes a note of caution. He said offshore services driven by labour arbitrage had a limited play.
Restrictions placed by various countries on Indian IT
2017 survey
Sidhartha, Not only US, others restrict IT pros too, Sep 15, 2017: The Times of India
The woes of Indian information technology companies are not limited to the US and extend from Australia to Canada as they not only have to grapple with visa curbs but also obscure rules that are open to interpretation by local authorities. Following the concerns brought out by Nasscom in a study , the government has started flagging the hurdles, many of which are against the commitments given by these countries at the World Trade Organisation or in trade agreements with India.
The study has brought out the fact that there is no match between the commitments given and the visa issued. The report comes at a time when India is seeking a permanent agreement for trade facilitation in services. Separately , it is pushing for liberal rules in Asean and other countries such as China, Australia and New Zealand, under the regional comprehensive economic partnership agreement, which will create one of the world's largest free trade areas. These countries are, however, reluctant to ease the rules, but are seeking sharp duty cuts for goods imported into India.
What makes it easier for other countries not to honour their commitments is the absence of any clarity on the number of visas that they have agreed to.Pointing to the US, Nasscom has said that it is the only country that partially mentions the visa category , H1, under WTO's agreement on trade in services (GATS) but there is nothing on offer for the information, com munication and technology category . Then, there are other conditions such as high fees to dilute the commitments.
Some rules could even be tweaked by countries. For example, Indonesia had notified a rule allowing one visa for every 10 local workers hired.
Other complaints revolve around the duration of the visa and the time taken to issue it, which can be long, and can often come with quotas. What makes life more difficult for Indian workers is the fact that many countries have not signed (and some are reluctant) social security agreements which will allow for contributions to be transferred once the employee returns to India.
There are other issues which have stalled the Indian IT sector's expansion drive, such as outdated definitions, said a government official. For instance, there is very little clarity on the definitions of contractual service providers, independent professionals and inter-corporate transfers, which results in lack of confidence among companies.
The industry also has to deal with subjective and discretionary elements of the commitments that have been given, resulting in interpretations that are only meant to block access.
