Indian IT services to reach $11B by 2010, says Gartner
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India&#39;s IT services market is forecast to grow to $10.73 billion by 2011, at a five-year compound annual growth rate of 23.2 percent, as outsourcing emerges as a more favored option for companies in India, according to research firm Gartner.As companies are finding it more difficult to hire and retain staff in their IT departments, they are looking at external service providers as an option, hoping to also cut down costs, and better manage growth in the process, Gartner said Tuesday.Indian user companies compete for staff with Indian outsourcing companies and Indian operations of multinational companies, which hire new staff by the thousands each quarter.Staff attrition is however not the key reason why companies are outsourcing, said Arun Gupta, chief technology officer, at Shopper&#39;s Stop, a top Indian retail chain. Driving outsourcing in India is a growing demand for new technologies and applications. Shopper&#39;s Stop has six IT projects in progress with another 12 projects planned for the next six to 12 months.Rather than creating and managing a large IT organization in house, the company is working with service partners to support its 45 IT staff, Gupta said. Some of the functions it outsources are network maintenance, desktop and server maintenance, monitoring enterprise resource planning (ERP) applications, and software development, he added.A number of large banks and telecommunications service providers are already outsourcing key IT operations, though the key winners so far have been multinational services companies. Many Indian outsourcing companies had neglected the Indian market in favor of exports, according to a survey last year by Gartner. But that may be changing as the&#160;weakening dollar puts pressure on rupee&#160;realization from exports.IBM,&#160;Tata Consultancy Services (TCS), and Wipro together accounted for 26.1 per cent of IT services vendor market share in India last year, according to Gartner. IBM was the top vendor, with 11.2 per cent market share. TCS and Wipro occupy the second and third positions with 10.9 and 4.1 percent market shares, respectively.However, the Indian IT services market is still fragmented, with the majority of the market being serviced by smaller local players that account for close to 40 per cent of the IT services market, according to Gartner.&quot;We have looked at smaller players for very small and specific jobs, but for larger jobs, running into a number of years, and which require a variety of skills, we look at large Indian companies or multinational services companies,&quot; Gupta said.The key segments of the Indian IT services market are hardware maintenance and support, software support, consulting, development and integration, IT management, and process management, Gartner said.
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The Nielsen Company, a provider of consumer and media information services, is outsourcing a portion of its IT and business processes to Tata Consultancy Services&#160;(TCS), an Indian outsourcer based in Mumbai.Under a 10-year agreement valued at $1.2 billion, TCS will take responsibility for some of Nielsen&#8217;s IT and operational processes and help the customer integrate and centralize multiple systems, technologies, and processes on a global scale. TCS will also deliver certain finance and human resource business processes, the company said Thursday.On Monday, TCS reported growth of 45 percent in revenue and profit for the quarter ended Sept. 30, despite fears that the weakening dollar would erode margins for Indian outsourcers.
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Study predicts customers in 2010 will spend $191 million on software to handle data produced by RFID-tagged devices.
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Indian outsourcers already have a large share of outsourced application development and maintenance and are dominant in business process outsourcing. The country is now targeting a larger share of the market for remote infrastructure management services (IMS), and is planning to more than double revenue from these services to $15 billion by 2013.
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Global revenue from server sales climbed to $11.5 billion in the second quarter, according to new data from Gartner. This represents a 7.7 percent revenue increase over the same period last year, the market researcher said Wednesday.
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(InfoWorld) - With Web 2.0, SaaS (software as a service), and open source grabbing all of the headlines, launches of enterprise infrastructure software that were once major IT events now sometimes seem like forgotten affairs. Certainly the new millennium marked a downturn in interest for traditional, monolithic back-end software. Yet, boosted by virtualization, there appears to be plenty of life in old-school offerings. According to its 2007 global IT market forecast, IDC predicts that spending on infrastructure software will grow 9 percent this year, faster than any other software category. In this 'diminished' environment, Oracle's pending release of its upgraded 11g database may not grab the imagination of the technorati, but it remains significant to a vastly underestimated group of IT users. The global database market grew 14.2 percent last year to total $15.2 billion, according to Gartner. Oracle, which released its last major database upgrade, 10g, four years ago, already holds almost half the market. That's more than double the share of second-place IBM. The official launch of 11g is set for next Wednesday, July 11, in a New York City ceremony overseen by Oracle President Charles Philips. Publicly, Oracle has for the most part avoided specifics, saying that 11g will offer improvements in high availability, performance, scalability, and manageability. Tidbits it has revealed include free migration and management tools that will let administrators oversee non-Oracle databases at the same time they manage their Oracle ones. Oracle has also said that 11g will have new compression technology that could potentially reduce customers' storage demands by two-thirds, the ability to store unstructured data faster than traditional file systems, and better partitioning. Fleshing out the details Web accounts by beta testers and others are now confirming those reports. According to what appears to be a presentation by Oracle Vice President of Technology Mark Townsend, many of the new features are in the area of "change assurance." These help companies save money and testing time when migrating to new hardware or making configuration changes. For instance, features like database replay and SQL replay let DBAs view how changes in the database or SQL code affect performance. 11g will also let users set up test environments using snapshot standbys and help automate rolling database upgrades. Other features include online table and index redefinition, support for online hot patching and continuous availability of online applications even when they are in the midst of an upgrade, and automatic diagnostic workflow to fix problems faster. In the area of information lifecycle management, 11g will allow DBAs for the first time to partition by interval, ref, or virtual column. It also adds a new composite way to partition. According to an article by Jim Czuprynski, an Oracle senior instructor at Fujitsu Consulting who beta-tested 11g, some of the best new features include in-memory caches for retaining widely used, slow-changing data; better diagnosis and repair features; and enhancements to Oracle's flashback tools for data recovery. Longtime Oracle watcher Donald Burleson notes in his list of 11g features support for schema-based Document Type Definitions for describing the internal structure of XML documents as well as more scalable Java for faster performance. On security, an area for which Oracle has been criticized of late, Burleson says 11g will include improvements such as case-sensitive passwords and an inviolable audit vault that protects against insider threats. Iggy Fernandez, editor of the NoCOUG Journal, the official newsletter for the Northern California Oracle Users Group, praises what he says is 11g's unheralded "learning optimizer" feature. "When relational databases replaced hierarchical and network databases in the 1980s, the promise was that programmers would no longer need to optimize their queries by hand," said Fernandez. While no database has "completely realized" that vision, 11g, says Fernandez, is a "great step -- the query optimizer simply learns from its mistakes -- in fact, it can stop a query that is already in progress and try a different approach!" "Performance tuning is the biggest component of database administration effort today, and the learning optimizer could produce tremendous labor savings if it works as advertised," Fernandez said. But will users upgrade? With 11g, will Oracle be able to extend its lead over IBM -- whose release of DB2 9 "Viper" last summer did not lead to mass early uptake, according to the Gartner figures -- by convincing users to rush and upgrade? Kevin Closson, chief software architect for clustering vendor Polyserve, says yes, based on how stable this release already is known to be. "From everything I've seen in this release, there should be no technical reasons holding back customers' adoption," Closson wrote in his blog. But Amy Stuemky, database administrator for travel tour operator Globus, says her organization is just starting to move its 50 Oracle databases to 10g. "Our philosophy with Oracle is that it is too bleeding-edge with any first release," Stuemky said. And the company is only moving now because Oracle's regular support, called Premier Support, is about to end. "Oracle almost pushes you [to upgrade] by desupporting its stuff," she said. Fernandez agrees that expecting users to rush to 11g any faster than they did with prior versions would be unrealistic. "There is just too much effort involved in testing and upgrading critical business systems and new releases can be plagued with software bugs," he wrote. "Speaking for myself, I would prefer Oracle to fix the bugs that still remain in the previous version instead of give us a feature-packed new version!" Oracle will go slow with one aspect of 11g. For its free Express Edition aimed at students and developers, which Oracle debuted in 2005, the company won't release an upgrade until the more stable 11g R2 comes out, according to an Austrian developer, Slavojub Krishan, who cited conversations with Oracle executives at a recent developer conference.
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Gartner Inc., a provider of research for the information technology industry, on Monday said it will buy Meta Group Inc. for $10 per share, or $162 million in cash.
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Worldwide server revenue surpassed 11.5 billion US dollars in the second quarter of 2004, up 7.7 percent from the same quarter a year ago, according to a study released Wednesday by Gartner.
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Intel Corp., the world's top  chipmaker, is set to increase its share of a growing global  semiconductor chip market this year to 12.2 percent, research  firm Gartner said on Friday.
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Technology to help tackle problem of data loss from corporate mobile devices, but the tools won't exist until 2012, Gartner says.
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(InfoWorld) - The outsourcing and offshoring of software development work has become such an ingrained part of the technology industry in the U.S. that stories about it no longer rouse the public's interest as they did even a few years ago. That means the only way to gauge the growth of the phenomenon is by watching the bottom line of outsourcing giants like India's Wipro, which recently reported a 41 percent jump in revenue in its latest fiscal year, and the heated debate in Washington over the number of H-1B high-tech visas that the federal government grants. But the runaway growth of offshoring has created its own problems in countries like India, where a substandard infrastructure and stiff competition for talented workers has changed the economics of setting up shop outside the U.S. The decision to hire a staff in India "wasn't even a second thought" when Munjal Shah, CEO of RiyaÂ , was laying the groundwork for his visual search startup back in 2004. (Riya is part of InfoWorldâs Month of Enterprise Startups feature.) "At 30 percent wage rates [the ratio of an Indian salary to a U.S. salary], it still was worth the communication overhead, the travel, and the late-night conference calls," Shah recalls. Those were the good old days. Today, wages in India have risen so much that maintaining development operations in Silicon Valley and India no longer made sense, forcing Riya to make what seems like an unusual decision: In April, the company nixed its Bangalore operations and consolidated operations back in the company's Silicon Valley headquarters. In the end, the cost advantages of lower Indian wages did not outweigh the efficiency losses that came from maintaining some 35 employees in two offices, 12 hours apart, Shah said.Â  Indian software development shops have been the workhorse for countless high-tech firms and U.S. enterprises for more than a decade. But steady demand for development talent is erasing some of the cost advantages that offshore development outfits have enjoyed, according to a report by Gartner. In fact, the wage rates for Indian software engineers will reach between 40 to 50 percent of Silicon Valley wages by 2008 with the gap continuing to narrow after that.Â  Wage increases for Indian engineers averaged 15 percent from 2005 to 2006, compared with a 3 percent average increase for U.S. engineers, according to a recent Gartner report. That's not to say that things will be even-steven any time soon, though. "Even if Indian salaries continue to grow at 15 percent annually, it would take 16 years for Indian software engineers to catch their U.S. counterparts," the report says. But wages among startup employees have been growing much faster than that, especially among top engineers in Bangalore, Shah said. A native of India, Shah paid a premium to hire experienced graduates of the prestigious Indian Institute of Technology. Unlike IBM or Infosys, a startup doesn't have the resources to train the brand-new graduates who would work for smaller salaries. "Startups aren't places where you train people from the ground up," Shah said. "They're places where either you know what you're doing or you don't. We paid to hire the best." To that end, Shah said, wage increases among his engineers in Bangalore tended toward twice the national average. "Salary increases have been 30 percent for more than a year now," Shah said; the engineers who lost a job when Riya decided to close the Bangalore office all have received multiple job offers with significant wage increases, he said. Differences in the high-tech cultures of the U.S. and India also play a part. Indian workers are less likely than their Californian counterparts to be wooed by the prospect of working for stock options instead of cash.Â  "In Silicon Valley, you see your friends from Google driving around in new Ferraris, and you think, 'Huh, occasionally this actually works,'" said Shah. "But there's no comparable value for options [in India]."Â  And without the lure of options that might someday make a software engineer wealthy, money isn't just one reason for a Bangalore engineer to join a company â it's the only reason.Â Â  "If you can't build a core loyalty with options, then you're in for a tough time," said Keerti Melkote, cofounder of wireless LAN hardware company Aruba, which went public in March. Aruba tried outsourcing to India shortly after the birth of the company in 2002 but found that it slowed down operations too much for it to be worthwhile.Â  "You need a critical mass for offshoring to work -- a whole project as opposed to part of one project -- and for a startup, offshoring might not make sense. Especially now, the loaded cost of all the late-night conference calls is high enough that it might not make sense." Melkote said that with its growth in the last few years, Aruba can now afford to support a fairly autonomous Indian operations center in Bangalore. But startups don't have that option. "We found that if you gave a guy less than a 30 percent salary increase every year, then he'd walk," Shah said. "By the middle of this year, we would have been paying [the Indian engineers] 75 percent of a U.S. salary, and at that point, it doesn't make sense because of all the other overheads that take away from productivity." What kinds of overheads you ask? "On average the power probably goes out three or four times a day," said Fran Karamouzis, a research vice president at Gartner who specializes in outsourcing issue. âYou get surges for 15 or 20 minutes, and if you don't have adequate power supplies, then that's a big issue." Thatâs a big issue for startups, whose employees often work odd hours from home, Shah said.Â  Of course, infrastructure problems are nothing new and are considered par for the course in India, but with competition from China, Russia, Eastern Europe, and even Vietnam and Africa, unreliable infrastructure is starting to cost India business, such as Intel's recent decision to locate a $2.5 billion chip plant in China. The nature of work at a startup makes them even less tolerant of those kinds of risks than companies like Intel. "If you're a startup and you're doing a lot of iterative design and you constantly need a higher level of agility, you might find it more burdensome than the cost differential is worth," Karamouzis said. On the other hand, "If you can give the Indian team things that are clearly delineated that they can own and drive on their own, then it works out pretty well," said Pejman Roshan, cofounder and senior director of marketing at Agito Networks, a wireless technology startup in Sunnyvale, Calif. that outsources software coding to a services firm in Bangalore. Roshan acknowledged, though, that the wage gap is shrinking. "I'd heard there was a five-to-one [ratio of Silicon Valley wages to Bangalore wages], and we were salivating at that notion," Roshan said. "We're seeing a three-to-one benefit, and we're still happy with that." Riya's Shah is confident that moving the company's operations back to the U.S. was the right move and expects to see more companies doing the same in the months ahead.Â  "We might be a little bit ahead of the curve in our decision -- maybe six to 12 months -- but I don't think wages are going to stop rising," said Shah, who detailed his decision in his CEO blog, Recognizing Deven. "I don't think weâre isolated." Still, despite wage increases, new startups aren't likely to rule out Indian operations any time soon, Gartnerâs Karamouzis said. In fact, they may have to consider such operations in order to get venture capital. "More often than not, what I hear is that venture companies are almost demanding that [startups] leverage India or Russia both to optimize the cost structure and to maximize a 24-hour cycle to get things done faster," Karamouzis said.
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India&#39;s business process outsourcing companies could attain revenues of up to $50 billion by 2012, but the industry will need greater investments in education and infrastructure by the government, according to a new report released Tuesday.At its current growth rate, India&#8217;s $11 billion BPO industry will reach about $30 billion by 2012, said the joint report, published by consultancy firm Everest Group and India&#8217;s National Association of Software and Services Companies (Nasscom).If the industry reaches $50 billion in revenue, it will directly employ two million staff and provide indirect employment for two to three times more people, said Som Mittal, president of Nasscom. The industry would comprise 2.5 percent of India&#39;s GDP (gross domestic product).Mittal said India&#39;s federal and local governments would have to play a larger role in order to push revenue to $50 billion. Over the last 10 years, the industry has done much on its own, such as building power generation facilities and providing training to staff, but could use more government support, Mittal said.Indian companies spend a lot on in-house training because the education system in India does not have direct links with the BPO industry, said Raman Roy, chairman and managing director of Quattro, a BPO firm.The BPO industry needs more employable graduates with skills in new areas such as analytics or the industry could face staff shortages of up to one million&#160;people for entry-level positions, Roy said.Some companies have explored setting up operations in smaller cities due to competition for staff from the retail and telecommunication areas.&#8220;We hire people from small cities, but we cannot set up operations there because the infrastructure does not exist,&#8221; Roy said. It is unfair to ask managers to move to small towns where there are no hospitals or entertainment, he added.The BPO industry now plans to set up regional hubs and develop infrastructure, including communications capabilities and staff housing. Many BPO companies now spend time and money transporting staff between cities and suburbs.The industry is also demanding that BPO companies be allowed to use the same facilities during daytime to address domestic business. India prohibits using the same facility for domestic and export business.Since nighttime operations focus on servicing foreign customers in the U.S. and Europe, using the same facilities during the day for domestic business would benefit companies, Mittal said.
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India was the fastest growing market for SAP last year, with licensing revenue increasing more than 100 percent over the previous year, a company official said Wednesday.SAP more than doubled its number of customers from 1,350 a year earlier to 3,024 in December, said Ranjan Das, SAP&#39;s president and chief executive officer for the Indian subcontinent.SAP did not disclose its revenue from India last year or the percentage of the country&#39;s contribution to SAP&#39;s global revenue.SAP has its largest product development operation outside Germany in India. The company also offers services to customers worldwide from India.India&#39;s IT market&#160;was valued at $9.6 billion last year, with hardware accounting for 54.9 percent, services 39.3 percent and software for 5.9 percent of revenue, according to research company Gartner.SAP is hoping to sign up 100,000 customers by 2010, and India and China will play a key role, the company has said.
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Technology research firm Gartner will purchase rival Meta Group for about $162 million. The firms have complementary business strategies, and both are headquartered in Stamford, Connecticut.
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Gartner forecasts chip equipment spending of $40.3 billion in 2008, down by almost 10 percent from an estimated $44.8 billion this year.
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Indian outsourcers are planning to double the revenue from remote infrastructure management services by 2013.
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Market-research firm Gartner Inc. has agreed to acquire rival Meta Group Inc. for about $162 million US in cash. Gartner said Monday it will pay $10 for each share of Meta, a 54 per cent premium