Indian outsourcers focus on reuse
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Up against competition for markets and for hiring staff, Indian software outsourcers are focusing on building reusable software that automates specific business processes. These software components can in turn be used across a number of clients, saving costs, and time.
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OCTOBER 15, 2004  - In quarterly reports released this week, three big India-based offshore outsourcing companies detailed sharp increases in employee head count, clear evidence of growing demand for offshore services.
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By Bangkok Post, Thailand  Feb. 17--In the past year, "innovation outsourcing" has become a  buzzword.
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(InfoWorld) - The appreciation of the Indian rupee against the U.S. dollar is affecting the margins of Indian outsourcers, the president of a trade association said Thursday. It's a difficult time for Indian outsourcers as they are already struggling with rising staff salaries, Kiran Karnik, president of the National Association of Software and Service Companies (NASSCOM), said Thursday. The rise of the rupee against the dollar has Indian outsourcing companies worried, as two-thirds of their business comes from the U.S. The rupee has appreciated against the dollar by about 8 to 9 percent in the last three months, Karnik said. A rising rupee has pushed down exporters' rupee revenues, even as their costs locally go up, he added. To help firms cope with the currency issue, NASSCOM is asking the Indian government to restore some of the export incentives that were earlier provided to Indian outsourcers. However, the government may not be in a mood to extend incentives to the outsourcing industry, which is generally seen as one of the more successful sectors of the Indian economy. Export revenue of a large number of Indian outsourcing companies was brought under the tax net in February after India's Finance Minister P. Chidambaram imposed a minimum alternate tax (MAT) on income that was covered under tax breaks. A large number of the operations of Indian outsourcing companies were set up under an export-promotion plan called the Software Technology Parks of India (STPI), which entitled them to tax breaks. But the STPI plan ends next year. Companies seeking tax benefits now have to move their operations to special economic zones, something that's not feasible for outsourcing firms, which have operations in multiple locations close to where staff are available. NASSCOM wants the STPI plan extended, and the MAT rolled back in the wake of the rupee appreciation, Karnik said. India's Minister for Commerce and Industry Kamal Nath promised earlier this week a package for exporters, in the wake of the appreciating rupee, but didn't outline specifics.ADVERTISEMENTIBM Information On Demand 2006Industrial Industry Leaders, please join us at IBM's premier information management global event, IBM Information On Demand 2006, October 15-20, Anaheim, CA. More IBM business and technical solutions content in one place than ever before! Select from  over 800 sessions. Register today!
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(InfoWorld) - Export revenue of a large number of Indian outsourcing companies was brought under the tax net in the country's federal budget. The tax could be the first of measures by the government to reduce tax benefits for the country's outsourcing industry. Prices that outsourcers charge their customers are unlikely to go up as a result, but profit margins will be affected, said N. Ramachandran, chief financial officer of outsourcer iGATE Global Solutions. In his budget speech before India's Parliament Wednesday, Indian Finance Minister P. Chidambaram announced the decision to extend a minimum alternate tax (MAT) to income that is currently covered under tax exemptions. There are other tax issues looming for the Indian outsourcing industry, consisting of software services, business process outsourcing (BPO), and call center companies. A large number of the operations of these companies were set up under an export-promotion scheme called the Software Technology Parks of India (STPI), which entitled them to tax breaks under the Indian Income Tax Act. However, the STPI scheme ends next year. Although the industry and the National Association of Software and Service Companies (Nasscom) have asked for an extension of the scheme for another 10 years, the finance minister made no reference to this request in his budget speech. The imposition of MAT is disappointing, as is also the absence of any announcement on the continuation of tax benefits beyond next year, said Ananda Mukerji, managing director and CEO of Firstsource Solutions, a BPO company in Mumbai. If the STPI scheme is not renewed, outsourcing companies will have to locate themselves in special economic zones (SEZs) for tax benefits. Under the STPI scheme they could locate their facilities where it was most viable for them from the point of view of cost and availability of staff, Ramachandran said. A small group of executives in India's outsourcing industry, including N. R. Narayana Murthy, chairman of Infosys Technologies, believes that the outsourcing industry is now large enough to pay taxes at levels similar to other industries in India. The finance minister has also brought employee stock options (ESOPs) under a fringe benefit tax. This move will make current ESOPs expensive, and will make it difficult for the IT industry that uses ESOP as a major tool to attract talent, said Deepak Ghaisas, CEO of the India operations and chief financial officer of i-flex solutions ltd., a financial software company that is majority owned by Oracle. The focus of the budget this year was on the agriculture sector, where growth is faltering. India's gross domestic product is forecast to grow by 9.2 percent in the year to March 31, with 11.3 percent growth in the manufacturing sector, and 11.2 percent growth in the services sector. Growth in the country's agriculture sector is likely to be only about 2.3 percent. There are about 115 million families engaged in agriculture in the country.
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India's software exports are on track to grow by 30 percent in the year to March 2005, despite attempts in the key U.S. market to discourage outsourcing and protect jobs, the industry's head said on Monday.
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Indian outsourcers are planning to double the revenue from remote infrastructure management services by 2013.
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BANGALORE, INDIA - An anticipated boom in mobile telephony use in India is attracting multinational and local companies to establish manufacturing operations in the country.
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Indian outsourcing companies should expand their operations to other low-cost countries if they want to maintain their edge, experts said Thursday at an international software conference.
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(InfoWorld) - Indiaâs business providing software and services to companies outside its borders will grow a healthy 26 to 29 percent this year, the country's main trade association for that sector said Monday. Revenue from exports of software, services and business process outsourcing (BPO) will reach about $40 billion for the fiscal year that ends next March 31, according to data released Monday by the National Association of Software and Services Company (NASSCOM). Export revenue from these sectorsÂ grew 33 percent to $31.3 billionÂ in the fiscal year to March 31,Â according to data released by the trade body. The strong growth in software and services exports is coming from an improvement in India's competitiveness, and the addition of new services, such as remote infrastructure management, by Indian service providers, Kiran Karnik, president of NASSCOM told reporters in Bangalore on Monday. The revenue figure also includes exports to their parent companies and clients by Indian subsidiaries of multinational companies such as IBM, Oracle, and Accenture, that are expanding fast in India. Indiaâs overall IT industry grew by 30.7 percent in the year to March 31 to earn revenue of $39.6 billion, with the domestic market also growing by 22 percent to $8.2 billion, NASSCOM said. Many multinational companies including Hewlett-Packard and IBM have bagged outsourcing contracts from Indian companies. The Indian IT industry employed about 1.6 million staff as of March 31, besides about 6 million indirect staff employed in supporting the large offshore software development and BPO operations in India, Karnik said. About 1.2 million people are employed in developing software and running back office processes and call centers for customers abroad. The U.S. continues to be the largest market for Indian exports, accounting for 66 percent of revenue, Karnik said. Indiaâs IT industry is facing high staff attrition and salary increases, but that will not slow down growth, Karnik said. In the short term, NASSCOM, of Delhi, is helping set up finishing schools that will make more Indian graduates employable by the IT and the BPO industry, he said. In the long-term, though, NASSCOM is counting on more investments by government and industry in the education sector, he added. The IT industry in India is also grappling with the strengthening of the Indian Rupee against the US dollar, which pushes down realization in Rupees of revenue earned abroad by Indian companies. In the year to March 31, exports of IT services grew by 35.5 percent to $18 billion, while exports of BPO services grew 33.5 percent to $8.4 billion. Revenue from exports of engineering services, a classification that deals with non-electronic design services, grew by 23 percent to $4.9 billion.
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Corporations have made India a laboratory for extending modern technological conveniences to the worldâs poor.
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(InfoWorld) - India's chief outsourcing association has admitted there may be instances of U.S.Â visa abuse by Indian companies, but said the problems are confined to "small, fly-by-night operators." Most of the Indian companies that sponsor large numbers of U.S. visas are "publicly listed and ethically managed," the National Association of Software and Service Companies (NASSCOM) said on Thursday. Any abuse of U.S. visas at such companies would tend to be less than at smaller operations, it added. However, NASSCOM admitted in its statement that small companies are "an area that may need more attention." The association's comments come after further allegations of U.S. visa abuse by two U.S. senators this week. Following their complaints last month aboutÂ alleged misuse of H-1B visas by Indian outsourcers, U.S. Senators Chuck Grassley, a Republican from Iowa, and Dick Durbin, a Democrat from Illinois, this weekÂ questioned the use of large numbers of L visasÂ by Indian outsourcers. Information from the U.S. Bureau of Citizenship and Immigration Services (BCIS) indicated that the companies using the most H-1B visas are the same firms that use the most L visas, the senators said. That made them suspect that companies are using L visas to circumvent worker protections required under the H-1B program. The allegations come as the U.S. Senate attempts to revive an immigration reform bill which includes a provision for increasing the number of H-1B visas available. Earlier this month, Patni Computer SystemsÂ reached an agreement with the U.S. Department of Labor to pay back-wages to employees brought to the U.S. under the H-1B visa program, who then worked at lower salaries than U.S. workers would get for similar work. Patni is among the top 10 users of H-1B and L-1 visas from India. The senators wrote letters toÂ nine Indian companiesÂ in May, asking them for details on their use of H-1B visas. Among the companies were top Indian outsourcers including Tata Consultancy Services, Infosys Technologies, and Wipro. The nine companies together account for close to 20,000 visas, the senators said. Companies appear to be increasingly using H-1B visas to displace qualified American workers, Grassley said in May. India's Minister for Commerce and Industry Kamal Nath warned at the time that the complaints could have repercussions at the ongoing World Trade Organization (WTO) negotiations, since the issue of work permits is a trade issue. Those negotiations fell through this month, not due to work permits but on account of differences over subsidies and tariffs on agriculture products. NASSCOM replied to the two senators in May but has yet to receive any acknowledgement, the association said on Thursday. It said it looks forward to a positive engagement that will address the politicians' concerns withoutÂ disrupting the growing two-way tradeÂ between India and the U.S. The H-1B visa is an employer-sponsored, non-immigrant visa that allows a foreign worker to come to the U.S. temporarily to perform services in a specialty occupation. The L-1 visa, a popular type of L visa, is a non-immigrant visa that allows companies in the U.S. or abroad to transfer certain classes of employee from their foreign operations to a U.S. operation. L visas are designed to give multinational companies the freedom to transfer managers and specialists within the company to their U.S. offices, Durbin said on Tuesday. But some of these companies have hundreds, and, in some cases, thousands of L visa workers, he said. "I find it hard to believe that any one company has that many individuals that are legitimately being transferred within a single year," Durbin said. "I find it even harder to believe that these L visas are being used appropriately when many of the same companies are some of the largest employers of H1-B workers." TCS of Mumbai was the largest user of L visas in 2006, with 4,887, according to a list of the top 20 L users posted by the two senators on their Web sites Tuesday. The list also includes the names of multinational companies such as IBM and Intel. Â
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Indian software companies, which have been busy conquering the world and neglecting their backyard, should not continue doing so. This is because the domestic market is going to grow into a huge opportunity
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A UK company is formed specifically to help more businesses outsource their operations to India.
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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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New services are helping appliance makers and consumers find spare components.
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Indian officials today disclosed details on revenues from IT outsourcing for the last year.