Indian IT Services to Reach $11 Billion by 2011
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Indiaâs IT services market is forecast to grow at a five-year compound annual growth rate of 23.2 percent, according to research firm Gartner.
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It may now be the turn of Indian companies to offshore outside India their IT services requirements.
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Cisco Systems plans to have one-fifth of its top executives in India by 2012, in line with its plan to make India the hub for the development of technologies and new business models for emerging markets.The company expects 60 to 70 percent of its growth to come from emerging markets, John Chambers, the company&#39;s chairman and CEO, said in Bangalore at the inauguration of the company&#39;s Globalisation Centre East campus. The new center will work with partners in the Middle East, Africa, China, Asia, and Latin America on developing technologies for these markets.While emerging markets are growing at between 5 and 10 percent, markets in developed countries are growing at just 1 to 4 percent, according to various estimates, Chambers said.The company&#39;s plan to have senior vice presidents, vice presidents, and directors, cutting across all corporate functions, in India is not aimed at cutting costs, but at nurturing talent in India, said Wim Elfrink, chief globalization officer for Cisco, who also heads the new center.Cisco currently employs about 3,000 staff in India, which it plans to increase to 10,000 by 2010. The new center, which currently has 900 staff, is expected to grow to 3,500 staff by October next year, said Elfrink. Some of the technologies developed in India will be rolled out in other emerging economies, and also in developed countries, he added.Cisco also announced Tuesday a collaboration with Indian outsourcer Satyam Computer Services, of Hyderabad, to focus on software for handling medical distress situations and other health management applications. Cisco plans to take a minority interest in the venture, details of which were not disclosed. Health care is one instance of Cisco&#39;s strategy to use India as base for technology and applications that can be deployed worldwide, Chambers said.The company announced in 2005 that it would&#160;invest $1.1 billion in India&#160;over three years, including $750 million in research and development (R&amp;D), $100 million in customer support, and $100 million in a venture fund. The planned investment is on track, Chambers told reporters in Delhi on Monday.Chambers announced Tuesday that the company was increasing the size of the venture fund by $100 million. The venture fund will be focused on &quot;disruptive technologies,&quot; Chambers said.
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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.
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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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Unisys is opening two additional global service delivery centers in India as part of its plan to expand its offshore resources to 6,000 people by 2008.
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India's premier software body has said outsourcing of engineering services by global firms presented the country with a 40-billion-dollar opportunity.
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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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(InfoWorld) - New research has confirmed that India's mobile phone market is set for a period of fast growth, with revenue from cellular services expected to jump by more than 18 percent each year for the next five years. Most of the growth will come from rural areas, where only 2 percent of the population have access to mobile phones today, said Madhusudan Gupta, senior research analyst at Gartner, which conducted the research. Service providers have already started to focus on rural markets, with aggressive rates and handsets priced at under $25, he said. Cellular service revenue in India will increase at a compound annual rate of 18.4 percent between this year and 2011, to reach $25.6 billion, Gartner estimated. Cellular revenue last year was $8.9 billion. As call rates fall from their current level of 2.6 cents per minute to rates comparable to fixed lines, which are about 0.9 cents per minute, a broad swathe of additional users will start using mobile phones, Gupta said. "The fixed-line infrastructure in India is not that good, which is giving enough of space for mobile wireless to move in," he said. Revenue from data will outpace that of voice services and contribute to about one fifth of revenue in 2011, more than double its share last year, although most of that growth will come from urban markets, Gartner said. As they expand into rural areas, operators will see their average revenue per user (ARPU) fall to $59.50 per year by 2011, from $82.1 last year. Successful operators will be those that make up for the falling ARPU through economies of scale, Gupta said. Operators are likely to collaborate by sharing infrastructure and outsourcing their network management to equipment vendors, and possibly system integrators, he added. For example, Bharti Airtel, a large Indian service provider, said Wednesday it had awarded a contract worth $2 billion over two-years to Telefonaktiebolaget LM Ericsson, to expand its network in rural areas and provide capacity management. The service providers should not be short of funds for expansion.Â Vodafone Group's acquisitionÂ in May of a controlling interest in the Indian operator Hutchison Essar, for $10.9 billion, has increased the valuation of all Indian service providers, and is helping them to attract private equity and other investments, Gupta said. The rural demand will come from businesses expanding into these areas, as well as from local businesses. Some individuals will own mobile phones, although the predominant model is likely to be a communally-owned handset, a concept already tried in some areas, Gupta said. India added 15.5 million mobile subscribers in the first quarter of this year, taking the total to 165.1 million, according to the Telecom Regulatory Authority of India. Gartner expects 58 percent of the rural population and 95 percent of the urban population to be covered by mobile networks by 2011. That year, the total number of mobile connections in India will have increased to more than 462 million, according to Gartner. India's total population at that time will be close to 1.2 billion, according to some estimates.
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(InfoWorld) - 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. Top Indian outsourcers such as Infosys Technologies Ltd. and HCL Technologies Ltd. for example, have developed a variety of components including an RFID (radio frequency ID) component for supply chain applications, according to Forrester Research Inc. senior analyst Sudin Apte. Currently, outsourcers' business models are largely based on a cost-plus model where they add more staff to a project to get more revenue. "They are trying to break out of this linearity and dependence on low-cost staff alone," Apte said. Midsize outsourcers are also investing in creating reusable components, consisting of business applications or middleware. "If you look at the applications we develop, about 30 to 35 percent are common across various applications, so there is an opportunity to make them reusable," said Bala Variyam, vice president for IT delivery at iGate Global Solutions Ltd., an outsourcing company in Bangalore. The company develops prebuilt components that can be used across a variety of industries, as well as business components for banking and financial services that are quickly configured and deployed for customers, Variyam said. Besides developing components in-house, iGate is also looking at open-source components. "We are looking, for example, at an open-source trading platform that can be used for capital markets and investment banking applications," Variyam said. Among multinational services companies, IBM Corp., for example, set up last year in India a Global Business Solutions Center as the company's global hub for the management and creation of reusable software components. IBM also set up last year development centers in Beijing, China, and Pune, India, that focus on developing industry-specific SOA (service-oriented architecture) services that are reusable across various customers. In the short term, this strategy will require Indian companies to invest in top quality staff to understand the business problem and the technology and develop the software. Most Indian companies like Infosys and HCL that are developing reusable components have large teams that are not immediately billable, so they don't earn direct revenue for their companies, Apte said. In the long term, though, these companies could probably have less demand for new staff as they reuse software across a large number of customers, according to Apte. IGate is already seeing dramatic time savings of up to 30 percent on applications development, though time taken on the design and testing phases does not change, Variyam said. Customers are also demanding components that have already been proven across other deployments, Variyam added.
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(InfoWorld) - French IT services company CapgeminiÂ will have more staff in India than any other country by the end of this year, as it expands its offshore services delivery from that nation. With about 19,000 staff, the company's largest operation by headcount is currently in France, but that will change as Capgemini plans to have over 19,000 staff in India by the end of this year, said Salil Parekh, executive chairman of Capgemini India on Thursday The company, which has 15,000 staff in India currently, plans to expand further in the country to employ 40,000 workers by 2010, Parekh said. The majority of the staff will work in IT services with the rest in BPO (business process outsourcing), he added. A number of large Indian and multinational IT services companies, including IBM and Accenture, have been hiring significant numbers of staff in India to take advantage of lower employment costs. Accenture, for example, said in January it will haveÂ more staff in IndiaÂ than in any other country by the end of its fiscal year on Aug. 31. The company's staff in India will increase to 35,000 in August, up by 52 percent from a year earlier, with the number of employees more than those in the U.S., which will have a little over 30,000 staff. The large-scale hiring by services companies has led to a shortage of quality staff and an increase in average salaries in India. However, Capgemini does not anticipate any obstacles to its hiring plans. The company's recruitment team is equipped to hire about 1,000 employees a month, both from university campuses and the services industry, Parekh said. "India remains cost-effective, and we haven't seen any evidence to the contrary yet," Parekh said. In addition to India's lower staff costs, the country remains attractive because it offers quality staff and Capgemini can scale operations to a level not possible in many other countries, said Parekh. By 2010, Indian staff will account for 70 percent of Capgemini's offshore services, down from 80 percent today, as the company ramps up operations in other countries like Argentina, Morocco, Romania, the Philippines, and Vietnam. China will also continue to serve as a key location. The company has about 1,000 staff in China, and will likely increase staff levels there three-fold by 2010, Parekh said. Capgemini also gained new business and staff in India through acquisitions. Last year, the company bought a 51 percent stake in Unilever India Shared Services, a finance and accounting BPO operation owned by consumer-goods maker Unilever Group. This business, which becomes a wholly owned subsidiary of Capgemini by 2008, is a key center for the company's finance and accounting BPO practice, Parekh said. In February, Capgemini purchased Kanbay International, an IT services firm in Rosemont, Illinois, to boost its services delivery from India, and its business in the financial-services sector. The Kanbay acquisition brought Capgemini a number of customers in the U.S., Parekh said. As it grows in India, Capgemini plans to expand its business in areas such as infrastructure management, ERP (enterprise resource planning) development and maintenance, and non-voice BPO, Parekh said.
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Blog: Virtualization services are expected to turn into a $11.7 billion market by 2011, more than double its current level, according to an IDC report. VMware and its competitors are helping to drive this demand.
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TechWeb - The portion of new business software revenue generated from SaaS products is expected to increase to 25 percent by 2011.
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By the end of the year, the computing giant plans to have its biggest headcount since 1991.
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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.IMS involves managing an enterprise&#8217;s core IT systems, including hardware, software, connectivity and people. The IMS industry is moving towards a remote delivery model where services are increasing delivered from low-cost locations by service providers and wholly-owned services subsidiaries of user companies, according to a report released Thursday by India&#8217;s National Association of Software and Service Companies (Nasscom).Customers in the US and Europe are increasingly willing to outsource IMS to offshore locations, because the data does not move out of the home countries, and is only managed remotely, said Siddharth Pai, a partner at sourcing consultancy firm,Technology Partners International (TPI) in Houston, Texas.In India, IMS business is going both to Indian outsourcers, and the Indian operations of large IT services companies, Pai said. Because of the large staff component involved in IMS, there are cost benefits in outsourcing IMS to low-cost, offshore locations like India, he added.Research done by management consultancy firm McKinsey for Nasscom, suggests that the IMS business could generate between 325,000 to 375,000 jobs in India by 2013, as 70 to 75 percent of the roles in IMS can be moved offshore.Low-cost locations, including India, have so far captured a mere $6 to 7 billion&#160;of the IMS opportunity.Indian outsourcers have so far learned to price their services on the basis of staff time utilized. They now have to learn more sophisticated pricing that takes into account other parameters like amount of computing power being managed, if they are not to risk losing money in the business, Pai 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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U.S. spending on Web advertising and Internet access expected to increase by double digits through 2011.