Infosys Technologies’ BPO unit, Infosys BPO, announced that it has bagged a five-year deal with T-Mobile of UK. The two companies have not disclosed the size of the deal.

Infosys BPO is reputed for its strong F&A capabilities and understanding of the telecom industry.
T-Mobile is one of the world’s largest mobile operators with more than 125 million customers worldwide and about 16.7 million customers in the UK.

In an unrelated news, Infosys Technologies, along with IT companies Wipro, Microsoft India and telecom company Tata Indicom have been named among Top 10 Green brands in the country, in the 2009 Green Brands Global Survey.

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The Indian IT/ITeS industry is expected to grow at a CAGR of 13.9% and reach Rs. 534,479 crore (over $ 110 billion) in 2013, reveals IT advisory firm IDC.

In 2009, the overall India IT/ ITeS industry is expected to grow at10.8% and touch Rs. 3,09,573 crore (over $64 billion). The domestic market is estimated to grow at 10.2%, to touch Rs.1,09,406 crore (over $ 22 billion) and at the same time, exports are expected togrow at 11.2% to cross Rs.2,00,000 crore.

“Though there are certain signs of a revival happening in the domestic arena, the spending may not begin to increase just yet. IT spending behaviour would remain conservative throughout 2009 due to uncertainty in the economic environment,” said Kapil Dev Singh, country manager (India) at IDC.”The hardware market will remain under pressure through the year, while the software and IT services markets will also be affected, though to a comparatively lesser extent,” said Singh.

The domestic IT and ITeS market growth projection for the period 2008-13 is expected to moderate to 15.8%, as against the average annual growth of 25% recorded during 2003-08. This signals the onset of a new phase of growth, and this phase will see IT vendors helping enterprises design and deliver ‘new age’ services to their customers by leveraging the existing IT infrastructure.

Wipro and Infosys are planning to start domestic BPO operations in smaller towns and rural areas to offer native language based capabilities and data entry services. Infosys is eyeing partnership with rural service providers, although Wipro offers technology support to some local service providers. The BPO sector has average billing rate for domestic clients, which is somewhere around $3-4 per hour for every employee, while it bills $8-12/hour to international clients. The rural shift may further generate job opportunities at a low costs.

“We are in consultation with few big companies for partnerships in rural areas,” said Murali Vullaganti, CEO of RuralShores, a startup company that gets technical support from Wipro.

According to Amitabh Chaudhry, CEO and MD of Infosys BPO, it makes sense for rural BPOs to look at partnerships as they may not be able to bag large contracts on their own. “The idea is the same as moving jobs from the US to India - to cash in on cheaper talent and office space,” said Chaudhry.

The tie-ups will be based on revenue-sharing between IT majors and locally based rural service providers. “Currently, there are about 10 rural BPO companies that include RuralShores, DesiCrew, Sai BPO and HOV Services. These centers do routine tasks like data entry, processing of utility bills, native-language help desk and e-mail response,” said Avinash Vashistha, CEO of Bangalore-based advisory firm Tholons. However, he feels that there are various limitations, including availability of skilled manpower, broadband connectivity and frequent power cutouts.

Japan could emerge the next big destination after US and Europe, for the Indian offshoring industry. A new study by Zinnov says Japanese firms could drive the next phase of growth for the Indian offshoring industry Out of 1000 global companies, about 19% are based out of Japan, which appears to be a largely untapped market for the Indian companies.

In a study on Global 1,000 R&D Spenders: India Opportunity Identified , conducted by Zinnov Management Consulting, a management consulting firm brings to light the global R&D landscape from the perspective of the total number of dollars that are being invested by the top 1000 global companies from various geographies.

Praveen Bhadada, engagement manager of Zinnov Management Consulting said, “The offshoring potential from Japan is largely untapped and more and more companies are now looking to outperform their US and EU competitors. Besides this, while R&D offshoring to India from the US markets is reasonably high, given the current economic situation, the recession hit US market is likely to be overcautious on any new R&D offshoring commitments, which makes Japan the next desired destination to look forward for Indian companies.”

With home to about 190 global R&D spenders, Japan has witnessed high growth in R&D investment as well as R&D as a percentage of sales in 2007-08, the report said.

The study found that R&D companies based out of US and EU accounted for about 75% of the total R&D spend of $530 billion by global 1,000 companies in 2007-08, followed by Japan. It highlights that the opportunities to the Indian offshoring community to look at Japan as the next destination to get more work offshored, said Bhadada.

The report highlighted that the top 1,000 global R&D spenders accounted for about 53% of the total global R&D spend of about $1 trillion during this period. It also said that though the R&D spend has increased year on year, the total R&D spend as a percentage of revenue has decreased for the mega spenders over the last four years. US and Europe based companies together account for around 75% of the R&D spend of top 1,000 companies.

The study said that global R&D companies based out of Asia have witnessed a rapid increase in R&D investments over the last three years. However, the Indian R&D landscape has witnessed a decline in the trend of number of new centers opening has only 281 of the top 1,000 R&D spenders, which provides them with huge opportunity of growth.

Detailing on industry sectors that have witnessed the maximum amount of R&D spending globally, the report said that automotive has indeed been the single largest R&D spender, followed by pharmaceutical and hi-tech. It also added that R&D spend in computer software is dominated by the US market, while the European Union leads in pharmaceutical, telecom and automotive sectors.

As for the R&D investment, the report said that the telecom sector has registered the highest R&D investment growth followed by automotive. Additionally, among the top 10 verticals, pharmaceuticals has witnessed the highest R&D investment to sales ratio of 15.4% with a R&D growth rate of 13.8%.

Mumbai: In a bid to cut costs without compromising on seat capacity, some of the India’s outsourcing firms have tied up with telecom companies for outsourcing their own communications infrastructure, a model now known as “hosting services”.

Typically, BPOs have to incur a significant cost upfront in procuring technical requirements like automated call distribution system, dialers, dialer license and customer relationship management software to help connect its centre in India to clients across the world. Now, hosting services ease the burden on BPOs in both installation of these technologies, and more importantly, their maintenance.

Telcos, such as Verizon, Qwest and Genesys, are tapping BPOs with these “on-premise” services. According to Shrikant Parab, Director for global BPO operations at CDC Global Services, a U.S.-based company with call centers in Mumbai and Pune, the hosting services model helps a typical call center with 25-100 seats in saving Rs 35-40 lakh.

Raman Roy, who’s Quatrro, a BPO that provides mortgage and legal solutions among others, too, has jumped into the hosting bandwagon and he thinks this new strategy will change the way the BPO industry has been working. With hosting services, BPO players say, all that a call centre will need to go on-stream are switches, routers, headsets and computers.

“If we have to put in place the infrastructure, we will also need to hire those who have experience in operating hardware and call centre software. This will cost us about Rs 10-15 lakh per annum,” said Vikas Gupta, VP operations , Salient Business Solutions, the BPO arm of the Avantha Group.

“The customer pays only a fixed sum of money for the number of seats they contract with us. As the number goes up, the price per seat comes down,” said Yazad Boga, Head of Hosted Contact Center Services of Tata Communications, one of the telcos that offers such solutions to BPOs.

India’s IT outsourcing industry is valued at $47 billion.

SES Technologies has joined hands with RT Outsourcing for providing Warranty on Samsung HDD. This tie-up will enhance the brand positioning and even further increase acceptance and growth for Samsung hard drive business via SES in India .

RT Outsourcing is one of India ’s leading providers of Technical Support and Reverse Logistics Services offering integrated aftermarket service solutions for warranty support to leading multi-nationals and fortune 500 companies. SES has faith in RT Outsourcing’ expertise in the service arena and with warranty provider for WD products and now Samsung reflects their aftermarket service excellence. This service pact will commence from 1st June 2009.

“Samsung HDD business is growing rapidly in India supported by SES strong channel network in Tier II & III class markets and this tie-up with RT Outsourcing will fulfill the upcoming requirement of a specialist warranty & service provider for Samsung hard drives.” stated Mr. Jacques Roux, Director ,SES Technologies.

“We are indeed proud that we have been able to secure the contract for Samsung hard drive warranties from SES, and look forward to ensure the best possible service that customer could wish for! Based on the excellent quality of the product and the extensive service network that we offer, we are very confident of a smooth warranty service here” commented Mr. R.K Goel, VP – APAC, RT Outsourcing Services Ltd.

Samsung Electronics is leveraging off the well know strength that SES technologies holds in upcountry markets & metros last year by re-launching its hard drives range of products making the product more accessible across the country. Through this enhanced service model, the acceptance and penetration of Samsung hard drives will grow from strength to strength.

Even as Obama’s statements ring concern bells in the IT sector in India, a new IT hub is emerging in the country, Gujarat known better for its diamond industry, is making strong inroads in the IT sector and the state is on a recruitment drive.

While cites like Bangalore, Hyderabad, Pune and Chennai, are known to be IT hubs in the country, Gujarat is now emerging as a strong contender. And despite the slowdown ITeS and BPO players in Gujarat are busy recruiting people, despite the glooming scenario in the sector.

Some of the eminent IT players in Gujarat on a recruitment drive are :

* Azure is recruiting between 900 - 3500 IT professionals by July end.

* Aegis has 200 openings and Etech has 200 openings for recruitment.

And helping push these numbers are their strategy to service tier-2 and tier-3 clients
Nirav Shah, President, Gujarat Electronic and Software Industries Association (GESIA) said, “Over the couple of years, IT players from Gujarat have been able to create a good market goodwill and when it comes to relocating services to cost-effective service providers, players and Ahmedabad and Gujarat are on the priority basis, even when we talk of international space, small and medium players from international space are exploring options of cost-effective solution and services providers, for them also Ahmedabad and Gujarat are the favorable destinations, as compared to Bangalore and other IT destinations.”

Though the companies are on a recruiting spree…. Gujarat does not have a talent pool to match the demand. And this may trigger the companies to hire from other IT hubs…

Gurudutt Medtia, director, Etech, Inc. said, “It is also largely the selection of the process like when we talk of Gujarat, process are largely of legal processing in nature or back office or lead generation, which are recession proof in nature and that is the reason, recession really does not make an impact.”

With Obama s saying Yes to Buffalo and No to Bangalore, ITeS/BPO companies in Gujarat do not fear the curse of shifting outsourcing out of India, as they have domestic process on their kitty and that is one of the reasons, they are heavy on the recruitment, despite of global meltdown.

Washington: U.S. President Barack Obama is leaving no stone unturned in his effort to bring the ailing American economy back on track. Keeping his promises, Obama has announced an end to the years of tax incentives to those U.S. firms which create jobs overseas in places like Bangalore. And instead, the incentives would now go to those creating jobs inside the U.S., in places like the Buffalo, a city bordering Canada in upstate New York.

Announcing the international tax policy reform, Obama said, “We will stop letting American companies that create jobs overseas take deductions on their expenses when they do not pay any American taxes on their profits. We will use the savings to give tax cuts to companies that are investing in research and development here at home so that we can jump start job creation, foster innovation, and enhance America’s competitiveness.”

The new tax laws are expected to hit badly the countries like India, China and Philippines, where U.S. companies have been outsourcing their work. Chastising the current taxation system, Obama said, “It’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.”

The U.S. President further said, “The way we make our businesses competitive is not to reward American companies operating overseas with a roughly two percent tax rate on foreign profits; a rate that costs taxpayers tens of billions of dollars a year.”

Obama wants U.S. companies to remain most competitive in the world. “But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens,” he argued.

Announcing a set of proposals to crack down on illegal overseas tax evasion, close loopholes, and make it more profitable for companies to create jobs here in the U.S., Obama said his series of tax reforms would save $210 billion in the next 10 years.

The economic slowdown has resulted in increasing number of US-based companies now outsourcing their offshore R&D related work to third-party service providers in China, who charge lower billing rates. This has impacted the Indian outsourcing market adversely.

While the Indian R&D offshore outsourcing market is projected to grow at 14-16% in 2009, the Chinese market is expected to outshine India with a 30-35% during the recession period.

Even though China is only about 1/3rd of the total Indian R&D offshore outsourcing market in size, it has a relatively faster growth ratio than India. This is basically due to the capabilities of China in the manufacturing R&D and also lower billing rates.

In fact, India’s R&D offshore outsourcing market, which is estimated at $43.5 billion, experienced a 21% growth in 2008, while the China market, estimated at $9.5 billion, grew at a phenomenal 46% during the same period. It is primarily due the rupee fluctuations; the appreciation, followed by the depreciation, has largely impacted this market.

Talking to CXOtoday, Praveen Bhadada, engagement manager at Zinnov Management Consultancy, said, “The upswing in the number of US-based companies trying to offshore their R&D related work to third party service providers in China, among other factors, has resulted in this trend.”

The billing rates of the service providers in China are relatively lower compared to India. While Indian IT firms charge $24 per hour for new product development, Chinese firms charge $21 per hour for the same work. The billing rates for Indian IT firms are higher owing to factors such as better quality, IP protection and timely delivery. “But in the present economic recession scenario, both vendors and customers are looking to optimize on the billing rates,” said Bhadada.

In 2005, outsourced work to China amounted to $408 million, of which US had a 52% share. In 2008, China outsourcing R&D related work amounted to $1,287 million and US share amounted to 64%.  Similarly, Europe and Japan have also contributed to the major share of outsourcing work to China.
Another reason is Indian service providers do not offer a broad array of R&D services as opposed to their Chinese competitors and their focus is primarily on IT services. In fact, the total Indian service providers R&D headcount numbers to 110,000 with about 130 pure Indian players while the number in China is estimated at 39,000 to 45,000 with about 250-plus local service provider companies.

As per a Zinnov report, Indian service providers in China have not been able to scale up their R&D operations in spite of having ambitious ramp-up plans since inception. Also, all the major Indian IT players like TCS, Infosys, Satyam and Wipro have failed to reach the targets and also failed to make any inroads in China. Indian firms were to grow their headcount by 25% annually, but none have managed to do so.