Breaking News Latest News Updates Current News Todays e-Bulletins My News Wire Headlines

Bangalore: The ongoing migration of Indian citizens from paper cards to smart cards is throwing up a multibillion dollar business opportunity for domestic technology players.

The citizen ID card program proposed by the Unique Identification Authority of India (UIDAI) will be supported by a vast eco-system, comprising data collectors or managers, delivery channels, chip designers, smart card manufacturers, application and software providers, system integrators, networking analysts and print companies. The entire ID card project in India is estimated to be around Rs. 10,000 crore, with the first phase covering ultra-urban, urban, and semi-urban population offering Rs. 6,500 crore business opportunities.

IT companies like TCS and Infosys have confirmed that they would actively bid for the project. “The entire process including the bidding process, deal negotiations and business evaluation, are expected to be transparent. There will not be any conflict of interest for us and therefore, we will participate in the bid,” said a Senior Official at Infosys Technologies.

TCS has already been working with the government on projects like e-passport, Gujarat police and the Defence Ministry. “Since it is going to be an open bidding process, we will be bidding for it,” said a Senior Official at TCS.

Around 27 large e-governance projects worth Rs. 40,000 crore are currently in the pipeline. Having been badly hit by the economic recession, many technology leaders have been urging the government to accelerate these projects to induce economic buoyancy. The UIDAI comes as a quick response to the industry’s call.

Som Mittal, the President of IT industry body Nasscom, told Times of India, “This is a transformational project for the country as it will overlay many underlying projects, creating huge efficiencies for the country leading to enhanced governance and reduced costs.”

The global shipment of smart card surpassed an estimated five billion units in 2008 and this figure is projected to surge at CAGR of nearly 11 percent through 2012, according to “Smart Card Market Forecast to 2012″, a recent market research report.

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.

After the recent layoff of 2,100 staff for being “Non-performers”, Infosys Technologies has extended the mandatory training period for new recruits from the existing four months to seven months.

This move is ostensibly to ensure that more trainees get absorbed in the organization.
According to T. V. Mohandas Pai, member of the board of Infosys Technologies, based on their performance, 2,100 employees had left (or asked to leave) Infosys. “However, this does not mean that they were overall poor performers for the IT industry. They were only not up to our standards.” “The extension of the trainingeriod is to ensure more of them get qualified as per our standards,” said Pai.

Interestingly, while 2% of the staff were layed off last year, this year it is 3% of the staff.
At present, the company has 8,000 trainees, coming from various cities, undergoing training at Mysore.

Out of the total number of layoffs, Infosys claims 850 persons left on their own, while 650 were asked to go through personal improvement programme, and the rest were outplaced. “We don’t indiscriminately fire trainees, but have to layoff the bottom 5% of the poor performers,” Pai said.

Scam-tainted Satyam Computer Services, which lost out on an earlier BSNL ERP contract due to its inability to produce a Letter of Comfort from any bank, is once again in the race for BSNL’s mega outsourcing deal.

The contract entails implementation of operational support systems and billing support systems for the 93 million new GSM lines that Bharat Sanchar Nigam Limited (BSNL) is adding. The contract has been pegged at $1.2 billion.

The companies in the fray, apart from Satyam, are:Indian IT majors Tata Consultancy Services, Infosys and Wipro, along with HCL Infosystems, Tech Mahindra, and Spanco Telesystems.

TCS, HCL and Tech Mahindra have bid for all zones. Spanco has bid for north and west zones, Infosys for west and south, and Wipro and Satyam for east and south zones.

The estimated budget for each zone is Rs 1,500 crore.

India’s second largest software and services exporter Infosys Technologies is keen on acquisitions in Europe and Japan and in the areas of consulting, SAP implementation and BPO. Senior officials of the company said that they would be comfortable with a deal size of $600-700 million (around Rs 2,930-3,420 crore).

“More than the price and valuation of the company, its profile is important and it should help in our growth. Besides, we will continue with our expansion plans. We are committed to regions like China, Mexico and Eastern Europe,” said Kris Gopalakrishnan, CEO, Infosys at the India Economic Summit being held in New Delhi.

The company’s December quarter revenue will see an adverse impact due to the rise of dollar against other currencies. “Definitely, currency movements will have an impact but it is difficult to say what exactly it is,” said Kris. About 40 per cent of the company’s revenue comes from non-US markets.

During its second quarter results ended September 30, 2008, Infosys management revised its full-year dollar guidance down to 13.1 to 15.2 per cent — perhaps its lowest revenue growth since inception — from 19-20 per cent. It also cut earnings per share to $2.24 from $2.32-$2.36 projected in July.

Kris said that while there were indications that IT budgets in 2009 would be lower than this year, the offshoring component will be higher.

Despite these conditions, the company is on track to add 25,000 employees in the current fiscal. “We have not revised our salaries downwards. The utilisation has come down and the bench is higher but that is alright. We are taking this opportunity to train employees and we are increasing the R&D spend,” added Kris.

As for cost cutting, the company didn’t share the internal targets but cuts can happen in discretionary spending like travel and entertainment.