Breaking News Latest News Updates, e-Bulletins My News Wire

To ensure that their offices don’t get flu-ed out, IT firms in Pune are adopting preventive measures at the workplace including video conferencing and the option of working from home.
One of India’s IT hubs, Pune is home to over 200 IT companies, including the top names in the industry, and employs more than 2 lakh people. The city is among the most-affected by swine flu with their number increasing by the day.

In their effort to keep the flu at bay, most IT companies undertake daily checks on employees and those having temperature of 100–plus degrees Fahrenheit are sent back home. In fact, at Fujitsu Consulting even drivers who drop the employees home have to undergo a temperature check before entering the office complex.

Even employees whose family member at home is not well are sent back home as they are likely be a carrier of swine flu. When they return, they have to produce a medical certificate stating that they are healthy, a Fujitsu official said.

As IT firms are centrally air-conditioned, employees have also been given the option of working from home. Video conferencing has now replaced face-to-face meetings when employees enter the city from flu-hit areas. Infosys Technologies, on its part, has already issued travel advisories restricting travel in and out of Pune.

S.Mahalingam executive director and CFO of TCS said the company is seeing the first signs of a revival of the global economy. He, however, declined to say whether this was the end of the global recession.

Like the most IT companies, TCS has also been severely hit by the global recession. It has experienced a number of project cancellations since September 2008. “As the recession spread across the globe and sunk deeper, a number of customers were canceling their projects with us but lately we see an arrest in this,” said Mahalingam.

But customers remain cautious and are showing discretion in their spending, he said.

Mahalingam said TCS followed a policy of diversification in revenues that has helped in these rough times. Besides the company has also followed the same policy in terms of geography and has been focusing on emerging markets like the BRIC countries for growth.

“India has been a strong market for us besides the other BRIC countries and that has payed off,” said Mahalingam.

On the employee front, he said even though there is a freeze on hiring fresh staff, the company has honored the offer made to 24,500 people earlier.

TCS has seen a strong growth in retail, pharma, utilities verticals over the last few months.

Bangalore: In move to reduce the burden on their clients due to recession, IT majors are cutting down on their billing rates by almost 35-40 percent. According to analysts, the billing rates have touched the lowest ever rates at $16 per hour and they predict that this will continue till first quarter of 2010.

Avinash Vashisth, Chairman and CEO, Tholons, an offshore advisory firm says, “Last month has seen unprecedented cut in billing rates even for existing customers.” According to Vashisth, large testing services, and of services of similar value, $16-20 is the prevalent rate. These rates are almost 30-35 percent lower than the rates being charged earlier this year and steeper than the 20 percent cut that British Telecom had demanded from Infosys and Tech Mahindra earlier this year on some old and new projects. Also higher-end projects like SAP have faced pricing cuts of around 25 percent, which is again more than what it was earlier this year.

According to The Economic Times, top IT firms are offering such rates in the form of introductory discounts for new clients, and for a year or two for existing clients. Another worrying factor for the IT firms is that despite the rate cuts, there has not been a corresponding rise in the volume of deal flow, in either highervalue or the lower end services.

Diptarup Chakraborti, Principal Analyst at Gartner, says that he does not see the situation improving before Q1 or Q2 next year. “Good old days are not coming this year for sure,” Chakraborti said. A Gartner study says prices of IT services in outsourcing are anticipated to shrink well up to 2010 due to an uncertain economic climate, IT budget constraints and general market consciousness.

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.

Bhavin Shah, global technology research of JPMorgan, is of the opinion that IT companies will cut budgets by at least 15-20%. He however said there would be no material impact on the IT sector because of the cut in service tax.

“We expect significant budget pressure across the corporate space on a global basis. So, I think IT budgets could be down easily by at least 15-20% year-on-year for some of the major companies on a global basis,” Shah said.

He said customers will ask for 20% price cuts and the IT sector might see single-digit growth in FY10. IT stocks may see a further downside from the current levels.

With the global recession impacting IT companies, Indian software firms are eying the huge aerospace and defense (A&D) market as airplane makers and Defense companies look to control costs by outsourcing design and management systems.

Research firm Frost & Sullivan estimates the Indian Defense market to touch $36 billion by 2013 and companies in India are expected to get offset orders worth nearly $4 billion through 2011.

Sensing this potential, companies such as IBM, Wipro and HCL are working on IT implementation contracts. The offset program is expected to open up new opportunities for these IT vendors for A&D contract worth over Rs 300 crore.

Talking to CXOtoday, Anup Vittal, Industry Leader-Aerospace & Defense of IBM India, said, “With A&D OEMs and tiered suppliers increasingly outsourcing IT and engineering services, there is a very large window of opportunity created for software (IT) companies. A&D companies are increasingly being asked to demonstrate product development agility, human capital management, improve upon service offerings in the aftermarket space and enable enterprise cost effectiveness.”

“All of these capabilities can be developed by partnering with established software organizations that are capable of driving innovation and improvements. This, in turn, makes it a very lucrative market for software companies to exhibit their expertise,” said Vittal.

IBM is bullish about the A&D market in India and sees a huge potential to earn up to $5 billion from these sectors in India over a 10-year period. Additionally, as a qualified A&D offsets partner in India, IBM is well-poised for significant growth in this region, as companies in India are expected to get offset orders worth nearly $4 billion through 2011.

Similarly, Wipro offers application development and maintenance and enterprise business integration. It also has the expertise to offer IT services for the maintenance, repair and overhaul (MRO) of civilian aircraft, and is already offering these services to some of its clients.

HCL’s main area of expertise in A&D sector are avionics, aero structures and mechanical engineering services for aero engines and addresses the aerospace industry’s key points.

Karun Khanna, director of Alpha Design Technologies, said, “Looking at the huge demand for software in the A&D sector, most of the IT software players are all now eying a large share in this sector. Since they all have high domain knowledge, it will give this sector the much-needed boost.”

India’s opening up of the Defense sector to foreign direct investment, the ongoing modernization plan of its Armed Forces and enormous new opportunities in the civil aviation sector have opened innumerable new avenues.