Retail sector to grow at 28% during 2008-12 in India

During 2008-2012, the IT market in the Indian retail sector is likely to grow at an estimated compound annual growth rate (CAGR) of 23 percent; reaching $1.4 billion by 2012, says a report. According to the report titled as 'IT in the Indian Retail Industry: Emerging Trends and Market Opportunities' brought out by Springboard Research; software is estimated to grow at a CAGR of 28 percent for the period under review, while hardware will grow at 19 percent.

Springboard Research is an IT market research and advisory firm. The firm has brought out this report after interviewing leading IT vendors operating in the retail sector and 152 Chief Information Officers from both large and mid-sized retail companies across India. According to Nilotpal Chakravarti, Senior Research Analyst, Springboard Research, although the recession has affected retailers' profitability, it opens a window of opportunity for IT vendors as retailers turn to technology to address the challenging economic scenario. "Many retailers are eschewing curtailing their long-term IT projects, while they remain cautious with short-term IT spending and new investments," he added.

Nearly half of the CIOs in the retail sector interviewed, indicated large format stores/hypermarkets as the top business opportunity in the sector, while competition is named as the biggest business challenge by a majority of the CIOs. Inventory management has emerged as the top strategic IT focus areas for the CIOs, followed by supply chain management (SCM). Enterprise resource planning (ERP) topped the list of business applications in terms of actual deployments in the last 24 months.

According to Springboard's data, POS (Point of sales) is the top preferred store solution that Indian retailers have deployed in their stores. CIOs revealed that a large number of retailers mentioned price as a key determinant in external IT vendor selection, while strong service and support came in the second place on the list of priorities. Other influencers like vendor reputation and existing relationship rank much lower in the priority hierarchy. Springboard also found that local IT vendors have a sizeable foothold in the retail space because they provide low-cost, industry-specific solutions.

According to Springboard's data, SAP, Microsoft and Oracle hold the largest market share in the Indian retail sector, while HCL is the leading local vendor in the retail space. IBM is also named as among the leading vendors in this space.

"Best-of-class retail solutions like RFID, intelligent shelves, and kiosks still remain out of reach for the Indian market because of their high cost. IT vendors should look to address this gap by rationalizing costs, along with clearly defining ROI benefits for clients," said Chakravarti.

Agencies

Increase of IT spending by 20-25%, says GE

General Electric (GE) may increase its IT spending by about 20-25 percent for 2010-11, a step that can turn out to be a boon for several Indian information technology (IT) vendors.

Software firms like Tata Consultancy Services (TCS), HCL Technologies, Patni Computer Systems and iGate, who generate a significant amount of revenue from GE, are likely to benefit most from the increase in its IT budget.

A person close to this development said, "GE has allotted an additional $500-600 million for its IT budget during 2010-11. The firm may be looking to extend contracts with vendors like iGate and Polaris by three to four years and significantly increase its spending with large capital firms like TCS and HCL going forward."

GE has already extended its IT contract with Birlasoft, estimated to be worth $50 million and $100 million and with Mahindra Satyam, worth $100 million by three years. The existing contracts for iGate, Polaris Software Lab and Birlasoft will end in December this year.

Agencies

Will TCS reduce the salary of campus recruits?

IT services company TCS (Tata Consultancy Services) has announced that it would revise the compensation package of campus recruits. Under the changed structure, TCS trainees will no longer be paid the variable component of the compensation - which works out at Rs. 5,000 per month or 19-20 percent of the total annual pay packet of Rs. 3.1 lakh - offered to them during their in-campus recruitment.

Ajoy Mukherjee, Global Head, Human Resources, TCS said, "As part of a compensation restructuring exercise, freshers joining the company this quarter onwards will not be eligible for variable pay during the training period. Restructuring trainees' salaries is being done from the point of view of productivity so that they get accustomed to the fact that variable pay depends on performance."

Last year, the company had made campus offers to 24,885 students. Of this, the company is expecting around 19,000-20,000 students to join. Going by this number, the company is expected to save around Rs. 10 crore per month by altering the variable part of salary for trainees. For six months, the savings would be Rs. 60 crore. Mukherjee said, "The company would be able to take on board all campus recruits in the current fiscal itself."

However, other IT giants like Infosys and Wipro are not fiddling with the compensation package of trainees. Infosys decides on the variables based on a test conducted after 18 weeks of initial training. Mohandas Pai, HR head, Infosys said, "Those who score four out of five are entitled to variables." Wipro claims to pay the variable part to its employees from the beginning of the training period.

Now, it would be interesting to see, what steps these companies take for campus recruitment in next fiscal. TCS is yet to decide on how these campus offers would be made in the next fiscal.

Agencies

TCS, Wipro and HCL emerge top IT leaders

A recent rating — for global R&D service providers across India, China and Eastern Europe — by Zinnov Management Consulting identifies Wipro, TCS and HCL as market leaders in the overall rating based on components like financial strength and business models, innovation & expertise, people strength and operations.

The rating has also highlighted the impact of recession on the R&D service providers community across all key levers — like contract re-negotiation, increase in sales cycle time, bankruptcy of clients and fears of business continuity risk — which did result in many of them having to reassess and redefine their strategies.

Result of this reassessment has seen core mid-market service providers like Tata Elxsi, Tech Mahindra, Aricent, MindTree, Symphony, Sonata, Global Logic, Polaris and Aditi, moving strongly towards the top-pack and establishing themselves as leaders in specific industry verticals, said the rating.

Pari Natarajan, CEO, Zinnov Management Consulting said, the global economy has witnessed a major reset and is currently observing green shoots of recovery, with Germany, India and China among others showing signs of improvement. “This tectonic shift in the economy has led to numerous changes in the current market dynamics, but one thing that can be safely assumed is the continued growth of interlinkages between global businesses and stronger relationships between service providers and MNCs would only continue to grow in times to come.’’

Vertical specific rankings were also under taken to understand the capabilities of the various service providers in providing turnkey product engineering services in verticals like aerospace & defense, automotive, consumer electronics, healthcare, semi conductors, telecom, & software.

The rating study also found that, R&D offshoring to India, China, Russia and Central & Eastern Europe is expected to grow at 6-7% with India and China continuing to constitute close 90% of the overall market. Though large firms have neither dramatically cut down nor increased their R&D spends. Hence, R&D offshoring to India, China, Russia and CEE is expected to remain flat.

Agencies

Check out the best IT employer: Dataquest-IDC survey

The average salary increase in the IT sector during 2009 was down at 1.4%, according to a Dataquest-IDC survey.

Employees under two years of experience earned a 2% increase in salary, while those between 2.1 to 5 years had their salaries cut by 7%. Those between 5.1 to 10 years got an average salary hike of 5% and those with over 10 years experience earned a 4% salary increase.

In the survey, HCL Infosystems emerged as the best employer in the IT industry, followed by iGate, Rolta, RMSI and SAS Institute. HCL jumped up two positions from last year, while iGate slipped one notch to No. 2.

The survey covered 200 IT companies of which 31 companies were short-listed for the final round. For the first time, India’s top four IT companies declined to take part “as layoffs and salary re-alignment leads to dip in IT employee morale”, the survey said. The top four IT firms employ about 40% of the IT professionals in the country.

Seven new entrants — R Systems (6), Perot Systems (7), Ingram Micro (11), Sify Technologies (13), Infogain (17), Unisys (18) and Novell (19) — made it to the Top 20 Best Employers in IT list.

The employee attrition rate came down to an average of 15%, from 18% last year. A majority of IT employees said they changed job for better salaries and compensation (53%), overseas postings (38%), better job security (18%), flexible working hours (18%) and training and development (9%). While the average retention rate, defined as percentage of employees retained out of the total employees as on March 31, 2008, improved to 85%, from 79% in 2008, Hexaware Technologies showed a remarkable retention score of 100.

The study also reveals that companies have become more transparent in their communication with employees giving them a sense of belonging. They have also gone ahead and adopted a higher degree of professionalism in their dealings with employees as well as customers or suppliers.

Another key finding is that more employees are satisfied with the interest shown by their companies as well as their immediate seniors in helping them strike a worklife balance compared to last year. The study reveals that there is a drastic fall in the number of people who feel that their job is secure within their company.

Agencies

Has HP retained No 1 position in the Indian PC market?

Hewlett-Packard (HP) improved its market share in the first quarter to continue its lead in the India PC personal computer (PC) space, according to technology research firm IDC.

HP captured 18.2% of the India PC market in terms of unit shipments in the January-March period, an IDC India report said. The PC maker had a 15.6% share in the previous (October-December) quarter. HP has been numero uno in the India PC market consistently every quarter over the past four years. With a market share of 9.8% in overall PC shipments, HCL Infosystems regained the second spot, after losing out to Dell in the October-December quarter. Dell slipped back to the third spot with a share of 9.7% in the first quarter this year, IDC said in a release.

The India PC market witnessed a 7% quarter-on-quarter growth in shipments in Q1 of 2009. A total of 16.79 lakh units of desktops and laptops were shipped during the January-March quarter of 2009.

Desktop PC shipments of 12.13 lakh registered a sequential growth of 9%, while laptop shipments of 4.66 lakh units grew 3% QoQ.

The research firm said the market share, over the next two quarters, would depend on how well PC vendors capitalise on opportunities in the consumer, education and government segments in India.

In Q1 2009, fourth-placed Acer’s market share dipped marginally to 7.3%. Fifth-ranked Lenovo showed a more pronounced drop — its share came down to 4.7% in Q1 2009 from 6.6% in the previous quarter.

“Moving forward, hardware in general, and PC shipments in particular, will continue to remain under pressure. Winners would gain market share and improve profitability through the right price/volume mix and optimal exploitation of supply chain efficiencies,” IDC India country manager Kapil Dev Singh said.

Economictimes

Have computer sales dipped by 12%; As cos cut IT spends

Personal computer (PC) sales in India fell about 11.7% during the first quarter of the calendar year to about 2.1 million units as enterprises slowed down IT spending, according to research firm Gartner.

Both desktop PC and laptop sales declined about 11% during the period, as both large enterprises and small and medium businesses delayed their IT hardware purchases.

“Cost pressure seems to have kept away enterprises from spending on IT hardware during the first quarter of 2009, while there are signs of some turnaround in the consumer sentiment,” Gartner principal analyst Diptarup Chakraborti said.

Hewlett-Packard continued to lead India’s PC market, selling about 300,000 PCs in the quarter. The PC maker, however, saw an year-on-year decline in both desktop and laptop sales during the period. HCL Infosystems (200,000) and Dell (158,000) were ranked second and third, respectively. Acer was ranked fourth.

Gartner said it expects PC sales in India to decline 3.7% year-on-year to 8.98 million units this year. The firm had projected sales of 11 million units for the calendar year in the beginning of January, but the first quarter made it revise its projection downwards.

“Production of desktops and laptops has come to near a halt in manufacturing destinations such as Taiwan,” Mr Chakraborti said. PC makers say they saw some growth in new categories, such as netbooks and higher retail sales, in the first quarter but the good news is limited to the consumer space.

“Large enterprises and small and medium businesses are not buying. The e-government projects are also in a limbo with the Model Code of Conduct in place,” Acer India chief marketing officer S Rajendran said.

With the slowdown in enterprise spending, corporate buyers are expected to account for 69% of total PC sales in 2009, down from 71% last year.

The economic slowdown has resulted in a slump in PC sales across the globe. Worldwide PC shipments declined 6.5% in the first quarter of 2009 to 67.2 million units. As per Gartner, the decline could have been steeper but for low-priced laptops such as netbooks.

Agencies

Wipro, HCL unlikely to make any campus offers this fiscal

To save on the cost of training, one of the leading domestic software exporter HCL Technologies said it will hire people 'just in time' of requirement rather than maintaining a bench.

HCL has been following the policy of just in time hiring, which has paid off well for the organisation, HCL Technologies CEO Vineet Nayyar said.

Declining to give a hiring outlook for the year ahead, Nayyar said the firm is unlikely to make campus offers.

"We have hardly made any campus offers... we have moved to the lateral strategy," he added.

Similarly, Suresh Senapaty, CFO of Wipro Ltd said the company will not hold any campus interviews this fiscal but will honour all the commitments made to 7000 fresh graduates last fiscal.

The overall global headcount of the company fell by 992, to 54,026, from December to March. However, the company clarified that it has not laid off any employee.

During the quarter the company has made a gross addition of 2,298 employees. In the BPO services segment, however, the headcount has came down to 11,426 from 12,750 in December.

Commenting on the BPO business, he said the company is trying to move away from voice-based services to platform-based services. So, it is unlikely that the company would make new recruitments for voice-based services.

Agencies

Is it tough times ahead for Indian IT firms?

Major information technology firms are expected to post a decline in revenue growth in the fourth quarter of 2008-09, primarily on account of project cancellations, say analysts.

"Indian vendors have witnessed several project cancellations during the third and fourth quarter of the fiscal year 2009. The magnitude of project cancellations is different for different vendors," domestic brokerage firm Motilal Oswal said in its India strategy report.

Along with project cancellations, delays in client decision making will cast a toll on 4Q FY-09 volumes, it said. "We expect IT companies to report quarter-on-quarter dollar revenue declines owing to stressed volumes and declining realisations. This is the second consecutive quarter where the sector will see dollar revenue degrowth," it said.

The rupee has depreciated 4.69 per cent against the US dollar during the March quarter, while on an year-on-year basis it has depreciated over 27 per cent.

"Hence, the top-line growth even in rupee terms is expected to remain flat to marginally negative on an organic basis during the quarter," brokerage firm Sharekhan said in its IT earnings preview. Meanwhile, the appreciation of the dollar against other international currencies (euro and pound sterling) would impact the dollar term revenues of the front-line IT firms.

"This is likely to have a negative impact of 2-3 per cent on the dollar term revenue growth rate as the IT companies bill around 25-30 per cent of their revenues in the pound sterling, the euro and Australian dollar," it added.

IT major Infosys would kick-start the quarterly earnings season from April 15 followed by other IT majors -- Wipro, HCL Technologies and Tata Consultancy Services.

"Forward earnings for most companies are not expected to be good. The earnings for the entire IT sector are expected to be bad and the Infosys results are likely to give a new direction to the market," Arun Kejriwal of Kejriwal Research and Investment Services said.

The Sharekhan report stated that amid global turmoil and uncertainty, investor focus would remain on FY-10 guidance. "Going forward, the street would be keenly watching the guidance for FY 2010 as the same would influence the sentiments towards the IT stocks. In rupee terms, the street expects a guidance of a flattish growth in revenues," it noted.

"The street is expecting a revenue growth of 3-4 per cent in rupee terms in FY-10 despite a five per cent y-o-y decline in dollar terms," Sharekhan added. During the January-March period, Infosys scrip has gained 15.38 per cent to Rs 1,324.10 and TCS was up 9 per cent.

While shares of Wipro fell one per cent since January 1, HCL Technologies was up 17 per cent at the end of March 31. "Technology stocks are likely to underperform the markets over the next few quarters," Sharekhan said.

According to Motilal Oswal following substantial across-the-board price cuts, IT companies are hopeful of restricting price cuts to five per cent in the March quarter. Besides, focus on off-shoring would improve the impact from declining realisations.

"We expect growth to start picking up from second half of FY-10, as clients begin to adopt off-shoring to cut costs. As the freeze in technology spending begins to lift, we believe large players would start booking volume growth," Motilal Oswal added.

The Sharekhan report stated that in terms of earnings, Infosys is likely to meet the lower end of its dollar guidance.

Besides, HCL Technologies is likely to report a revenue growth on the back of acquisition of British consultancy firm Axon, which would cast its toll on the operating profit margin of HCL.

Agencies

Will HCL Tech layoff 450 employees?

IT services company HCL Technologies has asked 450 employees at its Delhi and Bangalore offices to leave. A majority of those axed were on the bench.

An HCL Technologies official, on the condition of anonymity, said that the company had sacked 400 people in Delhi and another 50 in Bangalore in the last one-two months. The firm had earlier asked those on the bench, the buffer of employees kept on the rolls for new projects, to get assigned to projects or face the prospect of being asked to leave the firm, he said.

In an email reply, a company spokeswoman didn’t comment on the number of people sacked by the company but indicated that the move was linked to the performance of employees.

“HCL follows a systematic process of performance review and development, and the expectation of the organisation is for employees to meet the stringent performance standards. This is a routine and ongoing process,” she said.

As of December 31, 2008, HCL had about 52,957 employees. The global downturn has impacted the revenues of clients of Indian IT companies, thereby dampening demand for software services.

Agencies

IT Cos Eye Slice of Aerospace Outsourcing!

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 programme 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.

CXOtoday.com

Wipro among top three in desktops segment by 2008

Computer major Wipro Infotech, a division of the $3.47-billion Wipro Limited, having rolled-out its new range of environment-friendly desktops in the Indian market, is now eyeing to be among the top three in the Enterprise and SMB desktop segment by 2008. Ashutosh Vaidya, vice-president – Personal Computing Division, Wipro Infotech in an interview with Manu Sharma, spoke on wide range of issues ranging from their foray into eco-friendly computers to future plans.

CIOL: What is Greenware range of desktops and laptops? What prompted Wipro to launch these products?
Ashutosh Vaidya: Wipro has been addressing the issue of increasing e-waste and in this connection launched eco-friendly range of products as part of its responsibility towards cleaner environment. This provides a compelling proposition to our customers to adopt eco-friendly, high performance and feature-rich computing products in their enterprise.

CIOL: Where does Wipro stand in the computer market and how does it plan to grow?
AV: After having registered sales of 150,000 units in 2006 (IDC report), Wipro is now looking to achieve a target of 225,000 units in 2007. In the Enterprise/SMB segment, the company occupied number five slot with sales of 70,000 last year and is now eyeing to reach 70,000 units in 2007, thus move up among the top three. HP leads this segment followed by HCL, Dell, Lenovo and Acer. We are targeting at state banks, government agencies to reach our target.

CIOL: What are RoHS compliance products and mention its importance?
AV: RoHS or (Restriction of Hazardous Substances) is a directive from the European Union to reduce substantial e-waste in the environment. A lot of e-waste such as Brominated Flame Retardants (BFR), PVCs and heavy metals like lead, cadmium and mercury are used by computer manufacturers. Now Wipro has set up its e-waste management process called Wipro Green Computing, which spans across its product lifecycle – from designing, manufacturing right up to the final disposal.

CIOL: How does Wipro plan to reduce e-waste in India?
AV: Wipro is among the first computer manufacturing companies to launch these products in India. We will also not procure non-RoHS components from our global vendors. Besides we will roll out only RoHS compliant products by the end of this fiscal. Presently, we have eight products including four desktops and three notebooks that are 100 per cent RoHS compliant. We also have 16 centers across the country where customers can come and surrender their old computers and we will handle the disposal.

CIOL: In what way is Greenpeace involved in this project?
AV: Greenpeace, a global NGO has been at the forefront of the campaign for clean production and safe recycling. Greenpeace wants the electronics industry to design products that are free from hazardous substances, easy to recycle, and do not expose workers to health risks during production or recycling. Greenpeace is convincing individual producer responsibility (IPR) for full take-back of their products at their end of life, and go beyond the EU RoHS directive in eliminating all hazardous chemicals.