IT services deal signed between GE, Mahindra Satyam

Mahindra Satyam today said it has received an extension of its multi-million dollar contract with GE for next three years January 1, 2010.

GE, which is among the top five customers of Mahindra Satyam for over a decade now, gets support in the specialised areas of Application Development Maintenance, Business Intelligence and engineering services, Satyam Mahindra said in a statement.

"We thank the leadership at GE, for having reposed their confidence in us, and reinforce our resolve to excel in our deliverables to our esteemed partner, for years to come," Mahindra Satyam Global Account Executive Arvind Malhotra said.

GE has signed a similar contract with 11 other vendors. "GE recognizes the support extended over the years by Mahindra Satyam, and their commitment to delivery excellence, even during trying times," GE GDC Leader Steve Morrison said.

Satyam management had been in constant dialogue with its major clients, including GE and others to continue working with it.

"Mahindra Satyam has gained 32 new customers in the last four months," a top official had said earlier.

"Some of the large clients we had lost earlier are coming back and are reassigning new business," Atul Kunwar, the company's president of the Middle East, Europe, India and Asia Pacific regions, said on the sidelines of an industry conference.

The company, currently has about 420 clients, he said, compared with 480 in January before it was left battling for survival after Satyam's founder revealed India's biggest corporate fraud.

Satyam was acquired by Tech Mahindra in an auction in April and subsequently renamed. The number of employees the company has on reserve has come down to 7,000 from 8,500 in July, Kunwar said.

"With the business improving and new deals coming in, we have slowly started taking in employees from the virtual pool."

Agencies

Seven-year IT services deal signed by IBM, Qantas

According to a report the outsourcing deal is valued at up to $200 million which could cost up to 178 Qantas workers their jobs

IBM Corp. said that it has signed a seven-year outsourcing contract with Qantas, Australia's largest airline, for the provision of project delivery functions, as part of the airline's improved business efficiency goals.

David Hall, Qantas executive manager of corporate services and technology, said the agreement with IBM will enable a fast transformation, increased efficiencies, and improved customer experience.

"Qantas believes the partnership with IBM will give us access to IBM's scale, strength, expertise, and the latest tools and technologies available in the global marketplace. We are confident that IBM will deliver significant benefits to our business," he said.

Under the contract, Qantas will gain access to IBM's deep research, analytics and business optimization capabilities.

"Qantas' partnership with IBM represents a major step towards the airline's mission to lead and innovate in the competitive airline industry," said Katie Bambrick, IBM Global Business Services Managing Partner for Australia and New Zealand.

"Drawing on IBM's advanced technologies and the airline industry expertise IBM has built over the last half-century, this partnership has an exciting future," said Ms Bambrick.

According to Australian IT the outsourcing deal with IBM is valued at up to $200 million which could cost up to 178 workers their jobs.

Staff at Qantas's project delivery team are set to transfer to IBM as part of the deal. Those who do not accept new employment terms from IBM will be forced to take redundancy, the report said.

Agencies

Does TCS plan to hire 25,000 jobs globally?

In a move that could bring a smile to many faces, Tata Consultancy Services (TCS) has announced that it will hire 25,000 people globally in 2009, with 90 percent of them in India alone. Though the number is bigger when compared to the hiring these days, it is less than last year when TCS appointed around 35,000 people.

With this recruitment drive, TCS also plans to expand its presence into the tier-II cities in India. "We will be hiring 25,000 people this year, which means roughly 25 lakh square feet of work space required and, therefore, we need to grow outside the metros. Tier-II cities are our only focus for expansion in the country as the top rung are clogged and saturated," said Tanmoy Chakrabarty, Vice-President and Head of Government Industry Solutions unit at TCS.

Following this hiring spree, the total global manpower of TCS would go up to more than 1.8 lakh. This will put the IT services provider among large private Indian employers like Tata Steel, which has the total employee strength of two lakh. Going forward, the company, which has an estimated 32 percent market share, plans to cash in on the Indian government's plan to invest Rs. 40,000 crore on IT services.

Currently, 70 percent of the IT segment's revenue is from India, while the rest comes from the U.S., Latin America, Africa and South East Asian countries. However, the revenue contribution from Indian government businesses to the total company revenue of $6 billion is less than five percent, which the company intends to increase to more than 10 percent in the next three years.

Agencies

Tech Mahindra bags Satyam Computers sale bid

IT services provider Tech Mahindra is the new owner of Satyam Computer Services. The company bid the highest at Rs 58 per share,
pipping rivals engineering firm Larsen & Toubro and billionaire investor Wilbur Ross to the post.

Engineering firm L&T bid at Rs 45.90 per Satyam share, Kiran Karnik, chairman of the govt constituted Satyam board told reporters.

Karnik also said that the Cognizant-Wilbur Ross combine had put in their bid at Rs 20/share for the fraud hit IT co.

Tech Mahindra will have to pay Rs 1,757 crore to buy a 31% stake in Satyam Computer Services. The IT co will have a market cap of Rs 5,666 crore on expanded equity. Tech Mahindra will have to pay a total of Rs 2890 crore for 51% stake in Satyam.

The acquisition will help the company, an arm of the Mahindra & Mahindra Group, to diversify into new areas instead of just depending on the telecom sector.

The Satyam acquisition will help Tech Mahindra diversify its software services business, and compete aggressively with bigger rivals such as TCS, IBM, Infosys and Wipro.

Satyam, which serves customers such as GE, GM and Ford will also help Tech Mahindra build a better portfolio of customers.

Satyam has a 46,600 strong work force, land assets of 450 crore, besides the order book position. Its liabilities include the legal liabilities arising out of the class action suits filed by shareholders in the US, besides any liability arising out of the tussle with UK based mobile payments services provider Upaid.

Agencies

Global IT spending to drop by 3.8% in 2009, says Gatner

The ongoing global slowdown will force companies worldwide to reduce their IT expenditure to USD 3.2 trillion this year against $ 3.4 trn in 2008, according to an IT research company.

"The unprecendented decline of the global economy is impacting the IT industry with worldwide IT spending forecast to total $ 3.4 trn in 2009, a 3.8 per cent decline from 2008 revenue of nearly $ 3.4 trn," IT research and advisory company Gartner said in a report.

Gartner said that all four of the key market sectors of the IT industry-- hardware, software, IT services and telecommunications have been revised downward, with only software spending growth remaining positive.

"Spending in computing hardware
will see a decline of 14.9 per cent with total spending to be around USD 324.3 billion as against $ 3.4 trn in 2008," Gartner said.

The spending in IT services and telecommunications sectors will also fall by 1.7 per cent at USD 796.1 billion and 2.9 per cent at USD 1,891.2 billion, respectively, the report said.


Agencies

Sapient lays off 300 employees in India

Software firm Sapient has laid off 300 employees at its offices in Bangalore, Noida and Gurgaon as a result of the global economic downturn, which has impacted several IT firms.

"In order to adjust to this changing demand environment, Sapient has exited about 8 per cent of its people. Sapient employs approximately 6,400 globally and as a result of this rationalisation, 300 people in India have been impacted," the company spokesperson said.

He said the exited employees have received severance packages and full outplacement services, and would be considered for rehiring on a fast track basis if the company finds that it again needs their skills and experience.

"These people were laid off to right size the company. They were at different levels of the management," he said, adding that Sapient has two-third of its workforce in India.

Businesses worldwide are feeling the impact of the economic downturn, and as a result, are reducing budgets and delaying projects. Despite the short-term softness in demand, Sapient remains well-positioned in two large markets - IT services and interactive marketing.

The company would continue to make strategic investments and targeted hires in several areas that are expected to drive success in 2009, including trading and risk management, marketing and government services, he said.

Agencies

Is Infosys getting tougher on poor performers?

The economic slowdown has made Infosys Technologies, India’s second-largest IT services firm by revenues, take a harder look at employee performance. The firm has put 2,200 employees under the scanner for non-performance this year — more than double the number last year, a senior executive said.

Last year, about 1.5% of IT services staff or about 1,000 employees figured among the bottom performers. This year, the percentage has shot up to about 3.5%. About 600 of such non-performers have left the company already this year.

Such employees are put under a performance improvement plan, provided mentoring and their performance is reviewed for a quarter. “When the times were good, people got away with things. Our tolerance of non-performance has come down now,” Infosys director (HR, education & research and administration) TV Mohandas Pai said.

Meanwhile, the IT services major has made about 20,000 job offers to college students across the country for 2009-10. The company will honour the commitment made, Pai said.

However, there could be lower or even no wage increases at Infosys next fiscal. “Wage increase next year will be subdued, if there will be an increase,” the Infosys director said.

The IT services firm said it expects IT budgets of clients to be flat or may even reduce 5-10% next fiscal. “Clients are in pain and they want us to share the pain. Their ability to spend is lower,” he said.

Economictimes

Caretel Infotech hires 600 people for BPO operations

Dalmia group company Caretel Infotech is upbeat about the opportunities in the BPO space and has hired about 600 people, even while others are handing out pink slips to employees amid the current slowdown.

"In last 30 days, we have recruited 619 employees for our various projects from metros and even small towns like Chindwara at Rajasthan for our Kisaan Call Centre Project. For our various assignments, we will be recruiting more and more people from all over India and train them for the future," Caretel Infotech Chief Executive Officer Amit Roy said in a statement.

The company also said it is looking at the downturn as as an opportunity to bag more deals, both in the country and overseas.

"We are looking at this slowdown as an opportunity and have started international outsourcing process for some part of the US, Europe, Australia and New Zealand to manage the slowdown impact. We have also increased our national clientele as we have bagged assignments from reputed brands like DDA ... and soon will close a DTH service provider in India," Roy said.

Caretel has 13 business centres in India and employs over 6,000 people. It is now expanding its operations overseas and is targeting a significant growth from its global clients.

For our international clients, we will be hiring 200 or more people in near future, he added.

Source: Agencies

World Bank rejects Satyam's demand for an apology

The World Bank has rejected Satyam Computer Service’s demand to withdraw a statement by which the organisation imposed an eight-year ban on any business with the IT major.

Satyam Computers had earlier asked the international lender for an apology for its statement on the IT major's failure to give proper documentation on fees charged for sub-contractors, and asked the Bank to withdraw the statement.

"The Bank stands by its statement issued on its Indian website on December 23," the India spokesperson of the World Bank Sudip Mazumder said.

The World Bank had said on December 23 said that "Satyam was declared ineligible for contracts for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charges for its sub- contractors."

Asked if the Bank would apologies as demanded by Satyam, he said any comment if at all had to come from the headquarters in Washington, but the Bank stands by its statement.

He said "It will be in appropriate to comment on Satyam's statement since I have not received it or read it."

It is important to note that these developments are based out of our headquarters in Washington and are not related to Bank's India Programme," Mazumder said.

Within two days of the Bank's announcement, Satyam had formally requested the World Bank to immediately withdraw those statements and asked it to "issue a new statement apologising to Satyam for the harm done to the company due to the Bank's actions."

Satyam, which is already reeling under a crisis over aborted acquisition of two firms promoted by family of Chairman Ramalinga Raju, advised the Bank that the IT firm would evaluate all options in view of both the Bank's "inappropriate" public statements and its response to Satyam's requests.

"Satyam usually does not comment publicly on matters involving our customer relationships. However, the inaccuracy and inappropriateness of the World Bank's public statements regarding Satyam has forced us to issue this brief statement in order to set the record straight," it added.

The issue will now come up for discussion at the December 29 Board meeting of the company, against which the Bank has imposed an eight-year ban.

Source: Agencies

MphasiS asks 1,300-1,500 employees to relocate or quit

IT services firm MphasiS has asked all 1,300-1,500 employees at its Noida office to either move to a low-cost location or quit.

Most of the employees have quit or are in the process of quitting the firm. Only a few have decided to shift to another centre, informed four former employees who quit recently.

MphasiS, majority-owned by EDS that was acquired by HP this year, offers outsourcing services in financial services, healthcare, communications, transportation, consumer & retail industries and has over 28,000 people on its rolls. It set up the Noida centre in 2005 for BPO operations and has over 1,000 BPO employees, besides some IT employees.

The four former MphasiS employees ET spoke to said the company had told the BPO employees about three months ago to decide between quitting or relocating to other MphasiS centres such as Indore and Vadodara. All employees were given time till December-end to decide and were not given any reason behind the move.

A company spokeswoman said that MphasiS continues to work out of the Noida centre. “We continue to shape our operations as per our client needs, and have recently set up a new centre in Vadodara.

MphasiS is known for its sensitive HR policies and the interests of its employees are a priority,” she said. The spokeswoman did not comment on the decision to relocate people.

Besides giving the option to relocate, MphasiS had invited rival firms such as HCL, ExlService Holdings and Tech Mahindra to recruit from among its employees.

One of the four ex-employees, who bagged a job with one of these firms, said most BPO employees at the Noida centre had managed to find another job.

However, those in the IT services business were not so lucky. One former IT employee at Noida said the company informed the team about a month ago that they need to find another job. “They also said that if we quit early, we will get our retention bonus, which was due later, with our November salary,” he said, adding he is yet to find another job.

Earlier this month, MphasiS opened a 400-seat BPO centre in Vadodara. The company had said it plans to increase the number of seats to 800 seats and employ 2,500 people within a year.

Source: Agencies

40pc of large businesses cut their IT budgets

More than 40 percent of large businesses have cut their IT budgets this year due to the global economic slowdown, according to a new survey by Forrester Research. The Forrester Business Data Services report surveyed nearly 950 senior IT managers across North America and Europe regarding their IT services spending and overall services strategies and priorities.

The economy’s affect on IT spending is evident in some specific data points contained in the report: Forty-three percent of firms have already cut their overall IT budgets in 2008 in reaction to the slow down in the global economy, while 24 percent of firms have put discretionary spending on hold. Twenty-eight percent of respondents said the economy has had no impact on their IT budgets.

Asked how the economy will affect IT services spending, 70 percent of respondents said they will likely negotiate lower rates with suppliers, and 16 percent said they have already cut their IT services spending.

IT departments in the financial services industry were hit hardest — 49 percent of IT shops in the financial services sector have cut their budgets. At the other end of the spectrum is the media, entertainment, and leisure industry, where only 39 percent of respondents said they have had to reduce spending.

IT departments in North America have been affected by the economy more than their European counterparts: 49 percent of North American firms have cut their IT budgets compared with 31 percent of respondents in Europe; although it should be noted that the Forrester survey was fielded in Q2 2008 prior to the deteriorating economic conditions in Europe.

“This is not an across-the-board spending slowdown; the impact of the economy on IT budgets varies widely by industry and geography,” said Forrester Research vice president and principal analyst John C. McCarthy, who is in India at present for a workshop. “With regard to the services sector, the slowdown has firms renegotiating rates, being more selective in choosing vendors, and examining spending plans more thoroughly, but they are still expecting to pay more for services. The demand for enterprise IT services has not dropped significantly.”

Regarding the state of spending on enterprise IT services, the report illustrates a number of trends: The demand for services holds steady. Forty-five percent of firms plan to increase their use of applications outsourcing, while 43 percent of firms are increasing their use of infrastructure outsourcing. Forty-three percent of respondents said they are moving more work offshore.

Infrastructure outsourcing expects to grow. Convergent telecommunications and network management is a hot area of growth as 20 percent of firms will outsource this service in 2008.
Few firms have fully tapped into offshore resources. Only 9 percent of firms use offshore resources wherever and whenever possible. A growing number of firms are interested in exploring more offshore work, with 14 percent ramping up use, 19 percent piloting, and 22 percent not using offshore but actively tracking developments. Of those firms not sending work offshore, a majority cite the questionable quality of the work done.

Satisfaction with outsourcing remains low. While overall firms are satisfied with their decision to use a third party, 52 percent say their biggest challenge with existing IT services and outsourcing relationships is that cost savings are lower than expected. Other noteworthy challenges include inconsistent or poor service quality (40 percent) and the inability of the vendor or contract structure to respond rapidly to changing business needs (35 percent).

Embrace the right technologies

Putting your neck out, betting and embracing the right technologies to create a differentiator is one of the major challenges that R. Muralidharan, Chief Information Officer (CIO) of Syntel India is facing. In a interview with Manu Sharma of CIOL Bureau, he shares his views of his achievements as a CIO and also on what he wishes to hear from vendors during the next fiscal. Excerpts:

CIOL: What are the major challenges faced by a CIO?
R. Muralidharan: The major challenges faced by the CIO today revolves around
* Reduction in total cost of ownership of running IT
* Ensuring that IT is always driving business value and consistently being perceived as a business enabler.
* Putting his neck out, betting and embracing the right technologies to create a differentiator.

CIOL: Does your organization link IT budget with the company's performance/growth? If yes please elaborate?
RM: Yes. Syntel does link IT budget with the company's performance /growth. The total IT spend is typically pegged as a percentage of revenue.

CIOL: Can you cite any specific areas where IT has come up as an accomplishment in your stint as a CIO?
RM: There have been quite a few major areas of focus for IT over the last two years in my stint as the CIO of Syntel. There have been significant achievements across not just implementation of technologies but the entire aspect of effective deployment of people, process and technology all aimed towards the goal of being valued as a true business enabler. The areas of significant achievements cuts across all areas of infrastructure such as network, storage, systems/servers, security, telecom all supporting critical internal business applications and connectivity needed for providing services to its global customers. Apart from focus on investments in technologies, there has been a significant focus on processes and people competency development all aligned to delivering value to customers.

CIOL: Going forward, what are the challenges which you foresee?
RM: The challenges of the future envisaged revolves around more and more Green IT initiatives thus enabling significant environmental benefits apart from providing a lower cost of ownership for running IT in the organization. The other challenge revolves around betting on the right technologies for the future which will deliver the maximum benefit to the organization.

CIOL: How far have you come as regards adopting 'Green IT technologies'?
RM: Green IT initiative is a moving target and Syntel is investing significantly on ensuring the all the campuses being built to support the growth is enabled using Green It technologies. On a parallel front, there is a large effort on driving investments in terms of time and processes to ensure that Green IT initiatives are inculcated across the organization thus focusing on reducing carbon foot print.

CIOL: What will be the IT budget for the new fiscal year/ What is the growth rate over last year?
RM: Syntel has been consistently growing at around 25-30 percent and hence the IT budget has also been growing to meet these needs of the growth. Apart from the growth of the operating budget, there is also significant amount of investment being done in investing on cutting edge technologies in its campuses.

CIOL: Name the top 5 items that you expect to spent on this fiscal year?
RM: The top five areas of spend is expected to be in the areas of:
* Build out of campuses to support growth
* Business productivity applications
* Security and Compliance
* Network Optimization
* Virtualization

CIOL: Do you feel the amount allocated for IT is sufficient if yes why? If not why not? How much should you be spending?
RM: IT being typically treated as a cost center, it is extremely important that any investment made in IT should be measured by evaluating as to how it has lowered the total cost of ownership to business. As an IT company that is growing, it is not possible to lower the absolute amount of investment. Hence the yardstick for measurement is to primarily focus on reducing the unit cost of providing IT services to the employees of the organization. We have been able to successfully demonstrate this across all domains. The business value delivered in terms of contribution to the bottom line has been apt so far.

CIOL: How big is the IT staff in your organization?
RM: The total IT organization size globally inclusive of outsourced staff is around 160. This team supports the various business entities within the group engaged in the business of IT services and KPO.

CIOL: As a global company how are you networked all the centres?
RM: All the global delivery and sales offices are networked using multiple technologies such as ATM, MPLS, Frame Relay and IPsec VPN's over the Internet cloud. The core network is built over Nortel Passport WAN switches that support data, voice over IP and video traffic. This backbone enables us to seamlessly integrate into our customer networks securely while at the same time providing scalability and high availability to meet varied requirements at an optimum cost.

CIOL: Is it difficult to gets adequate funds for IT implementations?
RM: The biggest challenge for CIO's for getting funds for new IT implementations is to continuously work on reducing operating expenses as a percentage of the total budget for keeping lights ON and meet business expectations of IT availability. It is always a moving target as every CIO would like to get the maximum funds diverted for new implementations.

CIOL: What part of IT implementations plays a more prominent role? Software or hardware or networking? Why?
RM: IT needs to be viewed as a tool and not the end. Hence no individual component whether it is hardware, software or networking is individually more or less important. What business gets in a highly mobile environment in today's context is a function of achievements across all these domains to enhance the user experience level.

CIOL: The success or failure of an IT deployment should be attributed to whom, the CIO or the vendor, or is it a collaborative accountability?
RM: Though any CIO would like to always have a joint accountability or would like to blame it on the vendor to cover up for failure, I firmly believe that it is always the CIO's accountability for the success or failure of an IT deployment. One can't have a situation where the CIO is complemented for success but the stick is on a collaborative accountability or put on the vendor. The CIO is in the best situation to know what fits his business the most and also the prerogative to choose the vendor and partner most suited to be successful for his business environment.
CIOL: What percentage do you outsource a portion of your IT project?RM: To a large extent possible, Syntel works in developing and implementing core technology components internally. What is typically outsourced for BAU support is low end hardware support activities. For any IT project under implementation, Syntel works very closely with its vendor partners to ensure that an optimum solution is implemented while ensuring that internal skills are developed. This helps us leverage our experience in these domains to deliver value and thought leadership to our clients while delivering IT and infrastructure services. CIOL: Has the nature and pattern of IT adoption become more sophisticated? If yes, to what extent?RM: IT has become an integrated tool as every aspect of business relies on IT. To this extent the dependency on IT by the various stakeholders and users has become very high. Some of the complexities or sophistication arises out of the diversified business needs and this coupled with the plethora of vendors providing various technology options. The sophistication of diverse user requirements is translated into sophistication in the need for integration of various technologies to deliver business value to the end user and business. This is making the task more and more difficult for the IT organization in terms of timely delivery of integrated solutions matching the pace of the need by the business.

CIOL: Are some enterprises under the myth that modernization processes such as automation and IT deployment can take place only in large enterprises? Elaborate.
RM: Yes. Today IT is all-prevalent and an enabler for growth. Investment in the right technologies for small and medium enterprises will help them be well prepared for scale up and growth. CIOL: As a CIO what would you wish to hear from vendors during the next fiscal?RM: One of the biggest challenges hearing from vendors is always the gap between what then can deliver vis-à-vis what they actually deliver. Secondly, there are a lot of exciting technologies in the areas of virtualization, unified communication etc. which is going to key investment areas. Key areas that I would like to hear from vendors is factual information of what they can deliver which will really help in reduce the time spent on POC's and implementing thus enabling a faster return on investment and maximizing business benefit.

CIOL: With so many vendors pushing their products, how are you able to distinguish what really works in your organization?
RM: We have a very elaborate and rigorous evaluation methodology when it comes to embracing any new technology and product. One of the key aspects of product selection focuses on relevance and adaptability to our work environment and we have been able to do a decent job so far.

CIOL: So many IT products fail after being implemented Why?
RM: There a lot of elements that needs to be addressed for a successful IT implementation. Beyond just simply what the product can do which can be addressed using a one time good evaluation process, there are areas of continuous investments in the right processes and people competency development that needs to be done to sustain the implementation and also keep upgrading it on a periodic basis to meet the changing business requirements as well as technological advancements. These are bigger challenges than the product itself and this also has a longer lifespan. These are areas where most failures occur. Or put differently, this is where competing organizations adopting similar products and technologies also differentiate themselves.