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
Showing posts with label Zinnov. Show all posts
Showing posts with label Zinnov. Show all posts
Thursday, September 17, 2009
Monday, March 30, 2009
Is Symphony eyeing more R&D acquisitions in India?
Symphony Services, a provider of outsourced product development, which recently acquired four captive R&D centres in India, expects the trend of captive acquisition to gain further momentum.
Symphony's four captive R&D centres are In-Reality, Intransa, CT Space and Cambridge Tech Partners in India.
Over the last decade, more than 700 product companies have embraced the offshore model and established captives in India, China, Eastern Europe and other lower cost, high talent regions.
Talking to CXOtoday, Ajay Kela, chief operating officer and managing director, Symphony Services, said, "Symphony's four acquisitions in the recent past are software companies with captive operations in India. We are currently in discussion with some of the subscale captives for acquisition and helping them turnaround, but cannot disclose the actual number."
Now with the recession sinking deeper, most parent companies are increasingly conserving cash and tend to avoid additional infrastructure expenses in a captive centre, thus giving opportunities for companies to acquire.
According to a report by Forrester, titled "Shattering the Offshore Captive Center Myth", about 60% of captives are struggling as they fail to meet expectations. There are several common reasons for failure: a poor delivery track record, operational problems, lack of scale, poor morale and high attrition, and escalating costs.
The challenges that captives are facing is resulting in a significant decrease in the number of new captives that are being introduced. According to Management Consulting company Zinnov, the number of new captives started in India over the last few years has declined from 76 to 15. Also, service providers are expected to outpace the growth of captives by more than 300% over the next four years.
Symphony acquisitions have been of different types - from outright purchase or acquisition of a captive to captive transfer where the deals did not have significant monetary implications, but captive transfers of its employees and operations to be run by Symphony.
In a 'captive transfer' employees of the captive entity become Symphonians and both the management teams collaborate to manage the operations and ensure product research and development for the parent company, Kela said.
"Over the last few years, there has been a trend of many subscale captives (manpower of less than 500 people) exploring alternative strategies like transferring their captive operations to services providers for managing their global product engineering operations because it no longer makes economic sense for them to run their own captive centre," said Kela.
Also, most software companies cannot afford to dramatically increase R&D expenditures by moving resources back onshore. Hence transferring their captive to a provider is a viable option for software companies and continues to leverage from the offshoring model, he said.
CXOtoday
Symphony's four captive R&D centres are In-Reality, Intransa, CT Space and Cambridge Tech Partners in India.
Over the last decade, more than 700 product companies have embraced the offshore model and established captives in India, China, Eastern Europe and other lower cost, high talent regions.
Talking to CXOtoday, Ajay Kela, chief operating officer and managing director, Symphony Services, said, "Symphony's four acquisitions in the recent past are software companies with captive operations in India. We are currently in discussion with some of the subscale captives for acquisition and helping them turnaround, but cannot disclose the actual number."
Now with the recession sinking deeper, most parent companies are increasingly conserving cash and tend to avoid additional infrastructure expenses in a captive centre, thus giving opportunities for companies to acquire.
According to a report by Forrester, titled "Shattering the Offshore Captive Center Myth", about 60% of captives are struggling as they fail to meet expectations. There are several common reasons for failure: a poor delivery track record, operational problems, lack of scale, poor morale and high attrition, and escalating costs.
The challenges that captives are facing is resulting in a significant decrease in the number of new captives that are being introduced. According to Management Consulting company Zinnov, the number of new captives started in India over the last few years has declined from 76 to 15. Also, service providers are expected to outpace the growth of captives by more than 300% over the next four years.
Symphony acquisitions have been of different types - from outright purchase or acquisition of a captive to captive transfer where the deals did not have significant monetary implications, but captive transfers of its employees and operations to be run by Symphony.
In a 'captive transfer' employees of the captive entity become Symphonians and both the management teams collaborate to manage the operations and ensure product research and development for the parent company, Kela said.
"Over the last few years, there has been a trend of many subscale captives (manpower of less than 500 people) exploring alternative strategies like transferring their captive operations to services providers for managing their global product engineering operations because it no longer makes economic sense for them to run their own captive centre," said Kela.
Also, most software companies cannot afford to dramatically increase R&D expenditures by moving resources back onshore. Hence transferring their captive to a provider is a viable option for software companies and continues to leverage from the offshoring model, he said.
CXOtoday
Friday, February 27, 2009
Are salaries at Indian IT MNCs melting?
Software multinationals in India have begun freezing wage increases, slashing salaries and postponing merit-based hikes, a study by Indian consulting firm Zinnov has found.
"Though Bangalore stands highest in its average salary for multinational R&D firms, followed by Pune and Chennai, the economic slump is causing undue pressure on them to retain compensation levels," Zinnov director for advisory services C S Chandramouli, said after the survey was made public.
Hinting that IT salaries in 2009 would see a freeze across the board in a majority of the firms surveyed, Chandramouli said the average increment would be in the 5-12 per cent range.
"Of the 30 representative multinationals surveyed in these three cities (Bangalore, Pune and Chennai), 27 per cent of them said they have frozen salary increases this year, while 42 per cent said they would provide salary increases and 15 per cent have postponed their merit increase cycle to take a call at a later stage if the economic scenario changes," Chandramouli said.
As a preferred destination for IT services and R&D, about 680 multinationals operate in India. Many of them have more than one R&D centre and presence in one or two of the three cities surveyed.
According to Zinnov's annual report on "Compensation and Benefit Study 2009", 12 per cent of the MNCs have announced 5-10 per cent salary cuts either for senior management or across levels.
"The survey highlights that multinationals are also shifting focus to the variable pay component to reward and retain top performers as opposed to fixed pay. Some of them have even restructured their compensation, linking employee rewards to individual and organisational results," the report said.
Referring to the adverse impact of the tough economic conditions on the compensation budgets, Chandramouli said MNCs were attempting to balance their need to retain key talent and address concerns over wage increase.
"Organisations are being proactive in managing people cost as it constitutes about 62 per cent of the total operating cost," he noted.
Highlighting compensation trends across functions like engineering, quality assurance testing and technical architects, the report said senior positions such as engineering manager and director engineering continued to be on a rise, with an average 8 per cent increase.
As India's IT hub, Bangalore, however, continues to dominate the compensation index, especially in software product and R&D. "Bangalore engineers are paid 5 per cent higher than their counterparts in Pune and 8 per cent higher than in Chennai for engineering and quality positions," Zinnov consultant Sahana Shetty said.
However, average salaries of senior positions in the three cities are similar, though average salaries at junior positions are two-three per cent higher in Bangalore. "Employees are not clear if they will be laid off or if the projects they are working on will be de-prioritised. They are also concerned about the financial health of the parent company. Employees are frustrated with cost cuts for what seem like inexpensive benefits (snacks, lunch, office parties, etc)," Shetty added.
Agencies
"Though Bangalore stands highest in its average salary for multinational R&D firms, followed by Pune and Chennai, the economic slump is causing undue pressure on them to retain compensation levels," Zinnov director for advisory services C S Chandramouli, said after the survey was made public.
Hinting that IT salaries in 2009 would see a freeze across the board in a majority of the firms surveyed, Chandramouli said the average increment would be in the 5-12 per cent range.
"Of the 30 representative multinationals surveyed in these three cities (Bangalore, Pune and Chennai), 27 per cent of them said they have frozen salary increases this year, while 42 per cent said they would provide salary increases and 15 per cent have postponed their merit increase cycle to take a call at a later stage if the economic scenario changes," Chandramouli said.
As a preferred destination for IT services and R&D, about 680 multinationals operate in India. Many of them have more than one R&D centre and presence in one or two of the three cities surveyed.
According to Zinnov's annual report on "Compensation and Benefit Study 2009", 12 per cent of the MNCs have announced 5-10 per cent salary cuts either for senior management or across levels.
"The survey highlights that multinationals are also shifting focus to the variable pay component to reward and retain top performers as opposed to fixed pay. Some of them have even restructured their compensation, linking employee rewards to individual and organisational results," the report said.
Referring to the adverse impact of the tough economic conditions on the compensation budgets, Chandramouli said MNCs were attempting to balance their need to retain key talent and address concerns over wage increase.
"Organisations are being proactive in managing people cost as it constitutes about 62 per cent of the total operating cost," he noted.
Highlighting compensation trends across functions like engineering, quality assurance testing and technical architects, the report said senior positions such as engineering manager and director engineering continued to be on a rise, with an average 8 per cent increase.
As India's IT hub, Bangalore, however, continues to dominate the compensation index, especially in software product and R&D. "Bangalore engineers are paid 5 per cent higher than their counterparts in Pune and 8 per cent higher than in Chennai for engineering and quality positions," Zinnov consultant Sahana Shetty said.
However, average salaries of senior positions in the three cities are similar, though average salaries at junior positions are two-three per cent higher in Bangalore. "Employees are not clear if they will be laid off or if the projects they are working on will be de-prioritised. They are also concerned about the financial health of the parent company. Employees are frustrated with cost cuts for what seem like inexpensive benefits (snacks, lunch, office parties, etc)," Shetty added.
Agencies
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