With sinking profits, eroding margins, cost-cuttings and an acquisition bid gone awry, 2008 was a year with more jeers than cheers for the country's over $50 billion IT sector, which has seen nearly a decade of uninterrupted boom.
However, as 2008 draws to a close, the sector is bracing up for a tough time ahead as the scars of global recession are showing up on the country's sunrise sector.
The sector, which has been charting a growth of over 30 per cent, had to settle for a growth rate of 20 per cent, as the global slowdown plunged the industry into unpredictable times.
In the year littered with economic disasters, the failed attempt of country's fourth largest software exporter Satyam Computer to botch up two family-promoted firms for $1.6 billion not only resulted in loss of face but also hit the reputation nurtured by the Indian IT sector over the years.
Faced with shareholder's revolt and heavy criticism over corporate governance issues, Satyam withdrew the offer within hours of making the proposal. But within a space of 24 hours, the scrip lost over 30 per cent in India and was down 55 per cent in New York Stock Exchange trade.
As a fallout, the Board size also shrank with four independent Directors resigning from the 10-Directors strong Board of the company in the wake of the fiasco.
The Satyam saga is likely to continue next year as well with the Board scheduled to meet on January 10.
If Satyam made it to the headlines for a failed deal, it was HCL Technologies, the country's fifth largest software exporter next to Satyam that made the country proud by inking the largest takeover deal in the software space overseas.
HCL piped rival country's second largest IT giant Infosys to bag UK-based SAP consulting firm Axon for $658 million. While Infosys had made 600 pence per share offer for Axon, HCL made a counter bid of 650 pence a share to acquire the UK-based firm.
The year was also some significant M&As on the IT front, such as the $13.9-billion acquisition of Electronic Data Services by HP. Back home
, Wipro acquired Citi Technology Services, Citigroup's IT arm in India, in an all-cash $127 million deal.
Earlier, TCS had bought out Citi's captive BPO arm Citigroup Global Services for about $505 million, which reiterates the strength of the Indian IT story. Another reason that will give the software services sector a reason to rejoice is the IT Amendment Bill.
The Lok Sabha passed the Information Technology (Amendment) Bill 2006 this month, which gives the government the power to tackle data theft. The bill might act as a shot in the arm for the BPO firms for whom data security is of utmost importance.
The Bill has provisions to deal with new forms of cyber crimes like publicising sexually explicit material in electronic form, video voyeurism and breach of confidentiality, leakage of data by intermediary and e-commerce frauds, among others.
The US is the world's largest technology market and accounts for between 50 per cent and 60 per cent of the revenues of the top Indian firms. Since September, however, the economic situation in the US and the rest of the world has worsened.
Country's software lobby group Nasscom had estimated that India's software and back-office services industry would grow by 21-24 per cent in the 12 months to March, but its president Som Mittal said recently that this number could be revised downward. With no signs of an early revival, all the IT biggies such as TCS, Infosys, Wipro and Satyam have revised their revenue guidance downwards.
The currency volatility has also compounded the woes of the Indian IT sector. If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September) impacted revenue realisation in dollar terms since 30 per cent of the billing is done in these currencies.
The sector also experienced slowdown in hiring. Already, under pressure to cut cost, most of the IT biggies had to freeze their hiring in the year. Moreover, the joining dates of the new recruits were also postponed, ringing the alarm bells in the job market. The top five IT companies posted a 36 per cent decline in their rate of manpower addition in the last quarter.
As for hiring by BPOs -- for long looked upon as poor the cousins of information technology companies -- also faced the heat.
However, BPOs remained a bit sanguine, as Nasscom's figures indicate that the BPO sector recorded revenue growth of 31.6 per cent whereas IT companies grew at 28 per cent.
In 2009, as the new administration led by Barack Obama takes a look at the outsourcing story vis-a-vis India, it is the efficiency and resilience of the IT sector which can help it sail through the troubled waters.
Source: Agencies
Thursday, January 1, 2009
What were the hottest tech news of 2008?
As we enter in 2009, it's time to look into the big happenings that kept made headlines in 2008. In many ways 2008 can be called an unprecedented year, history has seen collapse of corporate giants, but never has so many companies that signified the strength of the financial industry gone bust, and with them throwing the entire world economy in tailspin.
With the economy down, the fate of IT industry could have been better. The financial crisis means IT industry losing out as much as $170 billion in sales in 2009. As meltdown melted IT spending, IT companies went on a belt tightening mode: giving pink slips, extending holidays and cutting perks.
Other than the grim reality of meltdown, the year 2008 also saw several big mergers and launches. Indian telecom industry finally made its 3G leap, with MTNL launching the services in Delhi. On M&A front, the IT services giant EDS merged with HP. Indian IT cos too were no behind in the acquisition space, three big IT companies buying overseas firms to extend their global and product footprint.
Here's bringing to you all the big IT stories of 2008.
3G launch
In December, Indian telecom sector took another technological leap, with the launch of 3G services in the capital city of country, Delhi.
Mahanagar Telephone Nigam Ltd (MTNL) put India on the 3G global map with the launch of third generation (3G) mobile service 'Jaadu' in Delhi.
The 3G services will give mobile users high-quality voice transmission and access to high-end data applications on their mobile phones, including broadband Internet access, interactive gaming and download movies, video clips and music. They can also enjoy other multimedia features such as video conferencing, mobile TV etc.
For example, a user will be able to download a 3-minute song in approximately 15 seconds with 3G. This compares to 8 minutes usually required in existing mobile technologies.
This will help mobile players to offer high-end value-added services like movie downloads, mobileTV, etc to prop up their ARPUs (average realisation per user). Presently, Indian mobile operators generate only 7-10 per cent of their revenue from non-voice services, primarily dominated by SMSes.
As for the pricing, MTNL is yet to release a commercial tariff plan. The company is currently serving corporate clients and will rely on their feedback before the commercial launch.
Tech terror
The gruesome terrorists attacks that rocked several parts of the country brought to the fore the fact that the technology which makes our live simpler has also become a handy tool for terrorists. The use of technology is evident everywhere, right from providing recruiting grounds (social networking sites) to being a communication platform (Internet, mobile and satellite phones) to providing geographical details (digital maps).
The ease and frequency with which terrorists freely communicated using sat-phones, BlackBerrys and used Google maps to pin down locations, deepened the intensity of terror attacks across the country.
The recent Mumbai carnage also saw terrorists using Google Earth maps to establish locations, sat-phones for un-intercepted communication, Global Positioning Systems and VOIP (Voice over Internet Protocol).
Earlier in Feburary, Lashkar-e-Taiba terrorist Fahim Ahmed Ansari, arrested by Uttar Pradesh Police with maps and details of the spots hit during the recent terror attacks, in his statement had conceded that his masters showed him the maps on Google Earth to pin-point the specific targets.
The Google Earth Map gives a bird’s eye view of the city providing detailed topography of the area in the forms of actual photographs. The details provided in the application can be useful for identifying buildings, roads, streets.
Also, unlike the mobile phones that can be easily intercepted by the security agencies to track data, sat-phones are non-interceptable in India. This is primarily because no satellite phone network operator has its centre in India. Also, since these phones are satellite driven and the operator doesn't need any interconnectivity with India's domestic network, the communication cannot be traced.
Microsoft's Yahoo chase
The year 2008 began with the software giant Microsoft proposing a $31 per share buyout to Yahoo. However, the bid was rejected by Yahoo board of directors saying it "substantially undervalues" the company. On its part, Yahoo announced an expensive severance package which made any acquisition attempt more expensive.
In May, Microsoft revised its offer to $33 a share, which was again rejected by Yahoo. This was followed by speculations that Microsoft may go for a forced deal with the company talking tough.
Yahoo reportedly tried exploring alternative deals with News Corp, Google and Time Warner unit AOL. The chief executive Jerry Yang kept waiting for the software giant to offer a better price than $47.5 billion for Yahoo. However, it never happened. Instead, Yahoo's stock started to fell and hit nearly five-year lows. Yahoo's plan 2, an advertising deal with Google too failed, after Google pulled out fearing a court battle with the US Justice Department.
In November, Yang stepped down and Yahoo, in December, overhauled its severance plan apparently hiked to discourage Microsoft's acquisition plans.
Infy loses Axon
Infosys-Axon deal was hailed as the largest outbound acquisition by an Indian IT company. The analysts termed Axon as strategic fit for Infosys.
Then came the rumours that there was competition: a rival UK security firm has quoting a price higher by 7 pence per share to counter Infosys' offer.
But the software giant was confident. MD and CEO, S Gopalakrishnan said that the company can sail through the deal with its transaction advantage of a full cash deal offer.
However, it seems the Indian IT giant underestimated its rivals, tough competition was there, and closer home. In October, HCL Technologies makes a counter offer to Infosys' Axon bid by raising the value by 8.3 per cent to seal the biggest overseas deal by an Indian firm in this space. The deal got shareholder's nod in November.
HCL beats Infy to bag Axon
The deal for the first time saw two leading Indian vendors, HCL and Infosys, used to fighting over deals, battle it out over an overseas acquisition.
Infosys had made a cash offer of 407.1 million pound for buying out Axon. The country's fifth largest software exporter, HCL Tech, raised its counter bid 441 million-pound ($811 million) to clinch the deal.
HCL Technologies recently completed the acquisition and the new entity would pursue deals worth 1.2 billion dollars.
Post-acquisition, HCL Axon is headed by Steve Cardell, the President of Axon. The independent entity have about 4,500 consultants which includes 1,700 people involved in the SAP practice in HCL.
Enterprise Application Services (EAS), the sector in which HCL AXON operates, constitutes 11 per cent of HCLs revenue. Company's Corporate Vice President and Head - Enterprise Application Services Ram Krishna said that HCL-Axon will create a business accounting for 25 per cent of HCLs revenues.
Satyam saga
The year 2008 would have ended for India's fourth largest IT company, Satyam, just like it will for most other IT cos with worries of ongoing economic gloom. However, there's much more on Satyam plate to tackle now.
The company's troubles began on December 16 when Satyam announced acquisition of Maytas Infrastructure for $1.6 billion (Rs 7658-crore). Institutional investors strongly opposed the move. Satyam's ADR lost 50 per cent on NYSE. Faced with shareholders' revolt and heavy criticism over corporate governance issues, in the early hours of December 17 the company withdrew the proposal. But the scrip lost over 30 per cent in India.
What came as the next severe blow to the Hyderabad-based IT provider facing flak from investors on its decision to acquire Maytas' was World Bank banning it for 8 years over bribery and corruption charges. Ramalinga's family loses half a billion dollars in a week as stock crashes.
Then the worst followed. Shocked by Satyam’s admission to BSE that the company’s promoters have pledged their entire shareholding to institutional investors, independent directors Vinod Dham (father of Pentium chips) and Harvard Business School professor Krishna Palepu, immediately resigned from the board. Also, Indian School of Business dean M Rammohan Rao followed suit. Another independent director, academic Managalam Srinivasan had quit earlier.
This leaves Satyam with only five directors on the board, from nine directors earlier.
Wipro buys Citi unit
India's third-ranked outsourcer, Wipro Technologies acquired Citi Technology Services Ltd, India-based captive IT unit of Citigroup Inc, for $127 million in cash and signed a six-year service agreement worth at least $500 million.
As part of the deal, Wipro and Citi will sign a master services agreement for delivery of technology infrastructure services and application development and maintenance (ADM) services for six years. Under this the banking giant will source services worth at least half a billion dollar from the Indian vendor.
Citi Technology Services is based in Mumbai and Chennai and employs around 1,650 staff servicing the bank’s offices in over 32 countries. Apart from its core focus area of technology infrastructure services, the business also specialises on ADM for cards, capital markets and corporate banking.
Citi Technology Services is expected to report revenue of $80 million in 2008, up from $53 million last year. The deal done through Wipro Technologies, the information technology arm of the New York-listed Wipro, is expected to close in March 2009.
TCS buys Citi BPO
In one of the largest deals in the Indian BPO sector, IT major Tata Consultancy Services, clinched a deal to acquire Citigroup Global Services Ltd (CGSL), a large captive BPO of Citibank operating out of India, for $505 million (around Rs 2,425 crore).
In addition to the sale, Citigroup which is shedding its non-core assets worldwide, signed an agreement with TCS to provide, through CGSL, process outsourcing services to Citi and its affiliates for an aggregate amount of $2.5 billion over a period of 9.5 years.
Citigroup Global Services has around 12,000 employees in India and expects revenues of approximately $278m in 2008.
The acquisition broadens TCS’s portfolio of end-to-end IT and BPO services in the global banking and financial services (BFS) sector.
CGSL provides end-to-end process management across the BFS spectrum and a broad array of services to Citi’s consumer, corporate and global wealth management businesses worldwide.
Citigroup Global Services, the India back office unit, began as a business processing arm for Citi India in 1992 and expanded to serve Citi's global operations in 1998, according to its website. The unit operates out of seven facilities across Indian cities and offers back office services to Citi's consumer, corporate and global wealth management entities in 50 countries.
Pink slips scourge back
This year the ugliest face of slowdown, pink slips, came back to haunt Indian IT pros. The year that saw the slowdown hitting major IT players, many companies resorted to pink slips to beat the downturn blues. India's sunshine sector handed pink slips as the heat of global meltdown severely affected revenues and growth opportunities.
Country's largest software exporter, TCS laid off close to 500 employees and put many under performance scrutiny. Wipro too followed with 1000 employees shown door. India's fourth largest IT player, Satyam too laid off 4,500 jobs to cope up with the turbulent times. Mumbai-based Patni Computer Systems too gave pink slips to 400 employees on grounds of non-performance.
Incidentally, all companies termed the job cuts as purely performance-based. However, it came as no surprise that pink slips were a belt tightening measure from IT companies facing sagging bottomlines due to global economic turmoil.
According to the latest news on the layoff front, software giant Microsoft is reported to be planning a 10 per cent cut in its global workforce.
Bill Gates dethroned
This year tech tycoon Bill Gates not only made his exit from the company he founded, but also lost his position as the world's richest man, a title he had held since 1995. Gates' friend and investment mogul Warren Buffett, succeeded him as world's richest man according to Forbes magazine's annual ranking of the world's wealthiest people.
The magazine estimated Buffett's worth at $62 billion, and Gates' fortune not too far behind at $58 billion. But Gates didn't slipped one position down, Carlos Slim, a Mexican telecom tycoon, came in second with an estimated worth of $60 billion.
Riding the surging price of Berkshire Hathaway stock, America's most beloved investor Warren Buffett saw his fortune up $10 billion from a year ago.
The exit of Bill Gates marked an end of era. Gates retired from Microsoft, the company he co-founded with college-friend Paul Allen in 1975. In June, Gates quit as full-time chairman and software architect of the world's largest software company to work full-time at his charitable organisation Bill & Melinda Gates Foundation. Gates will remain the company's non-executive chairman.
Purse tightening begins at Google
Meltdown has left none, not even the world's top tech brand Google remains unscathed. In a cost cutting mode, the Internet search giant Google is cutting its famed `generous perks'.
Google, known for hosting the most extravagant holiday parties and pamperimg its employees with free food and drinks on the house, has gone into a strict cost saving mode.
Company's cost cutting programme include cutting new projects, ratcheting back spending, chipping away at perks and reducing employee strength. The austerity measures came in as Google's revenue growth has slowed down dramatically over the past one year.
Google also scaled back its holiday celebrations this year due to a global economic downturn and an ever-expanding workforce that had grown to 20,000 in October.
Not only this, the Web giant gave employees mobile phones instead of cash gifts this Christmas as it reins in costs during the recession. About 85 per cent Googleites got handset powered by Google’s Android operating system as a holiday gift. Last year, Google handed out $1,000 cash gifts to most employees.
Company's chief executive Eric Schmidt said that Google has adopted such necessary actions in wake of current turbulent times. He added that the company will no more give an engineer 20 people to work with on certain experimental projects.
HP-EDS merger
In the month of May, HP acquired EDS at a price of $25 per share, or an enterprise value of approximately $13.9 billion.
The deal makes HP the second-largest player behind IBM, and is HP's largest acquisition since it acquired Compaq for $20 billion six years ago.
Acquiring EDS advances HP's stated objective of strengthening its services business. The specific service offerings delivered by the combined companies are: IT outsourcing, including data center services, workplace services, networking services and managed security; business process outsourcing, including health claims, financial processing, CRM and HR outsourcing; applications, including development, modernisation and management; consulting and integration; and technology services.
The combination aims to provide extensive experience in offering solutions to customers in the areas of government, healthcare, manufacturing, financial services, energy, transportation, communications, and consumer industries and retail.
However, in the month of September HP announced that it will lay off about 24,600 employees over the next three years in an effort to streamline the company following its US$13.9 billion acquisition of Electronic Data Systems.
Source: Indiatimes Infotech
With the economy down, the fate of IT industry could have been better. The financial crisis means IT industry losing out as much as $170 billion in sales in 2009. As meltdown melted IT spending, IT companies went on a belt tightening mode: giving pink slips, extending holidays and cutting perks.
Other than the grim reality of meltdown, the year 2008 also saw several big mergers and launches. Indian telecom industry finally made its 3G leap, with MTNL launching the services in Delhi. On M&A front, the IT services giant EDS merged with HP. Indian IT cos too were no behind in the acquisition space, three big IT companies buying overseas firms to extend their global and product footprint.
Here's bringing to you all the big IT stories of 2008.
3G launch
In December, Indian telecom sector took another technological leap, with the launch of 3G services in the capital city of country, Delhi.
Mahanagar Telephone Nigam Ltd (MTNL) put India on the 3G global map with the launch of third generation (3G) mobile service 'Jaadu' in Delhi.
The 3G services will give mobile users high-quality voice transmission and access to high-end data applications on their mobile phones, including broadband Internet access, interactive gaming and download movies, video clips and music. They can also enjoy other multimedia features such as video conferencing, mobile TV etc.
For example, a user will be able to download a 3-minute song in approximately 15 seconds with 3G. This compares to 8 minutes usually required in existing mobile technologies.
This will help mobile players to offer high-end value-added services like movie downloads, mobileTV, etc to prop up their ARPUs (average realisation per user). Presently, Indian mobile operators generate only 7-10 per cent of their revenue from non-voice services, primarily dominated by SMSes.
As for the pricing, MTNL is yet to release a commercial tariff plan. The company is currently serving corporate clients and will rely on their feedback before the commercial launch.
Tech terror
The gruesome terrorists attacks that rocked several parts of the country brought to the fore the fact that the technology which makes our live simpler has also become a handy tool for terrorists. The use of technology is evident everywhere, right from providing recruiting grounds (social networking sites) to being a communication platform (Internet, mobile and satellite phones) to providing geographical details (digital maps).
The ease and frequency with which terrorists freely communicated using sat-phones, BlackBerrys and used Google maps to pin down locations, deepened the intensity of terror attacks across the country.
The recent Mumbai carnage also saw terrorists using Google Earth maps to establish locations, sat-phones for un-intercepted communication, Global Positioning Systems and VOIP (Voice over Internet Protocol).
Earlier in Feburary, Lashkar-e-Taiba terrorist Fahim Ahmed Ansari, arrested by Uttar Pradesh Police with maps and details of the spots hit during the recent terror attacks, in his statement had conceded that his masters showed him the maps on Google Earth to pin-point the specific targets.
The Google Earth Map gives a bird’s eye view of the city providing detailed topography of the area in the forms of actual photographs. The details provided in the application can be useful for identifying buildings, roads, streets.
Also, unlike the mobile phones that can be easily intercepted by the security agencies to track data, sat-phones are non-interceptable in India. This is primarily because no satellite phone network operator has its centre in India. Also, since these phones are satellite driven and the operator doesn't need any interconnectivity with India's domestic network, the communication cannot be traced.
Microsoft's Yahoo chase
The year 2008 began with the software giant Microsoft proposing a $31 per share buyout to Yahoo. However, the bid was rejected by Yahoo board of directors saying it "substantially undervalues" the company. On its part, Yahoo announced an expensive severance package which made any acquisition attempt more expensive.
In May, Microsoft revised its offer to $33 a share, which was again rejected by Yahoo. This was followed by speculations that Microsoft may go for a forced deal with the company talking tough.
Yahoo reportedly tried exploring alternative deals with News Corp, Google and Time Warner unit AOL. The chief executive Jerry Yang kept waiting for the software giant to offer a better price than $47.5 billion for Yahoo. However, it never happened. Instead, Yahoo's stock started to fell and hit nearly five-year lows. Yahoo's plan 2, an advertising deal with Google too failed, after Google pulled out fearing a court battle with the US Justice Department.
In November, Yang stepped down and Yahoo, in December, overhauled its severance plan apparently hiked to discourage Microsoft's acquisition plans.
Infy loses Axon
Infosys-Axon deal was hailed as the largest outbound acquisition by an Indian IT company. The analysts termed Axon as strategic fit for Infosys.
Then came the rumours that there was competition: a rival UK security firm has quoting a price higher by 7 pence per share to counter Infosys' offer.
But the software giant was confident. MD and CEO, S Gopalakrishnan said that the company can sail through the deal with its transaction advantage of a full cash deal offer.
However, it seems the Indian IT giant underestimated its rivals, tough competition was there, and closer home. In October, HCL Technologies makes a counter offer to Infosys' Axon bid by raising the value by 8.3 per cent to seal the biggest overseas deal by an Indian firm in this space. The deal got shareholder's nod in November.
HCL beats Infy to bag Axon
The deal for the first time saw two leading Indian vendors, HCL and Infosys, used to fighting over deals, battle it out over an overseas acquisition.
Infosys had made a cash offer of 407.1 million pound for buying out Axon. The country's fifth largest software exporter, HCL Tech, raised its counter bid 441 million-pound ($811 million) to clinch the deal.
HCL Technologies recently completed the acquisition and the new entity would pursue deals worth 1.2 billion dollars.
Post-acquisition, HCL Axon is headed by Steve Cardell, the President of Axon. The independent entity have about 4,500 consultants which includes 1,700 people involved in the SAP practice in HCL.
Enterprise Application Services (EAS), the sector in which HCL AXON operates, constitutes 11 per cent of HCLs revenue. Company's Corporate Vice President and Head - Enterprise Application Services Ram Krishna said that HCL-Axon will create a business accounting for 25 per cent of HCLs revenues.
Satyam saga
The year 2008 would have ended for India's fourth largest IT company, Satyam, just like it will for most other IT cos with worries of ongoing economic gloom. However, there's much more on Satyam plate to tackle now.
The company's troubles began on December 16 when Satyam announced acquisition of Maytas Infrastructure for $1.6 billion (Rs 7658-crore). Institutional investors strongly opposed the move. Satyam's ADR lost 50 per cent on NYSE. Faced with shareholders' revolt and heavy criticism over corporate governance issues, in the early hours of December 17 the company withdrew the proposal. But the scrip lost over 30 per cent in India.
What came as the next severe blow to the Hyderabad-based IT provider facing flak from investors on its decision to acquire Maytas' was World Bank banning it for 8 years over bribery and corruption charges. Ramalinga's family loses half a billion dollars in a week as stock crashes.
Then the worst followed. Shocked by Satyam’s admission to BSE that the company’s promoters have pledged their entire shareholding to institutional investors, independent directors Vinod Dham (father of Pentium chips) and Harvard Business School professor Krishna Palepu, immediately resigned from the board. Also, Indian School of Business dean M Rammohan Rao followed suit. Another independent director, academic Managalam Srinivasan had quit earlier.
This leaves Satyam with only five directors on the board, from nine directors earlier.
Wipro buys Citi unit
India's third-ranked outsourcer, Wipro Technologies acquired Citi Technology Services Ltd, India-based captive IT unit of Citigroup Inc, for $127 million in cash and signed a six-year service agreement worth at least $500 million.
As part of the deal, Wipro and Citi will sign a master services agreement for delivery of technology infrastructure services and application development and maintenance (ADM) services for six years. Under this the banking giant will source services worth at least half a billion dollar from the Indian vendor.
Citi Technology Services is based in Mumbai and Chennai and employs around 1,650 staff servicing the bank’s offices in over 32 countries. Apart from its core focus area of technology infrastructure services, the business also specialises on ADM for cards, capital markets and corporate banking.
Citi Technology Services is expected to report revenue of $80 million in 2008, up from $53 million last year. The deal done through Wipro Technologies, the information technology arm of the New York-listed Wipro, is expected to close in March 2009.
TCS buys Citi BPO
In one of the largest deals in the Indian BPO sector, IT major Tata Consultancy Services, clinched a deal to acquire Citigroup Global Services Ltd (CGSL), a large captive BPO of Citibank operating out of India, for $505 million (around Rs 2,425 crore).
In addition to the sale, Citigroup which is shedding its non-core assets worldwide, signed an agreement with TCS to provide, through CGSL, process outsourcing services to Citi and its affiliates for an aggregate amount of $2.5 billion over a period of 9.5 years.
Citigroup Global Services has around 12,000 employees in India and expects revenues of approximately $278m in 2008.
The acquisition broadens TCS’s portfolio of end-to-end IT and BPO services in the global banking and financial services (BFS) sector.
CGSL provides end-to-end process management across the BFS spectrum and a broad array of services to Citi’s consumer, corporate and global wealth management businesses worldwide.
Citigroup Global Services, the India back office unit, began as a business processing arm for Citi India in 1992 and expanded to serve Citi's global operations in 1998, according to its website. The unit operates out of seven facilities across Indian cities and offers back office services to Citi's consumer, corporate and global wealth management entities in 50 countries.
Pink slips scourge back
This year the ugliest face of slowdown, pink slips, came back to haunt Indian IT pros. The year that saw the slowdown hitting major IT players, many companies resorted to pink slips to beat the downturn blues. India's sunshine sector handed pink slips as the heat of global meltdown severely affected revenues and growth opportunities.
Country's largest software exporter, TCS laid off close to 500 employees and put many under performance scrutiny. Wipro too followed with 1000 employees shown door. India's fourth largest IT player, Satyam too laid off 4,500 jobs to cope up with the turbulent times. Mumbai-based Patni Computer Systems too gave pink slips to 400 employees on grounds of non-performance.
Incidentally, all companies termed the job cuts as purely performance-based. However, it came as no surprise that pink slips were a belt tightening measure from IT companies facing sagging bottomlines due to global economic turmoil.
According to the latest news on the layoff front, software giant Microsoft is reported to be planning a 10 per cent cut in its global workforce.
Bill Gates dethroned
This year tech tycoon Bill Gates not only made his exit from the company he founded, but also lost his position as the world's richest man, a title he had held since 1995. Gates' friend and investment mogul Warren Buffett, succeeded him as world's richest man according to Forbes magazine's annual ranking of the world's wealthiest people.
The magazine estimated Buffett's worth at $62 billion, and Gates' fortune not too far behind at $58 billion. But Gates didn't slipped one position down, Carlos Slim, a Mexican telecom tycoon, came in second with an estimated worth of $60 billion.
Riding the surging price of Berkshire Hathaway stock, America's most beloved investor Warren Buffett saw his fortune up $10 billion from a year ago.
The exit of Bill Gates marked an end of era. Gates retired from Microsoft, the company he co-founded with college-friend Paul Allen in 1975. In June, Gates quit as full-time chairman and software architect of the world's largest software company to work full-time at his charitable organisation Bill & Melinda Gates Foundation. Gates will remain the company's non-executive chairman.
Purse tightening begins at Google
Meltdown has left none, not even the world's top tech brand Google remains unscathed. In a cost cutting mode, the Internet search giant Google is cutting its famed `generous perks'.
Google, known for hosting the most extravagant holiday parties and pamperimg its employees with free food and drinks on the house, has gone into a strict cost saving mode.
Company's cost cutting programme include cutting new projects, ratcheting back spending, chipping away at perks and reducing employee strength. The austerity measures came in as Google's revenue growth has slowed down dramatically over the past one year.
Google also scaled back its holiday celebrations this year due to a global economic downturn and an ever-expanding workforce that had grown to 20,000 in October.
Not only this, the Web giant gave employees mobile phones instead of cash gifts this Christmas as it reins in costs during the recession. About 85 per cent Googleites got handset powered by Google’s Android operating system as a holiday gift. Last year, Google handed out $1,000 cash gifts to most employees.
Company's chief executive Eric Schmidt said that Google has adopted such necessary actions in wake of current turbulent times. He added that the company will no more give an engineer 20 people to work with on certain experimental projects.
HP-EDS merger
In the month of May, HP acquired EDS at a price of $25 per share, or an enterprise value of approximately $13.9 billion.
The deal makes HP the second-largest player behind IBM, and is HP's largest acquisition since it acquired Compaq for $20 billion six years ago.
Acquiring EDS advances HP's stated objective of strengthening its services business. The specific service offerings delivered by the combined companies are: IT outsourcing, including data center services, workplace services, networking services and managed security; business process outsourcing, including health claims, financial processing, CRM and HR outsourcing; applications, including development, modernisation and management; consulting and integration; and technology services.
The combination aims to provide extensive experience in offering solutions to customers in the areas of government, healthcare, manufacturing, financial services, energy, transportation, communications, and consumer industries and retail.
However, in the month of September HP announced that it will lay off about 24,600 employees over the next three years in an effort to streamline the company following its US$13.9 billion acquisition of Electronic Data Systems.
Source: Indiatimes Infotech
Nokia’s recycling campaign in India
Nokia will be launching its ‘Take Back’ campaign from Thursday (January 1) encouraging mobile phone users to dispose of their used handsets and accessories, regardless of the brand, at any of the recycling bins set up across Nokia priority dealers and Nokia care centres. For each handset dropped into recycling bins, Nokia will be planting a tree, besides giving gifts to people participating in its campaign.
As part of its initiative to educate mobile phone users on the importance of recycling of e-waste, India’s top mobile phone seller will begin the initiative from Delhi and then gradually roll out the programme in phases across the country. “We have laid out a robust recycling infrastructure across the country with over 1,300 recycling bins installed at our centre across India. We work with qualified recyclers around the world to ensure proper end-of-life treatment of used devices,” said Nokia India Vice-President and Managing Director D. Shivakumar.
The ‘Take back’ campaign aims to increase awareness of the concept of recycling.
Source: Agencies
As part of its initiative to educate mobile phone users on the importance of recycling of e-waste, India’s top mobile phone seller will begin the initiative from Delhi and then gradually roll out the programme in phases across the country. “We have laid out a robust recycling infrastructure across the country with over 1,300 recycling bins installed at our centre across India. We work with qualified recyclers around the world to ensure proper end-of-life treatment of used devices,” said Nokia India Vice-President and Managing Director D. Shivakumar.
The ‘Take back’ campaign aims to increase awareness of the concept of recycling.
Source: Agencies
BSNL rolls out Internet TV services
Bharat Sanchar Nigam Ltd on Wednesday launched its Internet Protocol Television services, which will enable consumers to watch TV channels using their fixed telephone line at home.
The company has launched the service in 10 cities, including Gurgaon in Haryana.
IPTV is a system where an interactive digital television service is delivered over a broadband connection instead of the traditional way of transmitting through a cable network.
Users will also get new services such as video on demand where they can watch their favourite movies for a fee. They can also pause, fast forward and rewind live and recorded content stored on a remotely located server by the service provider.
Since IPTV delivers TV channels in digital form, the quality of TV viewing is expected to be much better as compared to analog transmission.
Broadband link
To avail the service, subscribers will have to take a broadband connection from BSNL and a set-top box for an upfront payment of Rs 2,500. In addition, subscribers will have to pay Rs 280 each month for receiving all 150 channels and Rs 200 for 95 channels.
BSNL launches low-cost mobile phones for rural subscribers
In comparison, DTH subscribers pay over Rs 300 a month for receiving all the channels.
In 98 cities soon
Kuldeep Goyal, Chairman and Managing Director, BSNL, said the company plans to roll out IPTV services to 98 cities by end of the current fiscal year. He also said that this will enable BSNL to tap into the growing broadcasting sector.
BSNL has partnered Smart Digivision Pvt Ltd, a company promoted by Mahendra Nahata, Chairman, Himachal Futuristic Communications Ltd, to roll out the service in 54 cities.
Goyal said that BSNL will launch its 3G services over the next two months starting from Chennai.
The Smart TV Group, consisting Smart Digivision Pvt Ltd and Smart Broadband Services Pvt Ltd, has entered into long term contracts with MTNL and BSNL for providing co-branded interactive video services in 54 cities.
Source: Agencies
The company has launched the service in 10 cities, including Gurgaon in Haryana.
IPTV is a system where an interactive digital television service is delivered over a broadband connection instead of the traditional way of transmitting through a cable network.
Users will also get new services such as video on demand where they can watch their favourite movies for a fee. They can also pause, fast forward and rewind live and recorded content stored on a remotely located server by the service provider.
Since IPTV delivers TV channels in digital form, the quality of TV viewing is expected to be much better as compared to analog transmission.
Broadband link
To avail the service, subscribers will have to take a broadband connection from BSNL and a set-top box for an upfront payment of Rs 2,500. In addition, subscribers will have to pay Rs 280 each month for receiving all 150 channels and Rs 200 for 95 channels.
BSNL launches low-cost mobile phones for rural subscribers
In comparison, DTH subscribers pay over Rs 300 a month for receiving all the channels.
In 98 cities soon
Kuldeep Goyal, Chairman and Managing Director, BSNL, said the company plans to roll out IPTV services to 98 cities by end of the current fiscal year. He also said that this will enable BSNL to tap into the growing broadcasting sector.
BSNL has partnered Smart Digivision Pvt Ltd, a company promoted by Mahendra Nahata, Chairman, Himachal Futuristic Communications Ltd, to roll out the service in 54 cities.
Goyal said that BSNL will launch its 3G services over the next two months starting from Chennai.
The Smart TV Group, consisting Smart Digivision Pvt Ltd and Smart Broadband Services Pvt Ltd, has entered into long term contracts with MTNL and BSNL for providing co-branded interactive video services in 54 cities.
Source: Agencies
IBM in sales alliance with Japan's Ricoh
IBM and Japanese office equipment maker Ricoh Co Ltd will start sharing each other's sales network this year and promote their servers and printers together, the Nikkei business daily said on Thursday.
The alliance will enable them to offer corporate clients International Business Machines Corp's servers and Ricoh's copiers and printers as a comprehensive office information technology system, the Nikkei said.
Ricoh expects the new business ties with IBM to help boost its sales by 100 billion yen ($1.10 billion) in two to three years, the newspaper said.
The Tokyo-based company, which competes with Canon Inc, Xerox Corp and Konica Minolta Holdings in copiers and printers, forecast 2.15 trillion yen in sales for the current business year ending March.
IBM and Ricoh will start handling each other's products in their U.S. sales channels in spring 2009, with the cooperation set to expand to other regions including Europe and Asia eventually, the paper said.
Officials at Ricoh, which in 2007 bought IBM's digital commercial printer business for $725 million, were not immediately available for comment.
Digital commercial printers are used to print big documents such as product manuals and direct mail quickly and in large volumes, and are one of the fastest-growing segments of the office equipment market.
Source: Agencies
The alliance will enable them to offer corporate clients International Business Machines Corp's servers and Ricoh's copiers and printers as a comprehensive office information technology system, the Nikkei said.
Ricoh expects the new business ties with IBM to help boost its sales by 100 billion yen ($1.10 billion) in two to three years, the newspaper said.
The Tokyo-based company, which competes with Canon Inc, Xerox Corp and Konica Minolta Holdings in copiers and printers, forecast 2.15 trillion yen in sales for the current business year ending March.
IBM and Ricoh will start handling each other's products in their U.S. sales channels in spring 2009, with the cooperation set to expand to other regions including Europe and Asia eventually, the paper said.
Officials at Ricoh, which in 2007 bought IBM's digital commercial printer business for $725 million, were not immediately available for comment.
Digital commercial printers are used to print big documents such as product manuals and direct mail quickly and in large volumes, and are one of the fastest-growing segments of the office equipment market.
Source: Agencies
Top Citi bosses like Pandit to forego 2008 bonuses
Citigroup Inc.'s Indian American chief executive Vikram Pandit and chairman Win Bischoff would forego bonuses for 2008, the ailing banking giant announced as it formalised its bailout agreement with the US government.
Bonuses for other top executives will be "reduced substantially," Pandit said in a memo to Citigroup employees Wednesday.
Citigroup has received $45 billion in federal capital infusions and a government-financed arrangement to insulate it from hundreds of billions of dollars in potential losses after the bank lost three-quarters of its market value.
"The harsh realities of 2008, primarily our earnings results, mean that our bonus pool is dramatically lower," Pandit said.
Citigroup, the biggest recipient of US bailout funds, completed an agreement for a $20 billion government investment, Pandit said in the memo. That was on top of an earlier $25 billion and a US guarantee on $306 billion in troubled assets.
Pandit is cutting 52,000 jobs worldwide after four straight quarters of losses tied to bad loans and failed investments with the last quarter alone accounting for a loss of 2.8 billion dollars.
Citigroup expects "major challenges" to continue into 2009, Pandit said, describing the proposed actions as part of a major overhaul of executive compensation to confront the problems for the company and banking sector.
The new plan may also include "clawbacks" to "recoup executive compensation that over time proves to be based on inaccurate financial or other information," according to the memo.
"The most senior leaders should be affected the most," Pandit said. "Win and I believe this is fair, in light of the challenges of the year and the need for compensation elsewhere in the organization."
The memo said bonuses for the "senior leadership committee "will be reduced substantially." Members of Citi's executive committee would see bonuses "cut even more" and in some cases given as deferred compensation.
Pandit said the principles to guide the company's executive pay would include "pay for performance" and "meritocracy," adding that "compensation will vary based on each person's performance - again, relative to the overall performance of the company."
Severance compensation will be subject to "significant new limitations" for executives and that the top five executives "no longer can receive severance," said Pandit, who became Citigroup CEO in December 2007.
Those affected executives are Pandit, Bischoff, Chief Financial Officer Gary Crittenden and Vice Chairmen Lewis Kaden and Stephen Volk.
Pandit noted that former treasury secretary Robert Rubin, an advisor to the company who has no direct management responsibilities, "has elected to take no bonus for the second consecutive year."
"The overall objective for all of us at Citi is to build shareholder value, serve our clients and customers superbly well and create growth opportunities for our employees," he said.
"Adherence to the principles of compensation outlined above is fundamental to achieving these goals."
Pandit, 51, received 1 million shares from Citigroup as part of a "sign-on" bonus in January, in addition to a $2.5 million "retention equity award," the company said in March. He was paid $250,000 in salary in 2007.
Pandit got $165 million from Citigroup in 2007 when he sold Old Lane Partners LP, the hedge fund he co-founded and ran. Citigroup closed New York-based Old Lane in June and took a $202 million writedown on its $800 million investment.
Source: Agencies
Bonuses for other top executives will be "reduced substantially," Pandit said in a memo to Citigroup employees Wednesday.
Citigroup has received $45 billion in federal capital infusions and a government-financed arrangement to insulate it from hundreds of billions of dollars in potential losses after the bank lost three-quarters of its market value.
"The harsh realities of 2008, primarily our earnings results, mean that our bonus pool is dramatically lower," Pandit said.
Citigroup, the biggest recipient of US bailout funds, completed an agreement for a $20 billion government investment, Pandit said in the memo. That was on top of an earlier $25 billion and a US guarantee on $306 billion in troubled assets.
Pandit is cutting 52,000 jobs worldwide after four straight quarters of losses tied to bad loans and failed investments with the last quarter alone accounting for a loss of 2.8 billion dollars.
Citigroup expects "major challenges" to continue into 2009, Pandit said, describing the proposed actions as part of a major overhaul of executive compensation to confront the problems for the company and banking sector.
The new plan may also include "clawbacks" to "recoup executive compensation that over time proves to be based on inaccurate financial or other information," according to the memo.
"The most senior leaders should be affected the most," Pandit said. "Win and I believe this is fair, in light of the challenges of the year and the need for compensation elsewhere in the organization."
The memo said bonuses for the "senior leadership committee "will be reduced substantially." Members of Citi's executive committee would see bonuses "cut even more" and in some cases given as deferred compensation.
Pandit said the principles to guide the company's executive pay would include "pay for performance" and "meritocracy," adding that "compensation will vary based on each person's performance - again, relative to the overall performance of the company."
Severance compensation will be subject to "significant new limitations" for executives and that the top five executives "no longer can receive severance," said Pandit, who became Citigroup CEO in December 2007.
Those affected executives are Pandit, Bischoff, Chief Financial Officer Gary Crittenden and Vice Chairmen Lewis Kaden and Stephen Volk.
Pandit noted that former treasury secretary Robert Rubin, an advisor to the company who has no direct management responsibilities, "has elected to take no bonus for the second consecutive year."
"The overall objective for all of us at Citi is to build shareholder value, serve our clients and customers superbly well and create growth opportunities for our employees," he said.
"Adherence to the principles of compensation outlined above is fundamental to achieving these goals."
Pandit, 51, received 1 million shares from Citigroup as part of a "sign-on" bonus in January, in addition to a $2.5 million "retention equity award," the company said in March. He was paid $250,000 in salary in 2007.
Pandit got $165 million from Citigroup in 2007 when he sold Old Lane Partners LP, the hedge fund he co-founded and ran. Citigroup closed New York-based Old Lane in June and took a $202 million writedown on its $800 million investment.
Source: Agencies
IT sector likely to grow 31.4 percent in '09
The domestic IT- ITeS market is likely to grow 13.4% in 2009, the slowest since 2003, as per market research firm IDC India. The market which includes hardware, software and services, grew 17.3% in 2008 to generate revenue worth Rs 1,01,031 crore.
India is likely to witness a slower growth in the coming five years, IDC said. The domestic IT-ITeS market is expected to record an average growth rate of 16.4% in 2009-13, against 24.3% during 2003-08. The slower growth will see enhanced competition, leading to a change in strategy and continuous market re-alignment on the part of players, it said.
"The issues in the short run, more pronounced throughout 2009, will be productivity, cost savings and customer retention. This would eventually pave way for innovative services by leveraging the existing infrastructure and aligning it with emerging opportunities," IDC India country manager Kapil Dev Singh.
The research firm said global IT-ITeS market is expected to grow only 2.6% in 2009, against 5% in 2008 and much slower than 7% in 2007. Despite a lower growth rate, India will continue to be the fastest-growing IT market in Asia Pacific, followed by China, Vietnam, Thailand and Philippines.
In the domestic market, the product categories expected to grow faster than the average include collaborative applications, storage software, system and network management software. Within IT services, segments likely to outgrow the average include desktop management, information systems outsourcing, network management and application management. Solutions such as virtualisation, unified communications and business continuity services will also grow faster on account of enterprises' focus on cost savings.
Among emerging technologies, cloud computing services such as software as a service (SaaS) will be tested and adopted on a larger scale and will perform even better than in 2008. IDC said the economic slowdown will further increase and accelerate the adoption of outsourcing services by the Indian enterprises, while consumer spending on IT will moderate. There will also be increased consolidation among outsourcing vendors.
Source: Economic Times
India is likely to witness a slower growth in the coming five years, IDC said. The domestic IT-ITeS market is expected to record an average growth rate of 16.4% in 2009-13, against 24.3% during 2003-08. The slower growth will see enhanced competition, leading to a change in strategy and continuous market re-alignment on the part of players, it said.
"The issues in the short run, more pronounced throughout 2009, will be productivity, cost savings and customer retention. This would eventually pave way for innovative services by leveraging the existing infrastructure and aligning it with emerging opportunities," IDC India country manager Kapil Dev Singh.
The research firm said global IT-ITeS market is expected to grow only 2.6% in 2009, against 5% in 2008 and much slower than 7% in 2007. Despite a lower growth rate, India will continue to be the fastest-growing IT market in Asia Pacific, followed by China, Vietnam, Thailand and Philippines.
In the domestic market, the product categories expected to grow faster than the average include collaborative applications, storage software, system and network management software. Within IT services, segments likely to outgrow the average include desktop management, information systems outsourcing, network management and application management. Solutions such as virtualisation, unified communications and business continuity services will also grow faster on account of enterprises' focus on cost savings.
Among emerging technologies, cloud computing services such as software as a service (SaaS) will be tested and adopted on a larger scale and will perform even better than in 2008. IDC said the economic slowdown will further increase and accelerate the adoption of outsourcing services by the Indian enterprises, while consumer spending on IT will moderate. There will also be increased consolidation among outsourcing vendors.
Source: Economic Times
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