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Tech firms look beyond headcount to grow revenue
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| 05. INFOTECH |
Tech firms look beyond headcount to grow revenue |
Arvind Thakur, CEO, NIIT Technologies
In a bid to tide over the current slowdown in the US market and move up the value chain, major Indian IT firms such as Tata Consultancy Services (TCS), Infosys Technologies, Satyam and Wipro have put in place a non-linear business strategy, which is not merely headcount-related. In fact, firms like NIIT Technologies and EXL Services are already reaping the benefit of the first- mover advantage with over 20 per cent of their revenues coming from non-linear business in the quarter ended September 30.
A non-linear business' focus moves away from the tendency to measure growth on the basis of headcount or the concept that the more the number of people working, the more the revenue. It also means that organisations offer value-addition to the customers by introducing platform-based solutions or invest in creating Intellectual property (IP) rather than focus on pure application development and maintenance (ADM) work. Take for instance, the cargo operating systems (COSYS) developed by NIIT Technologies for Singapore Airport Terminal Services (SAT). The system owned by SAT integrates the airline cargo reservation systems and allows end-to-end cargo handling operations. While NIIT Tech created this IP-based solution for SAT, it is now taking the same solutions to other players in the travel industry and already has customer, including the cargo handling system at the new Bengaluru International Airport.
And the results show. For the second quarter ended September 30, 2008 NIIT Technologies registered revenue contribution of 25 per cent from non-linear business. Arvind Thakur, CEO, NIIT Technologies, said his company is targeting a revenue contribution of 40 per cent from the non-linear business in the next three years and 25 per cent for FY09. "Our strategy to go non-linear with focus on IP-based solutions and platform approach started 12 months back. The results are there to see. In the last quarter revenue from non-linear business strategy was 23 per cent and in this quarter we touched 25 per cent," says Thakur.
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Another case in point is TCS. It has identified and invested in various non-linear opportunities, namely, software products, platform BPO and software as a service (SaaS), as well as focus on unit-priced contracts. Nearly 2.5 per cent of TCS' consolidated revenue is expected to come from platform BPO. Under the SaaS model, targeted towards the small and medium enterprises, the company will give bundle solutions that would constitute hardware, software and networking infrastructure on a pay-as-you basis.
TCS has also been active in unit pricing in infrastructure management services (IMS) and transaction BPO. Macquarie analysts estimate that about a fifth of TCS' IMS revenue and 10 per cent of its India-based BPO revenue is unit-priced. TCS also has several products - all branded as TCS BaNCS 1 - which contribute around 3.6 per cent to its consolidated revenues.
Analysts believe that in order to become specialist vendors, firms may refocus their growth strategy. "These firms will initiate a strategy overhaul and take steps such as divorcing non-strategic clients or shifting from a pure services play to an IP or solution accelerator proposition. I also see them making niche acquisitions - instead of a sellout - as a way forward," said Sudin Apte, senior analyst at Forrester, a US-based technology and market research company.
Infosys BPO has said that platform BPO would constitute 25 to 30 per cent of its revenue by financial year 2010. Infosys has also launched a supply chain management (or 'Procure-to-Pay') platform in alliance with SAP and an HR ('Hire-to-Retire') platform with Oracle/PeopleSoft. Revenue flows from these platforms are yet to start. Infosys has also stated its intention to create offerings in the software as a service (SaaS) space.
Similarly, NIIT Tech has already launched four applications offering under its SaaS portfolio. Since its launch in February the company has introduced applications offering in procurement, sales and distribution, HR and Finance. Even multi-national players are joining the trend. US-based IBM, is moving from a labour-based to an asset-based model. It has created assets around each vertical. It reuses these assets even as it creates "industry templates" that serve as roadmaps in understanding verticals and the players within.
Source: Business Standard |
NASSCOM Presents 6th Animation & Gaming India 2008 at Hyderabad |
NASSCOM, the premier trade body and ‘voice’ of the Indian IT-BPO industry will be hosting the sixth edition of 'NASSCOM Animation and Gaming India 2008' on November 5-7 at the Hyderabad International Convention Centre (Near Hitech City). The event has been structured to chart out the vision, set aspirations and identify strategic imperatives to address global opportunities for these sectors in India.
Speaking about the event, Mr. Biren Ghose, Chairman, NASSCOM Animation & Gaming Forum, said "In the entertainment and educations space, animation has today crossed the threshold from a sunrise to a mature industry witnessing increasing applications and opportunity. India has outpaced the traditional Asian stalwarts in terms of growth rates for its skilled talent pool; studios; high end digital production infrastructure and is now poised to emerge as a major global hub for this industry.
NASSCOM has been championing this cause for the past 6 years and has now identified animation & gaming as a key focus area. It has set up Nasscom Animation & Gaming forum (NAGFO) comprising the leaders across different verticals in this sector. It has tied up alliances with international partners and with the Government of India. This event has already become the largest event in this industry and we have an eminent aray of speakers in the line up. It is the ideal platform for ideation, interaction and discussion and to meet the established and emerging professionals from across the industry at one dedicated venue."
The two day event will see participation from over 250 delegates, 60 plus speakers - animators, producers, program directors, broadcasters, production units involved in media & entertainment, art & design schools, IT companies, investors, VC’s, government officials from Films Division/ Information and Broadcasting Departments, media etc. It will also provide an opportunity for Indian animation, gaming, electronic media, mobile and console players to demonstrate their competencies, strengths and capabilities.
For more information www.nasscom.in |
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India's tech spending seen growing 17-24% by 2010
Asia Pacific's IT spending is expected to grow about 10-16% till 2010, beating developed markets, according to a study by consulting firm Zinnov. India and China, in particular, represent large untapped markets in the region. While India's IT spending is likely to grow between 17.6-24% by 2010, China would grow 10-13%, according to the study. This is in comparison to the 3.3-6.5% increase expected in global IT spending. Expenditure on hardware, software and IT-BPO services comes under IT spending.
"With the shrinking IT budgets of the developed world set to shrink further, IT services companies have been working on realigning growth strategies and looking at opportunities in countries such as India and China," said Zinnov advisory services engagement manager Chandramouli CS. India's IT spending currently totals $17 billion, while China's IT spending stands at about $21 billion.
Zinnov says North America would see its IT spending grow about 5% and Europe, 4-5%. Spends in the US would move in the range 2.5-6%, reflecting a dip in the nearer future and then picking up towards 2010. Mr Chandramouli says companies in emerging markets, which are in their growth phase, have a greater requirement for building IT infrastructure. A recent CIO survey in India showed that most domestic companies don't have scalable IT systems. The opportunity in India and China is also highlighted by the large presence of small and medium businesses (SMBs) in these emerging markets. According to IDC, about 23.4 million SMBs - nearly one-third of the global total - are located in Asia-Pacific, excluding Japan.
Source : The Economic Times
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Hollywood studios to use Indian patented tech
Hollywood is all set to use Indian technology for the first time. An erstwhile incubatee at the Centre for Innovation, Incubation and Entrepreneurship (CIIE), at Indian Institute of Management, Ahmedabad (IIM-A), has been approached by prominent Hollywood production houses for his patented technology, which finds its application in the current film technology and also for Digital Intermediate Technology of the future. Ujwal Nirgudkar, who recently started his own company, Alpha Imaging Systems Pvt Ltd, has developed a unique concept of 'Online Sensitometric Quality Control' for motion picture film processing. His innovative technology will bring down the cost of quality control and will be quite helpful to cinematographers, film laboratories, producers and scanner manufacturers across the world.
“I am in talks with some Hollywood post-production companies and one European company to license my patented product. As this new technology will help save cost and time for quality control of motion picture film processing, it has the potential to become the industry standard and has created a lot of interest in Hollywood,” says Ujwal Nirgudkar. The existing concept in the industry uses separate film strips for controlling the quality of film processing. The old concept is offline and difficult to computerise. “This new technology changes the current offline quality control using sensitometric strips to a new online control system, which will have the sensitometric strip between the perforations of the picture film, which is an area not explored so far,” added Nirgudkar. The technology has caught the attention of Indian filmmakers but it was Hollywood that Nirgudkar preferred to license his innovation with. “India may be making the maximum number of films but when it comes to the print, only 10 per cent of the world gets processed here, while Hollywood orders 3000-4000 prints per film, which accounts for almost 70 per cent of the world,” explains Nirgudkar.
Source : IBEF |
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Global reputation will help Indian firms grow:
Bill Gates |
Microsoft chairman Bill Gates said that Indian IT companies will be affected by the global economic slowdown but will continue to grow their business as they have built a global reputation."IT companies in India are great partners of Microsoft. They are investing in the long term and they have a pretty incredible reputation. They are always considered whenever a global project comes up," he said, speaking at a seminar at IIT Delhi.
Mr Gates is currently on a visit to India to promote anti-polio and other healthcare efforts, undertaken by his charitable foundation, the Bill & Melinda Gates Foundation, in the country. Talking about the financial crisis that started with the US and has now spread to other markets, Mr Gates said that global markets had overreacted in gauging the spread of the crisis. "There is no doubt that the US is in somewhat of an economic recession but it doesn't need to extend to other markets.
I think the markets have overreacted. The economy will have some weakness for more than six months but it will get back on track," he said. A proponent of increasing the number of H1-B visas, the speciality worker visas for foreign nationals working in the US, Mr Gates also highlighted the shortage of right skills worldwide during his speech. |
The Union Minister for Health and Family Welfare,
Dr. Anbumani Ramadoss meeting the Co-Chairperson of Gates Foundation, Mr. Bill Gates, in New Delhi on November 04, 2008.
"The world continues to have a shortage of the right skills. So, we need more IITs, more universities. The shortage might be bridged in another 10 years when it will catch up with the demand, leading to a new set of challenges. But there are always opportunities for those with the right skill sets," he said. The Microsoft co-founder also unveiled a new programme, DreamSpark, on Wednesday that will provide the latest Microsoft developer and designer tools to students for free.
Source: Economic Times |
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