Tag: outsourcing

Indian outsourcers try to beat Trump

trumpuckerWorried that Donald “Prince of Orange” Trump is going to be a lot more protectionist about his tech visa programme India’s $150 billion IT services sector is going to speed up acquisitions in the United States and recruit more heavily from college campuses in the Land of the Fee.

Tata Consultancy Services (TCS), Infosys and Wipro have used H1-B skilled worker visas to fly computer engineers to the US for ages now. Staff from those three companies accounted for around 86,000 new H1-B workers in 2005-14. The US currently issues close to that number of H1-B visas each year.

However, given Trump’s election comments and his appointment of a long-time critic of the visa programme Jeff Sessions as Attorney General of Senator, many are expecting a tighter regime.

Pravin Rao, chief operating officer at Infosys said that the world was seeing a lot of protectionism coming in and push back on immigration.

“Unfortunately, people are confusing immigration with a high-skilled temporary workforce, because we are really a temporary workforce,” he said.

While few expect a complete shutdown of skilled worker visas as Indian engineers are an established part of the fabric of Silicon Valley,  it is being acknowledged that any changes will jack up the costs.

Rao said that the company must accelerate hiring of locals if they are available, and start recruiting freshers from universities there.

He said the new model will require the recruiting and training of freshers and gradually deploy them.

Trump’s election win and Britain’s referendum vote to leave the European Union are headwinds for India’s IT sector, as clients such as big U.S. and British banks and insurers hold off on spending while the dust settles.

Buying U.S. companies would help Indian IT firms build their local headcount, increase their on-the-ground presence in key markets and help counter any protectionist regulations.

Indian software services companies have invested more than $2 billion in the United States in the past five years. North America accounts for more than half of the sector’s revenue.

Analytics spending worth $58.6 billion

cashA report from IDG said that spending on analytic services is worth $58.6 billion this year and will soar to £101.9 billion 2019.

That’s a compound annual growth rate (CAGR) of 14.7 percent.

IDC said that business analytics is now a “backbone technology” in this cloud driven age.

But there’s a problem as well as opportunities – there’s a shortage of talent coupled with a high interest in enterprises transforming their business using it.

Business analytics spending will grow across all lines in the coming years.

The research shows that there’s high growth not only in enterprises themselves, but in the outsourcing sector too.

Accenture creates 2,000 UK jobs

In a sign that tech outsourcing is back on track, the US-listed tech outsourcing giant Accenture has said it will create 2,000 UK jobs this year.

According to the company the new roles span a wide range of skills and capabilities and offer opportunities for candidates from experienced executives to entry-level recruits for its graduate programme.

Olly Benzecry, Accenture’s country managing director in the UK & Ireland said that the company was looking for highly motivated, skilled individuals who share our passion for how major UK businesses can transform themselves by harnessing the power of technology – particularly emerging digital technologies – to drive business strategy.

The roles will be spread out across London, Manchester, Newcastle, Edinburgh and Aberdeen.

The move was greeted with great enthusiasm by Prime Minister David Cameron.

These jobs are among 10,000 that have been announced today – jobs that will give people financial security for the future, he enthused.

Accenture says it is also hiring graduates for its Newcastle Apprentice scheme which was launched in 2012.

The programme is aimed at enabling school leavers to earn a salary while developing expert IT skills.

The company will be hoping that it never sees itself in trouble in Blighty like it was in 2003 when it took on a huge National Health Service contract which went nowhere and ended up costing the company £800 million when it had to walk away. 

India's IT workers increasingly depressed

Psychiatrists in India are noting a serious spike in depressed workers among the country’s considerable IT workforce.

A director at NIMHANS, the largest counselling and psychiatric centre in India, told the Economic Times of India that when the IT industry began its boom in the country, signs of work-life stress were showing but they are increasingly moving towards signs of depression.

Increasingly, symptoms such as anxiety, acute depression, low confidence and those with little to no interest in a social life are making themselves known to India’s mental health professionals.

Right now, the India Times reports, a NIMHANS centre specifically tailored for urban patients to balance work life problems is seeing more and more patients from the IT industry – and expects that soon, over half will be IT workers. Just two years ago, under a third worked in IT.

A depression counsellor who worked with IT staff who suffer from depression said pressures from social media aren’t helping – although their major points of interaction are online, many workers also feel under pressure to pretend they “have a slice of happy life”, while burying their head in the sand about work-life problems.

Hiring is slowing down in India’s IT sector, and the wider economic environment is seeing companies trying to save money by cutting employee costs first.

Earlier this April, industry body Nasscom said in 2013 there will be 50,000 fewer jobs available in the once booming IT sector. It claimed the enormous contracting deals Indian firms used to be able to score are starting to wane, and future outsourcing project deals will be much smaller.

Shine off Indian IT outsourcing

The once buoyant Indian IT industry appears to be continuing to slide.This week the IT industry association Nasscom has forecast that in 2013 there will be 50,000 fewer jobs available.

Nasscom insists that the lower number is not because of a slow down, but it claimed it was mostly because of economic uncertainties. It claimed that the huge outsourcing deals that Indian companies were picking up are a thing of the past.  

Deal sizes are much smaller. It also suggested that the depressed US and European markets are no longer making Indian companies the sort of money they are used to.

“It is the non-English speaking markets that will drive the additional growth this year. We are expecting the Asean, Africa and Latin America to be big market drivers,” the report said.

Nasscom President Som Mittal was quoted as saying that jobs will come this year but the numbers will come down. Another strange thing is that Indian companies are no longer looking for the single skill workers but those who can use technology platforms.

But for those who have worked in the outsourcing industry, this is a sign that things are not well in India. Saying you are moving to developing countries is all very well, but outsourcing projects depends on projects being there in the first place. It is rare for a company to approach an outsourcer and say we want something done, we don’t know what it is and we have no idea how much it would really cost. Instead, the Indian outsourcing market has been built on the back of companies not wanting to run existing operations.

For the Indian outsourcers to go into developing nations they will have to re-orientate themselves to selling packages of products to people who have no history of using them.  Not impossible, but difficult. It would probably be better for the Indian outsourcers to try and ride out any recession in the US or Europe rather than restructure.  

According to the India Times Nasscom has been asking the government to “reduce business friction” which is short hand for tax breaks and other sweeteners.  These could make it possible to function in the short term until things pick up. Such a cunning plan would have a side effect that would show foreign companies that India was a “hub of research and development and innovation”. 

One of the difficulties Indian outsourcers have had is convincing big business that they are  anything more than call centres. Attempts to build better companies in the region have been stymied by poor infrastructure. However all this means that the once lucrative outsourcing industry in India is on hold, along with the rest of the IT industry.

India is going censorship mad

India is worried that Twitter has become a threat to national security and has warned Twitter of “appropriate and suitable action.”

It has told the outfit that it has to close 20 accounts that it believes have spread scare-mongering stories.

India has been getting all censorship mad lately and blocked 200 web pages which it claims have incited communal violence in the northeast of the country. There had been fighting between Muslim settlers and local tribal groups in the state of Assam.

According to the Indian Government, the sites, as well as mass SMS phone messages, had frightened people from the northeast working in southern cities.

While Facebook, Google and Twitter were praised for helping the Arab Spring by facilitating the free flow of information, it seems that more established democracies are also starting to see the sites as a threat.

Google and Facebook are complying with Indian government requests to remove content. However Twitter has not said anything yet.

But the problem here is that the Indians are not just stopping with those particular Twitter accounts. According to Fox, it is trying to shut down the Twitter accounts of journalists who have criticised the government.

India has also thumped Al Jazeera news, as well as the Daily Telegraph and the Aussie Broadcasting Corporation, for stirring up trouble.

The moves appear to be a knee jerk reaction against anything which might “inflame passions.” But is also very often just bad press about botched government handling of a particular crisis.

The US government is also starting to get involved. As its relationship with Pakistan was revealed to be a sham, it appears to have been trying to cultivate India. Now it is finding that it has to leap to the defence of US companies, such as Google and Twitter. 

IT staff despair about crooked outsourcing

In-house IT professionals take a dim view of the jobs undertaken by outsourced workers, labelling outsourcing a “money pit” and blasting claims of a value return.

Recent research from software firm Lieberman Software showed that despite 71 percent of organisations outsourcing a significant portion of work, many in-house professionals think the ‘completed’ work is not up to scratch.

33 percent of those surveyed said that they trust the work of outsourced employees less than in-house staff.  

Almost half of IT professionals said that outsourcing agreements end up costing more than originally planned, while 64 percent even claimed that outsourcers invent work to bump up invoices.

According to Lieberman Software CEO, Philip Lieberman, this shows the “tenuous” nature of the relationship with outsourced staff and a general mistrust of expensive outsourced work. 

One health service IT worker said, speaking with TechEye, that the questionable level of quality rendered the whole purpose of outsourcing pointless.

“Outsourcing seems like a great big false economy; trying to save a few pennies in the short-term to deliver something costly to the operations of the business in the longer term,” TechEye heard.. 

“I’ve had experience where a system supplier of ours outsourced to India,” the health service worker said. “Any change requested by us would often take a long time to implement, would not always match the specification that was initially agreed upon and could sometimes have incorrect, yet comical, use of English.”

A prevailing view of the outsourced worker is that it directly impacts on jobs for in-house staff.

“They’re seen to take ‘our’ jobs and the work that’s returned often isn’t up to the required standard or just plain wrong,” the source said.

Overall, TechEye hears the whole outsourcing model “adds another layer of complexity to the design, build and test phases” and “increases the likelihood of errors along the way”.

“Most IT systems are fairly difficult to deliver and cost enough as it is,” TechEye heard.

Another IT professional at a well known international brand said that businesses risk hemorrhaging cash by employing an external workforce.

“Outsourcing seems like a huge money pit, and, even if it isn’t, the quality is so poor that the business will lose money by losing customers,” TechEye was told.

The IT professional outlined one example of when, as the Lieberman Software report contends, outsourcers were caught being somewhat ‘creative’ with invoices.

Our source worked at a company where a third party software outfit had been doing almost everything IT related for them.

“The IT manager and the supplier’s MD were very friendly,” the worker said. “I found invoices for ridiculous amounts for work that had never been done – like a report that would take a couple of hours to write which had been billed for tens of thousands of pounds, and never supplied”.

There were also staff who didn’t seem to know what they were doing.

“One of their “highly-skilled” staff had clearly had zero real training,” the worker said. “They just copied existing programs and kept fiddling with them until they kind of worked”.

Indian outsourcers feel the pinch

After being a key part of India’s technology boom, the outsourcing industry is suffering.

According to Reuters, the woe is due to uncertainty about spending by US and European clients who are a bit short of cash.

Apparently they are all chanting a mantra which says that demand will pick up in the second half of the year.

Analysts expect No 2 ranked Infosys, the only top-three vendor to provide a full-year forecast, to sort its revenue growth estimate for the current fiscal year to as low as five percent when it posts quarterly earnings on 12 July.

Infosys predicted an 8-10 percent growth for the fiscal year ending March 2013. That was bad enough as investors expected it to make 13 percent of its market value on the day. However it has only gained about two percent since.

The National Association of Software and Service Companies, or NASSCOM, an industry lobby, expects the industry to grow exports by 11-14 percent in the current year that ends in March.

Apparently Western customers are holding back discretionary spending due to the extended euro-zone crisis. There is no evidience that an economic recovery is under way in the United States either and that is where Indian companies make most of their cash.

Apurva Shah, head of research at BNP Paribas Mutual Fund, which manages investments of about $750 million, said that hopes of a recovery in the second half are just hopes.

To make matters worse the business is becoming harder to do. Clients demand more for every dollar spent and that is stuffing up billing rates on a commoditised set of services that Indian firms, competing with Accenture and IBM, rely on for the bulk of their revenues.

Shares of Infosys, which has a market value of about $25 billion, are down about 11.5 percent this year, while those of top-ranked TCS are up about 8.7 percent. By comparison, the main 30-share Bombay index has gained about 13 percent. 

Big companies vulnerable through outsourcing partners

Big banks, hospitals and insurance companies which have outsourced their IT are vulnerable to hackers because of weaknesses in their business partners.

Insecurity expert Evan Francen said that while many top companies would pass a rigorous security audit, those that rely on business partners would flunk.

Francen said that the world was in the Wild West period of security compliance and it is a period where there is a lot of dosh to be made.

It seems that the weak point in the whole game is the outsourcers who are finding it difficult to meet confusing and sometimes excessive security demands of big companies for which they handle data.

However they are bit stuck because many of their customers don’t really know what sort of protection they want. The only thing they are certain of is that they do not want to end up in the papers having had all their customer details leaked.

According to the Chicago Tribune, a lot of security rules were written by non-IT people, and they aren’t specific enough to give IT professionals a clear idea of how to set up security, and there are a lot of different ways to do it.

All this is forcing some outsourcers to spend a fortune getting hold of consultants to help them pull their socks up.

While it is possible to encrypt and secure everything to the nth degree, that would cost a lot of money, and most of the outsourcers were hired to save cash.

But what is alarming is that at the moment there is a vulnerability for many key businesses through their outsourcing partners which is a hole waiting to be exploited.

Francen hints that some companies have been focusing on their own security and forgotten about their outsourcing partners, although many are forcing their partners to undertake stiff IT audits which the outsourcers do not seem equipped to handle. 

Wipro asset strips Infocrossing

Wipro is about to sell all the data centres and other computer hardware assets of its US subsidiary Infocrossing.

According to the Times of India the move is to unlock value at the outfit’s ‘non-core’ business.

Wipro apparently has had initial offers from several medium to large US telcos. The deal is said to be worth $300-$400 million.

A deep throat in Wipro said the Infocrossing’s data centres were not the “game changer” it wanted over the next three to five years. . Data centres are being considered non-core by outsourcing vendors, but are becoming more important to telecom firms. We guess clouds are for other people.

Wipro said that so far the interest it has had has been unsolicited and there more than one potential bidder.

In August 2007, Wipro wrote a cheque for $600 million for Infocrossing. At the time the outfit only made about $200 million.

At that time, the company had plans to increase Infocrossing revenues five-fold to $1 billion by 2010. However it soon twigged that punters did not make decisions based on whether a vendor owns data centre.

There are some things that Infocrossing has which Wipro still wants and that’s mostly its lucrative healthcare business. Infocrossing has Nestle, BP, Capital One and Best Buy among its top customers.