IRTTech Blog

EDS OFFER TO ACQUIRE MPHASIS STAKE SUCCEEDS
New Delhi
The Economic Times  DNA    Business Standard  Deccan Herald  The Tribune  The Hindu Business Line  The Hindu   

The conditional offer by global IT services giant Electronic Data Systems to acquire majority stake in MphasiS has succeeded with the transaction expected to be completed by this month end. 

"More than 83 million shares have been tendered in the open offer," a company spokesperson said. 

EDS's had made an open offer of Rs 204.50 per share to acquire at least 83 million shares in MphasiS translating to 52 percent stake in the company for a total consideration of approximately 380 million dollars. The offer had opened on May 17 and closed on June 5. 

The offer was contingent upon EDS acquiring 83 million shares otherwise the company would have called off the deal. 

Following the acquisition, EDS's operations in India would be the second largest for the company anywhere in the world, with its headcount going up to 20,000 employees by the end of this year. 

"We look forward to EDS majority ownership of MphasiS and the expanded opportunities EDS brings to MphasiS employees and clients through its global footprint. For MphasiS, this means being able to offer our clients infrastructure outsourcing services in addition to our current application services and BPO offerings," MphasiS chairman and CEO Jerry Rao said. 
 

WIPRO TECH BUYS SARAWARE OY 
Bangalore 
The Hindu Business Line   The Economic Times    DNA  Deccan Herald  The Tribune  Deccan Chronicle  The Times of India  

Wipro Technologies announced yet another acquisition — Finland-based Saraware Oy, a wireless network infrastructure provider. The € 25 million (approximately Rs 147.5 crore) deal included upfront cash payment and debt takeover. In addition, there are earn-outs on achieving targeted financial conditions over an 18-month period. 

This is Wipro's third acquisition this financial year. The company has spent over Rs 400 crore on the acquisitions and added around 1,600 employees. Earlier this month, Wipro acquired Portugal-based retail solutions provider Enabler for € 41 million and, in May, it acquired US-based Quantech Global Services for $10 million. 

Saraware raked in revenue of € 3.8 million for the last quarter (€ 15 million annualised) and is a profitable firm employing 200, said Risto Niva, CEO, Saraware. 

"This acquisition would help us position ourselves in the GSM/WCDMA wireless network market, which stood at $32 billion in 2005," said Ramesh Emani, President, Product Engineering Solutions, Wipro Technologies. 

Wipro's near-shore presence in Europe has been fortified by this acquisition. It would also help Wipro prepare for the 3G evolution and give it access to the mobile security (public radio systems used by police) domain. "These are niche domains — we are intent on adding expertise in them," said Emani. The company will ramp up teams at each of the acquired firms overseas and plans to level out expertise across its locations.
 

PTC INTEGRATES MATHCAD WITH PRO/ENGINEER 
N. Nagaraj, Dallas (USA) 
The Hindu Business Line

Parametric Technology Corporation (PTC) has announced the integration of its April 2006 acquisition MathCAD with its computer-aided design solution Pro/ENGINEER. This integration will allow Pro/E to deliver `predictive engineering' capabilities that will allow customers to analyse their designs quickly and make improvements rapidly to their designs. 

"Our customers face mounting pressure to deliver better products faster and at a lower cost," said Jim Heppelmann, Executive Vice-President and Chief Product Officer, PTC, in his keynote address. 

The integration between Pro/ENGINEER and Mathcad will be available from mid-August, in the Pro/ENGINEER Wildfire 3.0 M030 maintenance release. PTC also announced some new capabilities for the maintenance release 30 for Windchill 8 planned for September 2006: the ability to use SQL Server; and the integration of the Arbortext Content Manager. Also on the horizon in Windchill 9 is a B2B project collaborator called MPMLink, based on PTC's acquisition of Polyplan.
 

I-FLEX PLANS ACQUISITIONS IN US, EUROPE 
Rajesh S Kurup & P R Sanjai, Mumbai 
Business Standard

i-flex solutions is scouting for acquisitions in the European and the US markets, mainly in the banking verticals. 

The software major has short listed a couple of companies in the vertical, while negotiations are yet to begin. 

“i-flex is looking at acquiring a major company that has processes in the banking solution vertical and in Europe and the US. This will increase its market access to other regions and make these countries gateways for its foreign operations,” a source close to the development told Business Standard. 

A senior executive of the company declined to comment on the plan. The company is looking at taking over firms, which hold intellectual property rights (IPR) in banking product solutions. i-flex is also looking at West Asia for acquisition, which will help in extending its reach in that part of the world, he said. 

The core banking solutions (CBS) provider was also looking at increasing its competence in the insurance sphere by acquiring companies in insurance and reinsurance verticals. 

Earlier, it had acquired 73 percent stake in Castek Software, a Canadian property and casualty insurance solutions firm.

Public sector is a phrase that normally evokes names of usual suspects like ONGC, IOC, SAIL, Bhel, public sector banks and the like. The universe of PSUs has remained the same, more so the well-performing ones, and even shrunk a bit due to disinvestment.

What is heartening is that a small set of PSUs seems to be flourishing away from the public gaze. From businesses like hydel power to new ones like rail ticketing, and supplying missiles and torpedoes to the military, these firms are a refreshing change from the usual oil, metal and machinery character of the public sector. 

The more well known from the lot is the Indian Railway Catering and Tourism Corporation (IRCTC), which started off as a catering and hospitality arm of the railways, but shot into prominence with its online rail ticketing facility. It offers e ticketing for rail travel that facilitates buying rail tickets sitting at home. Its success is visible in its numbers, with turnover doubling to Rs 124 crore during ‘05; its net profit grew from Rs 4.1 crore to Rs 5.2 crore. 

IRCTC is the smaller among the firms we picked. Then there is Antrix Corporation that vends products and services developed under the Indian space programme. The commercial arm of the Department of Space, it markets space communication services, earth observation services, remote sensing systems and software, spacecraft systems and sub-systems, testing facilities and mission facilities. 

Its turnover has more than tripled in the last three years to Rs 348 crore. It declared a net profit of Rs 39.4 crore, giving it a very healthy margin and it has just 15 staffs. According to its website, its customers outside India include companies like Hughes, Matra Marconi and WorldSpace. 
 

US BUSINESSMEN KEEN ON BIHAR
Patna
The Economic Times

American businessmen, including Indian expatriates, are keen to invest in Bihar's hotel, BPO, IT and health sectors, says a team of officials from the state that has just returned from the US. 

"We have received over half a dozen proposals from them and are likely to study them for clearance," said a senior official who was part of the team headed by Bihar Chief Secretary G.S. Kang that came back on Wednesday. 

The team, which also included State Planning Commission chairman N K Singh, attended a three-day seminar organised by Stanford University for an interactive session with investors. 

It was decided that a mirror conference would be held in Patna in January next year to be attended by major corporate chiefs, economists and IT experts from the US. 

"American investors are keen to invest in the hotel industry in the Buddhist tourist circuit like Bodh Gaya, Rajgrih, Nalanda and Vaishali," an official source told IANS. 

Non-resident Indians (NRIs) are also keen to open call centres and software units in the state. 
 

INFY TO HIKE REVENUES FROM EUROPE, TO FOCUS ON VERTICALS 
Bangalore 
Business Standard

IT major Infosys has firmed up plans to enhance the company’s revenue share from Europe by focusing on verticals such as banking, retail, transportation and health care. 

“Europe is a very critical market for us. Last year, its contribution towards our total revenue was between 23 percent and 24 percent. It is our intention to scale it up to 30-35 percent in the coming years,” Infosys chairman and chief mentor N R Narayana Murthy told a gathering of 50 interns from various US universities during the launch of the InStep programme for the current year at Infosys’ Electronics City campus here on Thursday. 

Interacting with the interns, he said Infosys was banking on its development centres in the UK, Germany and Belgium, and the BPO centre at Czech Republic to propel the firm’s growth. 

“However, our focus area will be Germany. It is a critical component of our plans to enhance revenue generation from the European continent. Very soon, we will launch a development centre in Germany,” he added. 

Murthy said Infosys would look at China as an opportunity rather than a threat. “We have to integrate China in our business plan. There are many good lessons to be learnt from them. We will make our presence felt in China in an increasing manner,” he said. 

Elaborating on plans for China, Murthy said Infosys aims to enhance the headcount in its Chinese operations to 20,000 over the next five years. 

“We are awaiting approval of architectural plans for our new campuses at Shanghai and Hongshu from the Chinese authorities. We consider China as a growing market and we want to be there,” he noted.
 

STATE PLANS IT HUB IN WARANGAL 
Warangal
Deccan Chronicle

The State government directed the district administration to send a detailed proposal to turn the city into a major information technology hub in the region. The proposed plan to turn the city into an IT hub includes setting up of IT parks at prime vacant land near Sridevi Theatre, and in Madikonda, where two US-based IT firms have already procured land and are in the process of setting up of their software development centres.

Joint collector Syed Omer Jaleel said that there would be a high-level meeting in Hitech city in Hyderabad to discuss the proposal to make a second IT hub in the region next only to Hyderabad. 

The soon-to-be-held meet would discuss ways to project Warangal as a IT hub to national and international IT companies to set up their shops and create employment opportunities for youth. Some top companies, including Reliance Infocom, are showing keen interest in setting up its IT park in this historic city of the Kakatiyas. 

Referring to other major developmental plans for the city, Omer Jaleel, who is also in-charge vice-chairman of the Kakatiya Urban Development Authority (Kuda), said that there was a proposal for a massive Rs 103 crore project to set up a multiplex, shopping mall, and a five-star hotel at the integrated Kuda complex at Balasamudram. 

The government has given administrative sanction for the mega project, which would virtually change the face of the city, and the works would be soon allotted. The joint collector explained that a mega truck terminal would also come up on 50 acres near Enumamula on the Warangal-Khammam highway. The proposed terminal would decongest traffic in the city and would considerably decrease heavy vehicular traffic here.
 

OPINION

'IF CHINA PLANS 50 HARVARDS, WE NEED 100 IITS' 
Bangalore
The Economic Times

While the Indian ITES/BPO industry continues to ride the path of growth, it is worried about improving the levels of education in the country to keep its knowledge and labour pool advantage. Industry leaders feel that both companies and government should work together in this aspect. 

Speaking at Nasscom’s India ITeSBPO Strategy Summit 2006, Nasscom president Kiran Karnik said tie-ups with state governments and educational institutions were the need of the hour with emphasis on changing curriculum at school levels and improving language, computer and soft skills. 

“China has said that it plans to build 50 Harvard Universities. Even if they build half the number, they can compete with us. India needs to build not 3-4 but 100 IIMs and IITs to ward off competition. The industry is ready to help in this endeavour,” was the view of Pramod Bhasin, chairperson, Nasscom BPO Forum and CEO of Genpact. 

Industry experts think that the BPO industry is going through a “mid-life crisis”. “As the market has become older, there is a bit of frustration among companies, including MNCs like IBM and Accenture that the growth hasn’t met expectations. 

The BPO companies are grappling to find the right strategy and business models in the face of stiff competition and consolidation in the industry,” said John C McCarthy, V-P, Asia Pacific, Forrester Research. He added that future BPO success would require serious technological and marketing investments by suppliers. 

Stating that a recent Forrester survey had come out with findings about a fair amount of angst among clients about offshore BPOs, he said that several of them are putting in more audits, re-evaluating offshore plans and renegotiating SLAs to put in more security measures. McCarthy said that the call centre scramble between 2002-2006 has played out and now the focus is on vertical build out. “Increasingly, there will be deals to build out skills and depth. We are also seeing IT firms including Infosys and Wipro, moving to leverage software products as a common platform,” he said. 

Hubert Giraud, CEO, Capgemini Global BPO Services, said price was no longer the only driver for customers. “Cost is important but it is increasingly becoming secondary to operational efficiency and processes,’’ he added. 

Communications and IT Minister Dayanidhi Maran is in favour of extending the tax holiday to IT companies based out of Software Technology Parks of India (STPIs). However, he wants the industry and Nasscom’s help in convincing the other ministries on the issue. 

Speaking at Nasscom’s India ITeS-BPO Strategy Summit 2006, the minister said, “From an IT minister’s point of view, the benefits should be extended after 2009 to help companies have a level playing field in global competition. But there is a need to talk to other ministries about it.” The current tax holiday given to companies registered with the STPIs will end in fiscal 2009-10. 

While there has been a lot of concern in the industry on this, the government is still to take decisions on it. On the education issue, Mr Maran asked Nasscom to select a few states like Karnataka, Tamil Nadu, Andhra and Bengal and prepare a white paper on the education standards and requirements needed for bringing them up to industry level. 
 

QUOTAS: MURTHY PREFERS AFFIRMATIVE ACTION 
Bangalore 
Business Standard  The Financial Express  The Indian Express 

Infosys chairman and chief mentor N R Narayana Murthy on Thursday made it clear that he prefers affirmative action over reservation to provide the best of opportunities to the disadvantaged classes such as SCs/STs and OBCs. 

He was reacting to Union minister for social justice and empowerment Meira Kumar’s warning that time was closing in on the private sector to implement reservation. 

"I believe in providing opportunities. It is the only way forward and the long-term solution. If we lay a strong foundation at the primary school level, improve the quality of education and provide nutritious food and health care, these kids (from deprived sections) will be as competitive as any other," Murthy told reporters at the Infosys’ Electronic City campus. 

Murthy claimed that Infosys is already working on this direction. "Last year, we chose 65 candidates from the disadvantaged sections and put them under intensive training. Subsequently, they were subjected to recruitment tests at Infosys. As many as 35 qualified for jobs at our BPO arm Progeon. This should be the approach," he contended. 

Murthy pointed out that Infosys is launching a similar exercise on August 15 in association with Canara Bank and Indian Institute of Information Technology, Bangalore.