IT Leaders - Where to after 2010
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Forum Name: Sector talk
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Printed Date: 05/Apr/2025 at 7:49am
Topic: IT Leaders - Where to after 2010
Posted By: omshivaya
Subject: IT Leaders - Where to after 2010
Date Posted: 15/Oct/2006 at 2:56pm
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It is a very good possibility that the 3 biggies of Indian IT: TCS, INFY and WIPRO, would be very close to 10 billion US$ by 2010 or a little into the year 2010. I am initiating a discussion here to discuss thoroughly what lies ahead for a TCS or INFY after 10 billion a piece in annual revenue.
What would their next growth areas be after that for next 5 years. See, for the likes of IBM etc. 10 billion was just another new start. These US IT companies have been growing pretty well despite being big firms for many years. It is only in the past 5-6 years, that their growth has stifled due to Indian IT emergence.
So, no reason that TCS or INFY cannot grow real big after 10 billion for years to come.
So, let's disucss what lies ahead after 2010: the new trends, growth drivers etc.
Also, since China and India will become world-powers, there is no reason not to beleieve that we could not have a google.com or microsoft.com or some innovative small firms(initially, when listed) like these with great innovations, that become BIG wealth creators in the future.
INFY AND TCS are still sweatshops to an extent. There is not a serious world-beating product-oriented innovative IT firm yet in India, which has made it BIG in the world-arena. So, that is one thing that we can also focus on in this topic.
------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Replies:
Posted By: basant
Date Posted: 15/Oct/2006 at 3:24pm
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It would be interesting to find out how many new computer professionals we would need to keep the clock ticking. Infy has about 60,000 employees now and by 2010 it should be having over 200,000 employees. Taking a 15% attrition and a 25% growth it would need 80,000 employees each year. If WIpro and TCS also have similar requirements we would need over 240,000 technically skilled people for the big 3 or maybe the big 5.
If the top 5 takes in over 200,000 employees the whole tech industry would need about 500,000 qualified professionals at least. Since software services pay better guess who would join engineering and other services. Salaries would rise; cost advantages would diminish and a reverse brain drain could occur but as they say in economics gaps do not remain for long.
This has been written randomly and is all a ball park figure. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 15/Oct/2006 at 3:41pm
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That is why innovation is the key. Innovation will lead to more work being done by less number of people and also, product-oriented firm would have higher margins and pricing power. TCS has a software called MasterCraft, which does a lot of auto-coding for professionals. TCS has a product into the Bio-Informatics arena, which could be a big growth-driver in future. All in all, I feel product-oriented firms would have an edge in the coming times and innovation is the only key to drive cost down. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: Ajith
Date Posted: 15/Oct/2006 at 11:45pm
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My guess is that after 2010,shockingly for Indians,recruitments and (perhaps development centres as well) may move away from India till supply gets augmented. Chinese may benefit. ------------- Ajith |
Posted By: nikhil090
Date Posted: 07/Nov/2006 at 8:00pm
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Dear all,
These companies Infosys, TCS etc have managed to manage growth exceedingly well till now. My feeling is that they are now relying on processes and systems to do the selection and train the staff. I read somewhere that entry level salaries have been roughly stagnant for the last 2 years. this implies that there is still talent pool (engrs, mca's graduates , msc's etc) who can fill in at the entry level pretty well. After that anybody who is trained can do it. So my feeling is that talent crunch may not be very severe. The companies will keep on going to 2nd rung/3rd rung institutes and develop/train people as per their requirements.
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Posted By: omshivaya
Date Posted: 28/Nov/2006 at 6:06pm
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Read and weep Accentures and EDSs.
http://www.rediff.com/money/2006/nov/28premji.htm - http://www.rediff.com/money/2006/nov/28premji.htm
------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: Ajith
Date Posted: 29/Nov/2006 at 3:53pm
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What I meant was that while Indian I.T companies will prosper more and more offshore development centres may be set up in China,Vietnam and to that extent Indians may lose out because of deficiencies in our educational system.But the I.T majors will continue to roar. ------------- Ajith |
Posted By: omshivaya
Date Posted: 29/Nov/2006 at 5:28pm
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TCS has started recruiting normal graduates(not engineers or software graduates) on a pretty large scale, and training them and getting them to be at par with a software graduate, within 7 months. Here is the link: http://www.sda-india.com/sda_india/psecom,id,22,site_layout,sdaindia,news,13781,p,0.html - http://www.sda-india.com/sda_india/psecom,id,22,site_layout,sdaindia,news,13781,p,0.html
This will take care of not only the talent crunch for sometime to come, but also provide good-paying employments to hundreds of thousands of graduates. First science graduates, and some day maybe any graduate with "maths" in their courses. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: xbox
Date Posted: 29/Nov/2006 at 8:14am
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Survival of Indian companies lies in invocation. First they innovated offshore model and they became giants of corporate India. As long as they continue to innovate, they will become bigger n bigger. One day they will be giants among global corporates aswell.
In this journey they will get brakes like INR appreciation, salary costs, worldwide recession, competition etc. etc.
Like other industry, companies with strong management will survive all that.
Indian IT companies have to venture out into other geographies and hire local talents. If Brazil or China offers better margins, they need to be present there. If mega projects means volume growth, they need to do that. Crossing horns with IBMs, Accenture, EDS is very much on the cards. I expect to see it happening as US goes into recession. Time at other side of recession will see bigger and stronger INFY, TCS and Wipro.
From market perspective, I expect PE discount shrinking. A 30-40 PE is not sustainable and when this re-rating happens, one can see blood in markets.
------------- Don't bet on pig after all bull & bear in circle. |
Posted By: omshivaya
Date Posted: 21/Jan/2007 at 2:53pm
Source: http://www.business-standard.com/compindustry/storypage.php?leftnm=lmnu1&subLeft=2&autono=272099&tab=r - http://www.business-standard.com/compindustry/storypage.php?leftnm=lmnu1&subLeft=2&autono=272099&tab=r ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: ramki830
Date Posted: 23/Jan/2007 at 11:33pm
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This is a very very interesting topic, so we cannot try to find out the future or share view in a single post or para. But I would put my thoughts this way: 1. The Big 3 (or 5) Tech Majors of India are trying to become the Indian equivalents of IBM/Accenture/EDs and they arent trying to become anything else. Atleast as of now. 2. The targets for 2010 are easily acheivable. But the biggest problem is that the number of people employed. It would be running to 2-3 lakhs. I feel that HR issues and Poltiics will start taking more and more of management time.
5. I think that portals would be the hottest and most profitable business by 2010. By that time, all the fringe players would have died and the only ones with brand (or web address)recall would survive. And there is this rule of thumb that as years roll on, Technology fads become habits and habits owned by businesses become brands. Orkut, Yahoo, Hotmail, Rediff, bharat matrimony could be brands valued at par or even more than a Surf or a Colgate or a Pepsi. Why not? What do others say |
Posted By: sanjay3
Date Posted: 23/Jan/2007 at 1:38am
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IT firms set to hire more women http://www.rediff.com///money/2007/jan/23it1.htm ------------- |
Posted By: sanjay3
Date Posted: 23/Jan/2007 at 2:00am
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Nasscom sees 33% growth for IT, ITeS
MUMBAI: Nasscom on Tuesday released its forecast for the Indian IT and BPO industry. The industry association has predicted a growth rate of 32.6% growth in total software and BPO export revenues, marginally lower than the growth of 33.3% in FY06. The industry is forecast to touch $31.3 billion in exports in FY07 compared to $23.6 billion in FY06. If the local software and BPO industry revenues are also taken into the account, revenues will likely touch $39.7 billion in FY07, and if IT hardware sales are also included, the total revenues will touch $47.8 billion in FY07. The IT industry’s contribution to the GDP is expected to rise from 4.8% in FY06 to 5.4% in FY07. “The size and the scale of the industry has grown, though the growth may be less its on a bigger base. And the industry is on track to reach the targeted $60 billion in software and services exports by 2010”, Nasscom president Kiran Karnik said. To reach this target, software exports have to grow at a CAGR of 24.2% for the next four years. The industry has grown at well over the targeted rate at a CAGR of 34.6% in the last few years. “We have to double whatever we have achieved so far - so the figure is big, although the growth rate may be lesser than what we’ve grown so far. The three-year outlook is based on opportunities and challenges,” Mr Karnik said. On the other hand, if the total IT industry continues to grow at the same rate as it is growing today, it will be touch $100 billion by FY10, according to Nasscom. The domestic IT industry, has moved away from hardware-led growth and is deriving greater momentum from the software and services sector. It is projected at $15.9 billion in FY07, representing a 21% growth over the previous year. However, hardware is still a large portion of the domestic pie at $7.6 billion compared to $5.6 billion from services, $1.6 billion from software and $1.2 billion from BPO. At these levels, the domestic BPO industry has logged a sharp 30% growth, IT services 25% and hardware a 12% growth over FY06. The number of people employed by the software and BPO industry has also grown rapidly, from 2,84,000 in ‘00 to 1.6 million for FY06. This is a 26% growth in manpower in FY07 compared to a 22% growth in FY06. As before, the industry’s growth was led by export services, which is forecast to be $18.1 billion in FY07. However, engineering services, R&D and software product development services have made a substantial contribution to export revenues. Revenues from this segment are expected to account for $4.9 billion, compared to $ 4.0 billion recorded in FY06. For exports, the US and UK were the largest markets. “The share of Europe has steadily increased, newer markets are also keeping pace,” Nasscom pointed out in its review. For FY06, revenues from Americas totalled 67%, Europe 25% and rest of the world, 7.7%. The growth in large deals and unbundling of multi-million dollar contracts - a key feature in this fiscal - has resulted in Indian players growing their share of the pie in the contracts of over $50 million to 7% in 2006, as compared to 1% in 2002. Multinationals announced investments worth over $10 billion in FY07, but the amount will be invested over a period of a few years. TIMES INTERNET NETWORK[ WEDNESDAY, JANUARY 24, 2007 12:25:51 ------------- |
Posted By: basant
Date Posted: 23/Jan/2007 at 9:14am
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Over the next 5 years the growth in IT industry could offset a lot of our current account deficit problems. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: johnnybravo
Date Posted: 24/Jan/2007 at 2:51pm
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Posted By: ramki830
Date Posted: 27/Jan/2007 at 10:14am
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Dear Tushar,
You set my brain cells working... let us try to debate further...
3. That's not entirely true, its just part of the story not the complete story. Outsouring is nothing but asking a cheaper guy to do the same job. That's what these companies are leveraging. If any Indian company needs to be acknowledged globally, it should move gradually move towards software products...that's where the real money is. Also please understand that not all softwares are free. If u spend time building something - wouldn't u expect money from it? Only the basic platforms and some utility tools are free. Otherwise there wouldn't have been money in the techology sector globally! Look at the few indian product based software companies - they r minting huge money.
Well i was trying to say same thing differently - Software as Product vs Software as a Service. My view is that Software as a Product is not that much of a growing business and its best days are gone. We will not have another Unix or another Oracle or Another MS Office or another Java. What we will have is another Infosys or another Accenture, the solution providers who use these tools to provide total solutions. So Indian Cos are right in concentrating on service aspect and not trying to launch a rival to oracle or adobe.
4. If these guys start buying out products and sell them in the US mkts - that's what will be the greatest thing. Imagine taking over the Cisco's, IBMs, NetApps or Symantics or even Microsofts....all these have a spectacular/niche product lines that have a huge global market.
Exactly.. but they need not buy SW cos alone. A TCS could buy a consumer electronics company, an Infosys can buy a Portal like Yahoo and Wipro could buy even some power equipment company... Diversification is very much a possibility. Of course, not now... it will be after a few years, when these IT majors have cash reserves of many billion dollars .
True. Technology integration - and bringing software applications to the Mobile Phone platform will be the biggest area of activity in next 10 years. But my only concern is that the business of Software services is likely to get too much commoditized over coming years... that would make Portals, which survive on Brand recall a better business. A sugar maker commands lesser P/E than a Branded Biscut Maker right? Likewise a Infy in future may deserve lesser P/E than a Naukri.
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Posted By: kulman
Date Posted: 27/Jan/2007 at 10:31am
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Great intelligent* debate going on here.
(And precisely the reason*, I won't be able to participate !) ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: omshivaya
Date Posted: 01/Feb/2007 at 2:00am
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Tata Consultancy Services led others in the list of top 10 best performing IT Services providers worldwide rated by Global Services, a specialized publication for IT businesses. According to the sources, Indian companies dominated the list with Cognizant Technologies occupying second place followed by Infosys Technologies, HCL Technologies, Neoris and Patni Computer System. MindTree Consulting was at the 7th spot followed by Politec, Satyam Computers Services and Wipro Technologies. The top ranking for both Leaders in Human Capital Development and Best Performing BPO providers went to Genpact, and Hinduja TMT was selected as the Best Performing Global Call Centre Provider. The honour for the best performing Managed Services Providers went to Affiliated Computer Services of the United States. While Polaris Software Labs with delivery centres in India led the list of the Top 10 Specialty Application Development Providers, the Top Engineering Services Provider slot went to Patni Computer Systems. India accounts for the largest number of companies among the top 100 with 36 finding the coveted slots and is followed closely by United States with 32 outfits. Together India and the United States corner 68 of the 100 slots. Expert from Global Services, a CMP-CyberMedia publication and outsourcing experts at neoIT, a consulting firm that specializes in servicing globalization, identified top service providers on the basis of survey conducted by the publication. Source: http://www.saharasamay.com/samayhtml/articles.aspx?newsid=69428 - http://www.saharasamay.com/samayhtml/articles.aspx?newsid=69428 ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: manishdave
Date Posted: 01/Feb/2007 at 4:07am
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Financial and Telecom are two biggest consumers of software services.
Chinese banking system is huge opp for software comapanies. They have whole banking system controlled by Govt and we know how it goes when govt runs them.
I believe we have better domain knowledge than Chinese. So when sector is opened there should be lot of work for our companies. If there is economic problem, banking will suffer most as they have very high NPA. In that case Govt will throw money at the problem and software companies will catch that money. Product companies should get most advantage.
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Posted By: manishdave
Date Posted: 01/Feb/2007 at 4:33am
I would see gap different way.
We used to say:
Mumbai ki kamai Mumbai me samai
Lets say somebody is making $80k in US. After all expenses and taxes person saves $20k. With same standard of living person saves equivalent of $20k but his/her salary is $40k. This is general idea but there could be variations which can be advantage or disadvantage.
1. If hudband and wife both are working, they can not save equivalent in India.
2. If they have kids couple may save more in India.
3. If somebody is single, he/she can live with family(in India) and all is saving.
4. Person is single child or very attached to family he/she would forgo some savings.
Second point is, there will be still gap betn non technical staff expense and other expenses.
Legal/health costs and that gap is going to stay big and for long.
Cost of SS and other taxes which employer pays is aprox 10% of salary. Health cost for family is not less than $500-600/month
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Posted By: johnnybravo
Date Posted: 02/Feb/2007 at 3:54pm
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Posted By: johnnybravo
Date Posted: 02/Feb/2007 at 4:12pm
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Basantji, Yes, I too belong to this industry....Worked in indian product based startups, indian services based companies, MNCs, and now an American startup! Seen all the models of money flowing into this industry. To me indian portals and online content providers do seem like very lucrative businesses in the next 5-10 years, but these business are highly competetive and easy to replicate - though i agree with ramki that the first movers have the advantage - but i am not totally confident that naukri (for example) will the best company to invest even after 5 years... In general (based on the 99-2000 experience), most portals even though they are successful, have a small lifespan - reason being others coming up with similar or better attractive ideas in very short time. I think background services offered like billdesk (the one which is used to pay online bills or purchases - connecting to ur bank/credit card account) might have a much more established and sustained revenue stream. |
Posted By: omshivaya
Date Posted: 07/Feb/2007 at 4:53pm
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Bulk deal of TCS of 69 lakh shares traded at 1314 recently. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: omshivaya
Date Posted: 07/Feb/2007 at 5:05pm
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Giving an outlook for the IT sector, Moshe Katri, Managing Director of Cowen & Company says that US' IT services spending growth is likely to remain at 2-3%. Further, offshore spending is likely to go up to 27% in 2007. Excerpts from CNBC-TV18's exclusive interview with Moshe Katri: Q: Post the results, you have seen that there was some sort of margin pressure on IT companies. There were talks of billing rates going up. What would you factor in as the outlook for the fourth quarter of this financial year for the IT sector as a whole?
Secondly, the March quarter is also very important for some of the companies that have March fiscal year because this is really where we start getting fiscal 08 guidance. We do fear that this year, given some of the trends seen from a big picture perspective, the guidance for fiscal 08 is going to be at least in line with Street expectations, if not a bit more upbeat.
We did have, for example, Cognizant report and their numbers just recently and one of the thing that lifted the stock, the day when they actually announced their numbers was that they did provide revenue growth guidance for 07 that was in line with expectations. But their EPS guidance actually was much more upbeat than what the Street was looking for.
On top of that, if you look at Cognizant’s headcount additions during 06, it was about 60%. And on the other hand, they guided for 43% revenue growth in 07, which typically gives us enough room for comfort that there is going to be more upside to the revenue numbers in 07. Q: The US economy has been a subject of much discussion, many people believing that perhaps it is slowing down. Your own outlook on IT Budget has been much more optimistic. Can you give us some numbers on how you think the order flow might increase in terms of percentage? What kind of percentage are you seeing in the billing rates as well? A: First of all, in the past two to three years, our internal surveys were telling us that IT services spending growth is going to be about 2-3%. So, talking about the offshore side of the business, I am talking about the onsite, more about the MNCs such as some of the management of the Accentures and the IBMs of the world are actually seeing, the main trend seems to be exceeding a lot of people's expectations, even some of the optimistic expectations.
We are seeing that reflected in the comments on pricing, in utilisation rates and even in recruiting. The market is doing extremely well and this is something considering the tough times you went through from ‘01 to '03. We don’t really expect to see it coming back so soon, but I don’t want to jinx it, when it occurs. But the main trends are very healthy now. Q: You touched upon onshore. What about the offshore because there are reports suggesting that there is strong support coming in terms of pricing for the offshore divisions as well? How would you factor that into what you have just said in terms of growth and which companies stand to gain most from this offshore pricing power? A: The offshore side of the business is benefiting from a couple of trends. One is what we have spoken about, that is the budget share shift, the percentage of the IT services spending budgets that are geared towards the offshore side of the business. That percentage was 12% in ’05, which went up to 19% in ’06 and that number is going to go upto 27% in ’07. So it’s a budget share shift. The cost of advantage continues to be here.
Thirdly, we are actually seeing the whole demand function really moving away from the traditional labour arbitrage theme to more value creation. On top of that, we are hearing a lot about pricing strength. If you talk to Tier I offshore players, we are looking at 3-5% billing rate increases on contract renewals. We are talking about another 5% plus increases on new contracts.
Remember from ’01 to ’03, many of the Tier I offshore vendors had to reprice a significant portion of their revenue base. We haven’t seen any billing rate increases since probably since months.
I am assuming what’s really happening is that the typical CIO is realising, that they have to ramp up pretty aggressively. If they want to get the right people to do the work, they are going to have to pay a bit more.
But in the grand scheme of things, we are really talking about USD 20-25 per hour for offshore projects. If you bump it up by 3-5%, it's not really a big number. So the pricing strength is really part of what we are seeing in January, which is the budget share shift that continues to be very strong. That’s obviously benefiting the Tier I offshore names, TCS, Cognizant, Infosys, Wipro, Satyam and the onsite side of the business.
We do feel that Accenture has done a very good job in building a global delivery model and I would say that today Accenture is really doing a superior job in competing head-to-head against the Tier I offshore vendors as well. Source: http://www.moneycontrol.com/india/news/fiiview/moshekatrimdcowencompany/cowencosees07of/market/stocks/article/266011/1 - http://www.moneycontrol.com/india/news/fiiview/moshekatrimdcowencompany/cowencosees07of/market/stocks/article/266011/1
------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
A: First of all, typically the March quarter is the sector’s weakest quarter. Our view here is that given some of the trends that we have seen during the past - we are talking about new clients additions, utilisation rates, some comments about strengthening bill rates - you may not see the typical seasonality in the sector that you see during the March quarter. Posted By: omshivaya
Date Posted: 13/Feb/2007 at 1:37am
Source: http://www.financialexpress.com/latest_full_story.php?content_id=154675 - http://www.financialexpress.com/latest_full_story.php?content_id=154675
------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: omshivaya
Date Posted: 01/Mar/2007 at 3:06am
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I just got some info. from my sources regarding TCS. I am not too sure of the news, so am just gonna say that some major good news in TCS is coming up in next 1 year. Stock may(MAY) have a chance of giving more than 50%, 12 months from now, from level of 1200 levels.I am just putting out this info. for viewing purposes and not want this to be the ONLY basis of making any investment. I don't have any more info. so cant say anymore obviously.
Hope this helps in someway anyone invested in TCS. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: India_Bull
Date Posted: 01/Mar/2007 at 3:29am
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Hi Om, Trust you have got right info and I am out of touch for a while.
See, I am becoming more and more dependent on TED and TEDDERS..
 I dont have TCS with me as I strongly believe in Infy compared to TCS.
With due respect to TCS guys and the company here is the story (Some of my friends absconded (Bond issue) and TCS continued to pay them for 3-4 months as they never realised that they have absconded or no more with the company...(Lack of control on resources ) people have to pray God for months to get some work atleast (low utilization and lack of resource planning !!)-that is why attrition rate is very less( who dont want to get money for no work) --Its my final destination for retired life !!) as I heard they take 5 days to write a few line code..
No doubt it is doing very well but feel TCS do not have adequate infra to handle the huge growth thru which they r going !!
------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: omshivaya
Date Posted: 01/Mar/2007 at 4:02am
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Ok sir good luck then. To each his own ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: vip1
Date Posted: 01/Mar/2007 at 11:38am
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I feel TCS is as good as Infy , after the Corus Deal will get better Brand image due to the Tata Factor , which leads to better rates and hence revenues ,and it is the only Indian IT Company targetting a USD10 Billion turnover by 2010. |
Posted By: catchsudipto
Date Posted: 02/Mar/2007 at 12:25pm
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Hi I feel that i have some knowledge about TCS and Infy as i have some of my friends working in both the companies. Now what i hear from than TCS is no compare to INFY( sorry om). Infy management is much superior that TCS. The quality of recrument is INFY is way above TCS . There is no indian IT company in INDIA, i repeat there is no Indian IT company in India where management is so helpfull to its employee like INFY. I have a friend in B'lore who user to work for infy. Then he left INFY to do some business of his own. But somehow its didn't click. Finally after having messed up he was hopeless he was not getting good job at that time. On the advice of some other friends he decided to ring Infy. He instantly got a call from Infy to join that same day. He is now in Endland.Now he says that he will never leave INFY in his life. He is an alumni of IIT kharagpur. Some 1 or 2 years back TCS recruted some IIT kharagpur students. They were sent to Chennai for training. Those students didn't like the way of training, and they are not happy with the quality of faculties there. Finally they decided to complain to the management about it. Next day they are not allowed to enter the training institute. They were handed 50,000 rs each ( part of the agreement) and they were thrown out of TCS. What i hear is that TCS is being RUN as a Govt company. Anyway i didn't know which will move more faster TCS of INFY. BUT as a company INFY is much superior that TCS. THis I am confident 100%. ------------- Make your Life as simple as possible. |
Posted By: omshivaya
Date Posted: 02/Mar/2007 at 12:32pm
Don't be sorry sudipto ji, it's okay really.
There are 2 faces of TCS: TCS as an Employer and TCS as a business. I know TCS pretty well 2 in various ways at various levels(loads of friends there)
My investment is based on the latter. TCS has been this way for its employees since a long time(as long as I can remember) and yet the latter has taken care of it. So investor point of view, I am happy. For an employee, sorry!
Law of Karma says it all has to end up in good finally and the bad shall pay. But that time is not coming soon! For the same reason that despite USA having screwed so many countries(Afghanistan, IRAQ, Vietnam etc.), it still is a formidable business and military superpower.
Many of these companies such as Infy, Satyam etc. have many such good TCS guys in them. TCS has the track record of the best in-house training.
And by the way, after the initial TCS training it is said in the IT circles, one can get a job in any software company in the world in his specialized domain. That is why earlier what some people used to do was to come to TCS: take the training, then start looking for a better paying job after a few years. It is only recently that Infy's training has come to some level close to that of TCS.
I know the ultimate law of karma will prevail...will see when it comes! ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: basant
Date Posted: 02/Mar/2007 at 12:42pm
Very interesting. Will never get these in any of the brokearge reports.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: catchsudipto
Date Posted: 02/Mar/2007 at 2:24pm
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Hi I know about the TCS training. I had heard a lot of prase ( in the past may be some 4 to 5 years back) about it. But unfortunately i dont hear the same about it now. TCS had already started to recruit peoples from Private engg colleges in WB. ( I have meet students from Private engg colleges of WB who were recruited for TCS. They came to me do some project. They have no idea, no goal. Their only intension is to get a rubber stamp of IIT kgp. After guiding some of them as a co-guide, i was able to know the depth of their knowledge. Yes They really need very very good training from TCS to able to make them fit for their software requirement.) Some weeks back i meet a senior TCS requirement officer (while he was visiting IIT, kgp). I asked him why TCS is picking up students from private engg colleges in WB, where there is no proper infrastructure. ) He said first they are very very cheap. TCS is offering 7000-8000 every student. Moreover experience tells him thay these students stay longer with the company ( TCS) say 3 - 4 years. Moreover most of them will be employed in the technical writing, or translation german code to english code etc etc. So no harm. ANYway i am only telling my part of story. What u said i fully agree with it. Hope TCS runs like a bullet train.  . ------------- Make your Life as simple as possible. |
Posted By: s_praharaj
Date Posted: 02/Mar/2007 at 11:06pm
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Some of my friends have joined TCS. They were offered initially 50% more than what they were getting. Some of them have gone to very high positions now. One of them was telling me that if you don't do any work in TCS also, no body will ever ask you for that. You will continue to get ur salary and perks. To deliver goods, You have to find out your work and get adjusted somewhere and perform. There not only you have to perform but also please your boss. One of my friend had to take his boss's house on rent to please his boss, though he had to do a lot of commuting. When I heard initially about this from one, I was very much surprised, but later the veracity of it I got confirmed from others also. ------------- Shashi Praharaj |
Posted By: basant
Date Posted: 02/Mar/2007 at 11:16pm
|
When I heard initially about this from one, I was very much surprised, but later the veracity of it I got confirmed from others also
____________________________________________________________
I thought only small and medium businessmen did this to please Govt. beurocrats, officials at their customers end etc. It is a matter of shame and disgrace.
This does not mean that the stock should be sold.
BTW is Ramdorai on rent at Ratan tata's apartment?  ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 02/Mar/2007 at 11:58pm
Is this friend a Bengali or his boss a bengali? Which city is this? Delhi, Guragon, Noida, Or Mumbai Shashi jee? ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: b_kothari2001
Date Posted: 02/Mar/2007 at 6:37am
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Hi,
Sharing few information regarding TCS:
Sudipto ji, I am strongly oppose your following statement: “Anyway i didn't know which will move more faster TCS of INFY. BUT as a company INFY is much superior that TCS. THis I am confident 100%”
Correct way is..... Both are great company you can not compare them just like you can not compare Oracle & Microsoft in Cheers,
Bharat |
Posted By: kulman
Date Posted: 02/Mar/2007 at 9:17am
|
Very hot & good discussion here!
To add some spice: Let's request BubbleVision to compare TCS & INFY based on Beta, Relative Strength, out-performance etc.... ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 02/Mar/2007 at 9:51am
|
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
... Kulman our time view is not on same wave length but you are absolutely correct .. this discussion is very good and HOT! I am enjoying!Posted By: basant
Date Posted: 02/Mar/2007 at 10:04am
Kothari ji is working with TCS, Om Shivaya is the owner so both have an insider's perspective
I think Om can single handedly defend any company!!!
Kulmanji as usual is always looking for some fun ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 02/Mar/2007 at 11:29am
|
Basant sir, TCS is hated for the same reason Microsoft is in the US. The biggest you are, more the people find faults in every action of yours.
But I am aware of a lot of bad stuff going on in TCS. Maybe the same thigs are happening in INFY too, but I am not aware of them. Biut irrespective of all that, I am also aware that TCS has in the past for many many years, successfuly increased its business despite having this employee problem since at least the past 10 years. Anyhow, my target of 35%-40% y-o-y growth is definitely going to be achieved despite all these issues and ultimately that is what I am looking for.
If as a company, where would I work? Nucleus or TCS? Definitely Nucleus! INFY I won't comment as I don't own it. Good luck to them 2! ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: basant
Date Posted: 02/Mar/2007 at 11:43am
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How sure are you of TCS doing 35% CAGR in EPS from Fy 07 - Fy10? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 03/Mar/2007 at 12:02pm
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100% sure in stock price - I am also taking into consideration an ADR issue. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: Mohan
Date Posted: 03/Mar/2007 at 12:14pm
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Are you sure if its an ADR ? ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: omshivaya
Date Posted: 03/Mar/2007 at 12:44pm
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Not sure Mohan ji. ADR, ADS...whatever! There would be a nice premium to the issue. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: omshivaya
Date Posted: 03/Mar/2007 at 12:49pm
|
Recent extract from Sharekhan:
Minimal impact on earnings There is a growing consensus among tax consultants and the management of the leading information technology (IT) companies that the levy of the minimum alternate tax (MAT) would have a minimal or absolutely no impact on the earnings of IT companies. To put it in perspective, the IT companies would have to pay additional tax on income from the Software Technology Park (STP) registered units (@ of 11.3% now), resulting in cash outflow to the tune of 1-2.5% of their revenues. However, the same would not get reflected in their profit & loss account due to the creation of a deferred tax asset. That's because the MAT payable in FY2008 and FY2009 can be carried forward and be set off against the full tax payable on the income from the STP registered units with effect from FY2010. This largely eliminates the concerns related to a possible decline of 3-6% in the earnings. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: kulman
Date Posted: 03/Mar/2007 at 1:03pm
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Then the Markets seem to have over-reacted. Isn't it Om jee?
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: omshivaya
Date Posted: 03/Mar/2007 at 1:08pm
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Yes, by the looks of it. I am not too sure what or how global factors are weighing in currently on the Indian markets, but fundamentally the report above clears Nucleus as well as TCS on fundamental grounds. Rest, let's wait and watch. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: BubbleVision
Date Posted: 03/Mar/2007 at 1:17pm
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Kulman continuing from where you stopped
"The market can stay irrational longer than you can stay solvent." -- John Maynard Keynes ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 03/Mar/2007 at 1:30pm
|
"The market can stay irrational longer than you can stay solvent." -- John Maynard Keynes
----------------------------------------------------- Hmmm....Shri John Keynes is absolutely right.
On second thoughts, it is not applicable to people who have really invested the money which is out of savings, not leveraged & are patient with it for real long term.
For the person who doesn't need that 'invested' money for next 8-10 years; "solvency" doesn't matter because of market fluctuations. It is more for leveraged guys & hedge fund managers.
Basant jee has put it nicely "notional loss of capital on paper v/s permanent loss of capital"
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 03/Mar/2007 at 1:38pm
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Excellent Kulman! ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: omshivaya
Date Posted: 03/Mar/2007 at 5:02pm
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So true, you JEEs...oops, meant you guys! ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: kulman
Date Posted: 16/Mar/2007 at 12:10pm
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http://www.dnaindia.com/report.asp?newsid=1085102 - Global IT budgets to grow, but pricing pressure to rise
Global IT spending is set to grow in 2007 over last year’s levels, albeit in single digits, the quarterly survey of global CIOs by Citigroup Research shows. That may still be good news for large Indian IT services companies like Infosys, TCS, Wipro and Satyam.
But the bad news for them is that when considering offshore outsourcing, CIOs are now more inclined to start their own captive units, or use lower-cost offshore vendors, instead of continuing to use their existing vendors. This is intended to diversify the vendor base, and also obtain better deals. Nearly 60% of the European CIOs had a positive outlook on IT spending over the next 12 months. About 51% of them, compared to 44% last year, expected spending to actually improve slightly over 2006. US CIOs also appeared bullish on IT spending with roughly 49%, compared to 38% last year, saying they expected spending will be up this year. The percentage who said IT spending would worsen too fell to 8% from 12% last year. “This positive outlook on IT spending is generally shared by IT service providers”, says the Citigroup report which, however, interprets the results to indicate IT spending in 2007 to increase but not much higher than the mid-single digits growth rate. “The overall scenario is quite positive for 2007”, said Srinivas Vadlamani, CFO of Satyam Computers. According to him, increases of between 3% to 5% in IT budgets and 15% in offshoring budgets can be expected from the US, which continues to be the main source of business for the Indian IT services industry. In a further positive trend, outsourcing and offshoring may be losing some of their negative stigma with responses from the 200-and-odd CIOs in the US and Europe being largely neutral to slightly positive compared to last year. Interestingly, however, CIOs are thinking more of kicking off their own captive offshoring operation or to use low-cost offshore vendors instead of continuing to use the already low-cost resources of their existing vendors, the survey of 200 CIOs across US and Europe shows. Srinivas felt this may be true of companies wanting to set up captive BPO units, but not so much for offshoring IT services. At the same time, traditional practices of application or hardware footprint consolidation or pressuring vendors for pricing concessions continue to remain the preferred cost-saving strategies, the survey points out. Not surprisingly, this could translate into pricing pressures for IT services companies during the year. While TCS has said it expects billing rates to grow just 3-5% for existing customers, new accounts could notch up higher growth at 5-10%. Satyam, on the other hand, has said it is seeing higher billing rates by 3-5%. Clearly then, while the size of the cake is set to increase for Indian IT services companies in 2007, they will have to work harder on retaining their exiting clients with the pressure clearly on billing rates. SOURCE: DNA MONEY
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: kulman
Date Posted: 04/Apr/2007 at 10:50am
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http://www.livemint.com/2007/04/05000622/IBM-ahead-of-rivals--in-IT-out.html - IBM ahead of rivals in IT outsourcing
Three summers ago, when International Business Machines (IBM), which runs the world’s biggest tech-services business, signed a deal to manage the computers, servers and other software of emerging Indian mobile phone firm Bharti Televentures, little did the Armonk, New York-headed company know of the market it was tapping into.
The decade-long contract, then worth $750 million (over Rs3,200 crore), has today expanded to $1.7 billion as the phone firm has grown its customers more than ten-fold to 35 million, India’s largest cellular business. IBM last month bagged a similarly-structured transaction, valued at up to $800 million, to handle the tech function at Idea Cellular. And, another one in the works with Hutchison Essar Ltd could be worth double that.
Today, India is so important to IBM that its chairman and chief executive, Sam Palmisano cajoles Sunil Mittal, chairman of Bharti Airtel, as the Indian company has been renamed, into addressing global schmooze events alongside him. “For him, Bharti is the most convincing case study he can present to the world,” Mittal recently said.
How has IBM bagged more than half such outsourced deals in a market that is home to growing global rivals TCS and Infosys Technologies? IBM insiders say the big advantage it enjoys over competition is the advisory capability it added after it bought consultant PricewaterhouseCooper’s technology services business. “That really was the silver bullet,” says a company veteran, who preferred not to be identified.
Jai Menon, director, technology and innvotion at Bharti, agrees. “When we partnered with IBM, nobody had an end-to-end capability to build a new system which would scale with our growth,” said Menon, who today sits on a global advisory board at IBM. Other chief information officers say even today, others such as Hewlett Packard or Accenture cannot match IBM’s breadth of offerings.
Nipun Mehrotra, director of technology services at IBM India, says the company’s ability to manage both small and large engagements spread over its multiple offices in India helps. “We are equally focussed on all our client engagements—whether it is the $29 million contract with DLF (a real estate firm) or an $800 million deal with Idea Cellular,” Mehrotra said.
IBM’s infrastructure and people costs are driven down as it shares the work of multiple Indian clients among a near-60,000 strong workforce, spread over 25 centres in Bangalore, Chennai, Gurgaon, Kolkata, Pune, Hyderabad and Mumbai, that services its global customers.
Big Blue, a nickname that stuck with IBM thanks to its large, blue-painted mainframe computers of the 1960s, sweetens deals by offering to take a share in the customer’s revenues in lieu of part-payments for the work it does. To date this sharing is on offer, say industry insiders, which other contractors struggle to match.
Besides costs, “while most Indian companies are still perceived to be ‘project-centric’, IBM has been able to position itself as a broad-based solution provider,” T.R. Madan Mohan, director of the tech practice at consultant Frost & Sullivan said. With committed investments across services and platforms, IBM has the financial and managerial depth to easily absorb tech staff of a client.
IBM’s successes are being heard at other company boards as some of India’s larger companies plan to adopt a similar model to concentrate on their core businesses leaving the management of technology to contractors such as IBM, Hewlett Packard, Accenture, Wipro, Tata Consultancy Services, Computer Sciences Corporation and other tech vendors jockeying for the deals.
If telecom was the first wave of such engagements, banking could be the next, says Anand Sankaran, vice president of total outsourcing at Wipro. “In the last 12-18 months, we are seeing a trend where enterprieses are adopting a single-vendor approach for outsourcing their tech infrasructure, applications and asset management,” he said.
Leading Indian enterprises such as Reliance Industries, ONGC, Reserve Bank of India, State Bank of India, and Allahabad Bank are going to be the next big outsourcers, analysts and industry insiders say. It’s not a small market. The value of such deals over 10 years could range up to $500 million each for banking clients such as Allahabad Bank and RBI and up to to $200 million for Bajaj Auto and other manufacturing firms.
Another set of potential outsourcers are multinational companies such as Unilever’s Hindustan Lever, HSBC India and Standard Chartered Bank. “One of the deals being chased by IBM is the HLL contract, especially since its Indian operations are already supporting Unilever’s activities in South Asia,” a source who did not want to named, said.
Tech researcher IDC’s local unit has predicted that the demand for system integration services will grow to $8.7 billion, typically the market IBM and peers target.
IBM’s shadow looms large here too. Most of the new deals are not simple service contacts where tech vendors are paid fixed amounts “but come with escalating performance indicators and with a direct relation to the customer business,” says Wipro’s Sankaran.
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: xbox
Date Posted: 06/Apr/2007 at 6:10am
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I guess, rupee appreciation has taken too much of resources. Currencies are very volatile. There are several factors attached to it. Right now INR is appreciating because of RBI's neutral stance. Time to time RBI intervene into money markets to balance excessive fall or rise. This time RBI is not doing may be because they don't want more INR in the system. Last year Korean Govt lost 11 BUSD just to stabilize their currency. Like inflation target does RBI projects INR rage for a year or so ? Although trend is up but time to time it may go down. Korean currency has appreciated 25% in 3 years and all exporters are licking their wounds. We can't imagine where INR-USD be after 10 years. It took 5-6 years from 49 to reach 44 but next 5-6 years could be drastically sharp. I will not be surprised if I see it around 35-36 by 2012 or so. It may not be good news to importers because commodity dollar prices increases with dollar depreciation. Our IT Service companies needs to modify their contract procedures with clients to take care of currency factor.In short-term Q4 or next Q1, Q2, IT service companies may show smiling faces (due to other incomes) but their margins are definitely under pressure.
In my opinion, next big challenge for IT companies to tackle currency fluctuations though mainline business. So, can one take contra call here ? God Knows ... ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: basant
Date Posted: 06/Apr/2007 at 10:18am
|
Very relevant observation Vipulji. During the 90's the rupee appreciated from Rs 33 to Rs 48 and that was a shot in the arm for these IT companies.
Each year the salaries go up in India and if US enters troubled waters salaries will drop there so the cost differential is also decreasing maybe that decrease in cost does not look too relevant now but small things add up by 2009 IT companies will have to pay taxes so clearly they have to contend with more then one variable. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 07/Apr/2007 at 2:13pm
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Excellent points Basant jee and Vipul jee. Post-2009 and rupee are the 2 factors that can really become big bottlenecks for the IT companies. They better find some solutions fast. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: xbox
Date Posted: 07/Apr/2007 at 3:43pm
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IT industry is all about intelligence. I am convinced that they will find out some solution to this problem. Sooner the better. US slowdown will help IT companies to find out solution quickly.
Any sharp fall in IT service companies will bring contra people. I think hold is best mantra. ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: Ajith
Date Posted: 07/Apr/2007 at 11:14pm
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Yes,Vipul, intelligence and also innovation,Catch the next tech wave!! ------------- Ajith |
Posted By: Mohan
Date Posted: 07/Apr/2007 at 1:17am
| In that case, lets consider the beneficiaries of the Appreciating Rupee |
Posted By: Ajith
Date Posted: 07/Apr/2007 at 9:44am
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Catch the Next Tech wave!!(the right stocks at the right moment-take care) ------------- Ajith |
Posted By: basant
Date Posted: 20/May/2007 at 11:46am
I do not know how the markets would have discounted it. Infy guidance is at Rs 43 and a fall to Rs 40.55 means a 8% downtick in revenue which cannot be explained by a 12% fall in price. Prices have to fall harder or maybe the market does not believe this rupee rally to be long lasting. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Ajith
Date Posted: 21/May/2007 at 2:05pm
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R Damani was nesgative on tech expecting strength in rupee whereas Surjit Bhalla was positive expecting strenth in dollar for the short term.I am going with Swaminathan Aiyer who argues basically that countries competing with India also face appreciating currencies and further I believe vis a vis US itself we offer tremendous value addition and deep competitive strengths. (these are my expectations not strong convictions because eventual reality tends to surprise on such issues affected by uncertain economic variables) ------------- Ajith |
Posted By: omshivaya
Date Posted: 21/May/2007 at 7:33pm
|
TCS for one has been trying to get many more orders from Europe in the recent past. In fact, their Pearl deal was from UK and a deal worth 2 billion is being speculated around July which would be froM Europe again. So, TCS has shifted focus to Europe long-time back, trying to de-risk the revenue model and besides everyone is usually hedged.
Beyond that I am not too sure what they can do, so let's wait and watch. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: kanagala
Date Posted: 21/May/2007 at 12:00pm
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Effect of Rupee on IT from HSBC report:- Rate of rupee appreciation is 3-5% higher than companies have assumed in their guidance (INR42.3-43/USD) Patni has the highest exposure to the US dollar (79% of revenues); TCS and HCL have the lowest billing exposure (c60%) Currency appreciation could have a significant impact on profitability The three main billing currencies for IT services companies are the US dollar, UK pound sterling and euro, and all three have depreciated versus the rupee in the current quarter so far. At the current rates, the rupee has appreciated 6.8% q-o-q against the US dollar. It has also appreciated 5.4% q-o-q against the pound and 4% q-o-q against the euro (compared to March 2007 quarter average rupee rate). Wipro and Satyam have c75% of their revenues billed in US dollar. Comparatively, this figure is c60% for TCS and HCLT. Due to its domestic and Latin America presence, TCS has the highest proportion (c13%) of revenues billed in currencies apart from the US dollar, euro and pound. Exposure to billing currencies for IT companies (%) Revenues billed Infosys TCS Wipro Satyam HCLT USD (%) 73 62 76 75 60 GBP (%) 13 18 16 10 25 Euro (%) 5 7 5 5 10 Others (%) 9 13 3 10 5 Op margin impact of 1% rupee appreciation 45bp 35bp 40bp 30bp 35bp Hedge position of companies Infosys TCS Wipro Satyam HCLT 4Q rate for hedge(INR) 43.1* 43.5+ 44-45.77 44+ 44-45 Forward cover(USDm) 470 1300-1400 595 460 900 Overall, most companies in our Indian IT Services universe derive c60-65% of their revenues from the US, except TCS (significantly lower at 51%), and Patni (the highest proportion at 79% from the US). Infosys and Satyam have assumed a conservative rupee rate for their guidance of INR43.1 and INR42.3/USD respectively. However, at current levels of INR41/USD, the rupee is already 3-5% higher than the guidance assumptions and c6.5% higher compared to the average of March 2007 quarter for Infosys and Satyam. Relative size of forward cover (USDm, %) Company 4Q annualised revenue Hedge Hedge/revenues HCLT 1,450 900 62% Infosys 3,452 470 14% Satyam 1,644 460 28% TCS (Intl) 4,291 1400 33% Wipro 2,764 595 22% Although all IT companies’ revenue in rupee terms is likely to be affected if the rupee remains at the current level, companies with large forward cover might gain on the other income line from any significant currency volatility. On the other hand, pricing continues to improve for large IT vendors. Infosys has seen two consecutive quarters of 5-6% y-o-y pricing improvement, as of March 2007. We believe better pricing might cushion the impact of rupee appreciation on margins. These are the some of the points mentioned in the report. I might have missed some important points to paste here. |
Posted By: Ajith
Date Posted: 21/May/2007 at 8:26am
|
Todays report in E.T about higher productivity of US I.T workers is interesting.Shows how much scope there is for rapidly moving up the productivity ladder.No doubt about it ,there will be huge winners in I.T perhaps the biggies INFY,TCS,Wipro or Mindree,Tech Mahindra or new names will make quantum jump in productivity and well-forgotten will be the dollar rupee woes...
As I seek admision for my child an interesting trend (much more than last year )is emerging-the best and brightest(even those who had earlier decided on medicine have changed their minds) are opting for engineering because of massive recruiments by biggies. ------------- Ajith |
Posted By: basant
Date Posted: 21/May/2007 at 8:52am
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Productvity growth etc are all means to repair the damage but the market has never looked at IT firms defensively. It is not that because the dollar has depreciated these guys will look at productivity led growth. THis has been happeneing ever since the companies started to operate.I still feel that if the dollar does not stabilise these companies could have a biog problem up their sleeve. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Ajith
Date Posted: 21/May/2007 at 10:36am
|
Short Term,I agree with you about the negative outlook but over the medium to long term productivity gains will throw up winners in the tech sector notwithstanding further rupee apreciation.
From another angle,product companies may throw up winners as their outlook may be unnnecesserily perceived to be negative by the market. ------------- Ajith |
Posted By: johnnybravo
Date Posted: 21/May/2007 at 11:22am
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Indian IT companies shall indeed try to be more productive in terms of resource utilization. Remember for a people centric business like IT where capex is equal to hiring more people, utilizing one's available resources is highly desirable. All the IT biggies like Infy, Wipro, TCS have a huge underutilization of resources. People are known to sit idle for upto 6 months....because these companies could afford that till now...But with pressure on margins, situation might not be the same. Those companies which are able to successfully manage and optimize their resources shall gain or at least be effective to the sinking $ scenario. Having said that, I also feel that suddenly everybody is talking about the Rs. $ equations - when the Rs. has already appreciated substantially. In a country like India where the Govt is more often than not, is able to mess with markets, I guess sooner than latter Govt/RBI might step in to protect the exporters. There are other industries which operate at substantially lesser margins that the IT companies. |
Posted By: xbox
Date Posted: 22/May/2007 at 8:30pm
|
Opprtunity is slowing coming...yes IT sector is perfect hedge in coming days. As & when market crashes, see IT outperforming in positive returns. Why ? Quite simple. Any crash will lead to depriciation of INR. So lets wait for INR to reach 39 or so (which I assume is possible, if crash does not come before it), around 39 or so one can wait IT sector at reasonable price and once crash happens...be marry & [thanks TED]. I hope very soon TAU will start speaking it on channels. ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: BubbleVision
Date Posted: 23/May/2007 at 12:27pm
Om -- Last 30 Days..
USD-INR down 2.64%
EUR-INR down 3.49%.
GBP-INR down 4.51%
That's a Reallity cheak!!!
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: basant
Date Posted: 23/May/2007 at 12:58pm
|
Very smart point that you make but have you checked over a longer period of time say from when the US$-Re exchange rate was Rs 45 or there abouts. Are we seeing the same pattern? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 23/May/2007 at 1:38pm
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Thanks for the reality check ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: Ajith
Date Posted: 23/May/2007 at 2:09pm
|
The very shape of IT is changing.Oracle may get into implementation says an insider-I do not understand the dynamics,but this planned move by Oracle may hit the biggies.Someone from the industry only can really understand the implications . ------------- Ajith |
Posted By: BubbleVision
Date Posted: 23/May/2007 at 8:05pm
BasantJi...
Cheak out these charts for
http://www.ksh*tij.com/graphgallery/spotpre.shtml - USD-INR
http://www.ksh*tij.com/graphgallery/eurinr.shtml - EUR-INR
http://www.ksh*tij.com/graphgallery/gbpinr.shtml - GBP-INR
http://www.ksh*tij.com/graphgallery/jpyinr.shtml - JPY-INR
http://www.ksh*tij.com/graphgallery/chfinr.shtml - CHF-INR
They all are in a "Sell-Off'. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: vivekkumar_in
Date Posted: 23/May/2007 at 10:22pm
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Bubble Ji, Unable to open the link. Is the website www.ksh*tij.com ? Regards, Vivek ------------- Often we forget there's a company behind every stock,and there's only one reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies. P Lynch |
Posted By: BubbleVision
Date Posted: 23/May/2007 at 10:43pm
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vivekkumar ....Yes. www. K S H I T I J .com I guess you will have to remove that " * " in the middle with an " i ". ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: basant
Date Posted: 23/May/2007 at 10:56pm
The computer does not understand the intention. The techies know this better thenanyone else. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: vivekkumar_in
Date Posted: 23/May/2007 at 5:04am
Thanks Bubble ji ! ------------- Often we forget there's a company behind every stock,and there's only one reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies. P Lynch |
Posted By: johnnybravo
Date Posted: 23/May/2007 at 11:22am
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Posted By: kulman
Date Posted: 26/May/2007 at 11:50pm
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Country's top software exporter http://www.thehindubusinessline.com/businessline/blnus/15261806.htm - TCS has acquired the remaining 49 per cent stake in its Brazilian joint venture for $33.4 million, giving the company 100 per cent ownership.
TCS do Brasil recorded a topline of $66.5 million for the year ended March 31, 2007 and has over 1,700 employees, the company said in a statement here. The Brazilian unit operates software centres in Sao Paulo and Brasilia and serves over 30 customers including ABN Amro, Good Year and Brasil Telecom among others, the company said. In the year 2002, TCS entered the emerging high growth Brazilian market through a 51:49 joint venture with Grupo TBA. In the synergistic relationship, Grupo TBA bought local market knowledge and client relationships, while TCS contributed world-class methodologies process and quality systems. Over the last five years, TCS do Brasil has been successful in scaling its business, achieving market penetration and enhancing delivery capabilities, thereby resulting in a high level of customer satisfaction. TCS, Asia's largest software services company, has over 89,000 trained IT consultants in 47 countries. The company has generated consolidated revenues of $4.3 billion for the year ended March 31, 2007 ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: omshivaya
Date Posted: 26/May/2007 at 1:27am
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Thank you Kulman sir for that update. Appreciate it a lot!!!! ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: basant
Date Posted: 02/Jun/2007 at 10:57am
Vipulji: do you have names of companies that lost on mkt cap as the korean won gained in value. People are talking about productivity gain but I think your assesement about 8 weeks back seems to be on track. IT companies could at best be market performers!!! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: xbox
Date Posted: 02/Jun/2007 at 11:55am
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Company's profitability is severely affected by WON appreciation. Now companies are reacting to it by opening new manufacturing facilities overseas but this is slow and cap-ex incentive program and fruits will only bear is 3-4 years from now. Consumer electronics is retail business where price hike depends upon success of product rather than anything else. So companies like LG, Samsung are not able to increase their product prices. Whereas IT service industry is totally different ball game. I assume sooner or later our IT companies will find some solution to currency problem though mainline business (not by INR hedging). Which will protect their top-line against currency. Last week TCS said some thing like this. India is very important IT outsourcing country which means India has power to influence pricing issue. ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: BubbleVision
Date Posted: 03/Jun/2007 at 12:30pm
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Vipul.....that currency appreciation has not been against the USD in the last 1 year. It has mostly againt the YEN (by 10%) in the last 1 year.
KOSPI is flying!.....Vipul ........How is KOSDAQ doing, as that contains the high flying export based tech companies in Korea.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: Mr. V
Date Posted: 04/Jun/2007 at 5:57am
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Andy Mukherjee on the long term strategy that IT biggies should employ to offset Forex risks.
India's Service Providers Need to Sell Products: Andy Mukherjee By Andy Mukherjee June 5 (Bloomberg) -- For India's software exporters, there is a somber message in the Plaza Accord of 1985. Following that agreement, the Japanese yen began a steep climb. It reached 121 to the U.S. dollar in December 1987 from almost 263 in February 1985. Japan's exporters, facing severe erosion in profitability, turned to their treasurers to create additional income by engaging in speculative trades. Something similar is now happening in India. Buoyed by capital inflows, the Indian rupee has strengthened 9.3 percent against the U.S. dollar since March 2. It's hovering close to a nine-year high. Expectations are gaining ground that this may be the start of a multiyear currency appreciation driven by a return of the exchange rate to a level closer to its true purchasing power. This scenario -- and it's no more than that at present -- is problematic for Indian software companies. Immensely successful in the past few years in getting Fortune 500 companies to outsource their applications-support and network-maintenance work to India, these companies are now reaching that point where they must think hard about how they are going to live with a stronger currency. And no, the solution doesn't lie in forcing treasurers to take additional financial risk to make the quarterly profit guidance. The Indian software companies have to stop being pure service providers and sell more products. From tools that allow mortgage banks to track defaults to applications that enable retailers to manage inventory, the scope is endless. Shrinking Margins Mumbai-based Tata Consultancy Services Ltd., India's No. 1 exporter of software services, said May 31 that its profit margin was shrinking because of rupee appreciation. Yesterday, Credit Suisse Group cut its price target on Bangalore-based Infosys Technologies Ltd., citing a stronger rupee. It also changed its rating on Wipro Ltd., a smaller rival of Infosys, to ``neutral'' from ``outperform.'' Shares of Infosys, Wipro and Tata have fallen during the 10 percent rally in the benchmark Bombay Stock Exchange Sensitive Index in the past three months. These companies are already highly efficient and investors doubt the rising currency can be overcome by squeezing more out of workers or cutting costs. The three firms hire thousands of employees each quarter and utilize them so as to protect their 25 percent to 30 percent pretax profit margins even after routinely handing out annual 15 percent wage increases. Expensive Resources In this model, there isn't much scope to get significantly higher prices from clients without hiring more expensive resources. That might sacrifice profitability, rather than boost it: After all, a consulting company such as Hamilton, Bermuda- based Accenture Ltd. has a pretax profit margin of less than 11 percent. Beating back the margin pressures from a rising currency requires a significant jump in revenue productivity per worker without an attendant increase in costs. It's possible to do this by moving away from merely selling time to creating products. Tata Consultancy has made a good start. Last week, it announced the formation of TCS Financial Solutions, a product unit focused on banking and capital markets. ``The idea is to grow our revenue disproportionate to the headcount,'' says Krishnan Ramanujam, the Sydney-based chief operating officer of the new division. Banking Transactions Tata Consultancy has, largely through acquisitions in Australia and Switzerland, come to own proprietary financial products that span everything from core banking to securities lending. Half of all banking transactions in South Korea and 45 percent in Taiwan are now processed using Tata's products. With 2,500 employees, the unit had $170 million in sales in the financial year 2007. Its per-employee revenue of $68,000 is two-fifths higher than for Tata Consultancy as a whole. This is the way forward for Indian software companies. They must utilize their robust cash flows to acquire products. Or else, they will remain efficiently run commodity producers. It's bizarre that just when old industrial companies in India are scouring the world for leveraged-buyout targets, some of the new-age software-services companies are paying out more money as dividends than they are setting aside for investments. Are they running out of ideas? Do they want to get acquired? It's widely believed that the global market for outsourcing will continue to grow, and a lot of the new business will come to India simply because of demographics: No other country between now and 2025 will add 273 million people to the workforce. Stock Rewards But the stock market has already rewarded homegrown Indian software companies handsomely for their ability to execute outsourcing projects with efficiency. Now investors would like to see a blueprint for withstanding currency risk. The rupee is at present trading at about 40.5 to the dollar. According to the University of Pennsylvania's Penn World Table, 8 rupees have the same purchasing power in India as $1 has in the U.S. It's natural for developing-country currencies to remain undervalued relative to purchasing-power parity for a long time, though there usually is a process of convergence. If the appreciation in the rupee turns out to be even half as rapid as it was in Japan, the exchange rate might climb to 30 rupees to the dollar in three years. The assumption that the Indian central bank won't allow the rupee to rise so quickly is no excuse for complacency. It shouldn't stop Indian software companies from starting their search for productivity gains. Otherwise, the poor corporate treasurer will be forced to become a gambler. And that, if the experience of Japan is anything to go by, won't be a good thing. Source: Bloomberg http://www.bloomberg.com/apps/news?pid=20601039&sid=aigaEYxE913A&refer=home |
Posted By: Ajith
Date Posted: 04/Jun/2007 at 7:42am
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The technology sector has to evolve with the changes,else it will be difficult to survive let alone thrive. ------------- Ajith |
Posted By: omshivaya
Date Posted: 05/Jun/2007 at 12:29pm
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Excellent article Mr V. Thanks ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: xbox
Date Posted: 06/Jun/2007 at 8:01am
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On much expected lines, Country's best contra fund has started picking INFY. ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: kulman
Date Posted: 07/Jun/2007 at 1:01pm
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http://www.financialexpress.com/latest_full_story.php?content_id=166348 - IT sector would require nearly five lakh professionals in the next five years to cater to the growing needs of this booming industry, NASSCOM President Kiran Karnik said on Wednesday.
Currently, the industry required three lakh professionals, however the number was expected to nearly double with the sector being poised for huge growth.... (Source: FE)------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: basant
Date Posted: 07/Jun/2007 at 1:37pm
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NIIt, APtech and a few engineering colleges had they been listed would have been excellent themes to back on. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Ajith
Date Posted: 07/Jun/2007 at 2:36pm
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I do hope that the increased demand which stems from global factors is not met increasingly by other countries notably China and Russia.
Further more dynamism must be injected into the tech companies to move into higher value added services as Israel has done and into products so that the focus remains on India for talent. ------------- Ajith |
Posted By: kulman
Date Posted: 15/Jun/2007 at 11:06pm
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http://www.dnaindia.com/report.asp?newsid=1103475 - 'India to be fastest growing IT services market' (dna money)
Small and medium-sized businesses in the Asia-Pacific region were expected to invest at least $18 billion this year in IT related services, up 11 per cent from last year, said the report by US-based Access Markets International (AMI).
India and China will be the fastest-growing IT services markets this year, with spending of small and medium-sized businesses in both countries rising by 15 per cent over 2006, a study said on Friday.
The biggest issue for small and medium-sized businesses across Asia, particularly commercial companies with staff numbering up to 99, is how to manage their IT systems in relation to their business growth but with skeletal or no in-house IT staff, Nishant Dave, Access Markets International's Asia-Pacific research director, told The Business Times. Companies with 100 to 999 employees were set to invest $10 billion on IT-related services in 2007 with more than 25 percent going toward software development, integration and consulting services, Access Markets International said
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: tigershark
Date Posted: 15/Jun/2007 at 8:27am
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how will it services cos manage wage inflation on one hand and an appreciating rupee on the other hand.the FM has gone on record that dollar inflows into the country will not be stemmed. ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: xbox
Date Posted: 18/Jun/2007 at 5:36am
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how will it services cos manage wage inflation on one hand and an appreciating rupee on the other hand..
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I guess managing INR appreciation is easier between two. This could be done though mainline business but taming wage inflation is not simple as more and more jobs are coming to India day by day.
Companies will be able to increase billing price in next few quarters. [be prepared to listen this from Biggies in Q2] but extent of billing price increase will not be sufficient to offset INR appreciation. So net net margin will continue to fall. Needless to say most of IT services companies enjoy fat margin of 25-30%, so they have a cushion before panic button is pressed.
On, other hand 12-15% wage inflation is continually eating margins. This is difficult to tackle when ESOPs are not attractive at all.
I was little contrarian on IT services but looks like time is not correct so far. IT companies may have to go for more pain. Few Teddies got is correctly.
Possibility of INR depreciating too much is ruled out. Constant FII, FDI will make sure $ is always in check. Soon, FDI in real estate alone will dwarf all other kind of FDI. A figure of 36-37 really scare me. Remember our SENSEX is tech heavy. ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: deveshkayal
Date Posted: 30/Jun/2007 at 11:43am
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Bear Stearns analysts are assuming the following impact of rupee rise For every 1% rise in rupee, operating margins have to be trimmed as shown below # Infosys: trims operating margins 50 basis points. # Wipro: 35 basis points. # Satyam: 30 basis points. # Cognizant: 20 basis points. # Sapient: <15 basis points. # Accenture <5 basis points. So, with a rupee rise of over 10%, Infy's margins could take a hit of 5% ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: kulman
Date Posted: 03/Aug/2007 at 6:23pm
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Infosys plans risk-based contract pricing
When the going gets tough the tough begin to innovate.
At least that is the twist Infosys Technologies is giving to the old adage where pricing for new contracts is concerned.
Coming at a time when the going has been particularly trying for Indian IT services companies with a strong rupee hitting them hard, while costs have gone up several fold, innovative structuring of deals and pricing methodologies are now being increasingly explored. To start with Infosys will look at risk-based pricing for new contracts wherever possible, S Goplalakrishnan, who took over as the new CEO and managing director as recently as June 22, told DNA Money. A few deals have already been struck on these lines, he added. When deals involve a significant BPO component, the company will go for a transaction-based pricing, he said. "The drive for new models is coming from both the clients and the IT services providers," he said. As part of this move, Infosys will also look for applications-hosting contracts and charge a transaction fee from clients as part of outsourced deals. There are multiple ways these deals can be structured including a certain portion of the contract being tied to a bonus or penalty based on performance. "There is an upside for us in these models when the client's business continues to grow," said Gopalakrishnan. At the same time, on the research & development side Infosys will develop products for the clients and license them out for a fee or royalty, he indicated, adding patent activity in the company had increased over the last 18 months. Infosys has filed for 93 patents in the period, which it is looking to monetise. Significantly, Infosys will also look out for more acquisitions of clients' IT operations on the lines of the Royal Philips acquisition it concluded recently. The strategy will give it a larger footprint apart from assured business. Infosys had acquired three captive BPO operations of Royal Philips late last month for $28 million apart concluding a $250 million contract for financial and accounting services with the Dutch major. The acquisition will also give the company its first footprint in Poland and Thailand. More outsourcing deals with such offers to buy out the client's IT operations are coming our way, Gopalakrishnan said. The second type of acquisitions Infosys is looking at is that of other IT services companies, albeit selectively, he added. Asked if Capgemini was one of the targets, Gopalakrishnan categorically ruled out the possibility. "We are keen on acquisitions but if you ask specifically about Capgemini there is nothing in it," he dismissed. The company will be very selective in the acquisitions it carries out, he said, adding that the benefit expected from such moves do not materialise 85 per cent of the time. Source: http://sify.com/finance/fullstory.php?id=14504174 - Dna Money/Sify news
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: kulman
Date Posted: 03/Aug/2007 at 11:19am
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TCS secures multi-year deal from Geneva firm
IT services provider Tata Consultancy Services on Friday announced it has secured a multi-year integrated financial management solution deal from the Geneva-based International Organisation for Migration (IOM).
While phase one of this deal involving seven major deployments would be completed by early 2008, the entire project spanning more than 120 countries and now involving over 1,600 projects would be completed over the next two years. Source: HBL http://www.thehindubusinessline.com/2007/08/04/stories/2007080451970400.htm - news here
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IT jobs will double to 3.2 m in four years, says Nilekani
Employment generation by IT and ITES sectors will double to 3.2 million within the next four to five years, feels Mr Nandan M. Nilekani, Co-Chairman, Infosys Technologies Ltd.
Delivering the 12th Prof. Y. Nayudamma Memorial Lecture, on ‘Information Technology for Development’, at the R.M.K. Engineering College, Kavaraipettai, on Wednesday, Mr Nilekani observed that it took the industry 30 years to reach the present level of employment of 1.6 million. “What has happened in the last 30 years, will now happen in the next four to five years,” he said. Source: http://www.thehindubusinessline.com/2007/08/04/stories/2007080451880400.htm - HBL news here ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: kulman
Date Posted: 06/Aug/2007 at 5:36pm
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TCS eyes up to 150 deals in financial solutions Tata Consultancy Services, the country's biggest software exporter, on Monday said it is eyeing up to 150 deals ranging from USD 5 million to USD 200 million in the financial solutions space over the next 12-18 months.
Source: http://economictimes.indiatimes.com/Infotech/TCS_eyes_up_to_150_deals_in_financial_solutions/articleshow/2259203.cms - ET ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: vip1
Date Posted: 06/Aug/2007 at 6:21pm
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“What has happened in the last 30 years, will now happen in the next four to five years,” he said.
and the same will happen in all Domestic sectors , and as RJ said that Day "yeh to shuruat Hain".
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