Category Archives: Media Mentions – Greyhound Knowledge Group

Enterprise Major Oracle Plans One Office in Every State Capital As It Sees Higher Tech Spending #Press #Media #CommunicationsToday

Oracle is looking to have branch offices in all Indian state capitals as part of its plan to boost business while some of its larger competitors deal with problems of their own.

Oracle, founded by technology billionaire Larry Ellison, counts companies like HP and IBM as its major competitors. HP is going through a restructuring exercise that may see as many as 50,000 employees cut from its ranks.

Separately, IBM has struck a deal to sell off its x86 server business as it focuses on higher margin products. “We are growing in India and we think that, with the manifesto of the BJP that focussed on technology, we are going to see increased spending on IT. We are looking at a geo-expansion strategy and the plan is to have a branch office in every state capital,” Sandeep Mathur, managing director of Oracle India, told ET.

Currently, Oracle has offices in the five metro cities and places like Pune and Ahmedabad. Mathur declined to give a timeline for the expansion but said it was the company’s stated goal.

The company has been growing steadily in India over the past few years. In 2012-2013, the company grew its revenue 15% to Rs 10,590 crore, according to Dataquest Top 20, making it the tenth-largest technology company by revenue in India.

Oracle does not break out the revenue or growth rate of its India business. “With Oracle, it has been a mixed bag, there has been strong customer demand for their enterprise applications like RightNow and Eloqua and database license renewals have been doing well. But I would think sales of the ExaData and Exologic systems have been a little sluggish outside BFSI and telecom,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research.

ExaData and ExoLogic are part of Oracle of engineered systems business – integrated software and hardware – that promised more efficiency and faster workloads as the components were built to work together rather than stitched together later. The company counts Reliance Commercial Finance, HDFC Securities and HDFC ERGO General Insurance Company as clients.

Source: Communications Today

IT takes an optimistic curve #Press #Media #CommunicationsToday

Despite wage hikes and currency fluctuations, top tier Indian IT firms managed to keep their profits in fine kettle on a year-on-year basis thanks to better utlilisation rates and a slow uptick in the demand environment. The near term looks promising with pricing remaining stable and operating margins being largely under control

India’s largest IT services exporter, Tata Consultancy Services (TCS), is now worth more than R5 lakh crore. It is bigger than the next four biggest Indian IT companies put together. Even with its huge base, TCS continues to generate healthy revenue growth sequentially. In fact among the top three companies—the other two being Infosys and Wipro—TCS was the only one which grew revenues sequentially (2.6%) during the June quarter of the current fiscal and also had the highest growth rate on an annual basis (23%). Infosys reported a decline of 0.8% in revenue growth sequentially while Wipro saw a steeper fall of 10.2% as compared to the preceding quarter.

TCS also has over three lakh employees now, which is almost equal to the number of employees Infosys and Wipro together have on their rolls. Though TCS always enjoyed a higher revenue base but it was Infosys which reported superior operating profit margins (OPM) setting a benchmark for the Indian IT industry. Even this index has undergone a change from the second quarter of FY13 as TCS started to report higher margins. During the quarter, TCS reported an OPM of 26.3% while it was 25.1% for Infosys. Wipro saw a drop in operating margins to 22.8% for the quarter against 24.5% in the previous quarter.

TCS has already stated that it would beat the industry growth guidance of 13-15% in US dollar for the fiscal as projected by Nasscom, while Infosys has retained its revenue guidance at 7-9%. TCS has started FY15 also on a very strong note by recording a 5.5% sequential revenue growth in US dollar terms for the first quarter with volumes growing at 5.7%. Infosys on the other hand grew its revenues only by 2% in the first quarter, with volumes growing by 2.9%. Wipro’s IT services revenue grew by 1.2% and the company does not give full year guidance.

TCS, Infosys, Wipro and HCL Technologies together account for close to 40% of India’s IT services revenues, but the degree of separation between the four have started to tell a story of its own. TCS ended FY14 with a revenue growth of 16.2% in US dollar terms while it was 11.5% for Infosys and 6.4% for Wipro.

Infosys

India’s second largest IT exporter recorded a 1% sequential decline in net profit for the June quarter in dollar terms surprising the markets which had projected a steeper fall in profitability. The company rode on the back of higher volumes and employee utilisation rates to register a net profit of $482 million during the period, sustaining profit margins while delivering a 2% sequential revenue growth in dollar terms. Volumes grew 2.9% for Infosys, which said that an increase in onsite volume, coming after nearly two quarters, pointed to more projects starting onsite, the company said.

Infosys’ consolidated net profit for the quarter grew 15.3% to $482 million from $418 million in the year-ago period, while it had reported profit of $487 million in the January-March stretch. Revenue for the quarter was at $2.1 billion, a growth of 7.1% year-on-year from $1.9 billion and a 2% increase sequentially from $2.09 billion.

In rupee terms, Infosys’ net profit grew 21.6% year-on-year to R2,886 crore compared with R2,374 crore, while it declined 3.5% sequentially from R2,992 crore. Revenues grew 13.3% to R12,770 crore versus R11,267 crore in the corresponding period a year ago. Revenue declined 0.8% from R12,875 crore in the January-March period.

Outgoing CEO SD Shibulal said he was handing over a stronger Infosys to new CEO Vishal Sikka. “When I took over in August 2011, we were faced with a number of external and internal challenges. The 3.0 transition is now complete and only the execution is waiting to happen. FY14 growth has been double that of FY13 and margins are moving in the right direction.”

Operating profit margin, lower by 40 basis points at 25.1%, came in as a positive surprise against analysts’ expectations of a drop of 200-250 basis points from wage hikes and higher visa costs. The IT major attributed this to utilisation level climbing to 80.1% from 76.7% in January-March, and cost optimisation measures kicking in. The margin would have been closer to the 25.5% reported in the previous quarter if not for an $8-million payment to Infosys Foundation, the company said.

Rajiv Bansal, chief financial officer, said that the company has put in place a robust cost structure to keep the margins under check. While margins might vary, it will be roughly around the 25% mark. “We are not worried about the margins. Growth will help us maintain the margin,” he said.

Infosys added 61 new clients during the quarter with a total deal size of $700 million. North America, which contributes 60% in revenues for the company, grew by 3.7% sequentially while Europe declined by 1.1% during the same time period. The India market continued to decline by a substantial margin of 6.9% even as the rest of the world market grew by 1.9% sequentially. The financial services and insurance segment grew 1.8% sequentially whereas manufacturing posted a robust growth of 2.6%. Retail and life sciences grew 2.1%, while energy, utilities, communication and services grew by 1.6% quarter-on-quarter.

TCS

TCS beat Street estimates reporting a profit of R5,058 crore in the first quarter of the current fiscal, a sequential decline of 4.5%. The company’s revenue stood at R22,111 crore, a 2.6% sequential rise while operating income increased 7.4% to R5,815 crore. Despite taking a one-time charge for depreciation, giving employees a wage hike and the appreciation in the currency, the company reported operating margins of 26.3%.

CEO and managing director N Chandrasekaran was confident the current year would be better than FY14, pointing out that the company had reported the second-highest incremental dollar revenues ever in Q1, FY15. “We have seen good growth across geographies and all verticals except BFSI (banking, financial services and insurance) where the growth was somewhat muted,” he said.

TCS won seven large deals during the quarter, spread across verticals including retail, banking, life sciences and high tech. “There are eight large deals in the pipeline,” said Chandrasekaran. He observed that thus far client spends had been in line with the company’s expectations and stressed that the opportunities were essentially around three initiatives—governance, digital and simplification. The company said that pricing remained stable with the industry segments led by media and information services, life sciences, retail and telecom had done well and that non-BFSI verticals grew in excess of 5%.

Wipro

India’s third-largest IT services exporter Wipro saw a 5.4% sequential drop in net profit for the June quarter in dollar terms, meeting Street expectations, impacted by wage hikes and employee stock compensation during the quarter. The IT major, however, remained confident of the overall business momentum, guiding for a revenue growth of 1.7-4% for the second quarter. Net profit for the first quarter stood at $351 million against $371 million in the previous quarter. IT services revenue grew by 1.2% to $1740.2 million during the quarter, falling within its guidance of -0.2-2%. On a year-on-year basis, its IT services revenue grew by 9.6% and net profit rose by 30%.

Wipro CEO TK Kurien said, “The demand environment continues to hold steady. In North America, we see a return of discretionary spending. Continental Europe continues to have significant potential for outsourcing IT services.” It hopes to achieve a revenue forecast of $1,770-1810 million in the second quarter. In rupee terms, the IT services revenue for the quarter stood at R10,508 crore growing annually by 18% while the net profit rose by 30% to touch R2,103 crore. “There is plenty of opportunities in the market for us. It is important for us to win large deals otherwise we cannot match industry growth rate,” said Kurien.

Wipro saw a drop in operating margins to 22.8% for the quarter against 24.5% in the previous quarter. Wipro CFO Suresh Senapaty said, “We continue to drive operational efficiency and invest in our strategy. Operating margins for the quarter was on expected lines, impacted largely due to wage hikes.” Wipro added 35 new customers during the quarter but the revenue growth from the top five and top 10 segment dropped marginally. The IT major also has not made any major addition in the customers’ category of $100 million, $75 million and $50 million. On the future prospects for Wipro, Kurien said, “There is plenty of opportunities in the market for us. It is important for us to win large deals otherwise we cannot match industry growth rate.”

During the quarter, Wipro received a big boost from its infrastructure line business which witnessed a 5% sequential rise. Among the verticals, media & telecom recorded the highest sequential growth of 4.3% followed by healthcare, lifesciences & services at 2.5%. The BFSI segment, which is the largest revenue generator for Wipro showed flattish growth for the quarter. In terms of geographic growth, Wipro’s largest market, Americas, remained flat sequentially at 0.8% and Europe dropped marginally to 0.3%. However, the India & middle-east business grew by 5.3% while for APAC & other emerging markets it was 3.5%.

Human Resources

TCS’ attrition level rose to 12% during the June quarter from 11.3% during the March quarter, which it attributed to the aspirations of the professionals leaving the company to pursue further studies. During Q1 FY15, the employee strength at TCS stood at 3,05,431 on a consolidated basis with people representing 118 nationalities. While gross additions stood at 15,817, net additions stood at 4,967 employees and the utilisation rate was at 85.3% (excluding trainees).

Sanchit Vir Gogia, chief analyst & CEO, Greyhound Research, said, “Employee retention and their happiness is very important to an IT company as it has a direct bearing on customer satisfaction.”

Infosys continues to be challenged by high attrition levels. At the end of the June quarter, attrition stood at 19.5% against 18.7% in the previous quarter and 16.9% a year earlier. The company added 11,506 people in the three-month period, but 10,627 left the organisation, resulting in a net addition of 879 people as against 2001 employees during the preceding quarter. Infosys had 1.61 lakh employees on its roll as on June 30.Infosys said that employee attrition rates are worrisome and it is implementing various initiatives to retain good talent.

Infosys CEO SD Shibulal said, “We tried hard to listen to our employees. The concern was not about compensation but other things like predictability, career growth and variable compensation.” Infosys gave around 7,500 promotions in the quarter and implemented other measures to stem the attrition rate. It has brought down the variable component in the salary, implemented a fast-track career progression cycle and enabled growth opportunities for employees in newer areas of technologies.

For Wipro, the attrition went up marginally by one per cent for the quarter to touch 16.1% driven by seasonality while the company said that it was a sign that the demand coming back to the industry. On the headcount front, the company showed positive signs by adding 1,399 people on a net basis after a year of declining numbers to its overall employee strength. The total headcount at the end of quarter was 147,452 as against 146,053 in the comparable sequential quarter.

Source: Communications Today

IT takes an optimistic curve #Press #Media #TheFinancialExpress

Despite wage hikes and currency fluctuations, top tier Indian IT firms managed to keep their profits in fine kettle on a year-on-year basis thanks to better utlilisation rates and a slow uptick in the demand environment. The near term looks promising with pricing remaining stable and operating margins being largely under control

India’s largest IT services exporter, Tata Consultancy Services (TCS), is now worth more than R5 lakh crore. It is bigger than the next four biggest Indian IT companies put together. Even with its huge base, TCS continues to generate healthy revenue growth sequentially. In fact among the top three companies—the other two being Infosys and Wipro—TCS was the only one which grew revenues sequentially (2.6%) during the June quarter of the current fiscal and also had the highest growth rate on an annual basis (23%). Infosys reported a decline of 0.8% in revenue growth sequentially while Wipro saw a steeper fall of 10.2% as compared to the preceding quarter.

TCS also has over three lakh employees now, which is almost equal to the number of employees Infosys and Wipro together have on their rolls. Though TCS always enjoyed a higher revenue base but it was Infosys which reported superior operating profit margins (OPM) setting a benchmark for the Indian IT industry. Even this index has undergone a change from the second quarter of FY13 as TCS started to report higher margins. During the quarter, TCS reported an OPM of 26.3% while it was 25.1% for Infosys. Wipro saw a drop in operating margins to 22.8% for the quarter against 24.5% in the previous quarter.

TCS has already stated that it would beat the industry growth guidance of 13-15% in US dollar for the fiscal as projected by Nasscom, while Infosys has retained its revenue guidance at 7-9%. TCS has started FY15 also on a very strong note by recording a 5.5% sequential revenue growth in US dollar terms for the first quarter with volumes growing at 5.7%. Infosys on the other hand grew its revenues only by 2% in the first quarter, with volumes growing by 2.9%. Wipro’s IT services revenue grew by 1.2% and the company does not give full year guidance.

TCS, Infosys, Wipro and HCL Technologies together account for close to 40% of India’s IT services revenues, but the degree of separation between the four have started to tell a story of its own. TCS ended FY14 with a revenue growth of 16.2% in US dollar terms while it was 11.5% for Infosys and 6.4% for Wipro.

Infosys

India’s second largest IT exporter recorded a 1% sequential decline in net profit for the June quarter in dollar terms surprising the markets which had projected a steeper fall in profitability. The company rode on the back of higher volumes and employee utilisation rates to register a net profit of $482 million during the period, sustaining profit margins while delivering a 2% sequential revenue growth in dollar terms. Volumes grew 2.9% for Infosys, which said that an increase in onsite volume, coming after nearly two quarters, pointed to more projects starting onsite, the company said.

Infosys’ consolidated net profit for the quarter grew 15.3% to $482 million from $418 million in the year-ago period, while it had reported profit of $487 million in the January-March stretch. Revenue for the quarter was at $2.1 billion, a growth of 7.1% year-on-year from $1.9 billion and a 2% increase sequentially from $2.09 billion.

In rupee terms, Infosys’ net profit grew 21.6% year-on-year to R2,886 crore compared with R2,374 crore, while it declined 3.5% sequentially from R2,992 crore. Revenues grew 13.3% to R12,770 crore versus R11,267 crore in the corresponding period a year ago. Revenue declined 0.8% from R12,875 crore in the January-March period.

Outgoing CEO SD Shibulal said he was handing over a stronger Infosys to new CEO Vishal Sikka. “When I took over in August 2011, we were faced with a number of external and internal challenges. The 3.0 transition is now complete and only the execution is waiting to happen. FY14 growth has been double that of FY13 and margins are moving in the right direction.”

Operating profit margin, lower by 40 basis points at 25.1%, came in as a positive surprise against analysts’ expectations of a drop of 200-250 basis points from wage hikes and higher visa costs. The IT major attributed this to utilisation level climbing to 80.1% from 76.7% in January-March, and cost optimisation measures kicking in. The margin would have been closer to the 25.5% reported in the previous quarter if not for an $8-million payment to Infosys Foundation, the company said.

Rajiv Bansal, chief financial officer, said that the company has put in place a robust cost structure to keep the margins under check. While margins might vary, it will be roughly around the 25% mark. “We are not worried about the margins. Growth will help us maintain the margin,” he said.

Infosys added 61 new clients during the quarter with a total deal size of $700 million. North America, which contributes 60% in revenues for the company, grew by 3.7% sequentially while Europe declined by 1.1% during the same time period. The India market continued to decline by a substantial margin of 6.9% even as the rest of the world market grew by 1.9% sequentially. The financial services and insurance segment grew 1.8% sequentially whereas manufacturing posted a robust growth of 2.6%. Retail and life sciences grew 2.1%, while energy, utilities, communication and services grew by 1.6% quarter-on-quarter.

TCS

TCS beat Street estimates reporting a profit of R5,058 crore in the first quarter of the current fiscal, a sequential decline of 4.5%. The company’s revenue stood at R22,111 crore, a 2.6% sequential rise while operating income increased 7.4% to R5,815 crore. Despite taking a one-time charge for depreciation, giving employees a wage hike and the appreciation in the currency, the company reported operating margins of 26.3%.

CEO and managing director N Chandrasekaran was confident the current year would be better than FY14, pointing out that the company had reported the second-highest incremental dollar revenues ever in Q1, FY15. “We have seen good growth across geographies and all verticals except BFSI (banking, financial services and insurance) where the growth was somewhat muted,” he said.

TCS won seven large deals during the quarter, spread across verticals including retail, banking, life sciences and high tech. “There are eight large deals in the pipeline,” said Chandrasekaran. He observed that thus far client spends had been in line with the company’s expectations and stressed that the opportunities were essentially around three initiatives—governance, digital and simplification. The company said that pricing remained stable with the industry segments led by media and information services, life sciences, retail and telecom had done well and that non-BFSI verticals grew in excess of 5%.

Wipro

India’s third-largest IT services exporter Wipro saw a 5.4% sequential drop in net profit for the June quarter in dollar terms, meeting Street expectations, impacted by wage hikes and employee stock compensation during the quarter. The IT major, however, remained confident of the overall business momentum, guiding for a revenue growth of 1.7-4% for the second quarter. Net profit for the first quarter stood at $351 million against $371 million in the previous quarter. IT services revenue grew by 1.2% to $1740.2 million during the quarter, falling within its guidance of -0.2-2%. On a year-on-year basis, its IT services revenue grew by 9.6% and net profit rose by 30%.

Wipro CEO TK Kurien said, “The demand environment continues to hold steady. In North America, we see a return of discretionary spending. Continental Europe continues to have significant potential for outsourcing IT services.” It hopes to achieve a revenue forecast of $1,770-1810 million in the second quarter. In rupee terms, the IT services revenue for the quarter stood at R10,508 crore growing annually by 18% while the net profit rose by 30% to touch R2,103 crore. “There is plenty of opportunities in the market for us. It is important for us to win large deals otherwise we cannot match industry growth rate,” said Kurien.

Wipro saw a drop in operating margins to 22.8% for the quarter against 24.5% in the previous quarter. Wipro CFO Suresh Senapaty said, “We continue to drive operational efficiency and invest in our strategy. Operating margins for the quarter was on expected lines, impacted largely due to wage hikes.” Wipro added 35 new customers during the quarter but the revenue growth from the top five and top 10 segment dropped marginally. The IT major also has not made any major addition in the customers’ category of $100 million, $75 million and $50 million. On the future prospects for Wipro, Kurien said, “There is plenty of opportunities in the market for us. It is important for us to win large deals otherwise we cannot match industry growth rate.”

During the quarter, Wipro received a big boost from its infrastructure line business which witnessed a 5% sequential rise. Among the verticals, media & telecom recorded the highest sequential growth of 4.3% followed by healthcare, lifesciences & services at 2.5%. The BFSI segment, which is the largest revenue generator for Wipro showed flattish growth for the quarter. In terms of geographic growth, Wipro’s largest market, Americas, remained flat sequentially at 0.8% and Europe dropped marginally to 0.3%. However, the India & middle-east business grew by 5.3% while for APAC & other emerging markets it was 3.5%.

Human Resources

TCS’ attrition level rose to 12% during the June quarter from 11.3% during the March quarter, which it attributed to the aspirations of the professionals leaving the company to pursue further studies. During Q1 FY15, the employee strength at TCS stood at 3,05,431 on a consolidated basis with people representing 118 nationalities. While gross additions stood at 15,817, net additions stood at 4,967 employees and the utilisation rate was at 85.3% (excluding trainees).

Sanchit Vir Gogia, chief analyst & CEO, Greyhound Research, said, “Employee retention and their happiness is very important to an IT company as it has a direct bearing on customer satisfaction.”

Infosys continues to be challenged by high attrition levels. At the end of the June quarter, attrition stood at 19.5% against 18.7% in the previous quarter and 16.9% a year earlier. The company added 11,506 people in the three-month period, but 10,627 left the organisation, resulting in a net addition of 879 people as against 2001 employees during the preceding quarter. Infosys had 1.61 lakh employees on its roll as on June 30.Infosys said that employee attrition rates are worrisome and it is implementing various initiatives to retain good talent.

Infosys CEO SD Shibulal said, “We tried hard to listen to our employees. The concern was not about compensation but other things like predictability, career growth and variable compensation.” Infosys gave around 7,500 promotions in the quarter and implemented other measures to stem the attrition rate. It has brought down the variable component in the salary, implemented a fast-track career progression cycle and enabled growth opportunities for employees in newer areas of technologies.

For Wipro, the attrition went up marginally by one per cent for the quarter to touch 16.1% driven by seasonality while the company said that it was a sign that the demand coming back to the industry. On the headcount front, the company showed positive signs by adding 1,399 people on a net basis after a year of declining numbers to its overall employee strength. The total headcount at the end of quarter was 147,452 as against 146,053 in the comparable sequential quarter.

Source: The Financial Express

Is Microsoft axing the ‘Nokia brand’? #Press #Media #Voice&Data

Microsoft’s recent announcements of doing away with Nokia X series, Nokia Asha 40 series smartphones, Nokia McLaren and other budget phones, and over 50% layoffs in Nokia have put the handset major’s future under a question mark

When Microsoft acquired Nokia‘s handset business in April last year in a $7.2 bn deal, one thing was palpable that the software firm was eyeing to strengthen its windows platform and position itself as a hardware maker.

Nokia was the most preferable choice as its windows phones were the fastest-growing phones in the smartphone market, and it accounted for 87% of all windows phone handset sales.

The move into hardware was a significant challenge for Microsoft as its Surface tablets were already witnessing disappointing sales, resulting in $900 mn write-off.

Over one year into this tie up with Nokia, Microsoft has announced major organizational changes with the end of Nokia X series, the Nokia Asha 40 series smartphones, Nokia McLaren and other budget phones, besides the company is laying off 18,000 employees, the biggest job cut in its history, with over 50% of the layoffs taking place in Nokia’s handset business only.

So, is this an indication that the software firm’s core focus area still remains enterprise and software only and not hardware? What repercussions it would have on Nokia?

The killing of Nokia X series, the Nokia Asha 40 series smartphones, Nokia McLaren is like killing the brand Nokia brand itself, which once enjoyed significant market share on the back of huge demand for its handsets. Analysts believe Microsoft’s shifting focus to software may prove a big setback for Nokia.

“There are similarities in the fate of Motorola and Nokia. Google brought Motorola, but sold it off after a while as it realized that its core area is not hardware. Microsoft’s core business area is again not hardware and that is where the whole change of plan might have taken place,” said Girish Trivedi, co-founder and director, Monk consulting.

Even, Microsoft chief executive Satya Nadella on a conference call with analysts recently outlined its investment plans in the ‘core areas’ like the windows operating system and its software.

Microsoft acquired Nokia keeping in mind the fact that Nokia was the only vendor for windows phones and taking the company into their own fold would strengthen its windows platform and help in newer areas. But one thing is clear now that Microsoft’s core focus remains the same and as a result, non-core area business of Nokia will be affected, added Trivedi.

“The way software firm works is very different from how a hardware firm works and vice versa, when a software firm ends up acquiring a hardware-oriented firm there would always be a mismatch around people, mindset, and always be an overlapse. Microsoft is now going back to what it was doing best and focusing on enterprise business, it is doing what it is best at, having said that it’s not a good sign for Nokia and its future is really under a question mark,” said research firm Greyhound Research CEO Sanchit Vir Gogia.

Analysts are of the view that the Nokia’s whole ecosystem will be disrupted with the move and it might impact the relationship with OEMs and other partners.

“The move would have a ripple impact,” added Gogia. “OEMs who are supplying equipment to Nokia will be affected as well as other partners who are involved in the ecosystem.”

Commenting on the Indian market specifically, CyberMedia Research telecom analyst Tarun Pathak said, “The move is a very big setback for Nokia. Microsoft’s Nokia was gaining ground in India smartphone market in the past quarter primarily due to stronger sales of Nokia X devices which were outselling Nokia Lumia series. Now since Microsoft has discontinued its Nokia X devices, it has shifted the entire focus on Windows based Lumia devices which are not much familiar among the Android dominated Indian smartphone market as of now.”

So, is this the end of brand Nokia? Or there still remains some silver lining for the handset major.

Analysts believe that Microsoft will not let Nokia die, they might shrink the business but Nokia will continue as a Micosoft’s company. The android strategy around Nokia may die and Microsoft may use the phone maker’s ability to make it more enterprise focus.

Source: Voice & Data

Hop, skip and jump: Making sense of the attrition puzzle in IT sector #Press #Media #Firstbiz

The irony is hard to escape. It is a sector where the perks for the staff are top notch, but it is also one where attrition is extreme. The sector in question is information technology and IT enabled services (ITeS).

A recent survey by executive search firm MANCER Consulting reveals that ITeS will face the highest overall attrition of 21 percent this year with the junior level seeing exits at almost 30 percent.

Interestingly, there is no perk the companies in the sector do not offer: from pick up and drop facilities, flexible work hours, crèche, the right to rate your peers, bosses, to even reach out to the CEO without asking for permission from your immediate manager, besides good salary packages. Of course, all these may not apply to all the companies in the sector, but largely the cross section has some of these services mentioned.

Then what is the reason for the high employee churn in the sector?

The fresher challenge

A fresher working for an Indian IT firm gets a package of Rs 8,000-12,000 and in an MNC, between Rs 10,000 and Rs 15,000, says Subhodeep Dutta, head, corporate strategy, new business initiatives, Mancer Consulting.

Gaurav Gupta, a 29-year-old Delhi-based IT sector employee, has changed five jobs in four years of joining the industry. The longest stint he has had in an organisation is 18 months and the shortest, 4 months. Of the five companies he has worked, one was a firm in the big league of IT firms.

“I left my first job at an MNC as they did not give me the increment of 30 percent they promised; exited my second job after 9 months as I did not want to continue working on UK timings in the severe cold in Delhi,” says Gupta.

Currently, Gupta works in a firm that offers him flexi-hours, cab facilities, etc., but he says, “If I get a job with a higher pay and designation sans these facilities, I will pick that up.”

Mark Driscoll, Human Capital Leader, PwC India, says, “This is a peculiar situation besetting Indian firms or rather BRIC countries.” He says that he often finds a candidate is not interested in investing in relationships at the work place, picking up new skill sets or honing what he has. “The majority of people who are moving jobs have just 1-3 years of experience. Jumping jobs may help in getting high pay but what about learning new skills sets,” he asks.

Reasons for jumping jobs

Stress factor: Employees usually work on projects which can run for a few months or years. For instance, if you are working on the supply chain management of a large auto firm and there is a technical snag, an immediate service ticket will be raised. These are service agreements that a vendor has with the company that says that the latter will tackle such a situation within hours.

It is a high pressure job, said a HR head of an MNC, requesting anonymity. “Many times we find that the young professional chooses to sit on the bench (not work on the programme) as he finds he can’t cope with the stress of the project.”

In this sector, employees have the luxury to sit out and not do anything till they hunt for another project. The comfort of sitting on the bench enables the employee to enhance his skills through in-house training programmes or even hunt for a job while on the pay roll of the company.

Lack of global exposure: Some firms send employees abroad for their offshore projects. That is an incentive to stay in the company for most youngsters, says an HR analyst. “If a company does not have a policy of sending employees abroad for projects, then employees will look out for another job that gives these facilities once their basic needs of a salary, perks, etc are met with in the existing job.”

Lack of growth curve: Sometimes employees leave if they find there is nothing new to learn. V M Manish, a IT analyst now working for an Indian firm in the US, left one of his earlier jobs because the “learning curve became stagnant and there was nothing new to discover in the project from a technical perspective. I was looking out for an onsite opportunity and also a better pay package,” he says.

Money factor: It seems to be the factor that drives an employee, especially in the initial stages of his career. “If I get more money, I will move jobs even if I have joined a firm only a few months back,” says Noida-based Manish Kumar who has changed two jobs in a short span.

Sanchit Gogia, Chief Analyst and CEO of Greyhound Research, an independent IT, telecom research and advisory firm, says it helps to have a transparent HR policy at the workplace. He reasons that employees in the IT sector leave jobs quickly because of two factors: the basic salary structure and lack of communication skills. He says when designing the salary structure, employers should give the employee options of how he wants it structured within the company policy. Don’t’s use one bullet for all, he adds.

Communication skills: “Lack of internal communication is another drawback,” says Gogia. When Narayana Murthy of Infosys was quitting, the employees got to know of it through the media, says Gogia. “Take your employees into confidence. They need to know the news first or they feel threatened and fear for their future.”

Exits at mid-level management

A mid-level manager in a domestic firm with three–four years experience takes home a salary of Rs 35,000 to 40,000 while in an MNC, it would be in the range of Rs 50,000-60,000.

Attrition at the mid-level management level would be 20 percent while at the top management level it would hover around 13-15 percent this year, says the MANCER survey.

“Generally, experienced employees leave as they get better opportunities. This is usually seen to be high at the mid-management level for the employee at this level knows the limits to his growth in the firm. Hence, turnout is high,” says Sarabjit Kaur Nangra, VP Research-IT, Angel Broking.

Reasons for leaving

Stress is a factor here too. The ‘plug off’ is one of the reasons that the mid level manager prefers to look out as his career stagnates. A plug off is a threat of an international company that outsources business to India and exits the contract if there are performance issues or if there are chances of getting a better price or value proposition from a different partner from the same country or another geography.

The mid-level manager has experienced this Damocles sword of the plug off often and wants to steer himself clear from this potential threat, says an analyst. “He would even prefer to go to another sector with a salary structure that will not see such a rapid rise or hike as the IT sector but is assured of job satisfaction without a threat of a plug off or may choose to join a domestic IT firm which does not face this threat.”

Easy mobility of skills:  Dutta, Mancer Consulting, says, “The salaries at the leadership level in the ITeS sector (especially in MNCs) can vary from as low as Rs 18 lakhs and can go up to more than a crore including  other perks like ESOPS, club membership etc, which their counterparts in the other sector may not earn with similar years of experience.”

To sustain the current job and growth, certain competencies are needed which is relatively very different based on the market scenario. The next level movement has many contenders and can be at times tough since most the companies seek brilliant track record with matching pedigree.

The senior executive who had an early growth and does not fulfill above criteria moves on. However, “if he has shared competencies and skill sets, he can shift to other industry since his shared skills from ITeS sector can help him settle in that industry which is moving into a global platform.”

“Currently, certain industries that are working with global partners need leadership who can manage and lead the relationship compared to their current teams. Here his skills of process centricity, ability to comprehend the business scenario, managing large operations and client relationship come handy.”

At the middle-management level, an employee is in his early or mid 30s and would seldom move since now he wants to reach stability to grow in the same organization unlike junior level who keeps on hopping jobs for making quick money rather than seeking out a career in the same organization.

Source: Firstbiz

Wipro Q1 profit up 29.5% as IT spending returns in North America #Press #Media #ZeeBiz

IT services major Wipro today reported a 29.5 percent growth in its consolidated net profit at Rs 2,103.2 crore for April-June period, helped by large deals in the application and infrastructure space.

The city-headquartered firm had posted a net profit of Rs 1,623.3 crore in the year-ago period, it said in a BSE filing.

Consolidated net sales rose by 15.5 per cent to Rs 11,245.5 crore in April-June quarter of the current fiscal from Rs 9,733.2 crore in the same quarter of 2013-14.

The figures are in accordance with International Financial Reporting Standards (IFRS).

Wipro Chairman Azim Premji said: “We see a significant rise in business confidence in developed markets as well as India.”

The new government at the Centre has brought about hope and confidence in the minds of all stakeholders through reform pronouncements with fiscal prudence, he added.

In US dollars, Wipro reported a net profit of $351 million and revenue of $1.9 billion.

Revenue from IT Services stood at $1.74 billion, a quarter-on-quarter increase of 1.2 per cent and year-on-year increase of 9.6 per cent. Wipro had guided this to be in the range of $1.715 billion-$1.755 billion.

For the July-September quarter, the IT services revenue is forecast to be in the range of $1.77 billion-$1.81 billion.

“We continue to win large deals particularly in the application and infrastructure space. We recently announced our largest ever total outsourcing deal,” Wipro CEO T K Kurien said.

These wins demonstrate confidence of clients in Wipro’s transformational capabilities and re-affirm their faith in its client engagement strategy, he added.

IT Services revenue in rupee terms was Rs 10,510 crore, an increase of 18 per cent year-on-year.

The IT services segment had 147,452 employees as of June 30, 2014 and the firm added 35 new customers for the quarter.

“We continue to drive operational efficiency and invest in our strategy. Operating margins for the quarter was on expected lines, impacted largely due to wage hikes,” Wipro CFO Suresh Senapaty said.

Analysts said the April-June quarter has been lukewarm for the country’s third largest IT services firm.

“Its been a lukewarm period overall for the IT industry at large, including Wipro. That said, few contracts over the last quarter has helped Wipro get access to more high-profile deals at a time when outsourcing demand looks stronger as compared to previous years,” Greyhound Research CEO Sanchit Vir Gogia said.

Wipro shares today rose by 1.31 per cent to close at Rs 576.80 apiece at the BSE.

Wipro’s IT products segment delivered revenue of Rs 770 crore, registering a decline of 6 per cent over the year-ago period, after Wipro’s strategy to focus on services business by engaging in selective transformational deals where products form an integral part of the solution.

Segment wise, BFSI contributed the most towards Wipro’s revenues in the first quarter followed by Manufacturing & Hi-tech, Energy, Natural Resources & Utilities, Global Media & Telecom, Retail, Consumer, Transport & Government and Healthcare & Life Sciences.

Geography wise, the US was the main revenue generator followed by Europe, Rest of the World and India.

Last week, Wipro had announced that it had entered into a multi-million dollar dual pact with ATCO through which the company will provide a complete suite of outsourcing solutions to the Canadian firm as well as acquire its IT services arm.

Wipro signed a series of Master Services Agreements with ATCO under which it will acquire ATCO’s IT subsidiary for an all-cash consideration of CAD 210 million ($195 million or over Rs 1,176 crore).

Besides, Wipro also secured a 10-year IT deal with ATCO for providing outsourcing services, that will result in annual revenues of over CAD 120 million ($112 million or over Rs 675 crore) for Wipro for the next 10-years.

Gogia said ATCO deal will definitely add to Wipro’s overall growth, particularly in the Utilities vertical.

“However, currently it is early to comment on the actual benefits and outcomes will only be visible once all formalities have been completed,” he added.

Going ahead, Gogia said the company is expected to gain substantially if it manages to crack the Rs 1,200 crore call centre deal from Reliance Communications.

Separately, its active conversations with the government on various pending issues like taxation and allotment of new SEZ are clear signs of the expected growth in the near future.

Wipro is also planning to invest in upcoming software firms, a clear sign of their intent to also sell software to their customer base, Gogia said.

Attrition still remains one of the key issues that the management needs to address, he added.

Gogia said attrition still remains one of the key issues that the management needs to address.

Wipro Senior VP Human Resources Saurabh Govil said: “We have RSUs, and salary increases so we expect to see impact of that in the coming quarters.

“Also, we are seeing that among the high performers at Wipro, attrition rates have fallen drastically, which makes for about 25 per cent of our total workforce.”

Last week, Wipro had announced that it signed a series of Master Services Agreements with ATCO under which it will acquire ATCO’s IT subsidiary for an all-cash consideration of CAD (Canadian dollar) 210 million (USD 195 million or over Rs 1,176 crore).

Besides, Wipro also secured a 10-year IT deal with ATCO for providing outsourcing services, that will result in annual revenues of over CAD 120 million (USD 112 million or over Rs 675 crore) for Wipro for the next 10-years.

Gogia said ATCO deal will definitely add to Wipro’s overall growth, particularly in the Utilities vertical. Going ahead, Gogia said the company is expected to gain substantially if it manages to crack the Rs 1,200 crore call centre deal from Reliance Communications.

Separately, its active conversations with the government on various pending issues like taxation and allotment of new SEZ are clear signs of the expected growth in the near future.

Wipro is also planning to invest in upcoming software firms, a clear sign of their intent to also sell software to their customer base, Gogia said.

Source: Zee Biz