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India’s IT Industry Growth Dips to 24 Percent

India’s information technology industry was hit by a slowdown in 2007-08, causing the revenue growth of the top 20 players to drop to 24 percent from 41 percent the year before, an industry survey said.

The top 20 IT services exporters also saw a dip in their growth, growing 29 percent as against the 45 percent recorded the year before, according to the Dataquest Indian IT Industry Survey 2008 conducted by Dataquest magazine, a publication of specialty media chain CyberMedia.

The finding is in line with what the National Association of Software and Service Companies, the organization representing the Indian software industry, said earlier.

In its annual report released July 9, Nasscom said IT services exports grew 28.2 percent to gross $23.1 billion in 2007-08, while the business process outsourcing sector showed an increase of 30 percent, fetching $10.9 billion as compared to $8.4 billion the previous fiscal.

However, the Nasscom report said the industry clocked a combined growth rate of 28.2 percent in 2007-08, as against Dataquest’s figure of 24 percent. It said the growth was expected to slow down to between 21-24 percent in the current financial year, the figure Dataquest quoted for last fiscal.

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Indian Railways to Provide Internet Service in Kerala

Indian Railways is set to join the bandwagon of Internet providers in Kerala with a special provision for those browsing education sites.

The railways are providing broadband Internet connection in the state through the Railtel Corporation of India Ltd. The biggest incentive for those taking the Internet service of Indian Railways is that they can download education material free.

A. Seshagiri Rao, executive director (southern region) of Railtel, said Railtel would provide the service through cable operators who have connectivity across the state.

“The Internet service would become operational in the next two to three months,” said Rao, who was in the city.

Railtel, which manages the communication sector of Indian Railways, has laid more than 38,000 km of optical fiber cable across the country, which would be the backbone for providing broadband connectivity in the state.

“Our network is such that every railway station in the country can be turned into a source for education centers. But we have decided to provide broadband connectivity to the people through cable operators. The biggest advantage for those using our connectivity is that they would get unlimited download in matters regarding education,” said Rao.

Towards this Railtel has finalized a tie-up with the seven Indian Institutes of Technology and the Indian Institute of Science in Bangalore where more than 6,000 hours of lectures by the faculty are available.

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INFOSYS: Cut Dependence

Infosys Technologies plans to cut dependence on the United States to about 40 percent from more than 60 percent now, its chief executive said, as a slowdown in the world’s largest economy hits outsourcing deals.

Infosys, which got 63 percent of its revenue from the United States in the June quarter, planned to boost contribution from Europe to 40 percent from 27 percent, while other markets would account for the remaining 20 percent, CEO S. Gopalakrishnan said.

“We will continuously evolve and change,” Gopalakrishnan said. “It’s also driven by realization that emerging markets are contributing more to the global GDP growth, that’s where the growth is faster.”

He declined to set a time-frame for this, saying: “It’s not that you need to do it tomorrow, that you have hit a wall.” Earlier this month, Infosys, India’s second-largest software services exporter, beat forecasts with a 21 percent rise in quarterly profit but warned of challenging times ahead as its major Western clients battle weakening economies.

Indian outsourcing firms such as Infosys and its bigger rival Tata Consultancy Services are rapidly expanding to Europe, Asia, the Middle East and Latin America to cut their dependence on the United States.

Gopalakrishnan said Nasdaq-listed Infosys was also focusing on markets such as Japan, India, Australia, China, the Middle East, Canada and Latin America due to growing technology spending in these markets.

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RELIANCE: Family Feud

The feud in the Ambani family over elder brother Mukesh’s right to acquire majority equity in Reliance Communications, which is in amalgamation talks with South African telecom giant MTN, dragged the company’s shares down in Indian bourses.

The shares of the company opened slightly higher at Rs. 545, against the previous close at Rs.543.35 and moved higher to the day’s high of Rs.549.70. The scrip finally settled lower at Rs.531.00 with a loss of 1.52 percent.

It was the first day of trading in Reliance Communications stock after the feud between the two groups came out in the open.

The 52-week high for the scrip was Rs.844 on Jan 10.

Mukesh Ambani-led Reliance Industries claimed recently that, based on a family pact two years ago, it has the first right to refuse majority stake in Reliance Communications, should they be put up for sale.

But Reliance Communications, which is a part of his younger brother’s Reliance Anil Dhirubhai Ambani Group, refuted the claim.

The matter came up after Reliance Communications and MTN started their talks for a possible consolidation of operations, and Reliance Industries Ltd shot a letter to the South African company making its claim.

But Reliance Communications, which has also threatened legal action against the Mukesh Ambani-led group, refuted the claim and said the family pact was not binding since officials of Reliance Industries alone signed it.

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WIPRO: Off Track Growth

IT giant Wipro’s growth story is off-track, as is being borne out by its performance for the June 2008 quarter. The company posted its slowest sequential top line growth of 5 percent in the past four quarters.

Its major business driver, IT services and products — grew at a slower rate compared to its peers like Infosys and TCS. Moreover, its revenues in dollar terms, as per US GAAP reporting, remained subdued.

The company has effected a change in its segment reporting structure, effective this quarter. So, for the purpose of analysis, a comparison was made of the aggregate numbers of IT products and services, reported now, with the global and India & Asia-Pacific IT services and products segment reported in earlier quarters.

It shows that the operating margin for the IT business is intact, hovering at around 18.5 percent. The overall revenue contribution from India as well as the U.S. has declined against the same quarter last year. Contribution of financial services sector remained robust both sequentially and on year-on-year basis despite the global subprime crisis.

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IBM: Focus on Faculty

Computer giant IBM has launched yet another academic program, this time to help university faculty instill modern-day skills among students.

IBM hopes the initiative launched in Chennai will soon be taken to five other Indian cities.

IBM India has invested $1.5 million in its academia initiatives in the last two years, imparting training on open standards-based technologies to more than 125,000 students from 575 colleges.

In 2007, it helped 62,000 students from over a thousand Indian middle-level technical institutions in 28 states to participate in its academic initiatives that changes an “IT student into a skilled and competitive global worker,” IBM officials said.

The company also trained over 8,200 teachers last year.

Industry sources say 1.5 million skilled information technology experts will be needed by 2012, a factor fuelling IT education in India, China and Southeast Asia.

“Today’s IT jobs require more than just strong technical abilities. They also demand industry and business knowledge as well as effective communication and interpersonal skills,” IBM India’s vice president for channels, marketing and ecosystems Anil Menon told an audience of senior faculty members from different universities in Tamil Nadu.

“This makes it imperative for industry, partners and academia to understand what the businesses are looking for in the next generation of IT hires,” he added.

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Broadband Use

India has 4.38 million broadband Internet users as of June 2008, a recent report from the country’s telecom regulator Telecom Regulatory Authority of India said.

According to the report, the total broadband subscribers, Internet users with download speeds in excess of 256 kilo bytes per second (kbps) has reached 4.38 million from 4.15 million it had at the end of May 2008.

The TRAI statement also said that during April 2007 to June 2008 the country has almost doubled broadband users.

“We have only now reached a point where broadband is slowly entering the scheme of things of household users. The costs are still high. For instance, a household should shell out not less than Rs. 500 a month for broadband connection and the costs only go up, depending on usage. A further reduction in costs will only help grow the base,” an official with a telecom service provider said.

The data pertaining to broadband only shows how India is still a pygmy in the Internet user’s space. Only a few days back, China became the capital of cyberia with The China Internet Network Information Centre revealed that its netizens reached 253 million by end of June, which is the highest in the world.

It also said that it has the highest population, (80 percent of the Internet users); of broadband users while the rest used low speed Internet services. The TRAI statement said, the country added 8.81 million telephone connections (both wire and wireless) during June 2008 as compared to 8.46 million it added during May 2008.

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SATYAM: South America

IT giant Satyam Computer Services plans to set up IT and BPO development centers in Mexico and Chile or Uruguay shortly, a top company official said.

After opening IT and BPO development centers in Egypt, Brazil and a second center in Australia, we are now looking at setting up the same in Mexico and either in Chile or Uruguay, Satyam Computer’s president, Ram Mynampati, told reporters on the sidelines of a press meet here.

Satyam sees major growth in the next few quarters coming from outside the United States, mainly the Asia Pacific, Middle-East and Europe, Mynampati said.

Today, the U.S. contributes 60 percent business volumes, while Europe contributes 19.5 percent and the remaining 20.5 percent comes from the rest of the world.

Australia, Singapore, Canada and some Latin American countries are growing. Satyam’s Middle-East operations increased 102 percent in revenue for the first-quarter.

We are hopeful that 40 percent volume currently coming from the Asia-Pacific will increase to 50 percent shortly, Mynampati said. He pointed out that India has been the focus area for the company, where the company was growing at 100 percent.
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INDEPENDENCE DAY SPECIAL
The Parrot’s Beak: A Sikh American Passage
In this month of India’s Independence, we salute an Indian American heroine. We present an autobiographical sketch by Kartar Dhillon.

NUCLEAR POLICY
False Premise: Indo-U.S. Nuclear Deal
The U.S.-India nuclear accord is actually testament to the large-scale failure of the Indian Department of Atomic Energy, writes M.V. Ramana.

TECHNOLOGY
Infotech Nepal: Berkeley Meet
The Computer Association of Nepal-USA organized a two-day conference at the UC Berkeley, writes Bineet Sharma.

ENTERTAINMENT
IIFA Awards 2008
A Siliconeer Exclusive Photo Essay

OTHER STORIES
EDITORIAL: A Sikh American in California
NEWS DIARY: July
SUBCONTINENT: Cell Phones: India Worried
ETHICS: Dow and IIT Bombay
SOCIAL WORK: Goodbye, Polio
ACHIEVEMENT: Eagle Court of Honor
SPORTS: Sania Mirza in Bay Area
TRAVEL: Alamos, Mexico
CULTURE: Srikanto Acharya Concert
AUTO REVIEW: 2008 Nissan Altima Hybrid
RECIPE: Khasta Kachori
FILM REVIEW: Brick Lane
TAMIL CINEMA: Subramanyapuram
BOLLYWOOD: Guftugu
COMMUNITY: News in Brief
BUSINESS: News Briefs
INFOTECH INDIA: Round-up
HOROSCOPE: August