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INFOSYS: Infotech Trendsetter Cautious on U.S. Slowdown Fears

The trend-setter for the Indian IT services industry — Infosys Technologies — has put its trademark caution upfront in its earnings growth target. The company said it expects sales to rise between 19.2 percent and 21.1 percent in 2008-09, with slower growth seen in the first two quarters amid a slowdown in the U.S. “Short-term growth will be slower, but medium- to long-term, there are significant opportunities,” CEO S. Gopalakrishnan said after India’s second-largest IT services exporter reported a 20.1 percent rise in consolidated revenues to Rs. 16,692 crore for FY08. Net profit jumped 20.8 percent to Rs 4,659 crore.

Infosys has now managed to generate a net profit of $1 billion on revenues of $4 billion. Its cash and cash equivalent reserves now stand at Rs. 9,600 crore. As a bonanza for its shareholders, it has recommended a total dividend of Rs. 33.25 per share, including a Rs. 20 per share special dividend for the profit milestone. The outgo because of the dividend payout will be Rs. 1,902 crore. Infosys said a survey of its top 100 clients on their IT budgets for 2008 revealed that 76 percent are either showing flat growth or marginal decline.

“There is a tightness in their spending and decision-making cycles are getting longer,” COO S.D. Shibulal said. The company also saw sporadic cancellation of projects, but termed it as nothing significant as it has around 5,000 ongoing projects at any given time. For the quarter ending June 2008, the company has projected income of Rs. 4,570-4,582 crore, a year-on-year rise of 21.1-21.4 percent. However, despite its current size of Rs. 16,692 crore and expecting to touch 20,214 crore for FY09, Infosys sees operating margins at almost the current level of around 32 percent.

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WIPRO: Changes at the Top

India’s third largest IT services company Wipro Technologies is all set to announce changes in its board. Company chairman Azim Premji will announce three top level changes in the board after the announcement of its annual results along with new roles for many of its vertical heads in the coming weeks.

According to sources, IT practices president and Wipro Infotech president Suresh Vaswani along with finance solutions president Girish S. Paranjpe and chief financial officer Suresh Senapathy will be inducted into the board. The current Wipro BPO chief T. Kurien might also be moved to new responsibilities, sources added.

The restructuring of the executive team and board will be the first significant one in many years after Vivek Paul, ex-Wipro president, left in 2005. It will also give more power to the executive team to take key decisions in the wake of the current U.S. slowdown and flux in the IT market.

While Girish Paranjpe is a chartered accountant and a graduate from Sydhenam College, Mumbai, who has worked with Wipro for more than 13 years. Suresh Vaswani is an engineering graduate from Indian Institute of Technology Kharagpur, and a management graduate from the Indian Institute of Management, Ahmedabad and is associated with the company since 1985.

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E-waste

The Maharashtra government is concerned about 11,000 metric tons of e-waste generated in Mumbai every year as there is no proper way to dispose of or recycle it.

Minister of State for Urban Development Rajesh Tope informed the legislative council that the state government has asked BMC to appoint a private agency for the disposal of e-waste.

Most of the e-waste gets deposited at Gowandi and Deonar dumping grounds in the city, he said, adding that it includes television and refrigerators.

The minister said a survey done by IRG System South Asia Pvt Ltd reveals that e-waste is hazardous because it contains lead, cadmium and mercury.

The centre is preparing a draft to dispose e-waste while the state government will also take measures to recycle it, Tope said.

The issue of e-waste was raised by MLC Sanjay Dutt. He asked if there is any way to dispose it.

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NOVELL: $100M Expansion

U.S. software giant Novell will invest an additional $100 million over the next three years to scale up its India operations, including research and product development capabilities, a top company official said in Bangalore.

"As our largest facility outside the U.S., the India development centre is key for our global engineering initiatives, including our award-winning products and technologies. The

India

centre has contributed a great deal in developing a suite of IT integrated management software products and delivering inter-operable Linux and other platform services.

"We are committed to invest $100 million in the next three years to ramp up our India operations," Novell CEO Ron Hovsepian told reporters in Bangalore at the subsidiary's new facility on the outskirts of India's tech hub.

The 700-seat new facility will enable Novell India to take up product development, engineering and testing in new verticals and provide solutions to its customers worldwide.

"We have end-to-end product development and product management responsibilities for several products and ownership of components of other global products. The right-blend of technology-oriented work, good infrastructure, and a great work culture enables us to attract talented engineers and serve our global customers," said Narsh Shah, Novell India managing director.

The India subsidiary of the $932-million firm employs about 600 software and product development engineers in the Bangalore facility.

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Exports Projection

Software exports from Tamil Nadu were expected to touch Rs. 26,000 crore in 2007-08, Chief Minister M. Karunanidhi announced in the state assembly.

Answering supplementaries regarding setting up of IT parks in the state, he said Tamil Nadu had made software exports to the tune of Rs. 21,700 crore in 2006-07 and Rs. 14,600 crore in 2005-06.

Responding to CPI-M's N. Nanmaran's question over setting up of an IT park in Madurai, the chief minister, who also holds the IT portfolio, said work would start in a month or two in this direction.

Further, the Electronic Corporation of Tamil Nadu was in the process of setting up an IT-Special Economic Zone at Hosur in Krishnagiri district.

"ELCOT has been provided with 172.19 acres of land at Viswanathapuram and they have initiated work for the project," he said adding that the central government's approval for the SEZ has been obtained.

IT parks would also come up in cities like Coimbatore, Salem, Tirunelveli and Tiruchirapalli, where ELCOT has initiated efforts in this regard, Karunanidhi announced.

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CURRENT ISSUE IN PDF
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COVER STORY
An Awful Option:
Nuclear Energy
The solution to global warming and power shortages does not lie in expansion of nuclear power plants, argues scientist Radhakrishna.

ECONOMY
The Yin and Yang of U.S. Debt
Growing American debt has consequences for both lenders and borrowers. Chinese institutions hold 10 percent of US Treasuries, but that may not give them the power to move US markets, write Ashok Bardhan and Dwight Jaffee.

HONOR
Laurels for Talent: Guggenheim Fellows
This year five Indians won the prestigious Guggenheim Fellowship awards. A Siliconeer report.

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