SILICONEER | INFOTECH INDIA: Tech News Briefs | MARCH 2009

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IBM Becomes Largest Vendor in Indian IT Services

IBM Global Services, business and technology services provider has emerged as the largest vendor in the IT Services market in India with a market share of 10.8 percent, according to a research report.

Springboard Research, an infotech tracking firm, in its report titled “India IT Services Competing for Tomorrows Market” ranked Wipro and TCS-CMC in the second and third place, with a market share of 8.7 percent and 6.1 percent respectively.

The Indian IT services market is estimated to be worth $4.8 billion.

IBM continues to be the leader as it continued the momentum this year by signing some major contracts in emerging verticals like retail, healthcare and insurance along with further consolidating its position in telecom and government sectors, it said.

Wipro has recorded the highest growth of all established vendors in 2008 with more than 43 percent growth over it 2007 revenues.

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Satyam Loses Coke, GSK Deals Too

Satyam’s prized possessions, both clients and employees, are slowly slipping away. Coca-Cola and GlaxoSmithKline are the latest to exit the company. While Capgemini has already bagged the $100-million seven-year Coca-Cola project, it is learnt that Cognizant will get the $35-million GSK contract.

Coca-Cola and Satyam refused to comment on the development, but Capgemini confirmed that it has bagged the order. On the other hand, both Cognizant and GSK said they do not comment on individual contracts. A few key employees who were critical to the implementation of the Coca-Cola project have quit Satyam to join Capgemini, an official at one of the companies said.

“Coca-Cola enterprises has selected Capgemini for a seven-year arrangement to implement comprehensive finance and accounting solutions in CCE’s North American business unit to create an efficient process in a cost-effective environment,” said a Capgemini spokesperson. However, the spokesperson refused to confirm or deny if some Satyam employees had been hired.

When companies change their software vendors, there is usually a clause in the client-vendor agreement that makes it binding on the exiting service provider to assist the new player during the transition period.

“In this case, it (enforcing the clause) wasn’t so easy due to the current circumstances, so Capgemini was asked to recruit some of the important (Satyam) employees,” said a consulting head who is advising some Satyam clients. Some Satyam employees may leave the organization along with contracts, he said.

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Banks Lose Nearly Rs 66 Million to Internet Fraud

Banks across the country have lost Rs 65.7 million to internet frauds in 233 incidents of cyber crime with Tamil Nadu topping the list in the last fiscal year.

Rs 20.9 million has been lost by various banks in Tamil Nadu in seven cases reported between April and December 2008.

Lending institutions in Maharashtra reported the highest number of 23 incidents, and have lost Rs 5.55 million to online fraudulent practices, Minister of State for Home Shakeel Ahmad told the Lok Sabha.

The banks in Rajasthan, Andhra Pradesh and West Bengal have lost Rs 8.99 million, Rs 6.42 million and Rs 3.57 million respectively while Kerala and Delhi lost Rs 1.76 million and Rs 1.09 million respectively owing to cyber fraud.

Eleven cases of Internet fraud were reported from Andhra Pradesh, eight from Delhi, seven from Tamil Nadu, six from Karnataka and five from West Bengal during the said period, the Minister said in a written reply.

However, banks in Bihar, Goa and Jharkhand did not lose a single penny to such activities and no case was reported from any of these states.

The minister tabled in the House a state-wise list of the number of incidents of Internet fraud that include cases of fraudulent withdrawal of money from banks through online banking, as reported by the banks to the Reserve Bank of India.

According to a data updated till 2007, out of the total 355 people arrested across the country, a maximum 156 people were arrested in Madhya Pradesh in connection with cheating related cases under IT Act -- Fraud digital signature (Section 64) and Breach of Confidentiality\Privacy (Section 72) -- and IPC Crime (Forgery and Criminal Breach of Trust/Fraud).

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INFOSYS: Risk-averse Strategy

A leading outsourcing expert has questioned the ability of Infosys Technologies to maintain its leadership position if it continues with its current risk-averse philosophy in pursuing acquisitions and business deals.

The company has, however, countered this view, saying that it’s not averse to risk and has taken the plunge after understanding what it means to them.

Peter-Bendor Samuel, founder and CEO of the Everest group, said the tech bellwether stands in danger of being overtaken by rivals if it sticks to old way of functioning as the days of fast growth and high-profit margins disappear.

“The game of consolidation is for the brave not the timid. It’s true they are exploring these options, but others are moving much faster. Their tentativeness in their acquisitions will consign them to a secondary position. If they are thinking about taking the plunge, others are already acting,” Samuel said.

In August 2008, Infosys announced a bid for the U.K.-based SAP consultant Axon Group, but was beaten by HCL Technologies. HCL bid 8 percent more than Infosys and bought a company seen as better suited for Infosys. But, Samuel said, while the decision may have been right in specific cases, in aggregate, Infosys was losing out to competitors. Infosys’ larger competitor, Tata Consultancy Services, also recently acquired Citigroup Global Services for $512 million.

Infosys CFO V. Balakrishnan said: “We are looking at acquisitions only to improve upon what we have today rather than as a tool to increase revenues. Most M&As have failed due to corporates taking a short-term view towards markets.”

Infosys’ philosophy has been to maintain pricing and also shy away from risky acquisitions.

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Online Networking

Internet users in the country may be growing substantially, but when it comes to networking online, India has been placed among the nations with least exposure to social networking sites in the Asia-Pacific region.

The U.S.-based internet marketing research firm comScore in a report has said that only 60.3 percent of Internet users in India are used to social networking sites, making it one of the Asia-Pacific countries with least exposure to the activity.

In terms of the penetration of social networking sites, India is ahead of Japan (50.9 percent), China (45.6 percent) and Taiwan (42.4 percent).

According to the report, Singapore has the highest number of social networking site users at 74.3 percent in the region, followed by Australia (68.3 percent), South Korea (68 percent) and Malaysia (66.6 percent).

Hong Kong and New Zealand have the same percentage of such users at 62.8 percent, the report noted.

However, comScore said that the number of visitors to social networking sites has increased by 51 percent in India.

In India, the number of Internet users visiting such sites rose by 51 percent to 19.37 million in December 2008, the report said. The number of visitors stood at just 12.8 million in December 2007.

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Yahoo! India: Internet Partner

Yahoo! India has entered into a three-year partnership with International Cricket Council, which will provide the Web-based services provider access to content like exclusive images and videos of major ICC events.

Through this partnership, Yahoo! will have access to exclusive images, videos, interviews and player chats around all major ICC events, including the ICC World, Twenty20, ICC Champions Trophy and ICC Cricket World Cup, Yahoo! India said in a statement.

"This partnership gives us access to never before experienced content in the online domain. As a global brand, Yahoo! will attract more users worldwide and contribute towards the growth of Cricket," Yahoo! Vice president and head of audience (emerging markets) Gopal Krishna said.

Yahoo! has also launched a brand new global cricket Web site cricket.yahoo.com, which will provide users with match updates, images, schedules and player profiles.

The new Web site will serve as a one-stop destination on the history of cricket, updates on ongoing cricket tourneys, as well up-to-date statistics for cricketers, it said.

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Patni Computer Systems: Expands Footprint

Software exporter Patni Computer Systems is expanding its presence in western Europe and beefing up its senior management there.

The company has announced four appointments to expand its operations in Germany, Austria and Switzerland. The senior-level executives have previously worked in major companies such as T-systems, Infosys Technologies, Cognizant Technology Services and Hewlett Packard.

“The appointments are an integral part of Patni’s overall strategy to build a significant operation in Europe to complement its business operations in the U.S. and India,” the company said. Juergen Dillenberger has been appointed senior sales manager while Georg Wagner has been inducted as vice-president.

Gabi Schulte-Holthaus has been appointed sales director, SAP alliance, while Amit Luthra has been taken on board as senior sales manager, life sciences, Patni said in a statement.

Dillenberger has more than 22 years of international business experience and has held a series of senior leadership positions in Germany. He was also vice-president at T-Systems, responsible for the global account with Volkswagen. Wagner was earlier global director for application outsourcing and offshoring at Hewlett-Packard.

Schulte-Holthaus was with Infosys Technologies and Siemens before joining Patni while Luthra has worked with Cognizant and Accenture management consulting services.

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WIPRO: No Export Support

Chief financial officer of IT giant Wipro Suresh Senapaty said there was expectation that some of the short-term measures to support export growth would be put forward in the interim budget "but this has not happened.”

But he said being a vote-on-account budget, the government had limited scope in making the policy changes.

"We hope that next budget, which will be presented by the newly-elected government, will have the measures that facilitate export-competitiveness and sustain the growth momentum", Senapaty said.

The allocation on rural development, health care and education system is consistent with long-term objective of leveraging India's human capital, according to him.

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U.K. Interest

At a time when the world's biggest IT market U.S. is evaluating protectionist measures against offshoring of IT jobs, Indian companies such as TCS, Infosys and Wipro are preparing to bid for around $2-3 billion worth of outsourcing contracts being fleshed out by Department of Work and Pensions, HM Revenue and Customs and the Ministry of Justice in the U.K.

UK's state-owned departments are seeking help from the Indian offshoring industry for bringing troubled government technology systems back on track and lower the cost of managing government IT systems anywhere between 25-40 percent, according to several experts.

Government IT spending in the U.K. is estimated to be over $36 billion every year, according to Bob McDowall, research director at TowerGroup Europe. Apart from the troubled NHS modernization program, which needs restructuring, HMRC will also seek to outsource more work as the department plans to make it mandatory for firms employing more than 50 employees to file tax related and other information online by 2011. "UK Government IT projects almost always suffer from scope creep, financial and time overrun of a significant dimension," McDowall said.

One of the reasons for UK's government departments to look for help is the scarcity of competent professionals for transforming the systems. "Internal IT development resources are not of the strongest quality-the good people go to commercial organizations. Those that are outsourced to UK based providers are not always delivered on a more efficient, timely and cost effective basis," he added.

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Local Commerce

Sulekha, the free online search engine for local commerce, will soon be making its clients pay for its services, as opposed to being supported by corporate advertisements. By doing so, it is likely to become the first horizontal C2C website, a site that offers classifieds across segments, to switch to a paid model.

"We believe we might just have become indispensable enough to our users to operate as a paid service," said Sulekha president and CEO Satya Prabhakar. The online classifieds industry has seen a 25 percent drop in its corporate ad revenues, owing to the slowdown, and expects it to go down by about 50 percent before the end of this fiscal. "Online ads are the first to go, as they have neither the permanence of print nor the visibility of broadcast."

Times Business Solutions CEO R. Sundar said, "So far, the only monetizable classifieds have been for B2C in real estate, and jobs segments, which is why we have separate verticals for those." TBS operates a host of classifieds services – print ads, online booking for print ads, online shopping etc.

"In our job sites, the customer pays only because we offer him value additions like resume writing assistance, contacts in industry, location assessment etc," he said. "If the customer is so used to posting ads for consumer durables also, then there is a good chance he'll pay for uninterrupted service. After all, the internet offers an interactive medium."

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Plan to Invest

The Kerala government plans to invest Rs 100 billion in the IT sector in the near future, Chief Minister V.S. Achuthanandan has said.

Laying the foundation stone for a Rs 5 billion IT park at Purakad in Ambalapuzha in Alappuzha district, he said the government was according top priority for development of the IT sector in the state. The aim was to generate 500,000 jobs in the next five years, he said.

The IT park, to come up in about 100 acres of land, was part of the government initiative to promote such parks in all districts in the state, he said.

Work on the Smart City IT Park in Kochi would be started after removing all hurdles, he added.

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Concern Over President Obama’s Outsourcing Plan

India, Inc. voiced concern over President Barack Obama’s plans to clamp down on the outsourcing industry. In his first address to a joint session of U.S. Congress, President Obama said that his government will not give tax breaks to U.S. companies that outsource jobs to other countries.

The move, if pushed into legislation will hurt India’s BPO sector and if President Obama lifts tax breaks, outsourcing jobs to India will not be as attractive an option for companies here in U.S. as it was in the past.

Industry bodies in India have said that the future poses big challenges for Indian IT companies after Obama’s latest comment.

FICCI president Rajeev Chandrashekar said, “This poses yet another challenge for Indian IT and software companies that are growing in the US. In a way this is a natural exception of the US government trying to create a much more protectionist environment. This will pose a real challenge to Indian companies.”

In his first speech to the joint session of Congress President Obama had said, “In this budget, we will end education programs that don’t work and end direct payments to large agribusinesses that don’t need them. Well eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that were not paying for Cold War-era weapons systems we don’t use.”

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10,000 H-1B Visas, 4 Indian Firms

According to a latest study, top Indian IT companies account for the largest chunk of the H-1B work visas.

The report mentioned that just four Indian companies last year accounted for more than 10,000 H-1B visas issued by U.S. Citizenship and Immigration Services for the year ending September 2008.

Indian IT giant Infosys tops the list of companies with as many as 4,559 visas. Infosys was followed by Wipro (2,678 H-1B visas), Satyam (1,917 H-1B visas) and Tata Consultancy Service (1,539 H-1B visas).

Microsoft is the only non-Indian company that got over 1,000 H-IB visas issued. It received 1,037 H-1B visas in 2008, a little more than the previous year.

Microsoft is ranked fifth in the list of companies, which were issued H-1B visas last year.

Cognizant with 467 and Larsen and Tourbo with 403 H-1Bs are the other two Indian companies to land in the top 10 list.

IBM India too figures in top 10 with 381 visas. Among other U.S. companies, Google got 248 visas and Lehman Brothers, which went bankrupt last year had received 130 visas.

The USCIS report comes at a time when there has been a general animosity against the H-1B visas in the U.S., specially when the country is experiencing a recession. The stimulus bill and the American Recovery and Reinvestment Act prevents American companies receiving federal bailout money if they hire foreign workers on H-1B visas.

U.S. senators Chuck Grassley and Richard Durban were instrumental in the imposition of restrictions on H-1B visa holders, have said that they are planning to introduce a legislation in the U.S. Congress to change the program, which they claim have benefited foreign workers. With about 3.6 million jobless Americans, it is time that U.S. companies should give preference to natives rather than hiring foreign workers, they argued.

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IIT’s Joint PhD. Programs

There’s good news for those aspiring to pursue joint PhD. program from the Indian Institute of Technology, as the central government has given its nod to IITs to offer joint M.Sc-Ph.D and joint M.Tech-Ph.D programs.

“IITs have been allowed to offer joint PhD. program with an aim to promote research activities in the country. We want more students to opt for research as a career,” said D. Purandeswari, Minister of State for Human Resource Development.

These joint M.Sc-Ph.D and joint M.Tech-Ph.D programs will allow interested students to opt for Ph.D after M.Sc or M.Tech while the other students can leave the course with M.Sc or M.Tech degrees.

The proposal was earlier discussed at the IIT-Council meeting held Jan. 28 in New Delhi.

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COVER STORY
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The 29th North American Bengali Conference will bring together some of the top Bangla artists from West Bengal and Bangladesh. A Siliconeer report.

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A Siliconeer Exclusive Photo Essay

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AWARDS: ‘Slumdog’ Slam Dunk
NEWS DIARY: February
SUBCONTINENT: India’s Gas Boost
HEALTH: Battling Heart Disease
COMMUNITY: Remembering Ekushey
CINEMA: Asian American Film Fest
ESSAY: Stage-managed Feminism
TRAVEL: France, Morocco
AUTO REVIEW: 2009 Toyota Venza
BOLLYWOOD: Review: Billu
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RECIPE: Vegetable Jalfrezie
TAMIL CINEMA: Siva Manasula Sakthi
COMMUNITY: News in Brief
INFOTECH INDIA: Tech Briefs
HOROSCOPE: March