Three IT firms bag $600 mn WalMart deal

Walmart has selected three IT vendors in India — Infosys Technologies, Cognizant Technology Solutions and UST Global — for multi-year contracts worth over $600 million (around Rs 2,750 crore).

The amount is roughly equivalent to the value of goods — textiles, handicrafts and other products — that the world's largest retailer sources from India every year.

This development is expected to boost the IT outsourcing landscape in India, given that Walmart typically prefers to develop its retail applications in-house. Walmart gradually started buying packaged retail applications from leading software vendors such as Oracle, HP and SAP only towards the end of 2007. It had, however, given Infosys and Cognizant pilot projects about five months ago.

Initially, the three vendors are expected to earn Rs 250 crore to Rs 300 crore, each, annually. The figure is set to grow as Walmart increases outsourcing of work from its main merchandising division. Infosys and Cognizant are expected to garner a larger share of the pie between them.

“What is more important is that these three vendors have now got a ticket to be in the club of Walmart's list of preferred vendors which will help them in growing this account in the long-run,” said a source close to the development.

According to the contract, Infosys and Cognizant will be responsible for application development and support, while UST Global will be responsible for specific testing of these applications.

Asked about the deal, Infosys and Cognizant declined to comment. “As a policy, we do not comment on speculation in the marketplace,” spokespeople from both companies said. A UST Global spokesperson in India said the company does not comment on any client specific information as “we have non-disclosure agreements with most of our clients”.

UST Global is part of the $6 billion US-based business conglomerate Comcraft Group, with a major presence in India.

Walmart's media relations director John Simley replying to an e-mailed query said: “We have a large and growing business and productive relationship with many Indian companies. We do not comment on speculations about the nature of any business relationship.”

Walmart, the largest private employer and grocery retailer in the US with revenues of $404 billion (2009), selected the vendors after a competitive bidding process in which most Indian IT services companies participated, except TCS, India’s largest IT services firm.

TCS failed to qualify for the bid because it has an exclusive partnership with Target, another American retailer, who is into direct competition with Walmart. Among the bidding companies, Walmart shortlisted six contenders of which three were finalised based on their level of competency in various processes.

Unlike other retailers, Walmart does not want to open its own captive centre in India, even though the company has established a huge sourcing office in Bangalore sometime back.

Some of the world’s leading retailers like Tesco, Target and Supervalu have their own software development centres in India. Tesco’s Hindustan Service Centre which went live in May 2004, employs close to 3,000 people. In 2006, Supervalu which is the third-largest grocery retail chain in the US, also set up a captive development centre in India for new applications development, technical operations and testing of applications.

Microsoft to launch Azure cloud service January 1

Microsoft Corp said on Tuesday it will launch its long-awaited Windows Azure cloud computing system on Jan 1, as it looks to take
advantage of the growing interest in internet-based software and services.

Azure, which provides an online platform for software developers to create their own programs, and space for customers to store data, was rolled out for experimentation a year ago.

The service will go fully live at the beginning of next year, Microsoft's chief software architect Ray Ozzie told the company's annual software developers conference on Tuesday.

The first month of the service will be free, and billing will start in February, said Ozzie.

Microsoft is expected to be a big player in the cloud computing market -- broadly the trend toward running software in remote data centers
and accessing it over the Internet -- but has lagged behind pioneering rivals such as Amazon.com Inc, which already sells cloud-based storage, and Google Inc, which offers a range of free, online software.

TCS to form business alliance with Dow

Tata Consultancy Services (TCS), an IT services, business solutions and outsourcing organisation, announced plans to form an innovative business alliance that will provide critical business services to Dow, a diversified chemical company, its subsidiaries and joint ventures.


The alliance is an expansion of an existing relationship between Dow and TCS, combining Dow’s leading chemical industry knowledge and operational discipline with the service delivery expertise of TCS.

“This strategic partnership will make our already lean and efficient corporate centre even more so, by supporting a business services model that delivers world-class capabilities at an estimated 30 per cent savings,” said Dave Kepler, Dow executive vice president of business services. “This innovative approach uses a variable staffing model, centralises activities and maximises efficiencies to meet evolving business needs.”

As part of this alliance and global network, Dow and TCS also are announcing plans to build a new strategic services centre near the site of Dow’s global headquarters in Midland, Michigan, subject to the approval of state and local incentives. Plans are underway to begin construction on a new facility in the next year, with the first phase of the build-out designed to accommodate 1250 employees. This effort will support the local economy through the creation of new jobs. In addition, TCS plans to expand its service offerings beyond Dow in the future, creating a service valley in central Michigan.

IT News for this week

News: Citigroup to stay with TCS, Wipro, drop Infosys
Detail: Infosys could see around $25 million of its annual revenues from Citigroup go to rivals like TCS and Wipro

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News: Infy eyes $250 mn BP deal as BT revenues shrink
Detail: At a time when revenues from its top customer BT are dwindling, Infosys is chasing new contracts worth $100-250 mn from BP

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News: Infosys seeing good demand in India, Middle East
Detail: Infosys Technologies is seeing good outsourcing business opportunities in India and the Middle East, a senior official said, as a global economic downturn crimps spending in developed markets

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News: Wipro sees Mideast as a main growth area
Detail: Areas of growth in the Middle East include telecoms and the banking and government sectors, said Premji

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News: STPI withdrawal may hit Infosys, Wipro net profit
Detail: The SEZ policy of the government provides five-year tax holiday for the IT units, followed by gradual taxation after the fifth year

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News: Wipro warns of adverse business impact due to WB disclosure
Detail: World Bank had made a disclosure nearly four months ago that Wipro was ineligible to work with the international lending institution

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News: Bharti, Infy, TCS, Wipro among world's top tech cos
Detail: The ranking showcases companies that managed to thrive even in the face of a bruising global recession

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News: Infosys to hire 1,000 people in US
Detail: Indian software firm Infosys plans to hire about 1,000 people in the US in the next 12 to 18 months amid a gloomy job market

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News: Premji takes pay cut, but hike for others in Wipro
Detail: Wipro had paid a total remuneration of $3,28,556 to its Chairman in FY-09

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News: Wipro honchos get big perks; but salaries dip
Detail: Commissions and incentives dominate Wipro senior management’s paychecks in the just-concluded fiscal - or so it seems

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News: Each Infosys employee worth Rs 97 lakh!
Detail: Infy's total value of human resources including software professionals and support staff is pegged at Rs 1,02,133 cr for FY09

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News: Infosys to cancel home loan facility
Detail: Infosys is planning to withdraw its home loan facility for employees with effect from July 1, according to an internal mail from the company

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News: TCS bags 5-year IT contract from Volkswagen
Detail: TCS will support the group in its business transformation programme to meet its aim to sell more cars, more parts and drive down costs

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News: Revenue per staff dips for TCS, Infy, Wipro
Detail: Revenue per employee for Infy and TCS has taken a sharp plunge to $40,000-odd levels from around $50,000 even an year ago

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News: Wipro bags outsourcing deal from Unitech Wireless
Detail: Wipro Infotech will provide a range of information technology services to Unitech Wireless, in which Norwegian telecom group Telenor holds a stake

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India IT News for this week

News: HCL unlikely to make campus offers
Detail: To save on the cost of training, one of the leading domestic software exporter HCL Technologies said it will hire people 'just in time' of requirement rather than maintaining a bench

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News: Salary freeze at Wipro, campus hiring depends on business
Detail: Wipro has freezed salary increase for the current financial year and gave no commitment on campus hiring

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News: Infy defers hiring plans for engg grads by 6 mths
Detail: Infosys Technologies, has postponed its hiring plans for engineering graduates this year by almost six months

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News: Watch out for a sudden online UK job offer
Detail: Unsuspecting Indian engineering grad are falling prey to new racket offering jobs in UK

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News: Satyam staff still worried over layoffs
Detail: Corporate India might be cheering the speed at which Satyam Computer is being put "on the road to recovery", but the IT giant's 50,000 employees aren't still entirely at peace

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News: CA to hire 1,000 professionals in India for R&D
Detail: The company had in 2007 announced an investment plan of $30 million to set up an R&D facility in Hyderabad

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News: Indian IT industry may cut 75,000 jobs this year
Detail: Indian IT industry stresses more on performance issues since downturn began in US & is likely to see 75, 000 job losses by 2009 end. Layoffs around world | Job-cuts

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News: Scattered layoffs in IBM can touch 4,600: Report
Detail: IBM, however, had said last week that its workforce in Brazil, Russia, India and China has climbed to 1,13,000

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News: IIT, IIM pass outs turn towards PSUs
Detail: Revised pay structure has made PSU jobs more attractive at a time when the private sector is cutting salaries

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News: TCS likely to lay off 1,300 staffers
Detail: TCS is likely to lay off less than a percent of its global workforce over the next few months

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News: IT companies using PIP to rationalise workforce
Detail: IT majors are downsizing using a weapon that’s been in their arsenal all along, the Performance Improvement Plan

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News: Wages at IT multinationals start melting down
Detail: Software multinationals in India have begun freezing wage increases, slashing salaries and postponing merit-based hikes

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News: 1 lakh Indians will return from US in next 3-5 years
Detail: The study warns move will greatly boost India's economy and undermine technological innovation in America

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News: Microsoft's reply to Grassley on H-1B visa
Detail: Full text of MS' response on plans for retaining visa program staff after job cuts

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News: Microsoft cuts temporary workers' rates by 10%
Detail: MS, believed to use somewhere between 40,000 and 60,000 contract workers worldwide, is slashing overtime, hours and pay

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IT export target of $50 bn will be delayed: NASSCOM

IT industry association NASSCOM today said the export revenue target of 50 billion dollar by 2010 will be delayed by 3-4 quarters due to the global economic downturn, and warned of uncertainties in the near future.

The NASSCOM-McKinsey, however, presented an ambitious scenario for the Indian IT industry for the next 11 years saying the total revenue from export is expected to expand to 175 billion dollars by 2020 and revenues from the domestic market could achieve the 50 billion dollar mark.

"This, however, needs a concerted effort by both the industry and the government to ensure swift and sustained reforms in critical areas of education and infrastructure," NASSCOM said.

On the economic scenario, the organisation said the "global economic crisis will have far-reaching and as yet uncertain impact on the industry. Near term volumes and pricing is likely to come under pressure."

Commenting on the opportunities for the industry, Som Mittal, President, Nasscom, said, "The Indian IT industry is in the midst of unprecedented times because of the current economic environment. We expect the next few quarters to be extremely challenging with companies doing everything required to effectively overcome the challenges."

NASSCOM is of the view that the 2020 business landscape would be different from the one that was witnessed in the last decade as now it would be driven by global megatrends.

There are likely to be new verticals in the public sector, healthcare, media and utilities (which have adopted global sourcing only to a limited extent) along with new customer segments in the small and medium businesses.

"These new opportunities will result in export revenues of 175 billion dollar by 2020. On the back of these megatrends the Indian domestic industry too will experience significant growth and record a four-fold increase in revenues from 12 billion dollar in 2008 to 50 billion by 2020," it said.

"80 per cent of the incremental revenue growth by 2020 will be driven by opportunities outside of the current core markets, verticals and customer segments and the industry needs to redefine its value proposition to capture these," Mittal said.

The NASSCOM-McKinsey report said that India has been the destination for global sourcing over the last 10 years and has garnered a 51 per cent share of the industry today. India continues to be the most competitive among 25-30 low-cost locations even today.

TCS declares 70% dividend to preferential shareholders

The country's top software exporter, Tata Consultancy Services, today said it would pay a 70 per cent dividend to its preferential shareholders.

Its board has approved a dividend of Rs 0.70 on every redeemable preference share of one rupee each, TCS said in a filing to the Bombay Stock Exchange.

The company would seek approval of shareholders for the same in its annual general meeting, it further added.

Yesterday, the Tata Group firm had reported a seven per cent growth in its net profit at Rs 1,333 crore for the fourth quarter ended March 31.

The profit for the entire fiscal, which saw the fortunes of many a company being hit towards the second half in the wake of one of the worst global financial crises, increased 4.57 per cent to Rs 5,256 crore. Its revenue grew 23 per cent Y-o-Y to cross $ 6 bn milestone.

The board has approved a bonus issue of 1:1 or one equity share for every share held.

Besides, it has declared a total dividend of Rs 14 per share, including Rs 5 as final dividend, for fiscal 2008-09.