Creating Ripples

Date:   Monday , September 03, 2007

China cannot outdo India on outsourcing: NASSCOM
Even though China is making fast strides in the global outsourcing business, India will still remain the most preferred destination, says a major Indian lobby for the services sector.

China’s educated workforce is growing rapidly and its government is supporting the growth of the outsourcing sector by providing incentives and fiscal support. But it is unlikely to catch India’s lead in global outsourcing operations for the next 3-5 years as currently the IT software and services sector accounts for a just 0.5 percent of the country’s gross domestic product, says the Nasscom.

“India needs to maintain this position in the years to come. This will require a favourable policy and tax environment, a huge thrust in education and human resources and vastly better infrastructure,” said Nasscom president Kiran Karnik.

Beijing, in its aggressive effort to boost the industry, has initiated as much as 10 million programmes with which it is aiming to promote 11 cities as key bases for undertaking offshore services. The Chinese government, under its ministry of commerce, has also created a specific fund for providing specialized training to some 400,000 university students over the next five years, the report said.

“Each month we host delegations from China which seek to learn from India. India too must learn from China’s experiences,” Karnik said.

“China’s systematic and planned approach to rapidly developing sectors and its strong focus on education and infrastructure offer key learnings that may be usefully adapted to the Indian context.”

Small, med biz spend on IT may rise 25 percent

Small and medium businesses in India are expected to invest about $640 million on packaged software in the current calendar year. This would mark an increase of over 25 percent on similar investments made in 2006, according to a study conducted by the New York-based Access Markets International (AMI) Partners.

According to the study, over 90 percent of the total software spending by SMBs this year would be on databases, accounting, networking, productivity and systems software. Increased IT awareness among SMBs is expected to provide a boost to the Indian IT market.

The study states that investments made by SMBs in packaged software are generally driven by business needs even as specific requirements determine the modules or packages that are chosen for implementation. Rationalisation of such investments has also emerged as a focus area for SMBs.

Presently SMBs are aware of how deployment of IT can accelerate their businesses. In fact, a small percentage of IT-savvy SMBs have progressed to the third wave of IT adoption, demanding tailor-made IT solutions and superior support services.

India is Asia’s top spot for billionaires
In a special report, Forbes listed more billionaires in India worth $191 billion than in any other Asian nation. From being one of the world’s poorest economies six decades ago to becoming a “top spot” today, India has come a long way

This year, for the first time in two decades of wealth tracking, Forbes counted more Indians than Japanese billionaires. Three Indians made it to the list of top 20 of the world’s richest and only the US had more billionaires than India.

“We have made decent progress in several areas during the last 60 years. We have produced world-class scientists, engineers, journalists, soldiers, bureaucrats, politicians and doctors,” says N.R. Narayana Murthy, the co-founder of Infosys and one among those in the rich list.

According to Forbes, in 1987 when the magazine began tracking fortunes around the world - that year the only Indian on the list was the Birla family with a net worth of close to $2 billion.

It was only in 1994 when Dhirubhai Ambani of Reliance Industries made his debut with his petrochemicals fortune. Today, London-based Lakshmi N. Mittal is the richest Indian worth $25 billion.

Bench strength at IT firms hit due to rising rupee
Appreciation of rupee has hit IT majors in a big way. IT companies are reported to be cutting down on their bench strength to battle the rising rupee. As per IT recruiters, bench strength in large majors has reduced by 20-25 percent.

Hence companies are adding a currency fluctuation clause in contracts with clients which would adjust pricing according to exchange rate movements. Another plan of action is for companies to decrease their bench strength. That is, reduce the number of people not yet on projects, but who remain ready to take on any new work that is assigned to them. This makes more people generate revenue. However, industry watchers feel that reducing bench strength so quickly is not possible.

According to a recruiting firm, there has been a slowdown since May this year and ‘Just in time hiring’ is the only way the companies can battle the rising wage costs. Companies are also going slow on lateral hiring and will bank more on hiring freshers in the next few months.

Nasscom, the apex representative body for both IT and BPO companies, has said that the rise of the rupee has been too quick for companies to react with measures that offset the currency impact.

Presently, rupee appreciation impacts BPO companies more than it does IT companies. While a significant chunk of expenses for BPO companies remains in India; IT services companies have some expenses in dollars due to sales force or other development centers being located onsite. This turns favourable when the dollar weakens. A one per cent rise in the rupee against the dollar will have a 75-80 basis points impact on the operating margins for BPO companies, unlike IT companies where the impact is about 40 basis points.

Indian youth, fastest adopters of digital technology in Asia
The world of digital technology seems to have mesmerized the young generation, reveals the survey conducted by MTV, Nickelodeon and Microsoft. The survey conducted across 18,000 kids in 16 countries reveal that Indian kids are more tech savvy than their counterparts in Asia.

The Circuits of Cool/Digital Playground Technology and Lifestyle study challenges traditional assumptions about the relationship of youth with digital technology, and examines the impact of culture, age and gender on technology use. It used both qualitative and quantitative methodology to talk to 18,000 “tech embracing” kids (8-14) and young people (14-24) in 16 countries: U.K., Germany, Holland, Italy, Sweden, Denmark, Poland, U.S., Canada, Brazil, Mexico, China, India, Japan, Australia and New Zealand.

While kids use mobiles and the internet constantly, the survey found that only 20 percent of 14-24s actually loved technology, and they’re in developing nations such as Brazil, India and China. The people least interested in technology were the Danes and the Dutch – despite saying they couldn’t live without it. While growth of mobile and digital technology in India is driven by the urban youth, gradually there will be involvement of the rural youth too. The Indian youth see mobile phones as a status symbol.

The way youth in different markets embraced technology depended on the stage of development as well as social and cultural factors. For example an average Chinese youngster has 37 online friends he or she has never met before, where as one in three American and British teenagers says he would not be able to live without his game console.