Reliance Plans to Outsource Management of Wired Services

Reliance Communications Ltd. plans to outsource the management of its wired services network in a deal likely to be worth more than $750 million, a company executive said Wednesday.

"We want to outsource voice and data wired transport network (the fixed-line network). The contract is to maintain and manage all parts of this network, including the towers, power and cable networks," Sandip Biswas, head of managed services at Reliance Communications, told Dow Jones Newswires.

He said the contract for wired services is likely to be bigger than the $750 million, five-year outsourcing order given last year for its wireless network to a joint venture between Reliance Communications and France’s Alcatel-Lucent.

The joint venture, in which Alcatel-Lucent has a 67% stake, will be among the bidders for the new contract, Mr. Biswas said.

He said Reliance is likely to first implement the system for the wired services network on an experimental basis in 5-10 service areas in the next three months, and then cover the entire country in the subsequent three months.

Reliance Communications, part of the Anil Dhirubhai Ambani Group, is India’s second-largest mobile services provider by subscriber base.

At the end of May, the company had 1.12 million fixed-line phone subscribers, according to data on the Web site of India’s telecom regulator. The company provides also national and international long distance voice, video and data network services.

Earlier Wednesday, Alcatel-Lucent said it will double its revenue from its Indian operations by the end of this year.

"We are on course to double India revenue by the year end, and it is not on a small base as you think," Sean Dolan, Alcatel-Lucent’s president for Asia-Pacific, told Dow Jones Newswires.

"We may now want to consolidate some of our offices here in India."

Alcatel-Lucent’s revenue from its Indian operations last year wasn’t available.

Source: http://online.wsj.com/article/SB124644515537679013.html

US Protectionism Could Lead to Trade War, Says Nasscom

US protectionism targeting Indian outsourcers may be met by retaliatory measures such as blocking access to Indian markets, India’s National Association of Software and Service Companies (Nasscom) said on Tuesday.

Describing the US tax system as "broken", US President Barack Obama said in May that it’s a tax code "that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York".

Though the changes proposed to the tax code are not likely to impact the Indian outsourcing industry, the statement by Obama has been widely interpreted in India as targeting the country’s large outsourcing industry which gets over 50 percent of its revenue from the US

Legislation introduced in April by Senators Chuck Grassley, (R-Iowa), and Dick Durbin, (D-Ill.) aims to put curbs on the use of H-1B visas, so that the visa program "should complement the US workforce, not replace it".

As unemployment goes up in the countries to which Indian’s outsourcing industry exports services, there are likely to be increasing demands for creating jobs in those countries, said Som Mittal, president of Nasscom.

"Once you take protectionist measures, it doesn’t stop there," Mittal said. India is a large market for a variety of products including defense equipment, and there could be a trade war, he cautioned.

Nasscom is focusing on conveying to the US and other countries that Indian outsourcing companies can help their companies get more efficient and cut costs in the economic downturn. It wants the Indian outsourcing industry to be identified as "part of the solution and not the problem", Mittal said.

Indian outsourcers are also taking steps to increase services delivery closer to customers, which will mean creation of jobs in countries like the US, said Pramod Bhasin, chairman of Nasscom.

Indian business process outsourcing (BPO) companies will have to change their business model in the future to deliver services from multiple locations worldwide, so that they deliver from where the customers want it, he said.

Profit margins will not get affected by the higher costs in those locations, because the work done there will be high-end, he added.

The Indian BPO industry is expected to post a revenue growth of about 15 percent this year, despite the global economic downturn which appears to have bottomed out, Bhasin said.

Source: http://www.pcworld.com/article/166399/us_protectionism_could_lead_to_trade_war_says_nasscom.html

Telstra confirms outsourcing contracts

TELSTRA has awarded $1.2 billion worth of new outsourcing contracts after the telco unveiled EDS, Infosys and IBM as the survivors of its IT partners roster rationalization.  Telstra has been reviewing its IT outsourcing contracts since last year, when the telco announced it would trim its list of major IT suppliers from four to two in an effort to reduce costs and streamline providers.

Previously, Telstra’s application development and maintenance contracts were held by Satyam, EDS, IBM GS and Infosys.

In March The Australian revealed the telco had dumped scandal-ridden outsourcer Satyam from its applications support contract, believed to be worth $32 million a year, and replaced it with EDS.

The Australian also revealed that Telstra had favored Infosys over IBM for its multimillion-dollar applications support contract.

Telstra today confirmed that EDS and Infosys will pick up application development and maintenance contracts worth a combined $450 million over the next five years, while IBM will remain a strategic partner in this area.

While losing out on its software and legacy applications support work, IBM has won a renewed IT Operations Services Agreement to manage the telco’s infrastructure.

This contract is worth an estimated $745 million over five years, and will see IBM maintain datacentre mainframe operations.

Telstra chief information officer John McInerney said the new agreements would deliver significant benefits to the telco’s transformation program.

“This is an important milestone for Telstra IT ," he said. "One of the key outcomes of our IT transformation is the delivery of operational excellence.

"These consolidated contracts contribute to our strategy and ensure an ongoing investment with our key partners.”

Source: http://www.australianit.news.com.au/story/0,24897,25609583-15306,00.html

Wal-Mart shortlists TCS, Infosys, Wipro for $500 million deal

Wal-Mart Stores has shortlisted top Indian tech firms, including TCS, Infosys and Wipro, for an outsourcing contract potentially worth up to $500 million over next few years, as the retailer seeks to award multiple contracts for managing its business applications and other back office activities.

At least two people familiar with Wal-Mart’s outsourcing strategy told ET on conditions of anonymity that the retailer is expected to start outsourcing more to India within six months.

“Wal-Mart has been testing the waters by outsourcing smaller projects to companies such as Infosys, TCS and Wipro. Now, the retailer wants to flesh out a more comprehensive outsourcing strategy and has shortlisted these tech vendors,” said a senior executive of one of the tech firms exploring business opportunities with Wal-Mart. He requested anonymity because he is not authorized to speak to media.

When contacted by ET last week, Wal-Mart spokesman John Simley confirmed his company is in discussions with several service providers, but declined to elaborate any further. “Certainly, we feel our company has a lot to offer India and we hope to grow our business there. We are always in discussions with potential service providers, but we have nothing to announce at this time,” he said.

However, unlike many other companies seeking to outsource in order to bring down costs, Wal-Mart’s outsourcing is more about globalizing its information technology sourcing initiatives. At a time when most companies are struggling to grow their business, Wal-Mart announced $15 billion share buy-back program earlier this month, as the retailer continues to woo more customers. Officials at Wipro, TCS and Infosys declined to offer any comments about the Wal-Mart contract.

Some of the world’s top retailers, including UK’s Tesco and American specialty retailer Home Depot, have been outsourcing projects to Indian third party service providers, including TCS and Infosys, apart from their own captive centres in order to support their existing IT systems and also develop newer applications. Tesco for instance, saves over $60 million every year by outsourcing its IT projects to India.

Wal-Mart, which has, so far, been depending upon its large in-house IT team is now seeking to globalize its IT operations, especially since the retailer is now actively planning to grow its business from emerging markets such as India. With almost $400 billion in annual revenues, the retailer also continues to look at establishing a captive technology centre in India, however, this could not be confirmed.

“Wal-Mart already has a sourcing operation in the country, apart from its Bharti joint venture, it’s natural for the retailer to explore various ways of leveraging its Indian presence,” another person familiar with the company’s sourcing strategy told ET on conditions of anonymity.

Meanwhile, Wal-Mart’s outsourcing of IT and back office projects is not expected to impact local US jobs, as the retailer is very sensitive about rising unemployment in the country. In fact, Wal-Mart said earlier this month that it will add around 22,000 new jobs in the US by adding over 150 new stores to its existing network of around 7,900 retail outlets.

Source: http://economictimes.indiatimes.com/Infotech/ITeS/Wal-Mart-shortlists-TCS-Infosys-Wipro-for-500-mn-deal/articleshow/4629457.cms