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Information Technology - Sector
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Chipmaker Intel on Thursday said a Rs 5,000 PC (excluding the monitor price) could be made available in the next 3-6 months.
The low-price point would be achieved with the help of its low-cost Atom processor, it said. “As demand soars and costs come down, it’s possible to achieve the Rs 5,000 price point within the next 3-6 months,” Intel Asia-Pacific V-P and GM Navin Shenoy said.
Earlier this year, the chipmaker launched its Atom processor for low-cost desktops and laptops. Intel India also announced the launch of an industry-wide movement—Connected Indians—involving the government, industry associations and private enterprise to mobilise people, resources and infrastructure to get citizens connected to the Internet. “Internet will propel India into the next decade,” said IT minister A Raja. -et...
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As all our analyst say dont buy tecnology shares ,i dont belive on this bcs thier is lots of factors why tech shares should not be bought at this levels which has good fundamentals ,every company is checking the cost cutting method and the advantage goes only to technolgy companies ,In 2003 internet was part of the life but now is life for all ,and we cannot send meesage easily to any one ,but nowadays it is possible and also in banking transaction ,like in our like technology is going to dominate the world ,for each and everything you need a technology and service provider ,APART FROM ALL THIS ,THIER INVETSMENT IS VERY LOW AS THEY REQUIRE ONLY LOW SPACE (NOT LIKE TATAS WHO ARE STILL IN PROBLEM FOR NANO PROJECT) JUST IN A SMALL PLACE THEY GENERATING GOOD REVENUES AND MARGINS ARE ALSO GOOD.SO DONT TOTALLY IGNORE THE IT SECTOR ...
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Infosys Technologies is eyeing orders from the middle-east and domestic companies, reports Business Standard.
Infosys sees significant opportunities to increase sales in these markets. The company, which on August 25 offered to buy UK-based Axon Group, aims to boost revenue from markets other than the US.
Customers in North America, mainly in the US, accounted for 63% of Infosys`s sales in the quarter ended June 30, compared with 27% from Europe, 1.3% in India and 8.8% for the rest of the world.
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Bangalore-based software services major Infosys Technologies Ltd is expanding its operations in the country's special economic zones (SEZ) to take advantage of tax incentives, a top official said here Wednesday.
All our incremental expansions are happening in SEZs as the tax incentives for units located in software technology parks is expected to go soon, Infosys chief executive and managing director S. Gopalakrishnan told reporters.
According to him, out of Rs.11 billion ($255.8 million) budgeted for expansions, nearly Rs.10 billion is being spent on setting up centres in SEZs in cities like Chennai, Chandigarh, Jaipur, Hyderabad, Mangalore and Thiruvananthapuram.
In Chennai, Infosys is expanding its unit inside Mahindra World City SEZ.
We have 129 acres and we can build facilities to have 35,000 seats in phases. The first phase will get over soon and will have 11,200 seats. In the second phase, we will add 5,000 more seats company director T.V. Mohandas Pai said.
Referring to the slowdown in the IT sector, Gopalakrishnan said:
The opportunities are increasing. Though bulk of the business is from North America and Europe, the market is not saturated. The slowdown throws up new service opportunities
Though the US accounts for 56 percent of the company’s revenue, Infosys is not dependent on any single economy, said S.D. Shibulal, chief operating officer of Infosys.
The industry risk is diversified, he added.
Riding on high growth, Infosys is planning to expand business in emerging economies like China, Eastern Europe and Mexico.
Pai said the company would hire 25,000 people this year.
We have issued 2,800 offer letters to fresh graduates this fiscal and they will join next year. The offer acceptance rate is around 78 percent, which is in line with the industry norms, he said.
Asked about the company's hedging practice to meet the risk of currency fluctuation, Pai said Currency fluctuation is a fact of life. Having said that, we do short term hedging and not long term. We do not speculate.
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Though Infosys-Axon deal is being hailed as the largest outbound acquisition by an Indian IT company, some market participants believe it will have no major financial impact on the IT bellwether.
They agree that this is a strategic buy in the consulting and package implementation space, but express concern on any sharp appreciation in the rupee against various currencies and a prolonged recession in major user economies.
The announcement of the Axon buy did little for Infosys ADR on Monday and it ended down 4 per cent at $39.90 on the Nasdaq, trailing the weakness in US markets.
Infosys announced acquiring UK-based Axon Group in a 407-million pound (Rs 3,310 crore) all-cash deal after market hours Monday. The deal is expected to be consummated by November 2008, with the payment being made in December, and would add to its earnings from January 2009, Infosys said.
Infosys shares looked up at start Tuesday on the back of the news and a slide in the rupee to a 17-month low against the dollar. But the stock ended off the days high on account of profit booking.
Infosys proposed take over of Axon Group may be a tad expensive, and not exactly be a value buy, but it is a better investment than making cash sit idle in your balance sheet. This should essentially take the pressure off the management and give them the elbow room to now look at better fitting plays, something that they had been avoiding so far, said Anagram Stock Broking.
However, the broking house is worried that the Eurozone may face more slowdown than the US. Hence, investing in a company that draws majority of its earnings from the zone may not be a very good buy.
Kotak Securities believes Axon is a strategic fit for Infosys, which has been consistently looking to expand its consulting and package implementation capabilities and its presence in Europe.
Kotak has maintained a buy on the stock for a target of Rs 2,027 and is certain that the deal will allow Infosys to gain in terms of acquisition of marquee customers, wider reach, improved transformational capabilities and incremental abilities to bid for larger deals.
Infosys values Axon at nearly 2 times CY07 revenues and about 20 times CY07 earnings, which is fair in our view. Axons revenues and PAT have grown by 43% and 68% CAGR, respectively over the past 5 years, albeit partly due to acquisitions, said the broking house.
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Shares in the British consultancy group Axon jumped by 20.1 percent Tuesday fuelling speculation about a counterbid to Infosys Technologies 407 million pound (0 million) offer to buy the company.
The all-cash offer by the Indian IT major, unanimously recommended by the board of the Surrey-based company, represents a value of 600 pence per share.
But Jonathan Imlah of Altium Securities said in a note, -Axon is a global leader in its field. We believe there is room for a counterbid closer to 700 pence a share.
Axon chairman Roy Merritt said Monday, Against the background of the global economic environment and increasing consolidation in the IT services industry the combination with Infosys represents a compelling proposition.
The offer from Infosys represents an attractive cash premium and provides certainty of value today for Axon shareholders. We are therefore unanimously recommending the offer to shareholders.
Speculation mounted as Axon, a global leader in the delivery of business transformation programmes for organisations that use software manufactured by the German company SAP, said Tuesday profits were up 23 percent in interim first half results.
Revenue was up 28 percent to 123.9 million pounds and adjusted operating profit up 23 percent to 20.2 million pounds compared to H1 2007, the company said.
Despite what analysts said, Axion told shareholders Tuesday: Infosys announced yesterday a recommended offer to acquire Axon Group to be implemented by way of a Scheme of Arrangement. Under the terms of the acquisition, Axon shareholders will receive for each Axon Share 600 pence including the interim dividend of 2.25 pence announced by Axon today.”
Axon was set up in 1994 by Mark Hunter, who left his job with SAP to bring together a team of IT specialists. Hunter will get 44 million pounds as part of the Infosys offer, reports said.
Axon was floated in 1999 and today generates more than 200 million pounds a year. Its major clients include Barclays, Xerox, British Petroleum, Pratt & Whitney, Sikorsky, Goodrich Corporation, Air Canada, Microsoft, Kraft Foods and Aquarion as well as public sector clients such as Transport for London and Wolverhampton City Council.
It employs 2,000 staff in Egham, Surrey, and has been growing through acquisitions in the US. Last month it bought Australias Consulting Principles for A.45 million.
The Infosys buyout is being interpreted in Britain as reflecting a bid by Indian companies to move up the value chain from providers of low-cost services based on cheap labour.
As they have grown, they have also begun attempting larger acquisitions, with some moving towards offering higher margin consulting services,one newspaper commentator said.
Wipro, India\\`s third largest software exporter, bought US technology firm and infrastructure management firm Infocrossing for 0 million last year.
Infosys has also been looking west to increase revenue in order to better compete with its main Indian rival, Tata Consultancy Services.
A source close to the deal was quoted saying the transaction was a good fit. SAP requires a real skill-set and even though Infosys already operates in the sector, for a first piece of larger M&A, Axon gives them a great leg-up, he said.
Infosys and Axon are among two dozen companies worldwide that implement back-office software systems designed by SAP.
The Indian company provides consultancy services for a number of IT platforms, and is understood to want Axon because of its position as a higher-end consultancy, able to generate higher margins by offering after-sales service, such as maintenance assistance.
Infosys chief executive Kris Gopalakrishnan said there was a strong demand for SAP systems, with Infosys registering a 62 percent increase in orders in the past year.
He added that the deal would allow Infosys to compete more effectively on the international stage with rivals such as Accenture, Oracle and Capgemini.
Our rationale was that with this acquisition, our global reach, scale and our ability to participate in large transformational deals would be significantly enhanced,he said.
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The Indian rupee fell sharply against the US dollar in opening deals on Tuesday. At about 11:40 pm ET, the rupee touched 44.1350 against the US dollar, which set a lowest point for the former since April 05, 2007.
On the downside, the rupee may likely target the 44.6350 level against the buck. The dollar-rupee pair closed Monday's deals at 43.6900.
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Dear all!
Stop creating unnecessary hype to the Axon acquisition.
What is more important is the company’s perspective and its attitude to be a true global leader.
* The recent initiative taken to reduce US dependency and increase other market penetration.
* All new 'Ticket-based' Pricing formula, which is going to improve Infy's margins further.
* More focus in the high margin software product business.
* Release of new retail software 'ShoppingTrip360' which is going to open up a whole new world in retail.
* More short term focus on growth than profitability in a market down time
* Establishing its foothold in 'Consulting business' to expand horizon.
* Making use of its huge cash pile of which 40 % is utilized for current acquisition
* Consistently above IT sector's avg profit margin
* Urge to be the global leader.
* Dollar appreciation against the local currency is just a blessing that came at the perfect time
The current acquisition is just a stepping stone for Infosys on its way to be the global leader.
Do not fall into the hype for a short term.
Infosys is only a tip of the ice berg of what it is going to be.
Cheers!
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Infosys Technologies India\'s No. 2 software services exporter, on Monday said it had agreed to buy UK-based consultancy services firm Axon Group Plc in an all-cash deal valued at 407.1 million pounds. Nasdaq-listed Infosys expects the deal to be completed by November 2008, it said in a statement.
It said the acquisition would \'accelerate the achievement of some of Infosys\' current strategic corporate objectives, including the continued expansion consulting capabilities\'.
Last month, Infosys, which develops applications, designs supply chains and offers back-office services, reported a 21 percent rise in quarterly profit but warned of challenging times ahead as its major Western clients battle weakening economies.
Ahead of the announcement, shares in Infosys, which the market values at $22 billion, ended 0.5 percent higher at 1,703.05 rupees in a Mumbai market .BSESN that closed up 0.3 percent.
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Infosys is all set to buy UK based Axon group for 407 mn euros. The deal is to be completed by November 2008. The UK based Axon Group is into consultancy services.
Axon Group has 2000 employees. The Q1 revenue for Axon was 204.5 mn pounds in 2007. The profit after tax for the same period was 20.2 mn pounds. According to sources in Infosys, transfer of ownership will be completed by November. ...
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The Wall Street rallied on the back of cool down in crude oil prices. The US crude oil futures plunged .59 to 4.59 a barrel after having surged over 1 the preceeding day.
The Dow Jones industrial average surged 198 points to 11,628. The Nasdaq gained 34 points at 2,415.
Among the Indian ADRs - Tata Motors advanced 4.3% to .70. Infosys soared over 3% to .56. HDFC Bank and Tata Communications moved up 2.7% each to .52 and .39, respectively. ...
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The Indian rupee turned weak despite a rally in equity markets and dipped by 36 paise to 43.70/71 against the greenback in morning trade today on month-end dollar demand as well as stronger dollar overseas.
In fairly active trade at the Interbank Foreign Exchange (forex) market, the local currency resumed at 43.43/46 a dollar from its previous close of 43.31/32 a dollar and later dropped sharply to 43.70/71 a dollar in late morning deals, where it is now trading.
Forex dealers said the rupee came under pressure after a two-day recovery last weekend as oil corporates began buying dollars for their month-end import payments.
They said strong dollar against the basket of currencies in overseas markets and tight dollar supplies also weighed on the rupee sentiment....
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India’s outsourcing industry is battling a rising number of \\\\`résumé cheats\\\\` – recruits who lie about their experience or qualifications – in a struggle that could be critical to the long-term prosperity of the business.
Recent high staff turnover at large outsourcing groups has been partly owing to the weeding out of résumé cheats who were able to penetrate the industry during the past two years when growth was high and companies were hiring tens of thousands of people each quarter.
\\\\`As the war for talent picked up and we kept looking for people with very specific experience and the talent pool became narrow, other people wanted to jump into that talent pool by embellishing their résumés,\\\\` said Girish Paranjpe, joint chief executive officer of Wipro Technologies, India’s third largest computer services company.
The integrity of recruits in India’s outsourcing industry, which employs about 2m people, is a concern because they are often entrusted with highly sensitive information and processes from multinational clients, including the world’s leading financial groups.
The faking of curriculum vitae and work experience has long been a problem in the industry but it has become more critical in recent years, when the top outsourcing companies stepped up recruitment. A common deceptive tactic among those applying to Wipro or its rivals, Infosys and Tata Consultancy Services, is to claim to have worked for one of the other members of the big three since their fierce competition precludes much sharing of data.
First Advantage, a US-based background screening company with operations in India, found that \\\\`education discrepancies\\\\`, or misinformation provided by recruits on their educational qualifications, rose 80 per cent in the first quarter of this year compared with the final quarter of 2007.
\\\\`In percentage terms, this [the number of CV liars] might just be something like 1 per cent of the [applicant] population but it is still a significant figure given the kind of trust-based work that we do. We do not want this happening,\\\\` said Som Mittal, president of the National Association of Software and Services Companies, the Indian outsourcing industry body.
In the January-March quarter, Wipro experienced a rise in staff turnover, to 18.5 per cent. Up to three percentage points of this related to an exercise in weeding out people who had lied about their qualifications.
\\\\`It’s not good either to have 300 or 400 people out of the few thousand people that we get in every quarter who have not made the grade,\\\\` said Suresh Vaswani, the other joint chief executive of Wipro.
Nasscom’s Mr Mittal said one initiative, the setting up of a \\\\`national skills registry\\\\` to screen employees’ credentials, was gathering steam, with about 322,000 people signed up, but registration was not compulsory and there were concerns among some employees about privacy.
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' Indian companies like Infosys and TCS have established their bases in U.S.A and Canada in order to offer the best of their services'
Whenever there is an economic slowdown and the period of recession, businesses shows a downward spiral indicating a negative future for the country. But, this period of business downturn can be a golden opportunity for some provided there is full utilization of resources to convert them to terrific outcomes.
With respect to the IT industry, the good time is called for as the slowdown brings positive change for them in terms of cost reduction and better business prospects. One such prospect is off shoring. Whether it is the offshore outsourcing of the products, services or the human resources to enable skilled labour force by the outsourcer, the dynamics of IT off shoring is changing for the better.
Companies operate on varying models of off shoring as per the requirements of the offshore clients. Most of the IT companies evaluate their clients’ needs and accordingly set the ball for off shore services in motion. The location is normally the prime criteria when off shoring and savings and cost-reduction among other factors. Some organizations undergo a huge makeover as they are on the look out for business revival and transformation. When the organizations choose a location which is apt for their business, the offshore location offers numerous advantages based on attributes of language skills, socio-political system, the culture of people etc.
Be it Microsoft, IBM or HP, these organizations have made their presence felt in many countries by offering excellent offshore services and products. Some of the Indian companies like Infosys and TCS have established their bases in U.S.A and Canada in order to offer the best of their services. India, no doubt has emerged as one of the top IT destinations to go off shore especially with regard to labour.
* Study the off shore location: Whenever any off shore client is in need of your services, do some research prior to offering your services. Understand the complete structure of the organization, their assests and how will you benefit them.
* Offer a reduction in the costs: This is a customary approach of any offshore outsourcer, as it faces the syndrome of business downturn. Only if is offered real value services at a reasonable cost, will it outsource.
* Emphasize on quality delivery and efficient services: Delivering services at a lower cost does not mean that you compromise on quality. Offer always the best as it will be good for you in the long run.
* Build your Human Resources Capital: Building your HR capital may include the best brains and hiring of foreign nationals in order to entice the offshore location organization.
While the banking and financial sectors were the worst hit during the time of recession, IT industry had a bright beginning in the past and serves to maintain a good growth. Rarely, the IT industry has seen a cut in the budget as far as off shoring is concerned. India has been unparalleled in terms of talent resources and organization culture, while countries like Japan are exploring the option of offshoring. A number of Indian IT/ITES industry made its mark and showed continuous growth and revenue increase in the last few years. ...
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Infosys Technologies has developed a new method of pricing software maintenance projects to make its revenues more effort-based and less manpower dependent.
Starting this quarter, the company will start offering clients ‘ticket-based pricing’ as opposed to fixed price and time and material-based pricing for software maintenance projects. The move is aimed at increasing revenues without a proportional increase in the number of employees.
Under the traditional time and material-based pricing, customers are billed based on the number of man-hours spent on a project, while under the fixed price, as the name suggests, the customer pays an agreed price that doesn’t vary with the manpower deployed on the project.
Under the new ‘ticket-based pricing’, a customer’s pay will be based on certain parameters such as whether the client request or ‘ticket’ that is raised is for a small enhancement in the software application, a big enhancement or a bug-fix.
'A software application becomes more stable with time. But if a client has opted for a fixed price model, then even after the application becomes more stable and the number of requests decrease, the same price has to be paid. Ticket-based pricing will give them the flexibility to change that and reduce the total cost of ownership,'said Infosys COO SD Shibulal.
Application development and maintenance (ADM) revenue accounted for 43.4% of Infosys’ total revenues, with maintenance being approximately half of that, in the just ended June 2007 quarter.
Infosys and other technology majors have been trying to decrease the dependence of revenue growth on manpower addition. Many of them have developed new services such as platform-based BPO and software-as-a-service, in addition to products, to do this.
But this is for the first time such an attempt has been made to bring a transaction-based pricing model to traditional ADM projects, which account for a bulk of the revenue for Indian IT service providers. For infrastructure management services as well, Infosys has come up with device-based pricing or pricing that is based on the type and number of servers, PCs and other devices.
Mr Shibulal said he expected client adoption to the new pricing-model to be very gradual. 'We will offer it to new clients and existing clients, based on their comfort. Client comfort will be the most important thing,'he said. Infosys is now focusing on getting more deeply involved with clients and adding more value to them, he added, about the firm’s renewed consulting focus.
While Accenture’s better than expected results last month gave a fillip to its stock, Infosys results were shade below expectations, acting as a dampner for all tech stocks on day the overall sentiment was negative. 'While it appears we address the same segments, Accenture started as a consulting and transformational services provider that now offers outsourcing and global delivery services.
Indian players started as outsourcing and global delivery service providers and are getting into transformational and consulting engagements. The two are now converging,'said Mr Shibulal on the difference between the segments the two companies address.
CEO's comment :
In this model, the risk is higher. For a particular type of ticket, the charge is fixed. It is not effort-based. If for that ticket, we take more time and more effort, we will incur more expenses.
The customers, of course, get the benefit that their expenses are going to be fixed. They can actually estimate their expenses much better. They will have historical data on the number of tickets that occur and based on that can fix their budgets much better.
For Infosys, the opportunity is that we can increase efficiency and reduce the time taken to fix the tickets. Now, if we make a mistake and are not able to fix the ticket on time or are not able to fix it properly, we incur penalty or higher expenses. So it is a sharing of risk and reward. ...
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