Source: www.informationweek.com

Travel and transportation is becoming an increasingly important vertical for TCS, accounting for 4% of the company’s $5.7 billion in total revenues last year.

British airline Virgin Atlantic has extended its technology outsourcing contract with India’s Tata Consultancy Services.

Under the deal, TCS will continue to manage Virgin’s network and computing infrastructure and application development needs through 2011. TCS will also provide 24-hour help desk services for the airline and manage its relationships with third party IT vendors.

“Today, airlines need to effectively exploit IT more than ever to be successful in a very competitive marketplace,” said Virgin IT director Mike Cope, in a statement.

Financial terms of the deal were not disclosed.

Airlines typically outsource certain tech and customer services operations to lower cost countries like in India to save money. However, with the price of jet fuel skyrocketing along with other petroleum-based fuels, the savings only go so far.

A number of airlines, including Midwest, have in recent weeks announced service cuts in response. Others, such as American Airlines and Delta Air Lines, are raising fuel surcharges on tickets.

Travel and transportation is becoming an increasingly important vertical for TCS, accounting for 4% of the company’s $5.7 billion in total revenues in its most recent fiscal year. The company last year launched a dedicated Travel & Hospitality Innovation Lab in India to develop software and services aimed at companies in those industries.

In tackling the aviation market, TCS is going head-to-head with Dallas-based Electronic Data Systems (NYSE: EDS), the world’s largest provider of outsourcing services to the airline industry. On Thursday, EDS and Microsoft announced an agreement under which EDS will use Microsoft technology to build computing networks that use service oriented architectures for its airline customers.

Source: economictimes.indiatimes.com

NEW DELHI: British banking giant Barclays is setting up a 5,000-seat captive BPO unit in India, at a time when the global financial turmoil is forcing many companies to defer their outsourcing decisions. The bank, which sold its 50% stake in BPO firm Intelenet Global Services last year, had earlier asked the BPO firm to set up a 1,000-seat BPO facility under the build-operate-transfer (BOT) model. However, it has now decided to go on its own.

Barclays has brought in Sameer Chadha from Lehman Brothers’ Mumbai office as chief operating officer (COO) of the offshoring unit. An e-mail sent to Barclays Plc did not elicit a response. “As a matter of policy, Intelenet cannot comment on client engagements or project timelines. Intelenet will continue working with key Barclays accounts as usual. Barclays will continue to be a critical customer for Intelenet,” an Intelenet spokesperson said.

While most outsourcing analysts have sounded the death knell for the captive model of outsourcing, banks tend to follow it to maintain data confidentiality and to meet strict regulatory requirements. Citigroup, Standard Chartered, Deutsche Bank, American Express and HSBC, all have their own captive offshoring centres in India.

Last year, Barclays and HDFC, both of which held 50% stake each in Intelenet, sold their stakes to SKR BPO Services, jointly owned by private equity major Blackstone and Intelenet management. Intelenet continues to provide offshoring services to Barclays. At the time of the transaction, Intelenet had agreed to set up a captive BPO unit for the financial services major.

While the current US economic slowdown has resulted in some IT-BPO project cancellations, analysts believe outsourcing will get a boost in the medium to long term as companies turn to cost cutting. “The current US slowdown will lead buyers of IT services to consider increasing the percentage of their labour in offshore, lower-cost locations,” research firm Gartner recently said. According to it, India will remain the dominant location for IT offshore services for North American and European buyers as a result of its scale, quality of resources and strong presence of traditional service providers.

Recently, other banks had also announced plans to move more work to India. New Zealand’s largest bank, ANZ National, announced plans to move 500 jobs from the country to its offshoring unit in Bangalore. Australian bank Westpac, too, said it plans to increase offshoring - its technology costs went up by over $70-million in the half year ended March 2008.

Barclays provides consumer and commercial banking, credit cards, investment banking, wealth management and investment management services in Europe, Africa, Asia Pacific and the United States. It is present in India through its investment banking arm, Barclays Capital, and it recently started consumer and commercial banking services in Mumbai, New Delhi, Kanchipuram and Nelamangala, near Bangalore.

Early this year, Barclays signed a five-year outsourcing agreement with Mumbai-based BPO firm Firstsource Solutions worth up to $80 million for supporting the banking firm’s operations in the US, including managing its operations centre in Colorado Springs.

Source: www.business-standard.com

The US slowdown coupled with rupee appreciation, talent crunch and rising salaries, and the 2010 sunset clause on tax holiday for IT firms, is putting knowledge process outsourcing (KPO) firms in a bind.

Some experts predict that KPO revenues will fall as the ir US clients’ growth could be affected. Others feel that because of margin pressures, companies in the US will outsource even more.

Dharmesh Mistry, vice president, Ugam Solutions, says: “I think both viewpoints are justified. While revenues might see slower growth where the ‘penetration’ of outsourcing is higher, companies would need to focus on getting businesses from SMEs who outsource little as compared to bigger organisations. One will need to adapt one’s sales and operations strategy to be able to capitalise on the opportunities that could be available. It’s definitely not going to be a year of ‘business as usual’ for the Indian KPO industry.”

Sameer Walia, managing director, The Smart Cube, another business research and analysis KPO, says: “The far more serious impact has been the turmoil in the financial services sector. We now face a situation where bankers in the US and UK are in no mood to discuss future offshore initiatives.”

Analysts say that KPOs need to spread their risks. Organisations are expected to look for alternative locations for additional delivery centres for business continuity, better responsiveness, risk minimisation (multiple vendors to deliver specific activities) and regulatory constraints.

In fact, KPOs have started looking for locations such as Canada, Australia, the Philippines, Czech Republic, China, Latin America, Poland, and Bangkok. Unlike IT services companies, these KPOs plan to deliver their services out of India with front-end presence in China.

The booming Chinese economy is attracting Indian KPOs. The demand for KPO services in China has been steadily increasing as the market is still on a maturing curve and there are ample opportunities.

Though some KPOs have been providing services in China largely for the MNCs from India, it is the local Chinese companies which are now becoming the target.

Source: www.moneycontrol.com

Scotland based VoiceStream group of Companies has acquired 75 per cent stake in the Chennai based firm Helios Outsourcing.

The $25 million VoiceStream will invest around $3 million to develop Helios as India’ best niche outsourcing outfit and grow the business to $85 million in three years time. The VoiceStream with its majority stake in Helios will have three of its directors onto the board of the company.

Speaking after acquiring majority stake in Helios, Mr. Paul Kopec, Chairman and Managing Director of VoiceStream said, “We wanted to secure our UK revenues and have more control and hence we bought into our service provider Helios Outsourcing. There were several small and medium sized enterprises that would like to outsource some activities and we, with our centres in India would like to tap that potential”.

He added, “Outsourcing today is no longer a question of ‘How?’ or ‘Why?’ but ‘WHEN?’ With an increasing number of small to medium enterprises in the UK and around the world realising that the benefits of outsourcing is not just confined to the large Fortune 500 companies there is a whole new market of potential that we intend to fully tap utilising the experience and expertise of Helios Outsourcing”.

Helios’s expertise in call centre management proved to be of great value to Scotland based VoiceStream group who were looking for a single partner to outsource and manage their voice based outbound tele-marketing requirements in and around the country.

Mr. Satz Moses, CEO and Managing director, said, “The idea of this acquisition is to double our owned call centre facility as well as our associate call centres currently numbering to 50. Helios Outsourcing would now provide end to end call centre management service for the VoiceStream group and its elite clientele through its own in-house operations as well as through its network of ever growing associate call centres around the world”.

The Helios Outsourcing which has an experience in handling over 100 third party contact centre business processes with a combined management experience of over 36 years also offers consultancy for setting up BPO houses in India for small companies.

Source: www.business-standard.com

Delhi-based EXL Services Holding is planning to acquire mid-sized companies with revenues ranging between $50 million and $100 million (around Rs 200-400 crore) as a part of its inorganic growth plan.

The company is looking at acquisition of firms in both the US and India. It plans to close at least one deal by the end of this financial year.

EXL has set the revenue for target firms in India in the range of $50-100 million, while it is eyeing multiple acquisitions of small firms offering business process outsourcing services in the US.

“Acquisitions are a core part of our growth strategy and these targets, here and abroad, will happen if we get the right kind of opportunity,” said Rohit Kapoor, president and CEO, EXL Services.

EXL Services currently has funds of around $100 million (around Rs 400 crore) and also plans to use its equity if required. The company plans to acquire only when valuations are appropriate.

The company’s ticket size for acquisition has also gone up considerably. It had shown interest in acquiring firms in the range of $25-50 million. This also shows the trend in the industry, where acquisition size has been going up owing to the fall in valuations of IT firms.

Apart from the acquisition of Inductis in 2006, EXL has not acquired any other firm. However, this acquisition gave the company a considerable headway in the analytics and research services segment. Over 30 per cent of EXL’s revenues come from research and analytics and risk advisory services and the company is keen to add capabilities in the same through acquisitions.