Exclusive: HYDERABAD’S BRAND IDENTITY

By M H Ahssan

Satyam brand could have taken a beating over the last few days but the fact remains that this is one company that Hyderabad identifies with. Satyam, here, is king. HNN reports

It’s the best ‘status statement’ in Hyderabad, a Satyam identity card, that is. If a bunch of friends from the IT sector are dining out, the one with a Satyam I-card comes in the most handy to get the best discount on the bill. The waiter in his wisdom, more often than not, clubs the remaining IT firms as “other’’ companies.

The I-card gets you the best discounts on jewellery and even clothing. Call it a matter of local perception or respect for this homegrown IT major, but Satyam from the local Hyderabadi’s eye is a notch above any other IT firm, national or international.

So, while brand Satyam or ‘Satchyam’ as ‘mana’ Hyderabadis like to call it may have taken a beating with the developments over the last two weeks, the fact remains that this continues to be one firm that gave Hyderabad its very first IT identity.

Ask Bontha Murthy who still vividly remembers getting that appointment letter from Satyam eight years ago. “There were no other big IT companies in Hyderabad then. People in AP knew only one IT firm and that was Satyam,’’ he says, recollecting how the news of him getting a job in Satyam spread like wild fire among friends and relatives. “Satyam was the face of IT then. If you said you were an IT professional, people would spontaneously ask ‘Satyam?’,’’ remembers Murthy, who now works with a multinational. He says that even in the job market Satyam on the resume added great weight. “People took you seriously... knew that you have worked with clients on some good projects,’’ he says.

Satyam’s clout in Hyderabad and AP is a revelation of sorts for people who come to the city from various parts of the country. “Coming from Bangalore, I somehow never thought that Satyam would enjoy better popularity than the other three majors— Wipro, TCS, Infosys. After all, look at the way the other three firms shaped up over the years in comparison to Satyam. But in Hyderabad these reality checks do not matter. Satyam is king here,’’ says Prakash Dixit, who remembers fielding curious and even angry questions from his Hyderabadi friends when he had declined a Satyam offer.

“For any Hyderabadi it was an honour to be associated with Satyam. The firm stood for job security and in many ways it was like getting a government job,’’ says a Satyam employee.

After all, as Rakshita Swami, a systems analyst puts it: “Satyam gave Hyderabad its IT hub image. They were probably the pioneers in making Hyderabad the brand it is today. I think the city’s brand image has now received a blow.’’

Locals employed in the IT sector admit that Satyam’s popularity is more about ‘perception’ than what the reality is. But they do admit that Hyderabadis have a huge emotional connect with Ramalinga Raju’s company.

“It is a homegrown company, after all. It is like how Kannadigas feel proud of Infosys in Bangalore, in Hyderabad you feel proud of Satyam,’’ says S P Nambiar, who has lived in Hyderabad all his life and talks about the family pressure on him for joining Satyam when he entered the IT industry. Entrepreneur Ravi Mundoli adds, “Satyam at one time was a sensation, the most familiar face of the city and the possibility of it being involved in all this is disturbing.’’

A top management comprising largely of people hailing from the state, Satyam has maintained its local flavour even as other firms with cosmopolitan managements set shop here. Satyam’s involvement with various government activities is too looked upon as a homegrown empire aiding the state.

“It is certainly an emotional setback for the locals to see the Rajus go through this,’’ says an IT executive who started her career with Satyam. She adds that even now while most people understand that Satyam’s bid to acquire Maytas wasn’t correct, they feel that the company and the Rajus would bounce back.

“Satyam was our pride that we carried wherever we went. On many occasions, during our assignments abroad, people would associate Hyderabad with Satyam. So it wasn’t just our local fondness for this company but even what it gave us in return. The company gave Hyderabad prominence on the country’s map,’’ says software engineer S Naagesh Reddy.

SATYAM STAFF DEMORALISED
With the change of Satyam’s management imminent, the IT major’s office corridors are buzzing with employees talking about moving jobs and speculating on the changes the new management would bring with it.

Work has almost come to a standstill at Satyam offices in the city with employees hanging around near tea and coffee vending machines, discussing media reports on their top management and figuring out what can still hold them to this IT major. “People are demotivated. Spirits are low. But then they are also realising that their loyalties are with Satyam and not the Rajus. And Satyam continues to be a good company to be with,’’ a senior manager told TOI. Satyam has 52,865 employees on its rolls.

WHAT IS SRSR HOLDINGS?
Did the Rajus have a long range exit plan out of Satyam ? In September 2006, over two years ago the promoters of Satyam Computer Services formed a holding company called SRSR Holdings Pvt Limited and transferred all their shares to this entity. This accounted for 8.5 per cent of the shares of Satyam. The four promoters of the company were founder of Satyam Ramalinga Raju, his brother and cofounder Rama Raju and their respectives wives Nandini Raju and Radha Raju.

According to a company statement at that time these transfer of shares were executed through a block deal of 1.95 crore Satyam shares on NSE at a price of Rs 809 per share. Even at that time there was speculation that this Raju move was a prelude to their exiting Satyam. This was however steadfastly denied by them at that time and they contended it was just an easy way to handle their scattered holdings.

But now it is clear that the family shares were consolidated so that they could be pledged to institutional investors - in return for loans. In fact the pledgings happened simultaneously with the formation of SRSR Holdings. It is these shares that have now been sold off by the institutions, leaving the Rajus without any stake whatsoever in the company that is synonymous with their name.

While some employees are being encouraged to blog their solidarity with the company, there are others that this newspaper spoke to who have intensified their job hunt, floating their resumes through the day and calling up old friends/contacts in other firms for referrals. But many senior associates are taking stock of the situation, understanding how would this change of management affect them.

The management change will alter the way the company functions, employees fear. The speculated takeover by another IT firm has left Satyam employees speculating whether a ‘new’ resource pool would replace the existing one. “The axe is hanging on many employees now especially those who are on bench as the new management may prefer their trained teams to handle internal projects,’’ said a Satyam employee.

Employees also fear that if a change of management leads to dumping some not-soprofitable projects, it would in turn jeopardise their retention chances. Also, if the new management does not renew the existing projects, it could result in more lay-offs, they fear.

While optimistic employees hold that the current controversy over company ownership cannot affect them, the new recruits or those not very old in Satyam echo that they may not continue here for long. “I am now regretting my decision to opt for Satyam out of various choices I had. That I still have my job is secondary. I think its the brand that has taken a beating and this is working against our spirit,’’ a freshman says.

But a senior manager with the firm says that the company stopped laying off two weeks ago, ever since the Maytas acquisition bid backfired. “Besides, the projects are on and the customer profile is still very high. The company is not running out of projects, just yet,’’ he said.

However, what is pinching Satyam’s bunch of new employees is the bond they agreed to sign before joining the firm. As per the bond, the company stands to claim the Rs 2 lakh that they deposited as security money, in case they leave the company before completing two years. “I am in a total fix. If I resign now, I lose my bond money. If I am laid off, I won’t get a job in near future,’’ said a techie who joined Satyam a year ago.

“What the company is going through is definitely a cause of concern for us employees. We are curious, apprehensive and bothered about what is happening. But the job market is so low that we have no option but to be patient and wait and watch,’’ an employee summed up.

Exclusive: Rs 2.6 cr Goes Missing From BJP Central Office

By Kajol Singh

No one likes money to go missing. And it's harder if you can't even make a hue and cry about it. BJP finds itself in just such an unenviable situation after its chief accountant reported that Rs 2.6 crore in cash had gone missing from the party's central office at 11, Ashoka Road.

The amount was taken, clean as a whistle, from a "tijori" (safe) in a small room to the back of the party headquarters, not far from BJP president Rajnath Singh's office. The theft came to light on Friday, when the office reopened after Christmas holiday, causing deep consternation in BJP circles.

The money was deposited on December 24 and apparently stolen on December 25, when the office was closed. A premises, however, have a fairly large resident population of staffers and party office bearers who live in the office building and the next bungalow, 9, Ashoka Road.

The theft was discovered by party oldtimer Nalin Tandon, who has handled BJP accounts for several years, and is one of few persons with access to the room with the safe. The incident looked like an "insider job" as there were no signs of forced entry while the safe lay unlocked. The door to the room and the safe had been opened Ravichander with ease.

As a red-faced BJP brass mulled what had happened, it found itself wrestling with a peculiar dilemma, the money had possibly been collected for elections and was not accounted for and hence the police could not be called in. After consultations, the party called in a private detective agency to investigate into the theft.

The incident has left the party tonguetied with no senior party leader ready to make a statement on the missing boodle. When contacted party spokesperson Ravi Shankar Prasad said he had no comment to make.

BJP in a jam over missing Rs 2.6 cr from party office
The missing Rs 2.6 crore from its central office at 11, Ashoka Road, has put BJP in an unenviable situation. While sources close to the BJP president said the matter was being examined, adding that an explanation could lie in an “accounting error”, others suspect it could well be an inside job. Reports were being sought from state units about money deposited with the central office.

A FIR would have been lodged if the money was part of official donations or generated by party activity like a membership drive. Delhi Police sources said they too had “heard” that a large sum was missing from the BJP office but pointed out that in the absence of a formal complaint there was little they could do.

There are a few theories and versions doing the rounds. Some claim that Nalin Tandon, who has handled BJP accounts for several years, has reported the key to the safe as missing while others contest this, saying keys were very much accounted for. Tandon has been the focus of the private investigators as well, with operatives visiting his home. Staffers who live in the BJP quarters are being questioned even though party sources admit access to the room was limited to only a few.

Some in the party argue that Tandon, typically a low-profile RSS type, as the chief accountant had handled even larger sums of money in past, including during the 2004 general elections, while others slyly point to his expensive tastes in cigarettes and the Innova he drives which seem beyond his salary.

Apart from “the butler did it” theory, party sources talked about Tandon’s recent differences with office secretary Shyam Jhaju when the office staff had agitated for higher pay. It is being suggested that Tandon’s role in rallying staff was not appreciated.

The findings of the ongoing in-house inquiry are not known yet. But given the embarrassment BJP faces over the episode, it may have little option but to conclude that the purloined money was just a case of unreconciled accounts. This may leave the unknown felons richer by a couple of crores, but the party will probably grit its teeth and bear it.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.

Global Meltdown Catches IT Firms Off-guard

By M H Ahssan

After nearly a decade of uninterrupted boom, the Indian information technology industry finds the road ahead bumpy as 2008 draws to a close, with the global meltdown and financial turmoil in the US and other rich countries catching the otherwise resilient sector off-guard.

With no signs of early revival, even the top firms - TCS, Infosys and Wipro - are bracing for hard times in the year ahead.

A reality check of the industry by leading IT industry-specific publication Dataquest of Cyber Media shows that the Indian software services sector is set for a lower growth this fiscal due to declining IT spends by enterprises worldwide and a volatile currency market.

"The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters," Dataquest warned.

Though the software industry body Nasscom projected 21-24 percent revenue growth rate for this fiscal as against 28 percent in 2007-08, analysts fear the annual growth could decline to 15 percent by the end of the fiscal - the lowest in a decade.

Nasscom president Som Mittal said the growth rate target would now be reviewed in January, as the member-companies were in the process of furnishing fresh data to the representative body.

"We wanted to review the forecast in mid-December but could not do so as export and domestic firms are still assessing the situation. We will re-visit the numbers and give a revised forecast next month," Mittal told IANS.

A performance review of the top 20 Indian IT firms shows the projected growth rate of 28 percent may not be met.

"The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets," Dataquest said.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

"Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals," Forrester said in its report "Outlook for the global IT industry".

"Unlike in the first two quarters (April-September), clients have put discretionary projects on hold in the third quarter. Decisions on new projects have been postponed to next year, as clients are busy grappling with the ongoing crisis," the report said.

Bearish sentiment in the US and British markets, which account for about 80 percent of the Indian IT export revenues, are compelling vendors to tap emerging markets.

According to Dataquest, the meltdown also impacted projects in the banking, financial services and insurance sectors, which contribute about 40 percent of software sector revenues.

"Coupled with recession, the prevailing negative sentiment is also affecting new projects in manufacturing and retail verticals, which account for 15 percent and eight percent of the total revenues," it added.

To sustain the growth momentum, albeit more slowly, Indian IT vendors are shifting to fixed price model from time-and-material billing model. Infosys, Wipro and HCL are moving away from billing customers by the hour to entire projects or in parts to maintain their profitability, as fixed price contracts give flexibility to drive productivity and protect margins.

In the second quarter (July-September), fixed price contracts accounted for 34 percent of the combined business of Infosys, Wipro and HCL, as against 29 percent in the same quarter the previous fiscal. TCS has been sustaining on fixed price contracts, which accounted for 44 percent in the last quarter.

The currency volatility has also compounded the woes of the Indian IT sector.

If a rising rupee in the last fiscal had dented export earnings, the steady rise of the US dollar against the rupee, British pound and Euro during the second quarter (July-September), impacted revenue realization in dollar terms since 30 percent of the billing is done in these currencies.

"The sharp and sudden appreciation of the US dollar against the rupee by 5.5 percent, euro (13 percent) and pound (13.8 percent) in the second quarter had adversely impacted the revenue of Indian IT firms in dollar terms," Dataquest noted.

As a result of over-hedging in forward contracts, benefits of a weak rupee were limited. For instance, Infosys posted a market-to-market loss of $28 million (Rs.1.35 billion) on hedging $932 million for the entire fiscal.

Similarly, Wipro suffered a forex loss of Rs.280 million in the second quarter on hedging $2.1 billion, while HCL took a hit of Rs.970 million.

On the other hand, multinational companies proved to be resilient.

"Having consolidated their presence in the hardware segment, thanks to a liberalized import regime and lowered tariffs, global brands such as Dell and Lenovo have outperformed their Indian counterparts even in these times of slowdown," the Dataquest report said.

Similarly, in the software segment, global majors like Microsoft and SAP registered revenue growth of 29 percent and 104 percent respectively last fiscal, and continue to grow despite the slowdown.