Tag: information technology

Mahindra Merger Creates a Top-five Indian IT Company

Posted on March 21, 2012

Tech Mahindra, the information technology subsidiary of the Mahindra Group, will acquire the conglomerate’s other tech arm, Mahindra Satyam, in a deal that will create India’s fifth largest IT company.

Although observers had long expected the merger, which goes into effect April 1, the details were formally announced today in a press conference in Mumbai. The Mahindra group had earlier successfully bid and won Satyam Computers, which was up for grabs after the exposure of a long-running scam perpetrated by former chairman and founder B. Ramalinga Raju.

The merger creates India’s fifth largest IT firm with a turnover of ound $2.4 billion (Satyam on its own was fourth in the sector.) But in the aftermath of the scam Satyam lost business, clients and employees. “This merger will help propel the combined entity into the top tier of Indian software and services companies,” says Anand Mahindra, group vice-chairman and managing director. “It will help achieve the group’s key objective of being in a leadership role in each of our focus business areas.”

The Tech Mahindra-Mahindra Satyam merger could catalyze another round of consolidation in the industry. The recently rolled out Union Budget didn’t give the IT industry the incentives it expected. The IT sector, as a big foreign exchange earner, had in the past received tax holidays and other concessions from the government. One change that will happen sooner or later is the BT (formerly British Telecom) Group exit from Tech Mahindra. BT had joined hands with the Mahindras to set up Tech Mahindra; its main business was handling the back-end work for the U.K.-based company. The two partners started with around 40% of the equity each. The BT share fell to 23% last year. The merger will reduce it further to around 11%. Tech Mahindra has acquired a number of non-BT clients and the U.K. major has been looking for a buyer for its stake.

Meanwhile, engineering company Larsen & Toubro (L&T) is also likely to exit Mahindra Satyam. The company still has a 2% holding; it had picked up a stake when it had bid to take over the beleaguered Satyam. The Mahindras won that battle and L&T was left holding the equity, which it had no use for.

Larsen & Toubro, which has L&T Infotech in its stable, has not given up plans of inorganic growth. The top brass, led by chairman A.M. Naik, realizes that their infotech ambitions will go nowhere unless they achieve critical mass. The new target is thought to be Hexaware Technologies, an Atul Nishar-founded company. Though Nishar has denied that Hexaware is up for sale, he is known as a serial entrepreneur. He has been heading Hexaware for some time and observers say that he has begun looking for the next challenge. The L&T board met recently and approved efforts to acquire companies in the infotech domain. But it did not say anything specific about Hexaware.

The charge to consolidate is also being encouraged by a change in the rankings of Indian IT companies. Though TCS and Infosys are comfortably perched at the top, No. 3 Wipro was usurped by Cognizant in the last quarter of 2011. That lead could change, however. One way for Cognizant to maintain its ranking is by adding turnover through takeovers. Two years back, the firm acquired the UBS India Service Center for $75 million. More recently, it picked up the Indian operations of U.S.-based CoreLogic for $50 million. The company has made about 10 acquisitions since 2005.

The country’s large tech firms are keeping an eye out for opportunity. Tata Consultancy Services (TCS), the largest IT company in India, has earmarked $2 billion to fund its takeovers, though the firm prefers organic growth. Infosys has twice that amount. Wipro, too, has taken that route in the past; in 2007, it acquired Infocrossing Inc. of the U.S. for $600 million.

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Ban Email? Mon Dieu!

Posted on December 8, 2011

Do internal emails make you more productive, or are they a big time-waster? Reports last week on the progress made by Atos — a Paris-based global information technology services company — in its efforts to prohibit internal emails have reignited the debate.

Few thought Atos CEO Thierry Breton would pull it off when he vowed last February to become a “zero-email company within three years.” After all, Atos is Europe’s largest IT services company with 78,500 employees across 42 countries. According to Breton, emails are a “pollution of the working environment.” Social media tools and online community networks would do the job just as well, he contended.

Last week, Atos claimed a 20% drop in the volume of its internal emails six months after Breton’s declaration, says a CNN report. Amid media flurry over the Atos move, The New York Times has featured it on its “Room for Debate” page.

The Case Against …

Email raises “efficiency concerns — like the amount of time spent using it — and is also is a less effective way of communicating,” says Wharton management professor Sigal Barsade, who specializes in emotional intelligence, among other areas. “Email can be dangerous, because it leads to miscommunication. We think we are saying one thing and think the other person understands it.” Indeed, Barsade preferred to give her comments in a phone interview rather than in an email.

Research shows that ambivalence is communicated primarily through facial expression and body language, to a lesser extent through vocal means, and only about 7% through the written word, says Barsade. “When you use email, by definition you are in a weakened position to really understand what the other person wants and how they will respond.” Also, with emails, people are more likely to “say or do things they would never do if the person was in front of them or on the phone,” she adds.

According to Wharton marketing professor Cassie Mogilner, who studies happiness as it relates to time and money, email can have a detrimental effect on productivity. “The frequent distractions [of emails] keep individuals from entering the highly creative, productive and generative state of being ‘in flow.’” That state is when an individual gets “completely engaged and absorbed in the task at hand, where time seems to melt away,” she says. Yet, she disagrees with the idea of banning emails, suggesting instead that individuals could take more responsibility for how they spend their time.

In addition to being “a constant distracter,” emails hurt productivity because many contain unimportant, useless and obsolete information, adds Maurice Schweitzer, Wharton professor of operations and information management. Furthermore, some emails contain harmful links that get past spam filters. “Worse, people often feel compelled to respond lest they risk offending others.”

Schweitzer contends that many people would do well to meet face-to-face, pick-up the phone or send a letter. “If issues are complicated or if emotions might run high, face-to-face meetings are the way to go,” he says. “Similarly, if confidentiality is important, email is a poor choice.” Face-to-face meetings are possible across the world with video chats, video conferencing and products like Skype, Mogilner adds.

The Case For …

Mogilner says the benefit of email is that it is a “very efficient form of communication because it allows people to convey information quickly to multiple people without having to synchronize the exchange.” It is helpful especially when all parties to a conversation cannot find a time that works for everyone, she adds.

Email’s big plus is it offers “a great vehicle for asynchronous communication,” according to Schweitzer. “I can send you a message now, and you can respond when you have time.” He describes it as “a fantastic vehicle” for reaching groups of people, plus it helps build a record or trail, is inexpensive and is great for sending documents, he adds.

Barsade acknowledges that emails help connect people and organizations in different geographic locations. “However, that’s not an excuse for avoiding phone calls or face-to-face conversations because we rely on these more immediate cues and thus, miscommunications are still going to be more likely to happen,” she says. “It could make companies less competitive.” In a globalized world, people still need to figure out new ways to communicate in real time, she adds. “Fundamentally, we are human beings, and the way that we most effectively and emotionally communicate is with body language, facial expressions and voice, none of which are in emails.”

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Can Bangalore Become the Innovation Hub of Asia?

Posted on September 22, 2011

A couple of years ago, the city of Bangalore made global headlines thanks to President Obama. In May 2009, when, in a bid to boost the U.S. job market, Obama removed some tax incentives for U.S. companies that offshored work rather than creating domestic jobs, his rallying call was “Buffalo [New York] before Bangalore.” Obama was reflecting popular public perception when he chose to highlight Bangalore. A few years prior to his speech, the term “Bangalored” — meaning to be laid off due to outsourcing — entered the lexicon.

Indeed, over the past few decades, Bangalore has been seeing a steady makeover. Riding on the success of its booming information technology and business process outsourcing (BPO) industry, the city has become the “IT capital of India” and has even been called the “back-office to the world.”

Bangalore now has another aspiration: to become the innovation hub of Asia. This was the theme of the recently-held India Innovation Summit 2011 organized by the Confederation of Indian Industry (CII) in the city. Various speakers at the event pointed out that this goal is grounded in current realities. Bangalore is already home to a large number of technology professionals, both from within the country and many who have relocated there from across the world, and some of the world’s leading edge technology work is being done from there. For many of the multinational companies, be it GE, Cisco, Intel, Yahoo, 3M and others, their research and development centers in Bangalore are among the largest in their network. With India being one of the fastest-growing economies of the world and with a huge market, many global innovations by multinationals are now happening in the country.

According to Praveen Vishakantaiah, president of Intel Technology India, “the research and innovation capability is present in the DNA of Bangalore. Over the past decade, the development work from there has ramped up significantly. It is now time to push the research element.” But Ajay Nanavati, managing director of 3M India, pointed out that, for innovation to grow, there needs to be a lot more interaction between the different companies. “What we have at present is a very silo-ed mindset,” he said. “Everyone is working in their own little universe.” Stronger industry-academia interactions, well-defined IP protection policies and a wider and deeper talent pool are other aspects that need to be explored, he added.

But that’s not all that Bangalore needs if it wants to don the mantle of Asia’s innovation hub. The city’s infrastructure — its roads, power supply and transportation system — all need a massive and urgent overhaul. For example, take the city’s power supply constraints. Vivek Mansingh, president of the collaboration and communication group at Cisco Systems, noted that “we have thousands of square feet of lab space, but we don’t have enough power to bring in more work here.” In terms of transportation gridlock, Bangalore ranked sixth in IBM’s most recent global Commuter Pain Index, which was conducted across 20 cities.

Sridhar Mitta, IT industry veteran and founder of NextWealth Entrepreneurs, said that in 2000, researchers from Stanford University concluded that “what distinguishes the Silicon Valley is not its scientific advances or technological breakthroughs, but the overall habitat or environment that is tuned up to turn ideas into products and take them rapidly to market by creating start-ups.”

So what does the government have to say? Addressing the audience at the CII conference, D.V. Sadananda Gowda, chief minister of Karnataka (Bangalore is the capital of the state of Karnataka) was categorical that, “The government is committed to supporting all initiatives needed to foster innovation.”

Now it remains to be seen if the government and other stakeholders will walk the talk.

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Can India Make a Global Impact with Its Innovations in Services?

Posted on July 29, 2011

For the past 10 years, Indian cardiac surgeon Devi Shetty has been working relentlessly to drive down the cost of quality cardiac care in India and to make it accessible to the masses. At his Narayana Hrudayalaya chain of cardiac care hospitals, Shetty offers heart surgeries at a fraction of what it costs across the world. The cost savings have been achieved through what he terms “process innovation.”

Shetty is now looking to take this service model outside India with a 300-bed hospital in the Cayman Islands. Over time, the facility is expected to expand to a 2,000-bed multi-specialty hospital. Talking recently to economic daily, Business Standard, Shetty said: “The Cayman Islands is an hour’s flight from the U.S. We intend to offer cost-effective treatment for the citizens of the U.S. and also for those who are under-insured. We will also cater to the local population.” Shetty is now looking at creating a presence in Malaysia.

With spiraling health care costs a matter of serious concern across the world, Shetty’s model could be a game changer for the global health care industry. Rana Mehta, executive director PricewaterhouseCoopers, notes: “The Indian model of health care is a very cost-effective one and is attractive to both developed and developing countries.” Rana says that, within the health care sector, services like diagnostics could also be an area where Indian companies can make a significant mark worldwide.

K. Raman, practice head (infocomm, media & education) at the Tata Strategic Management Group, an independent management consulting firm, points out that health care spending is high all over the world both at the individual and government level. “Any solution that brings down the cost of health care delivery can have a large scale impact,” he adds.

But this is not about health care alone. Shetty’s move needs to be seen in the larger perspective of services from India having the potential to be game changers and redefining various sectors across the globe. It has already happened in the information technology and business process outsourcing (BPO) industry. Not only are Indian IT and BPO companies servicing their global clients from India, they are increasingly taking their model outside the country and setting up centers in different parts of the world. Other global players have had to follow suit.

In the telecom industry, Bharti Airtel, India’s largest telecom player, is seen as a pioneer in introducing a new, low-cost business model. Last year, the company took its learning from the Indian market to tap African consumers through its acquisition of Zain Africa. Bharti plans to look at other markets, too.

According to Raman, services from India that are built around innovations to cater to the unique needs of the Indian market have global potential. Education, he says, could be another sector where India could make a mark. He points out that education, like health care, involves significant spending at the government and individual levels. The sector has a large nation-level impact; needs to be delivered over a wide area and can leverage technology in a big way. “If India is able to address its own internal challenges in this sector, particularly in terms of quality and reach, it could be replicated across many countries,” Raman notes.

He goes on to add: “As a concept, frugal innovation has been there for some time. The whole idea is around innovating for developing countries and then taking the same innovations to developed countries. Until now, this has primarily been on the product side. Taking low-cost service methodology to other countries is a logical extension.”

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