SOURCE: Wall Street Journal

CHENNAI, India — India’s Tata Consultancy Services Ltd. expects the recent U.S. visa fee hike to have a 30 basis points impact on its operating margins annually, but the software exporter plans to absorb all the cost rather than pass it onto clients, its chief financial officer said in an interview.

The U.S. last month passed a legislation that requires all companies that have more than half of their U.S.-based employees on H1-B or L-1 visas to pay thousands of dollars in new fees for each worker.

“These (visa fee hike) are not big issues,” S. Mahalingam told Dow Jones Newswires. “These are not things that you take to your customers.”

India’s TCS, the country’s largest software exporter by sales, counts major U.S. banks as its clients. The comments from the executive contrast those given by other rivals such as Infosys Technologies Ltd. and Wipro Ltd. which have said earlier that they have no plans to pay for the extra fees.

Earlier this week, India’s third-largest software company Wipro said it is already talking to clients to make “price adjustments” to include the higher cost of visas, while Infosys, the second largest, maintained that the cost increase will have to be passed onto clients at “some point.”

TCS’s Mahalingam said the company expects to maintain operating margins at around 27% for the current financial year that began on April 1, the same as the previous fiscal year.

“We are essentially attempting to ensure that over a period of time–at a constant currency basis–we are somewhere around that margin level,” he said.

The task to keep margins at last year’s level comes as the Mumbai-based company, like its peers, has been weighed down by increased wage costs, currency volatility and pressure on billing rates.

“Currency fluctuations will be there,” he said. “At the moment, we are not seeing any billing rate improvements.”

Mr. Mahalingam, however, expects rates to improve towards the end of this year.

After two consecutive years of a decline in rates, the company’s pricing optimism comes at a time when investors remain wary of a double-dip recession in the U.S., one of the biggest markets for Indian IT companies, amid weaker than expected U.S. economic data. Earlier this month, data from the U.S. showed the economy grew only 1.6% in the second quarter.

But TCS, which gets more than half its revenue from the U.S., doesn’t see any impact on client spending on technology.

The business environment is “reasonably good,” Mr. Mahalingam said. “We’ll be growing (the business volumes).”

He declined to comment on whether the company will be able to maintain the momentum it saw in the first quarter of current fiscal year, where it posted a robust 8.1% sequential rise in the volume of outsourcing work.

“At least, our client base is not acting as if we are facing a double-dip recession,” he said.

TCS’s deal pipeline looks “good,” he said, adding the pipeline remained the same as the beginning of the quarter which ends Sept. 30. In July, the company had said it is chasing 15 large deals worth $50 million-$100 million.

Even with recessionary fears lingering, Mr. Mahalingam expects clients’ technology budgets for software services to grow in 2011.

The company now looks to improve its revenue contribution from continental Europe, a region that saw the sovereign debt crisis erupt two quarters ago.

“We get 9% of our revenue from continental Europe…we believe it can improve,” Mr. Mahalingam said.

He also said the company is open to acquisitions to build its revenue from the region.

“Some of the geographies that have a potentially large amount of business, if we’re not getting our due share, then non-organic growth will be the key.”

TCS, one of the largest and established players in the Chinese market, also plans to export services from China to other regions. “Our strategy will be to get local customers and to go after multinationals that also have a significant operation in China.”

Brazil, Mexico and Colombia are targeted for expansion

By Chandan Das

The fourth largest Indian IT firm Tech Mahindra, the information technology arm of the US $7.1 billion Mahindra Group is among the leading communications service provider globally. Having operations in over 25 countries with as many as 17 sales offices and a total of 13 delivery centers worldwide, Tech Mahindra has now set its focus in the Latin American region with a view to draw on the growing local telecom market in the region as well as to use it as a center for near shore delivery for its clientele worldwide. Here is an excerpt of an interview with Mr. Harshul Asnani, Tech Mahindra Head for the US West, Midwest and Latin America.

Telecom Basis

“Our interest in Latin America is actually two-fold – first, to utilize the region as a hub for near shore delivery for our global clientele and, second, to tap into the burgeoning local telecom market,” revealed Mr. Asnani. Elucidating further, he said, “We are seeing increased interest from our global customers to work with us in Latin America. It (Latin America) offers the right blend of skilled resource pool and a relatively low cost base that will allow Tech Mahindra to serve its global customers in North America and Europe’.

Targeting Telecom: "Latin America today has approximately a $120 billion telecom industry and it is growing rapidly. We see significant scope of developing the local market in Latin America itself" - Harshul Asnani, of Tech Mahindra

Another aspect which prompted Mahindra Tech to expand its footprint in the Latin America is the rapid acceleration of the region’s economy that is spurring growth in IT and Network spend enhanced mobile/ broadband penetration as well as large-scale consolidation in the telecom sector. According to Mr. Asnani, all these aspects offers vast opportunities for a specialized Telecom-focused System Integrator like Tech Mahindra to play a key role. “Given our deep telecom experience and integrated offerings, we are well poised to deliver value to Latin American clients in terms of Network Engineering, BSS/ OSS, Integration, Transformation and VAS.

Feet on the Ground

Every new market that one ventures into has its unique set of opportunities and challenges and it was no different for Tech Mahindra when it set its footprint in Latin America. According to Mr. Asnani, the local language, regional taxation and laws are the potential challenges for the company in the Latin American market. “We realized early in the game that trying to do business in Latin America remotely from the US or India will not take us anywhere,” he says, adding, “We need feet on the ground and, hence, we are looking at hiring local employees, expanding our existing delivery center in Sao Paolo and also actively considering mergers and acquisitions in the region to create a self-sustaining ecosystem in the region.”

At the same time, the Tech Mahindra head for Latin America operations pointed out that they are still in the initial stages of building their business in the region and are leveraging the existing infrastructure of its subsidiary Mahindra Satyam (formerly Satyam Computer Services Ltd., which Tech Mahindra acquired in 2009) in Sao Paolo to build our business. We are pursuing organic and inorganic means of growth in the region,” Mr. Asnani said.

The LATAM Advantage

According to Mr. Asnani, the biggest advantage or opportunity that he sees in Latin America is the growing economy and rapidly expanding communications industry in the region, which offers Tech Mahindra great prospects in the areas of system consolidation, integration and IT/ Network transformation. At the same time, he says that the export promotion agencies in Brazil, Mexico and Colombia have been very receptive to Tech Mahindra and have offered a variety of benefits to set up its operations in these countries. “However, this is still under consideration,” he clarified.

Mr. Asnani further said, “Latin America today has approximately a $120 billion telecom industry and it is growing rapidly. We see significant scope of developing the local market in Latin America itself.” At the same time, the Tech Mahindra executive pointed out that they are looking at a dual strategy of using our base for local as well as international operations.

Moreover, Tech Mahindra finds that geographically, LATAM has a distinct advantage over India given the time zone proximity to US, Canada and even Europe. According to Mr. Asnani, another big advantage that LATAM brings is language, which is a big plus for Latin speaking European countries for whom offshoring mean Latin America and not India.

Preferred Locations

Presently, through Mahindra Satyam, Tech Mahindra has approximately 80 professionals on its rolls in Brazil and they intend to increase the employee strength during the ensuing quarters. In addition, the company also has resources deployed in Mexico on customer projects.

Talking about his company’s future plans in the region, Mr. Asnani said, “We are very bullish about Latin America and are looking at it as our next frontier of growth. According to him, the company’s initial go-to-market focus will be in Brazil, Mexico and Colombia, which comprise almost 70% of Latin America’s economy. In the next phase, they would look at Argentina, Chile and Peru.

“In terms of recruitment, we are considering using Brazil as our delivery hub for Latin America. The recruitment will be done in lockstep with the contracts we are able to bring to the region. In line with our strategy to look at LATAM as a self-sustained P&L center, we will hire local talent and build our base closer to the availability of talent pool, Mr. Asnani said, adding, “In addition to Sao Paolo, we see good potential in locations Campinas, Londrina, Belo Horizonte, etc.”

Mr. Asnani further said that Tech Mahindra is also actively looking at acquiring a company that can bring it either unique capability or local relationships that complement the strong telecom solutions and SI expertise that the Indian tech firm can bring to the Latin America market. “An acquisition would also bring us quick access to management bandwidth, market accessibility and better scalability,” pointed out.

“Our intent is to hire local talent and plough investments that would further fuel our growth in the region. We want Latin America to be a self sustained unit with its own sales, presales, delivery and back office support. In view of this, we are also talking to local companies that we can either partner with or acquire,” Tech Mahindra boss in-charge of the company’s affairs in LATAM assured.

Targeted Verticals

Talking about the targeted verticals, Mr. Asnani said, “While Mahindra Satyam will continue its focus on other verticals, Tech Mahindra is exclusively focused on Telecom. With over 35,000 professionals deployed globally, we are one of the largest Telecom SI and outsourcing firms in the world. We are investing in building high level of competencies in technologies such as Cloud computing, Web 3.0, 4G etc which will define the future of telecommunications.” He further said that Tech Mahindra is looking forward to bringing this expertise to the Latin American market and is seeing a lot of similarities between the emerging markets in Asia/Middle East and Latin America. “Therefore, we are keen to replicate our experiences and business models that we have successfully applied in other parts of the world,” he asserted.

When asked about the company’s clientele in Latin America, Mr. Asnani said, “Over and above some marquee international and regional customers we have in the region through Mahindra Satyam, Tech Mahindra has also been chosen by a large Latin American Telecom company as preferred software solutions partner.  We are also in active discussions with some of our other multinational customers to set up base in Latin America.”

Exporting Services from LATAM to India

Referring to the issue of exporting services from the Latin American region to India, Mr. Asnani said, “The amount of work executed in Latin America v/s India would essentially depend on the nature of the project, the contractual terms and commercials. However as a thumb rule, we believe that if we have to be successful, we need to deliver close to the customer. And this has more to do with the outsourcing maturity of customers and the language issues in trying to do work out of India.” Mr. Asnani further said that they believed that roles where a high amount of customer interfacing is required need to be based out of their local delivery center in Latin America or even on customer premises (as deemed appropriate). “The low end work can be carried out in India, which still offers reasonable cost advantage over Brazil,” he opined.

Tech Mahindra Versus the Competition

Commenting on his company’s role vis-à-vis other multinationals in Latin America, Mr. Asnani said, “Tech Mahindra today enjoys an enviable position in the telecom world. Our expertise spans IT, BPO and network technologies, which helps us to bring end-to-end solutions to our telco customers. This, coupled with our creative business models and experience in helping some of the leading telecom operators worldwide in their transformation journey, gives us a unique advantage as we make our foray in the LATAM market.”

He further said that while there is a couple of American multinationals in the telecom space in LATAM, Tech Mahindra does not see many Indian tech firm playing in this area. “Having met CXOs in some of the top telecom operators in the region, I am convinced that there is room for a specialized and domain focused organization like us to play a role. We see a distinct service and expertise gaps in the market that we intend to fill”, the Tech Mahindra boss for Latin America observed.

A Decade Ahead

When asked to comment on Tech Mahindra’s position in Latin America a decade from now, Mr. Asnani remarked, “A decade is too far out to predict in this dynamically changing world! Tech Mahindra aims to be among the leading companies in all the markets we serve. We hope to consolidate our leadership position in India, USA and Europe. Latin America is a centerpiece of our Americas strategy and if I had a crystal ball, I would hope to see us as a well respected

Currently the Head of US West, Midwest and Latin America at Tech Mahindra, Harshul is a business development executive with 15 years of accomplishments in strategic solution sales, structuring large deals, building consulting/outsourcing practices and management in the IT industry. He has worked at leading IT product and consulting firms like Wipro, Compaq, HCL Technologies and Patni Computers in a variety of sales and business development roles prior to joining Tech Mahindra.

Source: TechNews.com

Analyst firm Gartner has identified 10 major forces that are actively reshaping the future of IT services and the outsourcing market.

“Buyers, providers and investors in the IT services market confront the same confluence of market and technological forces, even though their approaches and core concerns may differ,” said Benjamin Pring, research vice president at Gartner.

“These forces are radically reshaping the fundamentals of how providers deliver and sell IT services and how buyers consume them.”

The 10 key forces that will have a material impact on organizations’ outsourcing-related strategies and tactics include (in no particular order):

Hyperdigitization
Hyperdigitization is the accelerating manifestation of the impact of IT. Digitization describes the parts of the economy in which the “product” or “service” is content that is entirely, or almost entirely, digital. This proportion of the economy is growing significantly faster than the “physical” aspects of the economy and as such, this force describes an essential part of the global economy. The impact is pervasive, influencing personal and social lives — but increasingly accelerates economic, commercial and political activity. It is estimated that by 2020, roughly one-quarter of the global gross domestic product (GDP) will be generated by the force of digital activity.

Globalization
Globalization is the fundamental force changing IT service delivery and business’s competitive activities in almost every vertical market — and thus economies — in some way, shape or form. Globalization alters the perspective of all aspects of businesses, from partners, to suppliers, to clients, to supply chains, to technology and labor. Every business must embrace the notion of being global. Similarly, an IT strategy must be global, which means taking advantage of IT to break down physical limitations, and, at the same time, tapping into a global labor pool that brings new energy and innovation at scale.

Consumerization
Consumerization refers not only to the acceleration of consumer-oriented technology and behaviors into people’s lives, but also to the introduction and expansion of these consumer-oriented technologies into enterprise IT strategies. Consumer behaviors will have the power to reshape how enterprise IT works; they will bring new and varied expectations for IT, which, at an enterprise IT level, must be recognized and developed. Growing consumer-buying power and the use of IT (and information access to the buyer) will force vertical sectors to adopt new technologies and create new products that better match consumer needs. Enterprises must answer the question: Do “old-school models” of IT and IT outsourcing jeopardize future requirements to be synchronized with internal clients and consumers? Consumerization will dictate IT access/usability standards.

The Cloud
Gartner defines cloud computing as “a style of computing where scalable and elastic IT-enabled capabilities are provided ‘as a service’ to external customers using Internet technologies.” Because of the interaction of the commoditization and standardization of technologies, virtualization and the rise of service-oriented software architectures, and (most importantly) the dramatic growth in popularity/use of the Internet and the Web, a discontinuity has arisen that amounts to a new opportunity to shape the relationship between those who use IT services and those who sell them. The discontinuity implies that the ability to deliver specialized services in IT can now be paired with the ability to deliver those services in an industrialized and pervasive way. The reality of this implication is that users of IT-related services can focus on what the services provide them, rather than how the services are implemented or hosted.

Intelligence Technology
After decades of investments in IT, many organizations still feel that its ability to generate true business insight that can elevate that organization’s capability to compete in its chosen market(s) is not as effective as it could and should be. Business intelligence, analytics, pattern recognition, and “smart” solutions are the new vocabulary of IT’s value; new IT-related initiatives that don’t fit within this framework will be increasingly less attractive to enterprises that are not interested in more “IT for IT’s sake,” but are laser-focused on “IT for the business’ sake.”

Security and Privacy
As activity migrates to the Internet and the cloud, and the hyperdigitization trend accelerates, the need to upgrade the security of the experience and the clarification of rights to privacy of the individual/corporate user increases in tandem. The breaches of security and privacy that occur have enormous ramifications — financially and in terms of buyer confidence. Although some people argue that high profile incidents of identity theft and credit card hacks haven’t stopped the growth of the Internet over the last 15 years, it is also hard to argue against the notion that more investment and more regulation is needed to ensure that the next wave of migration to the cloud has net/net positive outcomes.

Componentization
More elements of IT can be regarded as a component (definition: a constituent part; element; ingredient) of a larger, or broader IT application or system. The notion of reusable “objects” is becoming more of a reality as the Internet creates a “platform” on which users can configure prebuilt IT components rather than constantly starting from scratch for each new IT project.

Hypercompetition
Hypercompetition essentially refers to a buyer’s market in IT services, where a combination of factors coexist that drive widespread, cost-based decision making. Hypercompetition drives lowest-cost deals — but the real threat is the sustainability of those deals. The economic realities create a short-term buyers’ market, but a long-term problem for buyers — and providers.

Value Chain
Service value chains will redefine competition and how IT services are consumed and paid for. A new maxim for the future regarding service provisioning is that “the whole is greater than the sum of the parts.” Organizations must become more proficient their ability to examine their providers’ partners — and their value chains. In the cloud, the value chain is not one-dimensional; a network of providers will be evaluated for their specialization. Service value chains will emulate visionary practices from other industries.

Hyperverticalization
Deep specialization into subvertical processes will be an imperative for commercial success in the new arena of alternative services delivery. Deep process knowledge and industry IP will be applied to subverticals. The formula for future success — microverticalized solutions — will indeed lead to market fragmentation. However, that fragmentation will spawn vendor-led innovation, increased choice to the buyer and differentiated value in prebuilt solutions.

“In the future of IT services and outsourcing, the role of IT management and sourcing leaders as well as the role of service executives will be more important than ever before to help their respective organizations navigate the current market forces and apply these new norms of outsourcing in a successful way,” said Allie Young, vice president and distinguished analyst at Gartner. “Embrace the opportunities that these forces introduce to reinvent IT support of business goals.”

In what is sure to be one of the biggest blockbuster deals of 2010 in Latin America IT services, worldwide sourcing superpower Capgemini revealed just how much Latin America means to its global vision by acquiring a controlling stake in Brazil’s CPM Braxis last week. (Astute readers may remember Capgemini’s own David Poole forecasting the company’s destiny in Brazil several months ago.) Capgemini is essentially jumping aboard a fast-moving locomotive –  Brazil represents about half of all of LatAm’s IT services market, and it continues to clock double-digit annual growth rates.

Read on for an exclusive view into the origins of the deal, what’s in store for CPMBraxis and how Capgemini is ramping up to become one of the preeminent forces servicing both domestic Latin America customers and as a Nearshore partner for U.S. corporations.

A Surprise Move

For starters, few of those who are close to the Brazil outsourcing industry expected that CPM Braxis would be open to surrendering a majority share or even consider “selling” any part of the firm, having only established the company a few years ago. But, according to David Shpilberg, vice chairman and co-founder of CPMBraxis, Capgemini approached CPMBraxis originally and it was largely because Shilberg had a long association with Capgemini’s CEO Paul Hermelin that the talks began to take shape. “Remember we were not for sale,” said Shpilberg in an interview with Nearshore Americas. “We were raising money directly from private equity .. I have a long relation with Paul dating back to my days with Ernst and Young.” (Shpilberg is a member of Nearshore Americas’ Power 50 Ranking for 2010.)

Capgemini’s pursuit of CPMBraxis was largely based on a single reality – it had a very small presence in Brazil and had to often rely on secondary partners to provide services to customers, most of whom are large multinationals. (Capgemini currently has about 2,600 employees in five Latin American countries, including Argentina, Guatemala and Chile.)

Ross Tisnovsky, Vice President of Research at the Everest Group, was surprised by CPM Braxis’ decision. “CPM seems to be independently oriented and I thought they would try to stay independent,” said Tisnovsky. Capgemini is paying $298 million to obtain the 55% share, and the company has an option to purchase the remaining 45% between three and five years later.

Tisnovsky praises Capgemini for increasingly becoming the model of the globally distributed services players – having established solid hubs around the world. The firm has 56,000 employees in Europe, followed by close to 30,000 in Asia-Pacific and – with the CPM Braxis holding – about 8,100 in Latin America, which is just a bit more than the firm has in the U.S. Tisnovsky contrasts the positioning of Capgemini to many of the India-based players, who he argues will always maintain their operational base in India. “India companies are fundamentally focused on India, the core of the business will always there.  Capgemini has not always been focused on a core geography,” he says.

Among the keys to the deal were, according to Shpilberg:

• The current CPMBraxis leadership will stay in place, led by CEO Jose Luiz Rossi
• Capgemini capitalizes on CPMBraxis’ strength in remote infrastructure management, where technicians can constantly analyze the functioning of IT infrastructure for clients. (A thriving business for Nearshore customers.)
• Capgemini acquires key accounts in the financial services area as well as telecom and manufacturing, while leveraging its existing relationships in utilities where CPMBraxis had little exposure.

In interviews following the news last week, Capgemini’s Hermelin made it clear that expanding market share in Brazil is not an easy task. IBM (which arrived in Brazil close to 100 years ago), Accenture, HP and Dell are all active and have the technican acumen and capital firepower to continue building formidable businesses.

Looking forward, Shpilberg anticipates an “acceleration in cloud services” for the newly combined provider.  One of the weak points in the portfolio of many (but not all) Brazilian IT firms has been a slow-to-ramp-up cloud strategy as we outlined in these pages several months ago. As competition continues to heat up among the three key IT services groups in Brazil – a) large multinationals b) domestic incumbent providers and c) India-based providers – there will undoubtedly be an increasing awareness of which group has portfolio shortcomings and how to attack that from a strategic position.

“Our goal has always been to become a top ten player,” said Shpilberg. With the stroke of a few pens, that goal is now reality.

The fallout from the visa hike issue is still being felt across the global outsourcing industry.  One of the obvious questions is whether large India firms will aggressively reshape their operating models to accommodate the new visa costs – or – is it just a mild bump in the road to continued expansion in the Americas?

Giving us an exclusive perspective on the issue is Ameet Nivsarkar , NASSCOM Vice-President for Global Trade, who is in charge of international and policy relationships for the India ITO/BPO advocacy group.

What long term impact do you think the visa fee hikes will bring to the way in which India outsourcing firms conduct business in the United States?

The fee per say is not going to be a large cause of concern. Our bigger concern is the direction all of this is taking. This is not the first attempt the US. Congress has taken to discriminate against India firms.

This is the first time we are seeing legislation go into law. Obviously India firms are concerned, and this certainly will add to the bottom line.

Do you anticipate that U.S. lawmakers will introduce further laws that will hamper or complicate business process and IT service delivery by Indian firms into the U.S.?

If you look historically in the past, in the last 18 months there has been many types of legislation introduced that go against India firms. There have been attempts made to completely ban access for visas for these firms.  As comprehensive as immigration reform is, we worry that we might see more issues on that front.

What is Nasscom doing to help educate and provide different perspectives for the lawmakers?

We have been working on this for some time. We have spoken to the lawmakers who passed this bill. We have made the case that US customers will ultimately be impacted.  I think this is being done with an eye on the elections – and unemployment is high, so there are political issues at play.

In your view, do you believe these actions are a determent to the long-term competitiveness of U.S. businesses?

Definitely the US is trying to stay competitive globally. Lawmakers seem to be taking a short term approach  instead of looking at the long term. The cost of doing business in the US will go up. Obviously companies will look at other options to do business. The objective the lawmakers are citing – to create more US jobs – is commendable but the reality is they are making it difficult to operate in or locate operations in the US.  It’s terribly short sighted. If you look at science, tech, engineering and mathematics- there are not enough skilled workers currently.

It is the view of Nearshore Americas that the new visa “surcharge” will become an incentive for India outsourcers to  rely increasingly on Nearshore operations to deliver services. Do you agree or disagree?

I would think so. Companies are going to evaluate all the options, whether Canada or Latin America. The visa fee issue alone is not a deal-breaker, but if we get to the point of another step that is a deal breaker, then providers are really going to evaluate their options.

What is your overall view on the value of Latin America in contributing to the success of India outsourcing firms? Are there any drawbacks you see in leveraging Latin America?

We believe the future is extremely bright. We do believe that  India will continue to  be the center of gravity in global services. Latin America can bring in language capabilities and time zone and proximity benefits and we are firmly convinced the way forward will be to have a globally distributed model – pulling on the strengths of every location worldwide.

NEW YORK, NY and MUMBAI, INDIA, Aug 31, 2010 (MARKETWIRE via COMTEX) — WNS (Holdings) Limited , a leading provider of global business process outsourcing services, today announced a contract to deliver analytics and customer care services for IHG (InterContinental Hotels Group). Under this multi-year agreement, WNS will deliver customer care services in several languages including German, Italian, French and Spanish to IHG’s entities across Europe. WNS is also providing a dedicated analytics team to support IHG’s consumer marketing programs.

“IHG is committed to meaningful and lasting customer relationships through outstanding customer service, relevant communications, and memorable customer experiences. Our success rests on our ability to understand the needs and wants of all our guests, allowing us to treat each guest as a valued individual. We chose WNS because of their deep understanding of the travel industry, strong customer care capabilities, insightful customer analytics, and their global delivery footprint,” said Steve Sickle, Senior Vice President for Distribution and Relationship Marketing at IHG.

“This engagement with IHG is testimony to WNS’s reputation as a world-class provider of business processes in the travel and hospitality industry. We are fully committed to IHG’s goal of making their brands the first choice for guests and hotel owners,” said Keshav Murugesh, Group CEO, WNS Global Services.

WNS delivers a comprehensive range of services to companies in various industries, including operations management, analytics, sales and customer care.

About WNS WNS is a leading global business process outsourcing company. Deep industry and business process knowledge, a partnership approach, comprehensive service offering and a proven track record enable WNS to deliver business value to some of the leading companies in the world. WNS is passionate about building a market-leading company valued by our clients, employees, business partners, investors and communities. For more information, visit www.wns.com.

WNS Safe Harbor Statement under the provisions of the United States Private Securities Litigation Reform Act of 1995 These forward-looking statements are based on our current expectations, assumptions, estimates and projections about our Company and our industry. The forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “project,” “seek,” “should” and similar expressions. Those statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources. We caution you that reliance on any forward-looking statement involves risks and uncertainties, and that although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions could be materially incorrect. These factors include but are not limited to worldwide economic and business conditions; political or economic instability in the jurisdictions where we have operations; regulatory, legislative and judicial developments; our ability to attract and retain clients technological innovation; telecommunications or technology disruptions; future regulatory actions and conditions in our operating areas; our dependence on a limited number of clients in a limited number of industries; our ability to expand our business or effectively manage growth; our ability to hire and retain enough sufficiently trained employees to support our operations; negative public reaction in the US or the UK to offshore outsourcing; increasing competition in the BPO industry; our ability to successfully grow our revenue, expand our service offerings and market share and achieve accretive benefits from our acquisition of Aviva Global Services Singapore Pte. Ltd. (which we have renamed as WNS Customer Solutions (Singapore) Private Limited following our acquisition), or Aviva Global, and our master services agreement with Aviva Global Services (Management Services) Private Limited; and our ability to successfully consummate strategic acquisitions. These and other factors are more fully discussed in our annual report on Form 20-F for the fiscal year ended March 31, 2010 filed with the U.S. Securities and Exchange Commission which is available at www.sec.gov. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans, objectives or projected financial results referred to in any of the forward-looking statements. Except as required by law, we do not undertake to release revisions of any of these forward-looking statements to reflect future events or circumstances.

Q&A with HP’s Keith Kerrison

By Dennis Barker

Keith Kerrison looks at the Nearshore region not in isolation but sees it for what it really is: part of the much bigger world. He’s been involved in sourcing applications projects (“mainly SAP”) for about 15 years, back when he was with Proctor & Gamble.

He came to HP as part of an outsourcing arrangement with P&G and now, as director of the Best Shore Application Services for the Americas Region within Enterprise Services, essentially has the job of running HP’s global applications delivery system. Besides being an expert on sourcing, Kerrison is also numbered among the Nearshore Americas Top 50 Power Rankings.

We asked him about global-sourcing challenges, the Nearshore region, what it takes to make clients happy, and Canada.

What’s it like to go from P&G to a giant tech company like HP?

Obviously it’s a big change to go from a company’s internal IT functions to a company where IT, rather than packaged goods, is the business. At HP there’s the scale of depth and capability, and you can always find the capacity to get things done. You can also leverage solutions developed at HP Labs. HP has the software and other tools, the infrastructure, the technology, and the people to be able to have that end-to-end reach to deliver solutions. In a typical IT shop you’re making relationships with contractors…. You don’t have all that scale and breadth that a company like HP can offer. That scale, those capabilities, and outsourcing experience became even richer after the acquisition of EDS [in 2008].

A consultant told us recently that no one has really figured out how to operate globally. You’ve helped define a global delivery model at HP. What does it take to make that global approach work effectively?

You have to think holistically about models. Early on the company assembled a brain trust to work through process models, best practices, and so on. One of the things we decided is that global delivery wasn’t just applications delivery but also infrastructure delivery. We integrate the applications work we do with our counterparts in the infrastructure area. We define a model that integrates onshore, nearshore, and farshore. We pull resources from various regions, various functions, and we have systems for passing the baton back and forth.

You need common terminology, you need consistent language, you need consistent standards and metrics, and you need the tools to make sure that everything is consistent across a network of centers. We’ve developed consistent processes for moving work. We had global methods for applications services at HP but were able to combine that with process methodology at EDS. With EDS we picked up a lot of expertise in how to move work. Consistent processes are deployed across all our centers. We’ve invested a lot of time and training in this, educating our workforce. How we operationalize applications management should be the same no matter where it’s coming from.

We wanted more than an India-centric capability. India of course is always going to be important, but we developed an approach that lets us leverage multiple connected hubs. This gives us scale but also proximity to clients. Large multinational clients look for our capability to be close to them.

What we did not want was a collection of distinct delivery centers. We put a governance structure in place to manage all our centers as a global structure. We invested in building capabilities across centers, creating a community of people and expertise across that organization.

Our largest multinational clients might take delivery from as many as 10 different locations around the world. We’re able to put that together seamlessly. But we only use, or would only add, a location that makes sense for the client.

Everyone expects that a provider will deliver on their SLAs, but that’s not enough to make a happy customer. To be successful you need to focus on the relationship and how to bring more value to the client. More value can come in various dimensions, like innovation.

Tell us how the Nearshore Americas region fits into HP’s world.

Our model is a global model, so we need to think of the Nearshore in that way. I manage my team as part of a global system rather than strictly regional. Our centers in Costa Rica and Argentina, for example, have a role to play in serving the U.S. but they are also woven into our global delivery model. A team in Argentina might serve clients in Spain because of the language affinity, but also might give clients elsewhere in Europe a better price. We think of our Nearshore centers as part of that global model, but they might also provide a local solution. Sometimes the best place is local. Sometimes it’s best to have that resource closer to the client.

But for reasons of scale, to get the capabilities you’re looking for, sometimes you have to go to India or China. Our ability to grow resources is better in those two countries. That’s why we’ll see more growth going to those farshore locations. The Nearshore will grow because we have multinational clients who want support in their time zone or want to follow the sun, but it will not grow as fast as farshore.

Many customers are looking for “India Plus One” capabilities. India provides depth, but for reasons of business continuity, some customers may not want to have all their eggs in one location. Maybe they keep two-thirds of their resources in India but the rest in a place like Argentina. They want to have some redundancy. In the Philippines, periodically a typhoon goes through there, so you may want some resources in another location. That’s smart business.

How do the Latin America centers differ?

Costa Rica today has a strong focus around SAP as a technology and applications management. Argentina has great capability around applications development, and Java for industries such as manufacturing and transportation. Brazil has a higher cost but a higher level of capability and a higher level of maturity. They’re focused on healthcare and communications. Costa Rica has the best cost structure, with Argentina now coming close, but if you’re trying to hire a high-level developer, for example, it’s going to be easier in Buenos Aires or Rio because of the size of the talent pool. Brazil we think of in a different context. We mainly focus on leveraging Brazil for domestic opportunities. We’ve grown these centers in a complementary way. We make sure we have a network of centers that don’t cannibalize themselves.

What do you think businesses do not know or appreciate about the Nearshore region (Latin America especially)?

Many corporations would consider outsource providers or delivery centers in the Nearshore region as places to get work done for local projects. But they might not have considered how Latin America can play into a broader model, a global delivery system. People gravitate to India, China, the Philippines, but may not think about how these Nearshore centers can play a role. I’ve worked with this region. There are great people, there is great talent in this part of the world. It would be a mistake if people think of those countries only in terms of Latin American delivery. Costa Rica, for example, is closer to Houston than parts of the U.S. are.

And how about our friend to the North?

I probably started with Canada back in the late 90s with P&G, and the cost structure then was about two-thirds of the cost of the U.S. Over time, though, the cost structure has become close to the U.S. The cost advantages have slowly eroded. But Canada still has a big role to play. In the Toronto area, for example, there’s a really great talent pool. There are high-end skill sets for client-facing roles and solution architecture. If you need those resources and need them close to the client, it makes sense. We have to recognize that for things like application maintenance, it makes no economic sense to do that in Canada anymore. High capabilities but relatively high costs compared to other locations.

What are the reasons some outsourcing projects do not succeed?

Everyone expects that a provider will deliver on their SLAs, but that’s not enough to make a happy customer. To be successful you need to focus on the relationship and how to bring more value to the client. More value can come in various dimensions, like innovation. Customers expect us to have all the resources to execute the work, but they look for more than meeting SLAs. They want innovation and thought leadership, even if they don’t mention it at the beginning. They want a partner who can deliver innovation that helps drive down costs or helps them achieve their business goals.

The biggest mistake is to look at outsourcing as a transaction. Customers are expecting more from a partner. We have to strive for service excellence but also a strong relationship with the client. If we wait for the client to ask us for that, we’re too late.

How do you think outsourcing is going to evolve in the next few years?

Everyone has played the labor arbitrage game. There’s going to be a bigger focus on leveraging software tools and automation to eliminate work, getting more for less. There’s a lot of noise right now around how cloud services will change the game. People will be thinking less about services and where they’re delivered from and be more interested in quality. Companies that will be successful are the companies thinking about those challenges today. How do you automate, how do you integrate? How do you streamline and virtualize that whole thing, service delivery from end to end? Where services are delivered from will become invisible.

SOURCE: Hindu Business Line

Offshore BPO major Genpact is planning a major ramp-up of its ‘onsite’ presence by doubling the US workforce to 2,000 professionals in the next 2-3 years. It currently has about 1,000 professionals in the US, across functions such as revenue cycle management, mortgage processing and loan modification.

“This whole area of business process management and driving improvement in business processes will demand more onsite presence, more domain-specific capabilities and very high-skilled re-engineering capabilities. I think we need to be closer to our customers when we do this kind of work. So we are very comfortable from a business model and demand perspective, with regard to our hiring plans in the US,” the Genpact President and CEO, Mr Pramod Bhasin, told Business Line.

Of the 1,000 professionals that the company currently employs in America, between 60-70 per cent are US citizens. That proportion is likely to remain even when the company scales up its numbers in the US. The NYSE-listed Genpact offers a broad spectrum of services to global clients such as AstraZeneca, eBay, Kimberly Clark and Walgreens. Genpact delivers its services from a network of centres in 13 countries including China, Guatemala, Hungary, India, Mexico, Morocco, the Netherlands, the Philippines, Poland, Romania, Spain, South Africa and the US.

“There is another element about local hiring in the US which I think Indian companies need to be very conscious about. The unemployment level in the US has created a situation where you can hire good professionals, cheaper. So if you are going to get expertise and easily, I think we need to be a little more thoughtful about it and leverage it more. We would like to do that,” Mr Bhasin added.

For Genpact, a lot of work needs to be done at the front-end with clients, and hence the need for a strong onsite presence.

“A lot of re-engineering work, local helpdesk services, or work around our Smart Enterprise Processes has to be done onsite. Also, from an industry perspective, to be global players, we have to be nimble. Local hiring cannot be a scary issue, we have to embrace this strategy,” he pointed out.

CPM Braxis Co-Founder David Shpilberg identifies the drivers that led to the creation of CPM Braxis - and why Brazil is exceptionally well-positioned to provide high value IT services to U.S. customers.

Senator Schumer probably doesn't realize the huge incentive he is helping create to boost outsourcing to Mexico.

In its Haste to Gouge India, Congress Neglects to Consider the TN Visa

By Kirk Laughlin

In what could be one of the most extraordinary examples of the self-defeating consequences of slapdash, politically inspired protectionism, the new Congressional border bill which partly takes aim at Indian outsourcers is likely to trigger a nearshoring bonanza – with Mexico poised to become a major beneficiary. But wait, isn’t Chuck Schumer (D-NY) who is a key sponsor of the bill, going to protect U.S. jobs? Actually no and we’ll explain why.

Taking Aim

First, let’s take a look at the bill itself which is designed to strengthen the Southwest U.S. border by hiring more law enforcement and deploying more high-tech tools to monitor illegal immigration. In order to fund the $600 million project, Schumer and co-sponsor Sen. Claire McCaskill (D-Mo.) are taking aim at companies like Wipro, TCS and Infosys which depend on non-immigrant “H1B” visas to transfer highly skilled workers from countries like India to come to work in the U.S. The bill would raise the visa processing fee by $2,000 per visa, a huge hike which has been called “discriminatory” by leaders from the India outsourcing industry.

The issue gets very interesting however when you take a step back to realize that Congress has basically exempted the TN Visa (borne from NAFTA)  from falling under the new levy, effectively emboldening the pursuit of highly skilled nearshore labor to supplant those inflicted with the onshore visa surcharge. The non-immigrant TN Visa enables Mexican nationals to transit without hassle in and out of the U.S. In addition to its close proximity to the U.S., the TN Visa stands out as one of the most compelling attractions of nearshoring to Mexico, and continues to be one an important value-enabler for companies like TCS,  Infosys, Dell, HP and Accenture among others.

An interesting side note: Infosys – which was directly embroiled in the Schumer bill controversy when Schumer referred to Infosys as a “chop shop” – recently told us that Mexico has a bright future for the firm. It appears the firm now has every reason to further expand operations in Mexico, given that it would effectively be penalized by bringing more workers onshore.

The NAFTA Professional TN visa has no cap,  is good for three years and can be extended

Unlike the H1 visa which reaches a cap sometime during the year and restricts further visits during that year or the L1 which requires sometimes complicated justification of domain expertise, the TN visa enables the free flow of employees to and from the US. The NAFTA Professional TN visa has no cap,  is good for three years and can be extended.

Adjusting Business Models

Further evidence that Mexico will win big when visa complications are put in place came two years ago when Phaneesh Murthy, president and CEO of IT services firm iGate, said during a conference call: “We will probably utilize a higher growth in our Mexican center by having more people come from Mexico to the U.S., where they don’t need the H-1B because of being part of NAFTA.” said Murthy, according to a transcript on the financial site Seeking Alpha. “So, I think our business models will change and we are ready for those changes in business model,” he said.

Mexico has somewhere between 500,000 and 600,000 IT professionals and the country graduates approximately 65,000 IT students a year. Both Guadalajara and Monterrey landed on Nearshore Americas ranking of the Six Leading IT Cities in the Nearshore Region.

The other consequence from the Schumer Bill (which was received congressional approval today) is that Indian outsourcers may think twice about bringing Indian nationals into the U.S., which may result in the U.S. collecting far less that the $200-$250 million it is projecting to fund the border programs.

Finally, it is the U.S. companies themselves – who are battling to compete in a fiercely competitive global economy – who really hold the cards. The Schumer bill does nothing to inspire long-term strategies to compel U.S. companies to keep jobs in the U.S. What it does do is pass along an increase to their operating costs in an assortment of mostly back-office, non-strategic functions – from application maintenance to business processing activities.

Of course economic reality will trump the politically charged motivations of the bill – which conveniently is being pushed through Congress to maximize the impact during the Fall election season.  And economic reality will be the driving force behind what is likely to become a huge boost for Nearshore outsourcing – and classically what Schumer had least hoped for.