India NEWSAugust 1, 2008 Page 7

India ‘undisputed leader’ in offshore services

IIndia remains the “undisputed leader” ina list of the top 30 countries for off-shore services prepared by IT market

research major Gartner Inc. The researchfirm based in Connecticut, U.S., applied alist of 10 criteria to find its top 30.According to the report, India is the “undis-puted leader” in offshore services, withChina, Russia and Brazil providing crediblealternatives, while Ireland, Israel, NorthernIreland and South Africa are strong in lan-guage skills.

According to Gartner, there is, however,a stampede of new locations determined toget more offshore business. For the 30countries that met its criteria, Gartnerreports, another 35 were viable contenders,giving companies plenty of choices in2008. Thirteen of those 35, “came darnclose to making the list”, according toHelen Huntley, an author of the Gartnerreport prepared in December 2007.

Those coming “darn close” areColombia, Guatemala, Panama, Peru,Puerto Rico and Venezuela in theAmericas; Indonesia, Mauritius andThailand in Asia-Pacific; and Belarus,Egypt, Latvia and Morocco in Europe,Middle East and Africa, or the EMEA

region. The aim of the Gartner study wasnot to rank each country but to help sourc-ing managers determine which locations areright for their particular needs, Huntleysaid.

The seven countries from the Americasare becoming or already are attractive des-tinations for the U.S. companies, but lackof government support is restricting off-shore development, Gartner said.

Only Mexico rated “very good” in thisarea, followed by Canada and Uruguay.Canada and Mexico rated higher thanBrazil in the quality of the labour pool.

The Asia Pacific region has the maximumnumber of countries — ten — in the top

30 list. India rules, with China close at itsheels. Asia has also come a long way inlanguage skills. Only China, Sri Lanka andVietnam rated less than “good”.

As for government support, Gartner saidthis was strong in China, India andSingapore.

The rest of the countries are a “mixedbag” of pluses and minuses. Australia, NewZealand and Singapore, and an increasing-ly proactive China, rate high on infrastruc-ture and educational systems.

Vietnam leads the pack on cost, earningan “excellent” tag, while China, India,Pakistan, the Philippines and Sri Lankarated “very good”.

The established EMEA countries gener-ally score high on educational systems,infrastructure and language, either becauseof their high English-speaking populationor because they offer other useful languageskills.

No country earned higher than a “good”in government support.

Only Russia rated a “very good” in quali-ty and quantity of labour pool. Newcomerslike Slovakia and Romania scored well oncost, but costs in the EMEA region in gen-eral are in flux, Gartner warned.

AAccording to economic forecasts,India will overtake the U.K. and

become the world’s fifth-largest economywithin the next 10 years, the third-largestbehind China and the U.S. by 2025, andthe second-largest after China by 2050.The number of Indian companies in theWest Midlands in Britain has doubledsince 2006. This year saw the biggestdeal of all — Tata’s acquisition of Jaguarand Land Rover, which made it the largestforeign investor in the region, employingover 13,000 staff.

In a bid to forge more ties, an actionplan has been put in place to seal newbusiness and academic ties between theWest Midlands and India. Two-way tradebetween the the two countries is todayworth $ 8.7 billion per year.

TTata Motors’ acquisi-tion of Jaguar-LandRover inflated the

mergers and acquisition(M&A) basket of thedomestic automobile indus-try during January-June2008, with the sector wit-nessing fewer, but highvalue deals.

The number of M&Adeals struck by the domesticautomobile companies dur-ing the period stood at nine,with a combined value at

$2,390 million. This is almost half the number of deals that were clocked dur-

ing the same period last year. In 2007, the sector witnessed 18deals worth $515.51 million, according to a Grant Thornton report.

While Tata Motors emerged the front-runner in terms of value,

Mahindra & Mahindra with its three Italian acquisitions — GRGrafica Ricerca, Metalcastello and Engines Engineering — scoredhigher in number of deals. JK Tyres and Industries’ acquisition ofMexican company, Tornel, for $67 million, Daimler AG’s 26 per-cent stake in Sutlej Motors, and Carburettors increasing its stakein the same proportion in UCAL Fuel System boosted the M&Akitty during the first six months of 2008.

“There has been a shift in the automotive industry’s strategyfrom pursuing the organic route to globe trotting for acquisitionsto penetrate the newer market and leverage its cost advantage,”said C.G. Srividya, partner, Specialist Advisory Services, GrantThornton.

A similar trend persisted in private equity deals, with the peri-od seeing four deals for $221 million as against an equal numberof deals at $75 million in the same period last year.

The prominent PE deals during the first half of 2008 includeGoldman Sach’s arm, Golbot Holding 3.68 percent stake in M&Mfor $175 million, AIG Global Investment’s $20 million in Uniparts,AIG’s 14.50 percent in Kinetic Engineering and Phi Advisors’ 10percent in M&M’s subsidiary First Choice.

India to overtakeBritain in 10 years

Mobile VAS marketto hit $2bn in 2008

FFollowing a dip inrevenue from

voice-based services,mobile value-addedservices (MVAS) is allset to see a phenom-enal growth acrossthe world. Accordingto a report by

PricewaterhouseCoopers (PWC), theIndian mobile VAS market is all set togrow to $2 billion in 2008.

Currently, mobile VAS in Indiaaccounts for 10 percent of the operator’srevenue, which is expected to reach 18percent by 2010.

“India has a high proportion of mobilesubscribers to total telecom subscribers,driven by the faster wireless rollout, inex-pensive handsets and low-cost prepaidcards. There, money transfers, driven bylack of banking infrastructure is a keyservice need,” the report said. About 44percent of VAS revenue in India is drivenby short messaging service applications.

Oberoi hotels amongtop three in Asia

HHo s p i t a l i t ymajor Oberoi

Group’s threehotels have beenranked the bestthree in the whole

of Asia and among the top six in theworld by the Travel Plus Leisure World’sBest Awards 2008. The Oberoi Rajvilasof Jaipur, The Oberoi Udaivilas ofUdaipur and the Oberoi Amarvilas ofAgra have been ranked the first, secondand third best, respectively, among Asianhotels in the Travel Plus Leisure awards,The Oberoi Group said in a statement.The Oberoi Rajvilas, The OberoiUdaivilas and The Oberoi Amarvilas havealso been named the second, fourth andsixth best ranking hotels in the world bythe magazine, the statement added. “Lastyear, our hotels had secured very goodratings. However, this year’s performancehas been even better,” the statement said.

Avalanche predictionsystem evolved

IIn a boon for armed forces personneldeployed in high-altitude areas, Indian

defence scientists have developed a sys-tem which can forecast avalanches withgreat accuracy. The lead time will giveenough buffer to the forces to take pre-emtive measures. The system, developedby researchers of the Snow andAvalanche Study Establishment (SASE),can predict any given day as an “ava-lanche day” or “non-avalanche day”.

The system, tested on a 60-km stretchof a new road being developed betweenChowkibal and Tangdhar, some 200 kmfrom Srinagar, an area prone to avalanch-es, has proved to be 80 percent accurate,its developers say. SASE, an arm of thepremier Defence Research andDevelopment Organisation is based atManali in Himachal Pradesh.

Revenues of domestic BPO sector to treble by 2012

TThere will be an almost four-fold risein the number of people employed toprovide back office services to Indian

domestic firms, with the industry expectedto more than treble in revenues by 2012.

According to a study by the Pune-based research firm, ValuenotesDatabase, domestic business processoutsourcing (BPO) firms would collec-tively employ about 540,000 employeesin the next four years as against 140,000staff currently.

In the same time period, it will achieverevenues of Rs. 228 billion from Rs. 69 bil-lion in fiscal 2008, the study suggests.

Apart from opening new vistas of oppor-tunity for third-party BPO companies, thegrowth in domestic BPOs would help in thecreation of job opportunities in semi-urbanpockets of the country.

Unlike international service providers,what drives domestic BPOs is not labour orcost arbitrage but better customer service,scalability, better productivity, and reduc-tion of time-to-market, says Pranav Dixit,

Senior Analyst with Valuenotes. Third partyplayers will be better positioned to benefitfrom this growth wave as companies areincreasingly choose them instead of form-ing a captive set-up to get back-office workdone.

BPO observers feel that many captivesare finding it difficult to scale up owing tolack of strategic direction within the parentfirm. Moreover, they are not able to justifyoverheads in many cases with their currentscale of operations.

By 2012, revenues for third party vendorswill grow at an annual rate of 44 percent toRs. 77 billion from Rs. 18 billion,Valuenotes says.

Telecom and banking, financial servicesand insurance together amount for nearlythree-fourths of the total revenue generatedby this sector.

Low value but high volume servicessuch as data entry, digitisation andaspects related to customer assistancewould be easily outsourced in the Indiancontext, says Dixit.

Auto sector riding high on M&A, PE deals