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Post# of 617051
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mick

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mick

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Re: None

Sunday, 10/09/2005 4:15:38 PM

Sunday, October 09, 2005 4:15:38 PM

Post# of 617051
this will be our new india subject with international comments by midastouch017


http://investorshub.com/boards/read_msg.asp?message_id=8049889

Posted by: midastouch017
In reply to: None Date:10/9/2005 3:35:29 PM
Post #of 70099

INDIA.Many words have been poured over China, but
INDIA is hot on their heels and may represent an
interesting venue.
I keep an open eye on this huge emerging market.
Herewith an article, although somewhat old, still
very relevant:

India's Gaining Market Share a key topic of The Wall Street Transcript IT Services Report
Wednesday September 14, 8:43 am ET


67 WALL STREET, New York--September 14, 2005--The Wall Street Transcript has just published its IT Services report, offering a timely review of the sector to serious investors and industry executives. This 38-page feature contains expert analysis from three leading research analysts, plus industry commentary through in-depth interviews with top management from 7 firms. An "Off-The-Record" review of management by management is also included. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Long-term growth metrics, India's market share, Indian Strategy of US firms, Technology education, Offshore solutions, Government IT growth, Global markets, M&A trends, Outsourcing & consulting markets, Investor attitudes, Stock recommendations, Stocks to avoid.

Companies include: Accenture (ACN), BearingPoint (BE), Infosys Technologies (INFY), Satyam Computer Services (SAY), Cognizant Technology Solutions (CTSH), Ness Technologies (NSTC), DiamondCluster (DTPI), CIBER (CBR), CACI (CAI), SRA International (SRX), Cognizant (CTSH), Covansys (CVNS), Kanbay (KBAY), SI International (SINT), MTC Technologies (MTCT), Anteon (ANT), ManTech (MANT), Lockheed Martin (LMT), Northrop Grumman (NOC), Wipro Limited (WIT), First Data (FDC), Fiserv (FISV), Global Payments (GPN), iPayment (IPMT), Alliance Data Systems (ADS), Zanett Inc (ZANE), Allin Corporation (ALLN), Syntel INC (SYNT), Answerthink INC (ANSR), SRA International INC. (SRX), Associated Network Solutions PLC. (ANS.L), Analysts Include: Jamie Friedman, Fulcrum Global Partners LLC, Sandra Notardonato, Robert W. Baird & Co., Moshe Katri, SG Cowen Securities Corp.

In the following brief excerpt from the 38 page report, Jamie Friedman discusses the ongoing market share gains of India in the IT Services sector, and the outlook for investors.

TWST: Looking at the services side, what's going on from a business perspective so far this year?

Mr. Friedman: You can segment the industry as follows. There are the pure commercial vendors that sell to the private sector. There are the public sector vendors that sell into the federal, state and local governments. There are the offshore vendors and then there are the captives or conglomerates that marry all three. In general, there have been fairly good growth indicators from all three sectors. We have average pricing in each sector improving maybe hundreds of basis points for the first time in a number of years. What the companies are struggling with still is the cost side, i.e., managing their margins.

TWST: Is the demand just reflective of a better general environment?

Mr. Friedman: SAP (SAP), which is maybe the largest application software vendor, increased their sales about 15% in the first half of calendar 2005, and that has called in a need for systems integration from the guys who actually put that stuff in place. The demand is reflective of modest improvement in IT purchasing at the level where you require systems integration. So although we have had PC sales that have been decent for a number of years, this is the first year since arguably the end of 2001 where we have seen acceleration on the enterprise side,

TWST: That means India continues to take market share?

Mr. Friedman: India continues to take market share from an investment point of view, which is what most Wall Street Transcript readers are interested in. American investors and American companies are participating in India. So just because it's sourced from India doesn't mean it's owned by India. The main companies are Accenture, which has spoken publicly about having 50,000 employees in India over some time frame of years, but that's a big number, in concert with IBM (IBM), General Electric (GE), Hewlett-Packard (HPQ), Oracle (ORCL), and Cognizant, which is a captive. It's a US-based company with their IT services offshore. At the same time, you have the Indian guys coming here. You have Infosys opening up a domestic consultancy in the US, and you have Satyam with a nearshore model that's in the US. So we have four guys here for six guys there. The borders are blurring for a global delivery model, but there are still a couple of constants like in any industry.

One, you look for purchasing power parity, which means that you go to the low-cost provider. Two, you have to have fungible IT talent. What that means is that you have to have IT talent that's educated, whether it's in the United States or in India, with a certain level of skill sets and business process knowledge. I would argue that the business process knowledge is still a little behind the curve in India, though it is much better than it used to be. So basically, you can get highly qualified, cheaper labor in India, which means that you, as a commercial vendor of IT services, need to have a presence in outsourcing.

TWST: When you talk to investors about this space, what's the prime concern or question?

Mr. Friedman: I've been covering this subject for two years, and if we talk to five investors about outsourcing, there will be two people who have been doing it less than I have, there will be two people who have been doing it more than I have, and there will be one person like me. The point is that there is quite a bit of new interest in outsourcing, but among the people who have been doing it for a while, the focus is not so much on the demand trends, which are good, it's more on the cost trends because the increased demand is causing wage inflation.

There are about 200,000 graduates from the Indian Institute each year. At that level, there is minimal wage inflation, but when you get into the third, fourth and fifth years of middle management where people actually have customer-facing relationships, that means they start to know their customers and tend to have some wage inflation at that sector. So the focus really for the last six months has been on operating margins because, although rates are rising modestly and revenue is rising nicely, costs are rising on the labor side as fast. So the companies are struggling to maintain their margins.

TWST: Given that, what are you telling investors to do in this space?

Mr. Friedman: You need to have exposure to India; you should be disciplined on multiples. The company that we like the most is Satyam, in part because it trades at half the multiple of the peers. It has a multiple of around 20 times next year's earnings, whereas some of the peers are in the 40s. It has probably the best chance at stable operating margins, and it has the largest SAP practice in India. So that combines to us to make an attractive investment.

TWST: Why the multiple disparity?

Mr. Friedman: The multiple is lower at Satyam because the growth rate is lower. Cognizant has the fastest growth rate at about 50%; Infosys is the next fastest at 40%, Satyam is about 35%. So they are growing slower. So on a p/e to growth basis, they trade at a similar ratio to Cognizant, but on a pure p/e basis, they trade 20 times where Cognizant trades 50 times. Our point would be, you are not going to get multiple expansions out of a 50 multiple company, but you could get multiple expansions out of a 20 multiple company.

TWST: Who are they serving?

Mr. Friedman: Satyam's largest customer is General Electric, but DuPont (DD) was a recently announced customer along with Ford Motor Company (F).

TWST: So they are playing with the big boys?

Mr. Friedman: They have big, big customers. A typical customer spends somewhere between $3 million and $30 million a year with them.

TWST: As one of the smaller players, can they compete with the big guys?

Mr. Friedman: They are not as small as you might think, first of all. They are $5 billion market cap. They are mid-cap, but they are bigger than some of the other ones that you might hear about like Kanbay International (KBAY) and Ness Technologies. They are not as big as Infosys, which is $20 billion, and not as big as Cognizant, which is $10 billion. They compete in part by having made a decision maybe three years ago to build as big an SAP practice as they could, and they really married that vendor. So what is good for SAP accrues to Satyam. In addition, they are not as concentrated in the tech hubs in India like Bangalore; they are more in Calcutta. So they don't see the type of wage competition that you might in other parts of India.

TWST: So they have a slight edge there?

Mr. Friedman: They have a slight edge there. Satyam is probably our best idea in India.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 38-page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

For Information on subscribing to The Wall Street Transcript, please call 800/246-7673

http://biz.yahoo.com/twst/050914/zar800.html

Dubi

On the constant lookout for the next hidden GEM.
..............................................................

http://investorshub.com/boards/read_msg.asp?message_id=8049907

Posted by: midastouch017
In reply to: midastouch017 who wrote msg# 70096 Date:10/9/2005 3:40:51 PM
Post #of 70099

Q&A: Tata’s Chandrasekaran

The TCS executive talks about the biggest outsourcing deal ever for an Indian outsourcer.
September 1, 2005

Tata Consultancy Services, India’s No. 1 information technology outfit, got a little bigger Thursday. The firm, based in Mumbai, secured the largest deal ever by an Indian outsourcer. The contract to provide application support and enhancements to Dutch bank ABN Amro is expected to generate some $247 million in revenue over five years.

TCS’ cut is part of a much larger $2.24-billion contract, one of the biggest yet in outsourcing, that the bank also inked with other Indian outsourcers Infosys and Patni Computer Systems. Global majors including IBM and Accenture are also in on the deal, which will help ABN Amro with in-house consolidation, partial outsourcing, multi-vendor strategies, and offshoring.

Working with TCS and the other companies, the bank expects to save $322 million a year beginning in 2007. Infosys and TCS will share the application support and enhancements projects and all five companies will be involved in application development. The IT infrastructure contract was awarded to IBM.

‘In India, we are the largest player in terms of revenues, profits, and margins and this will only enhance our position.’

-N. Chandrasekaran,

Tata

As part of the deal, more than 500 TCS consultants will work from the company’s global delivery centers in Brazil and Hungary to service ABN Amro’s operations in the Netherlands and Brazil. That’s in addition, of course, to staff who will be based at its large Indian development center. Long an offshoring partner with U.S. companies, TCS is expanding rapidly in Europe, where it logged 60 percent growth last year.

Under the contract, about 2,000 full-time equivalent employees at ABN Amro will be transferred to the selected IT vendors, with a majority of them going to IBM. The bank is expected to cut its staff by 1,500 over the next 18 months.

N. Chandrasekaran, TCS executive vice president and head of global operations, has helped play a part in the landmark deal, handling TCS' delivery operations globally and overseeing the company's sales in Europe, the Middle East, Africa, India, and Latin America. Based in Mumbai, Mr. Chandrasekaran is responsible for the formulation and execution of TCS' global strategy. At TCS for 18 years, Mr. Chandrasekaran has helped establish and manage the company's key client and partner relationships.

RedHerring.com spent some time with Mr. Chandrasekaran to discuss implications of this deal for the company and the global outsourcing industry.

Q: What does this deal mean to TCS?

A: The deal is the largest IT services deal for an Indian IT company. It is very significant from multiple points of view. It has a global nature and (TCS) will serve ABN Amro from Brazil, Netherlands, and the American market. It will fully leverage our global delivery model, and the committed revenue for us is $250 million, which is two-third’s of the (application support) contract. We are the most significant supplier who has won a large deal. The other thing is, it’s the largest deal outside the U.S. (for TCS) and shows our spread in Europe’s banking and financial services industry. The transition will be for a period of 12 months.

Q: What do you mean when you say global delivery model?

A: TCS operates all its development on a global level—not only do we have development centers in India but also in Europe, Brazil, and China. We do work for some clients where we serve them with different development centers. In this case, we are fully exploiting all our capabilities, the regional skill sets, and know-how.

Q: Which was the largest deal for TCS before this one?

A: We signed another large deal with a global financial services institution based in the U.S. We don’t have the permission to reveal the name but we announced it last quarter and it was a $100-million committed deal. We also announced a deal with GE Healthcare.

Q: What is the significance of this contract to the outsourcing industry in India as a whole?

A: This deal was won by TCS competing not only with Indian companies but also with global majors like IBM and Accenture. The fact that we are all in the race and they decided to go with TCS—that’s a big move. We think that this will invite Indian companies for deals on the same footing as Western integrators and it will act as a reference for many other deals in the financial services industry.

Q: How important is the European territory for TCS?

A: It is very important. We have been doing a lot of deals in Europe and U.K. but not so large, and U.K. is not part of continental Europe. This is our largest deal in continental Europe.

Q: Will TCS take over some of the 2,000 full-time equivalent employees, a majority of which are expected to go to IBM?

A: We will be taking over and rehiring some of them in Europe and Brazil. The number will be in a few hundreds.

Q: What is TCS’s current position and how will it change with this contract?

A: In India, we are the largest player in terms of revenues, profits, and margins and this will only enhance our position. Last year, TCS had $2.2 billion in revenues and $512 million in profits, and we have 49,000 employees. We are looking to continue to grow at that pace and are quite bullish about the future. Globally, 60 percent of our revenues come from North America, 23 percent from continental Europe, 10 percent from India, 6 percent from Japan and the rest of Asia, and about 1 percent from Latin America. We are expecting growth in North America, Europe, and across verticals such as manufacturing and retail.

http://www.redherring.com/Article.aspx?a=13426&hed=Q&A:%20Tataג€™s%20C....

Dubi

On the constant lookout for the next hidden GEM.
...............................................................

Posted by: midastouch017
In reply to: midastouch017 who wrote msg# 70096 Date:10/9/2005 3:46:49 PM
Post #of 70099

Consider this: India is now bankersג€™ favourite a/c

TIMES NEWS NETWORK[ MONDAY, OCTOBER 10, 2005 12:42:55 AM]
NRI Special Offer!

India continues to be the flavour of the year on the banking circuit. Chuck Prince, Citigroup global CEO, will come calling sometime this month, and in November, it will be the turn of the HSBC bigwigs.

The global board of the UK bank will meet for the first time in India during the third week of November. The board is expected to meet in Delhi.

A host of appointments have been lined up with top government and finance ministry officials. Members of the board will also visit Mumbai and some other cities. A meeting with Reserve Bank of India officials, besides HSBC’s key clients and employees, is also on the cards.

Members on the HSBC board include Sir Mark Moody-Stuart, former chairman of the committee of managing directors of the Royal Dutch/Shell Group of Companies and RA Fairhead, finance director of Pearson.

HSBC has, till date, invested over $800 mn in its Indian banking operations. In March ‘05, the bank injected $150m. Along with retained earnings of the bank for FY04 and FY05, the total capital infusion into the Indian operations is $243 mn. The capital adequacy ratio of the bank was 14.03% as on March 31, ‘05.

Other than the branch operations, the group also has a data processing centre, software development centre, asset management business and a liaison office for its private equity business, apart from HSBC Securities and Capital Markets, (India) which offers broking and investment banking business in the country.

The group is also in the process of setting up a 100% non-banking finance company to target the consumer finance business in the country, for which it has already obtained FIPB approval.

However, compared to China, where the group has invested close to $4 bn by acquiring stakes in banks, the group’s investments in India have been fewer due to regulatory restrictions.

HSBC currently has a 12.19% stake in UTI Bank.

HSBC has been in talks with RBI to reduce its stake to 5% as mandated by the regulator. The bank’s stake had come down after the GDR offering by UTI Bank. HSBC’s stake will fall further if UTI goes for another capital offering

There have been many high-profile visits of senior global banking officials. Citigroup CEO, Chuck Prince, will be on his first visit to India this week. Standard Chartered Bank’s group CEO, Mervyn Davies and Barclay Group CEO, John Varley have also visited India in the recent past.

According to a senior foreign banker, “India is now the flavour. Even though the RBI has effectively blocked any acquisitions by foreign banks, these visits by global chiefs and boards are just to keep in touch with policy makers and other key constituents. Everyone wants to be seen as aggressive on India, and they all want a part of the action when things start moving. The visits are also a way of getting first-hand information on the economic boom in the country.”

http://economictimes.indiatimes.com/articleshow/msid-1257742,curpg-1.cms

Dubi

On the constant lookout for the next hidden GEM.
.............................................................

http://investorshub.com/boards/read_msg.asp?message_id=8049939

Posted by: midastouch017
In reply to: midastouch017 who wrote msg# 70096 Date:10/9/2005 3:46:49 PM
Post #of 70099

Consider this: India is now bankersג€™ favourite a/c

TIMES NEWS NETWORK[ MONDAY, OCTOBER 10, 2005 12:42:55 AM]
NRI Special Offer!

India continues to be the flavour of the year on the banking circuit. Chuck Prince, Citigroup global CEO, will come calling sometime this month, and in November, it will be the turn of the HSBC bigwigs.

The global board of the UK bank will meet for the first time in India during the third week of November. The board is expected to meet in Delhi.

A host of appointments have been lined up with top government and finance ministry officials. Members of the board will also visit Mumbai and some other cities. A meeting with Reserve Bank of India officials, besides HSBC’s key clients and employees, is also on the cards.

Members on the HSBC board include Sir Mark Moody-Stuart, former chairman of the committee of managing directors of the Royal Dutch/Shell Group of Companies and RA Fairhead, finance director of Pearson.

HSBC has, till date, invested over $800 mn in its Indian banking operations. In March ‘05, the bank injected $150m. Along with retained earnings of the bank for FY04 and FY05, the total capital infusion into the Indian operations is $243 mn. The capital adequacy ratio of the bank was 14.03% as on March 31, ‘05.

Other than the branch operations, the group also has a data processing centre, software development centre, asset management business and a liaison office for its private equity business, apart from HSBC Securities and Capital Markets, (India) which offers broking and investment banking business in the country.

The group is also in the process of setting up a 100% non-banking finance company to target the consumer finance business in the country, for which it has already obtained FIPB approval.

However, compared to China, where the group has invested close to $4 bn by acquiring stakes in banks, the group’s investments in India have been fewer due to regulatory restrictions.

HSBC currently has a 12.19% stake in UTI Bank.

HSBC has been in talks with RBI to reduce its stake to 5% as mandated by the regulator. The bank’s stake had come down after the GDR offering by UTI Bank. HSBC’s stake will fall further if UTI goes for another capital offering

There have been many high-profile visits of senior global banking officials. Citigroup CEO, Chuck Prince, will be on his first visit to India this week. Standard Chartered Bank’s group CEO, Mervyn Davies and Barclay Group CEO, John Varley have also visited India in the recent past.

According to a senior foreign banker, “India is now the flavour. Even though the RBI has effectively blocked any acquisitions by foreign banks, these visits by global chiefs and boards are just to keep in touch with policy makers and other key constituents. Everyone wants to be seen as aggressive on India, and they all want a part of the action when things start moving. The visits are also a way of getting first-hand information on the economic boom in the country.”

http://economictimes.indiatimes.com/articleshow/msid-1257742,curpg-1.cms

Dubi

On the constant lookout for the next hidden GEM.







Caspermick

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