Re: Indian tech majors to top outsourcing


copied to SRC from one of several other NGs (alt.politics.economics)

On Sun, 14 Aug 2005, indiaBPOking wrote:

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=48508&version=1&template_id=48&parent_id=28

NEW YORK: Indian tech majors like Wipro, Tata Consultancy services and
Infosys Technologies are set to dominate the global outsourcing
business in the coming years and unseat existing giants, predicts a new
study.
"The Indian companies are evolving into truly global players, going
beyond India and developing their international strategies by
recruiting high-value talent in new markets like China and Russia,"
says consultancy major Katzenbach Partners.
"India-based IT and outsourcing companies could ultimately lead on a
global basis, potentially unseating such giants as EDS, Computer
Sciences, Capgemini, Unisys, Perot Systems, Accenture and
BearingPoint."
Katzenbach Partners have used a new corporate performance parameter
called the "relative value of growth" to determine the degree to
which a firm is rewarded - in terms of market capitalisation - for
growth and improvement of margins.
A company with high relative value of growth tends to be rewarded
handsomely for achieving high growth and also generally reports strong
profit margins, says the study conducted among others by in-house
analysts like Roopa Unnikrishnan.
A company rewarded by margin improvement tends to have an inferior
profit margin and may realise less pronounced gains in shareholder
value, due mainly to the difficulties of trying for cost improvements
to retain long-running customers.
In analysing IT and outsourcing firms, the study finds Indian players
to have a high relative value of growth rating. They are highly
motivated to grow and the marketplace recognises its quality of their
operations, cash flow and prospects.
But American and European companies have much lower relative value of
growth rating, meaning their main incentive is to build value by
cutting costs.
"The best of the Indian outsourcing companies derive 80-85% of their
market capitalisation from investor growth expectations," said
Nathaniel J Mass, a senior fellow with the New York-based Katzenbach
Partners.
"So we expect that they'll continue to invest in growth, invest in
people and invest in client retention," said Mass. - Indo-Asian
News Service


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