In spite of a credit crunch and slowdown in the US, both Indian and global IT services companies have seen strong business growth in 2007. Worldwide IT services revenue totalled $748 billion in 2007, 10.5 per cent higher than $677 billion reported in 2006, according to research from Gartner Inc. In the same period, the top six Indian IT companies TCS, Infosys, Wipro, Satyam, HCL and Cognizant increased their collective market share in the global IT service arena to 2.4 per cent against 1.9 per cent in the previous fiscal.
Even though Indian IT companies have collectively improved their revenues in 2007, they are still laggards when compared with US-based vendors, who dominated the IT services pie with 55.4 per cent market share. Indian IT companies account only for 4.1 per cent of the global IT services revenue tracked. On the global front, IBM and Accenture delivered strong growth rates of 12.2 per cent and 19.7 per cent, respectively.
However, domestic IT services business in the country also seems to have come of age. The Indian domestic IT services market has been outpacing the overall Asia Pacific growth, as it grew by 18 per cent in 2007. While cost remains a key consideration for users in the outsourcing services market in India, operational efficiency and business agility are driving most of the IT services engagements.
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Freight rate for iron ore is set to come down further with the Railways deciding to remove the 30% port congestion surcharge levied on the mineral meant for domestic use. The move is set to benefit steel companies such as Essar Steel, Ispat Industries and Vikram Ispat which do not have captive mines. These companies depend mainly on rail transport for moving raw material to their steel plants. A fortnight ago, the Railways had shifted iron ore from class 180 to 170. The reclassification had resulted in freight cut of ore by 4-5%. However, the port congestion surcharge on iron ore meant for exports would continue to remain at 100%.
The proposed changes follow a series of high-level government meetings over finalising a steel package to contain inflation. Iron ore constitutes an important cost element in the entire process of steel making. With iron ore prices rising 100% in a year and expected to rise further, the Railways’ initiative is expected to reduce cost pressure on the steel sector.
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Bharti Airtel is set to partner IT and telecoms hardware major Cisco for enhancing its managed services portfolio. With falling tariffs and reduced average revenue per user (ARPUs), all major telcos, are now looking at managed services which combines IT services with telecom offerings. According to a recent report by Gartner, network IT services is set to become a $7 billion market by 2011. Telcos are, therefore, looking to bundle end-to-end managed servicesinstallation of the hardware at the customer premises, providing customised software solutions, managing and maintaining both IT and hardware platform.
Airtel is collaborating with Cisco to launch managed Multi Protocol Label Switching (MPLS) services. With Cisco’s Tier I certification for the CISCO Managed Serviced Channel Partnership programme, Airtel will now be able to offer Indian enterprises end to end Managed VPN Services including last mile and Customer premise equipment (CPE) management, network design, installation, configuration, and 24X7 monitoring and maintenance support. Bharti Airtel expects to grow their MPLS business by 50-60 % in this financial year. The company, which has more than 400 customers on its MPLS network, intends to increase its customer base by at least 30% in the next one year. Bharti-Cisco combine would look at partnering other service providers and IT players from time-to-time depending on the specific requirements of their customers.
The Bharti move has come within a day of French-US equipment firm Alcatel-Lucent forming a JV with Reliance Communications (RCOM) to offer managed network services to domestic as well as international telecom operators. Managed services helps telcos move up the value chain and increase revenues as Indian telcos extend their footprint both within the country and globally.
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