Anyone reading about Bangladesh would be forgiven for thinking it’s a one-industry country. And when it comes to exports, they wouldn’t be far wrong. More than three quarters of Bangladesh’s exports are of ready-made garments. The anniversary of the Rana Plaza disaster, in which more than 1,100 people died, has focussed attention on the industry’s dangers. But what is being done to move the economy away from sweat shop factories?
Shares in Infosys, the Indian IT bellwether, dropped sharply on Thursday morning after senior management tempered hopes for growth in the current fiscal year and warned that the company was facing several challenges.
The stock was down 8.4 per cent by 2 pm in Mumbai at Rs3,364.
It’s all looking up for the US this week. New figures show manufacturing activity is growing at its fastest pace since April 2011. Analysts have braced themselves for better than expected jobs data on Friday. Oh – and Indian IT outsourcing companies are funnelling money into the country.
Francisco D'Souza, Cognizant CEO
Having overtaken Infosys to become India’s second ranked IT outsourcer by revenue, where next for Cognizant? The company produced strong results on Tuesday, buoyed by robust demand in the US, but chief executive Francisco D’Souza says the company is now setting its sights further afield — with plans for acquisitions in Asia.
Tuesday’s third quarter figures saw Cognizant increase revenues 22 per cent year-on-year and reveal higher full-year guidance — earning a 3 per cent market bump for the company, which is headquartered in New Jersey but employs almost all of its workers in India. Most of that increase will come from clients in the US, where Cognizant makes nearly 80 per cent of its sales, but Mr D’Souza says his group is also planning to increase its investment in less familiar markets.
Garment makers are set to stay in Bangladesh despite poor factory safety and worker unrest, according to a survey of 29 chief purchasing officers of some of the best-known European and US apparel manufacturers. But the level of commitment is falling.
In the past month, shares in Infosys have risen 21.1 per cent and Tata Consultancy Services has rallied 22.7 per cent. Meanwhile, shares in Wipro, India’s third largest IT company, have gained a relatively meagre 9.8 per cent.
The company’s results, out on Friday, followed positive figures from India’s other two IT giants. And comments from management suggest Wipro is ready to play catch-up.
Concerns around proposed reforms to US immigration laws have rocked India’s IT companies, which send employees to work on site with American clients.
But the president of Nasscom, India’s IT trade body, has said there’s little to worry about – the final legislation could actually benefit the Indian companies.
In January, unexpectedly positive results from Infosys sent the company’s stock soaring and set the tone for a good run of quarterly earnings for India’s information technology sector.
One quarter later and Infosys has kicked off the full fiscal year earnings season with news that has sent its share price plunging right back to where it used to be. Is this, once again, a sign of what’s to come?
Despite the threat of fierce protectionism, challenging cultural barriers and major linguistic hurdles, the giants of Indian IT are looking to break into China’s previously closed software and outsourcing industry.
The great outsourcing story used to be from Europe to India (IT) and China (manufacturing). But now southeast Asian countries are the preferred destination, and not just for western companies. India and China are outsourcing to their Asean neighbours too.
That’s according to Adecco, the world’s largest provider of HR services, which says its clients increasingly want to hire in Indonesia, Vietnam and the Philippines.
The outsourcing sector may not be particularly glamorous – and the words “contact centre” may be loaded with associations of irritating unsolicited telephone calls – but it’s certainly a big earner for many emerging markets. India and the Philippines are two of the better-known outsourcing destinations.
Some eastern European countries have also found outsourcing niches for themselves, capitalising on their location, low overheads and a workforce of technically-able graduates. The business process outsourcing sector has become something of a success story for Bulgaria, where it employs around 15,000 people and generates revenues of €200m, according to the official Invest Bulgaria Agency.
The nondescript four and five-storey office buildings springing up on the outskirts of many Polish cities house one of the country’s biggest economic success stories – thousands of office workers hunched in front of computer terminals providing accounting, IT, human resources and other back office functions for a growing number of international companies.
But the boom – which has created about 90,000 jobs and made Poland the third most attractive back office location in the world after India and China, according to the Hackett Group consultancy – is in danger of coming to a rapid close.
By Graham Stack of of business new europe (bne)
Ukraine’s IT outsourcing sector has exploded over the last 10 years to top $1bn in 2011, capitalising on the strong science schools inherited from the Soviet Union.
Looking to the future, the sector has the potential to become a real force for Ukraine’s modernisation if it can meet some challenges.
In a widely expected move, Cognizant Technology Solutions – which is based in the US but operates mostly out of India – overtook Infosys as the IT industry’s second-biggest company by revenues, according to results for the quarter ended in June.
Analysts said such expectation-beating numbers have come to be, well, expected from Cognizant – to such an extent that when it merely meets expectations its stock falters – so there were few surprises contained in the results.