From:	Baroni Limited [Baroni-Limited@tiscali.it]
Sent:	09 January 2009 12:16
Subject:	Baroni Limited - Offshoring Newsletter' - 01/2009

From the management and staff at Baroni Limited, in this our first Newsletter of 2009, may we take this opportunity of wishing you and your families a very Happy New Year.

The year starts as it ended, with much negative news and only a few positive, but out of any down turn there is always a host of new opportunities and an up.

Major news this week is the situation with Sayam, which for those that do not know, means ‘Honesty’.  Being one of the World’s largest such organisation, his is going to have a major impact on a lot of companies world-wide, if you are one of those, then we will probably be able to assist you.  Our agents in Asia have already been working hard doing some ground work and risk mitigation investigation.  Please contact us if so.

==========================================================================================================

Strong long-term demand seen for outsourcing: Tholons
The worldwide market downturn will impact the growth and margins of IT companies for the first two-three quarters of 2009 before picking up and ending the year on a stronger note as clients seek to cut costs and generate more revenues, indicates the latest report of Advisory and Research firm Tholons. But despite the uncertainty, there will be a strong demand for outsourcing over the medium- to long-term.
According to its latest report, ‘Top ten trends in service globalisation :2009’, the slowdown would also see reduced number of start-ups in the services sector as the focus shifts to sponsoring hard asset-intensive businesses.
'There are strong headwinds for vendors in the outsourcing space 'It has become increasingly clear that the downturn is impacting revenue and we expect most large firms will see a decline in the quarter-on-quarter earnings', it said.
Impact already felt:
Service providers have already started feeling the effects of decreased margins and employee downsizing, while buyers are reducing IT budget allocations for outsourcing engagements. This is evidenced by drying pipelines, cancelled bookings and increased pressure to deliver value beyond cost.
'Buyers will need to re-assess their outsourcing strategies and implement a better mix of multi-sourcing, combining nearshore and offshore models, while service providers will look to tap growing domestic markets such as China, India, Argentina, Brazil and even the US as a means to hedge against the volatility of existing offshore contracts, 'Mr Avinash Vashistha, Global Managing Partner & CEO at Tholons, said.
Clients, with reduced IT budgets, are expected to turn more selective, demanding greater contractual flexibility and output- or result-based payment schemes.
Eye on opportunities:
Terming 2008 as a 'tumultuous year for outsourcing', Tholons said that although it continued to advise clients to remain cautious this year, it did not discount the opportunities and potential evident in the market.
It further said that the global downturn is motivating service providers to focus on recession-proof industries such as healthcare and education. 'The healthcare industry globally has been a good adopter of global outsourcing in the last couple of years and we see this trend continuing on a steep curve as we look towards 2015,' says Dr Garima Vashistha, President (Healthcare) at Tholons.
Other sectors like manufacturing, retail and telecom would start to look attractive as they come under pressure to reduce cost drastically to survive.
Consolidation in the financial sector is inevitable due to the global financial crisis. Increased merger and acquisition activity in the financial sector would also mean that merged entities would want to integrate their outsourced services ' leading to an increase in spending for integration projects ' software applications, data centre consolidation and tighter integration of other operational platforms.
With financial institutions such as Lloyds TSB/HBOS and Bank of America/Merrill Lynch merging, service providers would also find themselves bidding against incumbent transnational rivals like IBM, Accenture and HP-EDS for several large-scale integration contracts (valued anywhere between $500 million and $1 billion over five years). Pricing pressures would kick in as suppliers scramble to meet their quarterly target through the year.
These shifts will significantly induce a high degree of consolidation - smaller and less efficient providers may face difficulties in tapping new revenue streams and will be prone to acquisition or outright dissolution. Paul Santos, Managing Director, Tholons Capital says, 'It's an opportune time for the larger players to continue their string of strategic, niche acquisitions. In an increasingly competitive market, and improbable economic state, the mantra of only the strong will survive has never been more relevant.'
Large India-based providers are expected to see EBITDA margins plunge below 20 per cent over the next three years, as they move more IT projects offshore (mostly to India), and struggle to balance operations with rising wages, Tholons said.	

 	
 Top Stories	
 	
The stories that failed to materialise in 2008
Microsoft to acquire Yahoo :- Reports had been circulating since May 2007 that Microsoft was about to make a bid for Yahoo. When the $44.6bn (£30bn) offer arrived in January, Yahoo rejected the offer.  Credit crunch to increase outsourcing :- As rumours of the credit crunch became a reality this year, outsourcing reports tended to focus on how an economic slowdown could drive a fresh wave of outsourcing and offshoring as companies attempted to cut costs. TPI's third-quarter index for 2008 shows that only 128 contracts were signed in the period, amounting to a global total of €11.5bn (£10.8bn), the weakest quarter for total contract value of outsourcing deals in six years.
IT firms shifting focus from headcount to result
Indian IT firms are taking steps to reduce costs wherever possible, they are also making their delivery mechanisms stronger with less focus on employee addition.  So, while agreeing to deliver the best results, the IT firms are also seeking to secure the authority to decide the number of people it will deploy in a particular project and the centres of execution.
IAOP Outsourcing Trends for ’09
Among the top five predictions from IAOP are: 1. Outsourcing will stay closer to home 2. Global uncertainties will create outsourcing volatility 3. Professional expertise will be valued 4. Strategic companies will prosper 5. Social responsibility and green will be outsourcing themes
Layoffs, Company Closures, Outsourcing, Cost Cutting, and Returning Retirees Dampen IT Salaries Says Janco
The January 2009 IT salary survey reflects the market conditions of today and a summary of Janco's findings are: -- Many companies have instituted hiring and spending freezes. This has been augmented by extensive layoffs, outsourcing, bonus reductions, and elimination of IT contractors -- which has decreased the demand for IT professionals and in some cases lowered wages, with higher priced positions being eliminated. -- The positions in the highest demand are at the staff levels of both large and mid-size enterprises with the focus continuing to be line operations and mandated security requirements such as Sarbanes-Oxley, HIPAA and PCI. -- Outsourcing is placing pressure on computer operations staffs, as those are the positions are the easiest to outsource.
7 Experts Paint Enterprise IT Landscape for 2009
Enterprise IT specialist Dana Gardner pulls together a panel of experts to give their thoughts on the developments they see taking place in 2009. Some have grim predictions, others hopeful -- but all see enterprise IT making great progress in the coming year.
Citi sells Indian IT arm to Wipro for $127 million cash
Citi is to sell its captive Indian IT outsourcing arm Citi Technology Services to Wipro for $127 million. As part of the transaction, Wipro and Citi will sign a Master Services Agreement for the delivery of Technology Infrastructure Services (TIS) and Application Development and Maintenance (ADM) services for a period of six years. The agreement - sealed on 24 December - provides for the delivery of at least $500 million in service revenues over the period of the contract.
Mutual Funds outsource more back office jobs
In recent times, various mutual funds have outsourced back-office operations, including fund accounting and valuations, to various custodians due to the decreasing fund management fees. The move is aimed at increasing focus and resources on core activities. Further, the outsourcing of these functions primarily benefits unit holders of the fund as it increases transparency. However, funds do not agree with the fact outsourcing has decreased their costs. 	
 	
 Service Provider News	
 	
Filipino software execs say their infrastructure and ties to the U.S. give them an edge over their bigger rivals, but a seasoned talent pool is lacking
According to the Philippine Software Industry Assn. (PSIA), the industry had $423 million in revenues from both outsourced and product software in 2007, up from $200 million in 2005, and currently employs around 28,000 software developers. In 2009 most of its business will come from customer support activities such as project maintenance and customer-requested modifications, with a smattering of new-product sales.
Software industry in China grows by 30%
Despite the decline of the industrial economy in China in 2008, the software industry maintained a growth rate of around 30%, an official from the Ministry of Industry and Information Technology (MIIT) said.
Oracle India trims salaries with hour-based payments
The world’s second-largest software products company Oracle is understood to have begun linking the payment of its 20,000-odd employees in India with the productive hours they spend in the company. This has resulted in salary cuts, ranging between 10 and 50 per cent across the board.
Satyam Struggles to Keep Customers
Amid board upheaval and possible management change, India's fourth-largest software company woos top customers to prevent defections Satyam's board is meeting on January 10 to discuss a new structure, apart from considering other strategic options to enhance shareholder value and address issues arising from a dilution of the promoter's stake.
IBM bags $5M Kotak Mahindra Bank IT outsourcing contract
IBM bagged a $ 5 million IT outsourcing contract from Kotak Mahindra bank under which IBM claims that Kotak will be able to save over $1.2 million in operational efficiency and reduced energy costs over the next five years.
Infosys to integrate IT & BPO operations to cut costs, add value
Infosys Technologies is looking at ways of increasing synergies with its BPO arm. In addition to easier movement of executives between the IT and BPO arms, the tech bellweather is also working on integration and business plans to maximise profits.
Tata Consultancy Services Completes Acquisition of Citigroup Global Services
Tata Consultancy Services announced that it has completed the acquisition of Citigroup Inc.'s interest in Citigroup Global Services Limited, the India-based captive business processing outsourcing for all cash consideration of $512 million.
Grafdom expands its R&D capabilities with the establishment of Dubai lab
Grafdom has announced the establishment of an R&D lab in Dubai to pursue the development of advanced technologies and web 2.0 applications.	

:: To subscribe, unsubscribe write to Baroni-limited@tiscali.it ::
: Glad to have your comments Baroni-limited@tiscali.it ::
Copyright © 2005; Baroni Limited. All rights reserved 
 
 	Baroni Limited
68 Penwortham Road
Sanderstead, Surrey CR2 0QS 	 		 Office: +44 (0)20 8660 6457	

 Fax: +44 (0)871 264 6922	

 Email: Baroni-Limited@tiscali.it	

 Website: www.Baroni-Limited.com	

 		
VAT Number:          814 6408                                 Company Registration Number                    4741496
              Registered Office: 10 – 14 Accommodation Road, Golders Green, London, NW11 8ED
**********************************************************************
This document and any attachments may contain information that is confidential and is intended only for use of the recipient(s) to whom it has been addressed.  
No person, without written confirmation of their contents, should rely on the contents of this eMail. This eMail and the information it contains are supplied in good faith but the Company shall not be under any liability in damages or otherwise for any reliance the recipient may place upon them.

Furthermore, this document is sent for information and/or negotiating purposes only and shall not have the effect of creating a contract between the parties.

If you have received this eMail in error, please notify the sender(s) immediately by telephone. Please destroy and delete the message from your computer. Any form of reproduction, dissemination, copying, disclosure, modification, distribution and/or publication of this eMail is strictly prohibited save unless expressly authorised by  the sender(s).  Thank you for your co-operation.
**********************************************************************