Wednesday, November 14, 2007

Indian IT companies set to capture challenging Japanese market

FInally Japan is getting the attention it deserves in the minds of Indian IT companies. This article from Economic Times talks of the focus that most of our customers' are placing on this sector. Editor.

NEW DELHI: Japan is the new battle ground for Indian IT companies, who have earlier been focussed on the US and Europe. With its language and culture placing hurdles on the information super highway, the world’s second-largest IT products and services market has been a challenge for Indian companies. However, as the Japanese outsourcing market comes of age and the need for geographic diversification assumes even greater importance, Indian IT majors are out to tap the opportunity.

Recently, Wipro acquired the wireless design arm of Tokyo-based Oki Electric Industry to help it expand in Japan and East Asia. “The acquisition would help us understand how to better our processes in Japan, apart from positioning ourselves capable of high level, complex works,” said Wipro Japan and Asia-Pacific vice president Venkatesh Hulikal. While Wipro has been present in Japan for over a decade, the revenue from the market was around 3-4%. “

We are enhancing our presence in product engineering, enterprise applications and financial solutions and hiring more local people. With the Japanese manufacturers’ growing interest in Indian market, the IT firms will also gain as there is always a natural inclination to do design with manufacturing,” Mr Hulikal said.

The Japanese IT services market is estimated about $95.3 billion and is expected to grow about $107 billion next year. “Traditionally, Indian IT firms have not focussed on the Japan market. One reason is that the market is very different — significant language and cultural barriers, nascent outsourcing market and proximity to China,” said Patni’s Asia Pacific senior vice president Deepak Khosla. For Patni, currently about 4.5% of its revenue comes from Japan, and the company plans to increase it to 8-9% in the next three years.

For HCL Technologies, Japan is gaining strategic importance. Recently, when founder CEO Shiv Nadar assumed the position of chairman and chief strategy officer, he named Japan as a key focus area. For Infosys, Japan figures among its growth markets. The company has formed the New Growth Engines unit to expand business in Japan, Australia, China, Middle-East, Canada, South America and Latin America.

Thursday, November 08, 2007

Indian youth are simply unemployable: Report

This artice in the Economic Times is a reminder of what ails the Indian education system. Unless Public Private partnerships are allowed, it is unlikely that rot can be stemmed. Our youth today are simply "unemployable" as they do not have the necessary JobSkills. Editor

MUMBAI: If its jobs India's youth are looking for, there are many waiting to be snapped up. The problem, says the India Labour Report 2007, is that the Indian youth are simply ''unemployable''. ''90% of employment opportunities require vocational skills. But 90% of our college and school output has only bookish knowledge,'' says the study commissioned by TeamLease Services, a human resource and staffing agency.

While only 8% of the youth are unemployed, 53% have some kind of skill deprivation. This becomes critical, as nearly 90% of jobs in India are still skill based, with the bulk of employment coming from farming, fisheries and other related work.

''Youth unemployability is a bigger crisis than unemployment as poor quality of skills or education show up in low incomes rather than unemployment. 58% of graduates make less than Rs 75,000 per year,'' the report says. Little wonder then that India's per capita income continues to be among the lowest in the world, despite being the fastest growing economy in the world.

That is also the reason, economists say, while India will grow to be among the richest countries in the world, its citizens will not be as wealthy as the average American and European citizen. The math is fairly simple. Between a little over a billion people, even a marginal increase in their earnings can propel the country's GDP into a different league. For the people who put it there though, things will change only marginally.

The India Labour report estimates that repairing this skill deficit could cost Rs 4,90,000 crore, or 10% of our GDP over the next two years. While current budgets facilitate for 25% of this amount, merely allocating more funds is not the solution.

Failure in quality education and skills, lack of technical and vocational training and policy blunders make it imperative that our system needs a structural change, the report states. A negligible percentage of children who complete the primary level of education continue to the diploma level and even smaller ratios go on further.

The discontinuation of education leads to the accumulation of job seekers in the bottom of the education pyramid and the immediate fallout of this is the low skill levels among the working population

Wednesday, November 07, 2007

Stone India ties up with Sumitomo Electric - air springs for Railways

Lately there has been a lot of action in tie ups and JVs. This is a good trend since Indo Japan trade has mostly been uni-dimensional with IT as a core focus! Finally some of the technology used in Bullet trains will make its way into India and hopefully passenger comfort will be increased. This is a reproduced article from "The Hindu" Business edition. Editor

KOLKATA: G P Goenka group company Stone India has entered into a technical collaboration agreement with the Japan based Sumitomo Electric Industries (Hybrid Products Division) for manufacturing air springs for the Indian Railways.

Air springs would be used for passenger as well as EMU and DMU coaches as part of the Railways’ technology upgradation plan, Stone India press release said. Air springs will support the pneumatic suspension system that will replace the existing mechanical suspension system. This will result in increased passenger comfort for trains running at higher speed. It may be mentioned that Sumitomo Electrical Industries is the leading supplier of this product to the Japanese Bullet Trains.

Referring to the recent tie-up, a senior company official told The Hindu that while Sumitomo was keen on a joint venture, Stone India wanted a technical tie-up only. The market for this product was seen to be huge since the Railways planned to fit all its new trains, especially the high speed ones, with this system. While this would open up a Rs. 175-crore market for air springs for new coaches, in case retrofitting on old coaches begin, then the market could double, the official said. Stone India, which closed the first half of the current fiscal with a turnover of Rs. 45 crore (with a net profit of about Rs. 7 crore), hopes to end the year with a turnover of Rs. 82 crore.

The company, which has three business groups — carriage, locomotive and train power —is implementing a greenfield project at Nalagarh in Himachal Pradesh which will make electronics item for the Railways. This unit is expected to roll out by next year, the official said.

Saturday, November 03, 2007

Japan FDI to touch $5bn in 3 years

It seems that Japanese FDI is firmly set for a take off in India. A recent report from "The Telegraph" in Kolkata seems to further confirm this trend. Editor

(From right) Japanese consul-general Motoyoshi Noro, Ficci (eastern region) chairman C.K. Dhanuka, DIPP director Sanjay K. Thade and Jetro director-general N. Noguchi in Calcutta on Friday. Picture by Kishor Roy Chowdhury

Calcutta, Nov. 2: Japanese foreign direct investment in India is projected to reach $5 billion in the next three years. The target sectors are automobiles, auto components, chemicals and infrastructure.

Between July 1991 and July 2007, around 5 per cent of the $60-billion FDI to India has been from Japan.

“A closer look at the Japanese investment pattern over the last decade reveals that companies from that country have invested in Asean nations and China for re-exports to Japan. Trade and investments are interlinked. Export of products manufactured in India can substantially increase with the redistribution of Japanese FDI,” said Sanjay K. Thade, director of the department of industrial policy & promotion (DIPP).

Thade was speaking at a seminar on doing business in Japan organised by Ficci, DIPP and Japan External Trade Organisation (Jetro).

Globally, Japanese FDI was $50 billion in 2006.

India received $15.7 billion of FDI last year, which is expected to double this fiscal to $30 billion.

“Bengal and Calcutta, being the gateway to the Asean countries, can play an important role in Japanese investments. The largest Japanese investment of $340 million by Mitsubishi is in Haldia, Bengal,” said N. Noguchi, director-general, Jetro, New Delhi.

However, Bengal needs to be more aggressive in promoting the state like its counterparts Gujarat and Rajasthan, Noguchi added.

The $100-billion IT market in Japan has also witnessed investments by 70 Indian companies.

Tata Consultancy Services has a centre of excellence in Calcutta that caters to the business from Japan.

Some Japanese consumer electronics companies that had closed operations in India and gone to other South Asian countries could be contemplating a return.