Comments on Madhusudan Rao's articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/madhusudan-rao/articles http://seekingalpha.com/article/77245-hp-snaps-up-eds-for-a-bargain?source=feed#comment-168098 168098 Thu, 15 May 2008 11:23:10 -0400 http://seekingalpha.com/article/77245-hp-snaps-up-eds-for-a-bargain?source=feed#comment-167512 167512 Wed, 14 May 2008 12:53:43 -0400
First the quality of the buy. We have to remember that EDS is not a tier-1 consulting company. They are frequently left out of many of the Global 1000's RFPs for strategic transformation projects. That said, Deliotte or Accenture would have been a better buy if HP could afford it and had a strong services strategy.

Next, cost controls. I am sure you can 'cut' heads and costs but I am also sure that Ron Rittenmeyer has been slashing for some years to meet his financial goals and thus stock price. So, I would say that cuts will be done, but limited to pruning and effectiveness unless EDS dips into short term thinking and slashes away their future.

Lastly, I question the deal's longevity to HP's bottom line. EDS doesn't have the strength and breadth to compete with IBM and the tier-1 consulting companies. EDS merged with an even poorer HP Services team move the needle anywhere other than increase its size.

You can pretty the monkey and balance sheets up for the next 2-3 yrs through cuts and usage of HP vs. Sun hardware, but it remains to be seen how much of a consulting force this marrige will make in the market. ]]> http://seekingalpha.com/article/77245-hp-snaps-up-eds-for-a-bargain?source=feed#comment-167404 167404 Wed, 14 May 2008 10:16:00 -0400 http://seekingalpha.com/article/77245-hp-snaps-up-eds-for-a-bargain?source=feed#comment-167374 167374 Wed, 14 May 2008 09:39:28 -0400
Are you serious?? Concentrate on the growth potential and profit margins of the EDS business model and you might change your opinion a bit. ]]> http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-166928 166928 Tue, 13 May 2008 13:29:52 -0400
I was referring to the Software engineers' (resources salaries) and not average salaries across the company. My apologies for the confusion. Please note that this also may have increased to about 2.5 to 3 lakh p.a (starting salaries).]]> http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-97237 97237 Sun, 30 Sep 2007 19:37:58 -0400 Infy itself has 5 employees getting paid more that a million dollars (ET) and 25 in 500k range. ]]> http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-96387 96387 Wed, 19 Sep 2007 15:04:34 -0400
In my analysis this implies that the ACN and IBMs have to start utilizing the offshore model more effectively to offer the associated cost savings to their customers. That is what they are focusing on.

The Indian firms (INFY and WIT) are trying to move up the value chain and play the game like the "big boys". There are still cultural and social nuances that hinder the Indian firms in forming the kind of strategic alliances that lead to long term, multi-million dollar contracts. The "partner" level organization at the Indian firms is still maturing into the sales force it needs to be. So the challenge for the Indian firms is to gain competency in the high-end strategic sales and client management space.

Therein lies the question - who gets the complete solution figured out first?

(itglobalsourcing.blog...]]> http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-96186 96186 Mon, 17 Sep 2007 14:25:39 -0400 A deeper analysis is definitely a great idea.]]> http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-96083 96083 Sun, 16 Sep 2007 12:52:48 -0400
Thanks for bringing this to my notice. To confirm, I did mean Tata Consultancy services.Will ensure that such errors do not occur again]]> http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-96044 96044 Sat, 15 Sep 2007 13:34:06 -0400 http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-96043 96043 Sat, 15 Sep 2007 13:34:03 -0400 http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-95973 95973 Fri, 14 Sep 2007 03:55:37 -0400 http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-95948 95948 Thu, 13 Sep 2007 16:06:07 -0400 You mean then one with 5 years experience can get at least 10 lakh/annum??]]> http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-95922 95922 Thu, 13 Sep 2007 11:51:56 -0400 For experienced hires, the salary average is about 1.5-2 lakh per year of experience.
sagecapital.wordpress.com/]]> http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-95800 95800 Tue, 11 Sep 2007 23:55:21 -0400
Well, I am aware of the salary numbers because I have worked in this industry for about 5 years now. Let me clarify that I am only refering to employees in the IT services. I went through the article that indicates that the salaries of employees engaged in R&D (MNCs) are high. (Which is correct)
I think these salary figures (stated in the article) include the component that is paid to engineers onsite, and that may also be the reason for a skewed figure. These onsite employees are also billed to the client higher than offshore employees. This onsite component should not ideally be considered outsourcing salaries (that will hit the margins), as they bring much higher revenues.

The article also confirms that TCS, Infy (ranked 28th) and other Indian s/w firms are low paymasters. (even onsite)]]> http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-95751 95751 Tue, 11 Sep 2007 13:19:16 -0400
"The average salaries of Indian software engineers is about Rs 12000 per month"

I don't know how you got this number!!

Look for today's news, "S/W salaries rise 19%, avg salary Rs 6.2 lakh p.a" at
www.business-standard....
]]> http://seekingalpha.com/article/46936-which-it-outsourcing-stock-is-the-best?source=feed#comment-95710 95710 Tue, 11 Sep 2007 10:17:10 -0400 I agree with your point that the core competance of offshoring gained by the Indian IT outsourcing heavy weigths cannot be mimmiced by the MNCs in few years. They would take years before they can achieve expertise in outsourcing field.

Coming back to your point on which stock is best for investment, it should be kept in mind that not all good companies are good stocks to invest. The golden rule of investing is to figure out "IS THE STOCK UNDERVALUED COMPARED TO ITS INTRINSIC VALUE".

In order to explain my point: Just consider the case of Microsoft. It is one of the best companies in the world. Their growth has been phenomenal in recent years (24% growth compounded annually).Following is their growth of net income last five years.

2002 $5.3bn
2003 $7.5bn
2004 $8.1bn
2005 $12.2bn
2006 $12.5bn

Now looking at the stock price, it was $30 in may-2002 and was around the same price in May-2007. The reason being the stock has been overvalued last few years and the market has been contantly correcting its value by reducing its P/E. Which during the dotcom bust was around 84 and has come down to around 20 now.

Following are the P/Es of some of the leading outsourcing companies.

Infy P/E = 28.5
Wipro P/E = 27.4
Cognizant P/E = 36.3

IBM P/E = 17.9
ACN P/E = 19.5
EDS P/E = 18.2

I guess your analysis should be more on evaluating the P/E of the above mentioned stocks and figuring out if they would remain the same in near future.

visit me @ annualreportanalysis.b... ]]>