Thomas Victor

Outsourcing Grows as a Business Strategy

The IBM Amway deal is the other way around. Amway GMBH's computer work is being outsourced to IBM - IBM is not outsourcing anything to Amway.

Amway is the company that goes around door to door selling cleaning materials. I was thinking - what can Amway do for IBM??

But I agree that we will see increases in outsourcing, I think it will come due to desperation - as demand keeps falling, US companies will do anything to decrease costs

Satyam Management Plans to Stay, Unveils Crisis Plan

The strange thing is that the CEO did not STEAL the money.

At times when profit growth was 2% he reported 30-40% profit growth allegedly to keep the stock price up so that Satyam wouldn't be the target of hostile takeovers. So the cash reserves just weren't there in the first place.

He did not sell any shares to take advantage of the inflated share price. In fact to keep the operation running he took out huge loans using more than half of his 8% of Satyam shares as collateral. A lot of those shares were sold by the institutions that gave him loans and now he maybe has only 3% of Satyam shares.

Very puzzling..

ICICI Bank: Indian Capitalism At Its Worst

Great article!

Infosys Shaky

Sramana, Infosys won't change it's emphasis on, as you call it, 'labor arbitrage' because it is their special skill, at which they are better than anyone else in the world.

They are getting more and more customers and their profit margins are very high. They are able to expand their workforce without lowering quality which is pretty amazing.

Regarding Saas which you regard so highly please look up Larry Ellison's comments last week. He basically ridiculed Saas and Cloud Computing and said no one is making any money on it after all these years of hype except one single company, salesforce.com

"Infosys was looking at the Axon acquisition to help get it out of pure body-shopping and into SaaS" Not at all, how did you get that impression? It was just another attempt to move higher up in the outsourcing food chain.

Infosys: Traumatized Environment Affords Rare Buying Opportunity

Ashish thanks for the detailed analysis.

You mention "principal risks include the following: U.S. slowdown".

I'm itching to buy INFY but my fear is that the whole world,not just the US is entering a slowdown and we might have a recession for years and years from now. So might be better to wait.

Still, Infosys is doing a great job as usual and in a recession more firms might turn to Infosys to cut cost and still maintain quality. I'm surprised how they have managed to stay so good inspite of having tripled or quadrupled their workforce from a few years ago.

Not getting the AXON acquisition was a bit disappointing. AXON is making a mistake going with HCL for the sake of a a few percentage points in price.

Today 10/15 INFY is back down to $25 - if it ever gets back to it's last Friday low of $22 I won't be able to resist.

Indian IT Stocks: Time to Bail?

Time to bail??

That would have been an appropriate title some time ago when it's price was higher. But now it is at a 52 week low and it seemed like a good buying opportunity so I took the plunge.

Infosys, Innovation and the Changing Face of IT

Frankly, the commercial value of these patents is not clear at all.

Lots of software patents are just commonsense and not worth anything.

As far as Infosys getting more into IP (intellectual property) goes, I'm more optimistic about INFY's mega banking software product 'Finacle'

May 28th: "BBVA, one of the top 15 banks in the world, will implement Finacle Universal Banking Solution.....As a strategic imperative, the bank decided to replace legacy solutions with a leading world-class banking solution."

That sounds very promising - there must be a lot of big banks around the world that need that kind of leap from old banking systems to state of the art systems.. and I'veseen a LOT of expensive failures - success at BBVA could be the start of something really big for Finacle.

Thursday Outlook: Commodities, Emerging Markets

EWZ (Just Brazil) versus EEB (BRIC with 50% Brazil) - any ideas? Short Term and Longer Term?

I'm holding RSX and EEB right now, wondering if I should put some of that into EWZ.

Thanks!

Infosys In Light of Recession Fears

That "diversification strategies" are needed, no one will argue with but Software as a Service? "the more leveraged technology/IP-driven business models"?? Rather dubious.

And please - stop the continued use of the term 'body shopping' with reference to Infosys!

Thanks!

Infosys Sees Some Customers Delaying Finalizing 2008 IT Budgets

From thestreet.com, "INFY..downgraded at Goldman Sachs to Neutral from Buy due to lower visibility, reduced growth outlook, and limited catalysts. See need for increased investor confidence in 2009 estimates, as well as potential impact of U.S. recession. Maintained $45 price target"

Tech Sector Spooky, Nasdaq Down 14.7% Since Halloween Peak

At the lower prices, people are buying INFY and CTSH today, CTSH ended up 4.57% on more than normal volume.

Cognizant’s Growth Will Come From Europe

The lackluster Q4 guidance "doesn’t seem tragic at all" if it's just for a quarter but what if it is just the beginning of a lower growth phase for CTSH, INFY etc.?

Infosys Needs to Diversify Out of Body-Shopping

I'm a programmer in a US company and have worked with Infosys and I agree strongly with SanityCheck that INFY is no way a body shopper!

But agree with Sramana that they should move higher up the food chain. They ARE trying hard to be Managemant Consultants similar to McKinsey, Accenture etc. - but besides Finacle, which they've had for ages, why aren't they trying to develop other software products?

Body shopping is a fairly specialised term. A company needs X programmers who say, know Java,for a one year project. There are many company's in India who can supply these programmers. But those companies are not involved with coming up any of the following:

1) Deciding that the company needed the project in the first place
2) High Level IT Design and lower level detailed specifications

The US company itself has done items 1 and 2 finds it needs 15 programmers for this project but only has 12 employees free so it contracts for 3 more 'bodies' from India. Say $25/hour for someone in India, more if they want the programmers to be here in the US.

Infosys pretty much takes on only projects where it does item 2 completely or does item 2 in collaboration with the US company. And it is trying to get to do item 1 also via their ManagementConsulting whih right now is running ata loss.

Usually there are 2 phases for which they might be paid separately, one to come up with Design and Detailed Specs, then to actually program test and go-live.

The only situation where INFY would do body shopping is to get a foothold in the US Company - i.e. the 3 programmers they sent do so well that they can then persuade the Company to let INFY do 100% of the next IT project.

My US Health Care company is spending a HUGE amount of money on a 'do it all' health care package - provides the doctors with everything they need for medical care - patient chart, schedule display, prescription ordering etc etc. PLUS handles the business side such as billing.

From what I've seen, if INFY made an initial investment to study Health Care requirements they could do MUCH better than the software company we have now - come up with a better system, one that is designed to 'scale up', does what the doctors need, does billing etc.- and to maintain and enhance the system.

For the amount of money we're paying we would be happy to go with a better package and better support but there is no alternative on the horizon!

Indian Stock Plunge a Yearly Call

Mark,
From Chidambaram's talk in NYC, more than 50% is via PNs which allow the invester to remain anonymous.

Do you happen to know WHY such huge amounts are coming in via PNs? Why do these investers want to remain anonymous? Is this 'black money', maybe from illegal drug profits?

Thanks!
Thomas

Rising Rupee, Employment Delays Won't Hinder Infosys

However good Infosys is, I agree with a recent MarketWatch article that people are expecting the Rupee to rise further against the sliding US Dollar. So the entire software offshoring group of stocks will stay depressed.

So I was thinking I should invest in non-software ADRs,maybe HDFC and ICICI banks! Good Lord! HDB is down more than 11% today (Oct 16) IBN down over 7% plus all software ADRs are also down!!

Any clues as to what is going on?