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Friday, 28 June 2013

China Outbound Tourism: Why Hong Kong is the Most Preferred Destination For Chinese?

China’s growing middle and wealthy class population is attracting the attention of country’s tourism board in all over the world. Tourism sector is the only sectors which directly contribute the country GDP growth. Since tourists are always travel with expending mind set, either in shopping, accommodation, travel or any other purpose, So they are trying to find out the best opportunities, where they can spend.

As I mention earlier, growing middle class population are attracting Chinese tourist in all over the world.  Hong Kong is also going to the same track, as it has additional advantage of language and cultural similarities with border sharing.

According to Hong Kong Tourism Board, in 2012, Hong Kong has attracted 34.91 Million Chinese tourist, which was more than 100% higher than 2007 mainland tourist arrival. In 2007, it was nearly 15.48 Million.  In terms of by purpose overnight visitors; 9.1Milion for vacation (holidays), 1.6 Million for business, 3.4 Million for VFR, 0.3 Million for en-route and 0.7 Million for Other purpose Chinese outbound tourists have visited in Hong Kong.

However, in context of same day visitors; 12.8 Million for vacation, 2.1 million for business, 1.5 Million for VFR, 2.2 Million for en-route and 1.4 Million for other purpose Chinese outbound tourist have visited in Hong Kong.

With these numbers, Hong Kong is the most preferred destination for Chinese outbound tourist. I want put a question; Why Hong Kong is the most preferred outbound destination for Chinese? What I found the reasons for this are:

Sharing Culture: since both country cultures are more or less similar, so Chinese tourist feel comfortable during the trip in Hong Kong, with respects of other countries such as Australia, US, UK. For these countries, they have very little cultural knowledge, which sometimes feels uncomfortable for them.

Sharing Language:  In both countries, Chinese languages are speaking by the common man. So Chinese can easily convey their message during their trips, what they want and they can get immediate response in Hong Kong. However, this is one of the most problems for English speaking countries as they have very little English background, especially middle class tourist.

Sharing Boarder:  China and Hong Kong share borders in several places, which helps to increase Chinese outbound travelers, especially same day travelers in Hong Kong.  For short span of time period of trip, many Chinese tourists are preferred Hong Kong is the best destination.

Market opening for outbound operators: China National Tourism Administration (CNTA) has approved 979 travel agents to organize outbound tours. Among all travel agents, 257 travel agencies are members of the Travel Industry Council of Hong Kong (TIC).

Promotional Activities by Hong Kong Tourism Board:
  •    China International Travel Mart (CITM) (15 – 18 November 2012)
  •     Tactical Coop Advertising for WinterFest
  •     Pre-cruise promotion
  •     Hong Kong Wine & Dine Month Media Fam Groups 
  •     Promotions on “Hong Kong WinterFest”
  •     Promotion on “New Year New World – Hong Kong Countdown Celebrations “


Sunday, 20 May 2012

India Outbound MICE Destinations & Worldwide MICE Initiatives for Indian Outbound MICE Tourists


The meeting, incentive, convention, and exhibition (MICE) industry—a service industry combining trade, transportation, finance, and travel—has been active in Europe and America for over a century. The MICE industry is characterized by the “Three Highs—high growth potential, high added-values, and highly beneficial innovations”; the “Three Larges—large output, large opportunities for employment, and large industry associations”; and the “Three Advantages—advantage over other industries in human resources, technological know-how, and the efficient utilization of assets.” Today, countries all over the world are putting their best foot forward to develop the MICE industry as a means to enliven national economic development.
India is one of the fastest growing travel markets in the world. With more than 1.25 Billion inhabitants and the GDP increasing by more than 8 percent every year, the country offers enormous potential for future growth in outbound travel.  In 2010, Indians were traveling around 21,902 Thousand trips abroad for Business, MICE and Leisure purposes. Nearly 4 per cent (approx 500 Thousand) of the total India outbound tourist was traveled for MICE purpose in 2010 .During that period, they expend nearly INR 452 Billion. It is predicted that by 2015, Indians will travel abroad around 21,902 Thousand trips and they will expend INR 604 Billion during their trips.
     India Tourism – Outbound Expenditure & Departures Trips Forecast, 2010 - 2015
  Source: Euromonitor International, India April 2011
Indian outbound MICE market was estimated to be around US$ 550-600 Million in 2011. It grew strongly and resulted in an outbound trip volume of 6.2 Million, with around 1.5-1.8 Million Indians travelling outbound only for MICE. Industry verticals like Pharmaceutical, Cement, FMCG, IT and Financial services are the major contributors to the Indian outbound MICE sector.
Hong Kong witnesses over 12 percent annual growth from India MICE segment and the share of MICE is over 20 percent in Indian outbound to Dubai. Singapore, Thailand and Malaysia have already been getting a good MICE business from the Indian market. While countries like Austria, Dubai, Jordan, Singapore, Indonesia, Mauritius, Turkey and Bhutan are offering discounted offers to woo large size groups from the Indian MICE market, new entrants like Czech Republic, Oman, Taiwan, Spain are formulating Indian centric policy to tap the growing potential of Indian MICE market.

 Worldwide MICE Initiatives for India Outbound MICE Tourists
Presently, India being the third fastest growing global economy and its increasing dominance in international trade has compelled many foreign tourism boards to have a focused strategy for the Indian outbound MICE segment. Some of the key initiatives have taken by various countries are given below:
Hong Kong is targeting corporate decision makers, MICE specialists, industry and trade associations, online and media partners to showcase Hong Kong as a preferred incentive and conference destination via pro-active efforts through Meetings & Exhibitions Hong Kong (MEHK) division of Hong Kong Tourism Board (HKTB). HKTB will be organizing workshops for the incentive planners in key Indian cities. HKTB has already appointed key account sales teams in this high-volume and high-growth market to develop the meetings and incentive business.
Malaysia has emerged as a popular destination for corporate incentive trips and conferences. To draw more business from the Indian MICE segment, Tourism Malaysia is offering value for money packages in the Indian market. Tourism Malaysia offers good packages to corporates who are interested in MICE. All packages are very competitive and provide value for money to interested corporates.
Korea Tourism Organization is eyeing a major slice in the Indian MICE market. Korea Tourism Organization (KTO) will be promoting Korea as a MICE destination besides promoting the leisure options. The focus on MICE is due to the fact that there exists more than 400 Korean companies in India and some of them like Hyundai, Samsung and LG among others are very popular in India. KTO has also been trying to rope in Korean consumer brands present in India and make their employees more aware of the destination.
Kenya Tourism is also promoting its tourism products in India to MICE segment. According to the International Congress and Convention Association (ICCA), Kenya ranked at number four as a MICE destination in Africa. Kenya Tourism Board are liaising closely with the Kenyatta International Conference Centre (KICC) to unveil a marketing campaign to attract international conferences. According to Kenya Tourism Board, there has been consistent increase in MICE groups from India to Kenya.
It is not that only Asian countries are upbeat about Indian MICE market. Countries from Europe are equally focused on the Indian MICE market.
Finland, which currently gets equal percentage of leisure and business travelers from India and intends to draw more leisure and MICE groups from the Indian market.
Austrian National Tourist Office (ANTO) is also trying to tap the potential of the Indian MICE market. The MICE sector to Austria has definitely been on the upswing. Austria has some of the best conference facilities and hosted some pharmaceutical groups from India in 2010.
With the business travel segment accounting for nearly 22 percent of all Indian arrivals to Australia, Tourism Australia has been actively focusing on developing MICE. Tourism Australia is working with Austrade, the Sydney Convention and Visitors Bureau, the Gold Coast Convention Bureau and the Melbourne Convention and Visitors Bureau to tap the growing potential of the Indian MICE segment.

Friday, 11 May 2012

Telecom Operators & Original Equipment Manufacturers (OEM) Opportunities and Challenges in Mobile Application Stores

Telecom Operators Opportunities in Mobile Application Stores Market 
Telecom operators looking to benefit from the popularity of mobile apps cannot expect to rival Apple in the revenue it generates from the App Store. Nor should that be where operators aim to participate, since the potential incremental revenues are so small. We expect that in 2013, all application store providers worldwide will capture just a 30 percent share of overall apps revenues with the remaining 70 percent going to developers. This is a drop in the bucket compared with the telecom industry’s projected overall 2013 revenues of US$1.6 Trillion. 
The real economic value for operators lies in the increased revenues to be captured through the rising use of data services linked to mobile apps and the customer loyalty that app usage has the potential to generate. Users of iPhones use their phones more than other mobile phone users do, and most of that extra time is devoted to downloading data. As smart phones become more and more popular, data usage will only increase—and that, in turn, will be the source of real revenue increases for mobile operators. But those added revenues will appear only if operators can acquire and retain the customers most likely to use their phones to download mobile apps. 
The announcement of 24 mobile operators at the Mobile World Congress to open a joint, central store for smartphone applications is probably one answer in this direction. The participation of large operators as e.g. Vodafone, China Mobile, Telefónica, América Móvil, Orange, T-Mobile etc. representing a total of 3 Billion mobile subscribers worldwide shows the power behind the initiative.  
Telecom Operators Challenges in Mobile Application Stores Market 

Lack of Control over the Many Mobile Operating Systems 
Despite the many considerable assets operators possess in their efforts to compete in the mobile apps markets, perhaps the most serious challenge they face is their lack of control over the many mobile operating systems running on the vast number of different devices available to consumers. No matter what app store strategy they devise, operators must take this diversity—and the different market dynamics of each OS—into account, pulling different levers depending on the OS. 
Declining Average Selling Price of Applications 
Driven by the proliferation of free and mass market applications, the average selling price of applications is likely to drop – analyst estimates indicate a value of US$ 1.72 by 2014, as compared to a value of US$ 3.83 in 2009. 
Original Equipment Manufacturers (OEM) Opportunities in Mobile Application Stores Market 
Worldwide handset sales are reaching saturation in many parts of the world, leading to increasing competition among handset OEMs. With average selling prices falling, major vendors have already used all their cards in order to control handset costs. Despite their efforts, they find it hard to maintain margins because of the growing competition in the mobile market as different types of vendors – including incumbent OEMs, consumer electronics makers, PC vendors and Internet content providers – seek their share of the mobile handset market. 
The success of Apple’s Application Store has not only established the salability of mobile applications, but has also shown that the most excellent applications offer the potential to generate large amount of revenues. Every significant mobile phone original equipment manufacturer (OEM) has jumped on the application stores market, developing handsets, platforms, and ecosystems that aim to replicate Apple’s products and business model, with different strategies and varying levels of success so far. Nokia, Palm, and Research in Motion (known as RIM, the manufacturer of BlackBerry handsets) have developed their own devices and platforms, supported by their own dedicated mobile application stores. OEMs such as Dell, LG, and Sony Ericsson have developed devices that run on third-party operating systems—mainly Google’s Android and Microsoft’s Windows Mobile. Samsung has adopted a mixed approach, both developing a new proprietary mobile platform, called Bada, and manufacturing and promoting handsets based on third-party platforms. 
Original Equipment Manufacturers (OEM) Challenges in Mobile Application Stores Market 
Creation of consistent UI across a large portfolio of devices 
One of the key factors in the success of Apple’s App Store is its ability to offer a consistent user experience over a single phone with a single OS platform. This is not the case of top five OEMS who have a broad range of devices in their portfolio powered by various OS platforms and UIs. 

Management of application and service lifecycles 

OEMs do not often have a direct relationship with mobile subscribers. Consequently, they will find it difficult to manage the customer lifecycle covering the acquisition of applications and services, removal of services, applications update, and migration to a new device, and customer care. 
Creation of consumer-to-developer channels
Most of OEMs have not yet built a complete reliable developer-to-consumer channel for discovering, provisioning and distributing applications. This ecosystem takes years to establish. For example, it took Qualcomm about 4-5 years before there was strong traffic over its BREW ecosystem, which launched in early 2001.

Sunday, 6 May 2012

Worldwide Mobile Application Stores Revenue & Application Download Forecast Trend

Mobile App Stores are online store for purchasing and downloading mobile apps for mobile devices. Their primary business activity is the sale of apps, in contrast to platforms with other functions such as social networking sites. App stores are managed by a number of different types of operator. They provide simple payment mechanisms and easy-to-use environments, often linked to a device brand. For mobile applications sellers, app stores provide direct access to consumers and a reliable payment mechanism.
Application stores have gained considerable attention in the recent past, and are emerging as an important channel for the distribution of mobile content. An application store is an online aggregation and distribution platform for downloadable applications for smartphones and high-end feature phones. For developers, these stores act as a channel to reach out to a large number of consumers, while providing necessary functionalities such as billing, payment gateway and customer management. For consumers, storefronts provide a single destination for accessing reliable mobile applications across a variety of genres, with trusted and secure mechanisms for managing the interactions.
Worldwide Mobile Application Stores Revenue & Application Downloads Forecast
Worldwide mobile application store revenue is projected to reach US$ 58 Billion in 2014, both from end users buying applications and applications themselves generating advertising revenue for their developers. In 2011, mobile app revenue was US$ 15.1 Billion. This was a 190% increase from 2010 revenue of US$ 5.2 Billion.
Worldwide mobile application store downloads are forecast to reach 17.7 Billion downloads in 2011, a 117% increase from an estimated 8.2 Billion downloads in 2010, according to Gartner, Inc. By the end of 2014, Gartner forecast over 185 Billion applications will have been downloaded from mobile app stores, since the launch of the first one in July 2008.
 Worldwide Mobile Application Download & Stores Revenue Forecast (Billion, Billion US$), 2010 - 2014

Source: Gartner
Free downloads are forecast to account for 81% of total mobile application store downloads in 2011. This percentage has been decreasing since the first launches in 2008, and Gartner estimates free downloads will continue to decrease in 2011, but it will increase again from 2012 through 2014. Users will begin paying for more applications as they perceive values in the concept of mobile applications, and they become more trustful of billing mechanisms.
Components of Mobile Applications Stores
·         Device manufacturersincluding Apple’s App Store, Nokia’s Ovi, and Blackberry’s App World. These stores can be used only by consumers with the appropriate manufacturer’s device and proprietary software.
·         Operating system developer—including Android Market and Microsoft Windows Mobile. These stores can be accessed by consumers with devices from multiple handset manufacturers via the proprietary operating system software (OS). For example, Android mobile applications can be used on Motorola, HTC and Samsung devices.
·         Mobile network operator—including Telstra, Verizon and Optus. These stores can only be accessed by consumers with service contracts with the network operator. Consumers can use multiple handset brands to access these stores.
·         Independent—including app stores operated as independent commercial concerns, or by developers such as GetJar and Mobango. Access to these stores is not dependent on the brand of device used, service provider or proprietary software.
Key characteristics of a Successful App Store
·         Local Content-Apps and other services designed for subscribers in particular geographies served by the operator. Examples include mobile TV, news, and information. Local content may be especially successful as part of SIM-based app stores in developing markets.
·         Operator-Specific Apps-Apps intended to help subscribers manage their relationship with the operator, including account management; billing; and voice, message, and data consumption, as well as services such as mobile TV.
·         Premium Apps-Apps that are given premium placement on the storefront in exchange for payment by their owners.
·         Apps Catalog-A collection of apps sourced through partnerships with developers and companies promoting apps, which could be paid for through revenue-sharing agreements.
·         Payment-Tools that allow users to pay for apps and services through convenient m-payment solutions or through their mobile accounts.
·         Mobile Advertising-Space on app storefronts or within apps themselves, sold by operators to advertisers, with content often keyed to the current interests and browsing habits of subscribers.
·         Gateways to Third Parties-Links to other app stores owned by third-party apps developers, OS owners, device makers, and independents—redirecting traffic to cobranded spaces in third-party stores, for example.
Leaders of Mobile Application Development
All leading manufacturer brands have their own App stores.
• Apple - itunes App Store
• Android - Android Market
• Blackberry - Blackberry App world
• Windows – App Hub
• Samsung – Bada App Store
• Nokia – OVI App Store
Apart from all the manufacturers, all leading Operators are also providing Mobile Apps to their users.
• Airtel – Airtel App Central
• Vodafone – Vodafone Live
• Aircel – Pocket Apps
• Idea – Idea Fresh
• BSNL – BSNL Live
There are hundreds of channels providing Mobile Apps & Games to end users beyond the Operators & Aggregators worldwide. Few of these are Getjar, Mobile9, Mobango, Mobilerated, Handmark, Handster, Palm, Pocketgear, Cell11, CNET, Brothersoft, Smart Sam, ZED, Smokin Apps, Mobi club, Umnet, eMobilez, Ntt Docomo Inc and many more. Best MOBILE APPS DEVELOPERS are Halfbrick Studios, Gameloft, Rovio Mobile Ltd., Aims MIGITAL Technovations Pvt. Ltd., Cooper Media Corp., ZeptoLab, Machineworks Northwest LLC, Lupis Labs Software, DistinctDev, Inc., YoYo Games Ltd, Bithack.

Thursday, 29 March 2012

Mobile TV Growth Opportunities in India


Digital entertainment is slowly but surely finding its footing among young Indians. Almost 40 per cent of active Indian internet users consume TV content online. With boom in mobile video on demand, India has now over 200 million video views a month on mobile devices, the average duration of clips viewed being 1-3 minutes.

Mobile TV is a technology that allows people to view regular live television content on their mobile phones or other mobile devices (tablet PCs, etc) that they get through traditional cable or pay TV subscriptions at home. IAMAI suggests that in September 2011, there were about 46 million mobile users who would access Internet using their mobile phones (with 15 per cent growth quarter-on-quarter). 

With the launch of 3G services, the mobile TV and video landscape in India is also witnessing rapid changes. India has good future potential for mobile video streaming services, especially for videos focused on cricket highlights and updates, in addition to film based content. However, as many subscribers are not accustomed to paid subscription-based services, the monetization of video content will be primarily through advertisements. It is also expects greater adoption of mobile TV with users preferring to watch television on mobile while being on the move. It is predicted that by 2013, India and china will set to generate more revenues from mobile TV services than Europe and North-America combined.

India & China - Mobile TV Revenue & Subscribers (Million Euro, Million), 2007 - 2013

Source: Screen Digest Mobile Media Intelligence database – August 2010

So, India is on the way to become big market for mobile TV players (Device manufacturers, Content developers and telecom operators) as mobile devices have been adopted in India far more than any other communication devices.  Gartner has recently estimated that Mobile device sales in India are forecast to reach 231 Million units in 2012, an increase of 8.5 percent over 2011 sales of 213 Million units. Gartner has also estimated that mobile device market is expected to show steady growth through 2015 when end user sales will surpass 322 Million units.

Initiatives for Mobile Contents in India

Zee New Media, which has launched an Over-The-Top TV distribution platform called Ditto TV that delivers Live TV channels and on- demand video content to mobile phones, tablets, laptops, desktops, entertainment boxes and connected TVs.  Ditto TV, which has 21 channels, including channels from Multi Screen Media (Sony Entertainment Television), TV Today Network, BBC, and Zee, plans to offer up to 50 channels. Vishal Malhotra, business head (New Media) at Zee says, “We are aiming to get 1 Million subscribers (includes subscribers from international markets) for Ditto TV in 2012, and this is an aggressive target since ours is a premium content”.

Reliance Broadcast Network, with three channels, namely Big Digital, Big Magic and Big CBS, on mobile TV platform has seen catch-up content, short format content working very well on its platform.

Zenga TV, perhaps one of the earliest entrants in this segment, has a base of 7 Million users, started working on mobile TV platform as early as 2006 but launched it only in 2009. Zenga TV was the first company to bag the first IPL mobile rights. Zenga TV, which offers free usage, gives access to over 100 channels and has a movie library of 10,000 titles. By the end of this year of these 10,000 movies, at least 2,000-3,000 would be converted to digital format for better viewing on handsets.

With the emergence of tablet PCs that promises to offer a richer viewing experience, mobile TV is set for another facelift. Features that allow users to access supplementary information such as plot synopses and actor biographies on the mobile platform are in the offing. Zenga TV has recently experimented with a 24x7 reality show that was exclusively launched for the mobile platform. With IPL set to kick-start its fifth season, mobile users will perhaps have a better access to content. But more importantly, with the 4G services expected to roll-out sometimes in the later half of this year, players are gearing up with better content and offerings for the user.

Sunday, 11 March 2012

India’s Top Five IT Service Providers Overview & SWOT Analysis Series: Part-VI (Tech Mahindra Analysis)


Tech Mahindra Analysis
Business Description

Tech Mahindra is a leading Indian IT services player. The Company has benefited from the legacy of having been started in by the Mahindra Group in partnership with BT and has emerged as the leader in the telecommunications vertical. BT, with a 30% stake continues to be a promoter of Tech Mahindra along with the Mahindra group (42.8% stake). The Company currently serves 124 clients with 34,000 employees based in 17 sales offices and 13 delivery centres. Tech Mahindra has acquired a 42% stake in Satyam Computer Services and plans to merge the two entities and emerge as an integrated player across verticals.

Tech Mahindra Strength Weakness Opportunities (SWOT) Analysis

Tech Mahindra Strength
  • Leading player in the telecom vertical, Tech Mahindra participate in the next generation network roll-outs of BT and AT&T – can leverage execution experience to participate in roll-outs of other players
  • Steady revenues assured from Etisalat & Bharti Zain deals.
  • Favourable cost structure with 63% of the services delivered from offshore (largely Indian) locations

 Tech Mahindra Weakness
  • High client concentration (top client BT accounted for 35% of revenues in Q2FY11)
  • Single vertical focus
  • High attrition compared to top tier IT players

Tech Mahindra Opportunities
  • Increased demand for IT services from the telecom service providers
  • Acqisition of Satyam Computer gives Tech Mahindra a presence in multiple verticals
  • Excellent customer relations are an opportunity for growth of business with existing customers.

Tech Mahindra Threats
  • Fragile economic situation in Europe & USA
  • Potential negative impact of Satyam related litigation
  • Emergence of potentially disruptive technologies/practices, data security breaches


Wednesday, 7 March 2012

India’s Top Five IT Service Providers Overview & SWOT Analysis Series: Part-V (HCL Analysis)


Business Description

HCL Technologies is a leading global IT services company which has transformed itself from a IT hardware to a global IT services company. It had revenues of over US$ 2.7 Billion in FY10 and currently has over 426 active clients. The Company provides its services to clients across Banking, Financial Services, Insurance, Manufacturing, Telecom, Retail and Life Sciences verticals among others. It has over 70,000 employees and serves its clients through its extensive global offshore infrastructure and network of offices in 26 countries. HCL acquired Axon Group PLC in 2008 to become one of the leading SAP implementation services providers globally.

HCL Strength Weakness Opportunities (SWOT) Analysis
HCL Strength
  • HCL’s acquisition of Axon enables it to offer the full life cycle of SAP services — from consulting through implementation, infrastructure optimization and ongoing managed services and support.
  • HCL Axon has a particular focus and strength in aerospace and defense, high-tech manufacturing, utilities, and travel and transportation.
  • As the first SAP partner to be certified in Value Management,HCL Axon has 40 consultants trained in Value Management, and they have full access to SAP's Value Engineering database,
  • HCL Axon was a key partner in helping SAP develop its Value Management.
  • HCL Axon's clients cite project management, flexibility, focus on delivery, high percentage of senior consultants on project team and its willingness to commit to outcome-based fees as key strengths.

 HCL Weakness
  • Clients have experienced some problems with staffing, such as attrition, difficulty finding consultants close to operating locations and staffing for newer products.
  • As a part of HCL Tech, new HCL Axon is creating some confusion in the market on the positioning of this formerly high-end consulting outfit.
  • Lack of deep domain capabilities in the large IT spending vertical of BFSI

 HCL Opportunities
  • Potentially benefit from rise in discretionary spending given significant presence in SAP through Axon
  • Strong presence in the defence space and potential to benefit from offset provisions introduced in Indian defence imports

 HCL Threats
  • Delay/limited success in development of platform BPO capabilities may restrict participation in the BPO space
  • Adverse impact of foreign exchange movement
  • Emergence of potentially disruptive technologies/practices like cloud computing


Tuesday, 28 February 2012

India’s Top Five IT Service Providers Overview & SWOT Analysis Series: Part-IV (Wipro Analysis)


Business Description
Wipro is amongst the largest Indian IT services companies. In addition to the IT business, Wipro also operates in the consumer products and lighting solutions industries. The company had consolidated revenues of over US$ 5.8 Billion with IT services revenues of US$ 4.4 Billion and currently employs over 115,000 professionals. It serves 890 clients across several industry verticals including Technology, Media, Telecom, Financial services, Manufacturing, Retail, Transportation and Utilities. Wipro has followed a “string of pearls” acquisition strategy to acquire domain competencies, with Infocrossing and Citi Technology Services being among the larger acquisitions.
Wipro Strength Weakness Opportunities (SWOT) Analysis
Wipro Strength
·         Wipro continues to build out a full set of capabilities for SAP implementation, including investing in consulting and account management, to accelerate its move up the value chain, from being a technology partner to a strategic business solution partner. To that end, Wipro is also hiring more experienced local talent for on-site client-facing activities.
·         Wipro continues to focus significant investments in selected verticals — especially in utilities, CPG and manufacturing — building out a large set of templates and accelerators. In addition, it is investing in newer areas, including sustainability solutions, SAP's Business By Design SaaS product and cloud solutions, such as its private cloud Vblock-based SAP solutions.
·         Clients cite Wipro's willingness to sign fixed-price contracts, responsiveness, cost-effectiveness and technical expertise as key strengths.
Wipro Weakness
·         Even as Wipro is investing in industry expertise, at the project level, clients continue to play an active role in domain-centric work.
·         Its fast growth has impacted resourcing, as clients have raised concerns on the quality of some of its consultants. And in some engagements, clients have noted some turnover in Wipro project resources and the staffing of junior resources, especially in the offshore team.
·         Incomplete physical delivery presence in Europe and Asia/Pacific
Wipro Opportunities
·         Ability to participate in mega deals given increased scale, leverage scale in the fast-growing IMS space
·         Strong presence in the defence space and potential to benefit from offset provisions introduced in Indian defence imports
·         Serve client need for service aggregator and integration services as part of migration to cloud-based services
Wipro Threats
·         Industry wide supply side pressures leading to attrition, wage inflation and eroding margins Significant ramp-up in offshoring capabilities by global vendors
·         Adverse impact of foreign exchange movement;
·         Economic slow-down in key markets and potential anti-offshoring legislation
·         Emergence of potentially disruptive technologies/practices, data security breaches


Thursday, 16 February 2012

India’s Top Five IT Service Providers Overview & SWOT Analysis Series: Part-III (Infosys Analysis)


Business Description

Infosys was incorporated in Pune, in 1981 as Infosys Consultants Private Limited, and later it changed its name to Infosys Technology Limited in June 1992 and came for an Initial Public Offering in February 1993 with an IPO price of INR 95 per share. In March 1999, it issued ADR and listed in NASDAQ.

Infosys Technologies is the second largest Indian IT services player with annual revenues of over US$ 4.8 Billion (FY10) and over 122,000 employees. It has over 590 active clients spread across verticals such as Banking, Financial Services, Insurance, Retail, Manufacturing, Telecom, Utilities and Transportation. It serves this client base spread across North America, Europe and Asia Pacific out of 63 offices and development centres in India, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan. The Company also has one of the largest BPO practices in India with over 24,000 employees across 10 countries. It also provides products and platforms across a number of segments including banking, digital media as well as mobile communication services.
Infosys Strength Weakness Opportunities (SWOT) Analysis
Infosys Strength
  • Infosys is one of the largest offshore-centric players in the SAP implementation space. It has a strong track record of growth, a long list of large clients across a wide range of industries and large complex implementation experience at some of the largest companies across all verticals.
  • Strong brand recall and long standing client relationship with 98% of revenue comes from existing clients.
  • Among the offshore-centric players, Infosys is furthest along in developing business consulting and industry expertise, although these capabilities are not yet fully realized in some SAP projects.
  • Infosys has invested in a large number of reusable assets, accelerators and solutions, including an All-in-One Solution for ISVs, a New Product Introduction & Promotion Solution for consumer packaged goods (CPG), a Complaint Handling Solution for Life Sciences and "Newspaper in a Box" solution for the publishing industry.
  • Clients cite price competitiveness, flexibility, superior technical expertise and strong partnership focus as Infosys' key strengths.
Infosys Weakness
  • Continued reliance on North America for over 65% of its revenues
  • Relatively weak on technology R&D services and a smaller infrastructure management services practice compared to peers such as Wipro
  • Not doing well enough when it comes to innovation beyond process IP
  • Organizational change management is an area clients suggest that Infosys can improve on
Infosys Opportunities
  • Significant scope for further mining of current client base especially in view of increasing trend of vendor consolidation
  • Evolution of non-linear delivery models which could positively impact margins
  • Scope for Geographic expansion in new markets
Infosys Threats
  • Rupee appreciation against the basket of currencies such as Dollar, GBP and Euro could adversely affect the earnings.
  • Its revenues are highly dependent on clients primarily located in US and Europe as well as in certain industries; therefore any macro economic factors such as decrease in discretionary spending, slower economic growth in US and Europe, any regulatory change could adversely affect the earnings.
  • Market is facing an intense competition for technology services from both domestic companies and MNC’s and further intensity in the competition could lead in pricing war.