Copyright The Financial Times Limited 2007
By Joe Leahy in Mumbai

India’s information technology outsourcing sector is heading for crunch time next year, as a rising currency and increasing wage and real estate costs force the industry to rethink how it does business.

Multinationals continue to view the country as one of the most viable outsourcing destinations, but competitive pressures are making other countries look attractive.

Vineet Nayyar, chief executive of Tech Mahindra, described as “horrible” the impact on IT margins of a 12 per cent appreciation of the rupee against the dollar this year.

“All your emerging sectors are going to have major problems because of the currency adjustment,” Mr Nayyar said.

India’s IT outsourcing companies have been among the worst performing on the stock market this year. The sector has underperformed the MSCI India index by 47 per cent.

Much of the negative sentiment concerns the stronger rupee, which hit Rs39.16 against the dollar last month, its strongest level since March 1998.

Indian IT outsourcing companies earn most of their revenue in foreign currencies, particularly dollars, but they incur most of their costs in rupees.

The leading companies, such as Infosys Technologies and Tata Consultancy Services, have so far largely maintained their margins. Measures they have used to keep margins up include moving more work onshore and hiring cheaper graduates from disciplines other than engineering. They have also employed hedging.

Analysts believe, however, that a longer-term shift in strategy is necessary if India’s IT companies are to prevent more work going overseas to emerging centres such as Vietnam, China and Brazil.

Gartner, the research group, in a study of outsourcing destinations, found that India accounted for 28 per cent of the estimated workforce available globally for offshore work. That makes the country the largest such labour pool in the world.

But the study also found that costs were rising fast. Salaries are climbing an average 14.5 per cent a year, almost double the rate in China and the Philippines, and the rate of attrition is 20 per cent to 25 per cent.

“The attrition [rate] leads to the challenge of consistency and therefore of quality for buyers of these services,” said Ian Marriott, research vice-president at Gartner. “And so the whole appeal of India is starting to just lose a little bit of the gloss.

“It’s still very appealing for a whole variety of reasons but it’s starting to get people thinking: should we investigate other locations as well, probably not as an alternative necessarily but in addition to India.”

Indian companies needed to move away from thinking that more demand meant more hiring and extracting greater productivity out of existing workforces, Mr Marriott said.

While the larger companies were also trying to become more global and were setting up centres in other offshoring locations, this was not an option for the small and medium-sized outsourcers, he said.

These smaller companies had to become more specialised. “They’ve got to be very niche by design and very focused on specific markets, specific services, specific kinds of customers,” Mr Marriott said.

Time for India’s IT outsourcers to take a fresh look at the data

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The survey, made through 305 interviews in Ha Noi and Ho Chi Minh City , also indicated that about 88 percent of professional internet users said internet is indispensable in their daily business.

“We strongly believe that the broadband internet service in Vietnam will see a boom in development,” said Valerie Faudon, vice president in charge of maketing programme at Paris-based Alcatel-Lucent Group.

She said the annual growth rate of broadband internet in Vietnam had already exceeded the government’s forecast as well as service providers’ expectations.

“The survey will help us to make a concrete business plan to provide the service in Vietnam ,” she said.

According to the survey, about 56 percent of professional internet users could afford a 10-20 USD internet bill at their home. Their main applications would involve multimedia content such as online music, video, games and downloads.

Meanwhile, about 95 percent of them have desktop computers at home, and 16 percent of them are planing to buy laptop computers, the survey reported.

The survey, also made in nine other countries worldwide, showed that Vietnam had a very high rate of voice over internet usage, just behind Brazil.

According to the Ministry of Information and Communications, there are currently 16.7 million internet users and 4.8 million internet subscribers out of population of 85 million.

The government recently announced plans to inject 100 trillion VND (6.3 billion USD) to increase the country’s Internet penetration to 35 percent by 2010. It expected the telecoms sector to generate revenues of up to 55 trillion VND (3.5 billion USD) per annum in the same period.

Vietnam to see broadband boom

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The internet has been around in Vietnam for 10 years and has spread to every corner of the country, from large city to the countryside. In the 10 years since the internet arrived in Vietnam the user number has risen to 18.64 per 100 population. In comparison, in Thailand it is 12.65/100, in China 9.4/100, and in the Philippines 9.2/100. In fact, internet services are far cheaper and more convenient here than in many other places in the world.

The price is so low that you only have to pay VND200,000 (US$12.5) a month to play online games frequently. Kids in Ho Chi Minh City sit all day long in Internet cafes paying just their breakfast money. Foreign tourists can easily find a plethora of Internet cafes with a maximum tariff of VND5000 per hour of access.

Internet in Vietnam

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NTT Communications Corp (NTT Com) and Vietnam Posts & Telecommunications Group (VNPT) have announced an agreement to form a joint-venture company, Global Data Service Joint Stock Co, in Hanoi in early January 2008 to provide world-class data-center services. NTT Com and VNPT will be among the first telecom operators to provide such services in Vietnam.

Expansion of the Internet in Vietnam is driving the need for data centers as network infrastructure from the companies that wish to run stable Internet related businesses increases demand for redundant IT facilities and data centers to ensure business continuity from Vietnamese, Japanese and other multinational companies operating in Vietnam.

The joint venture will establish data centers in Hanoi in mid-2008 and Ho Chi Minh City in early 2009 to provide services with support from NTT Com and VNPT. Its data centers will offer collocation and hosting services that ensure complete redundancy for uninterrupted power supply, air conditioning and power generation/distribution. High-security measures will include facility-access control and camera surveillance. In addition, customers will benefit from having direct access to high quality global networks within data centers as this joint-venture company is formed by telecom operators.

NTT Com, its wholly owned subsidiary NTT Com (Vietnam) Ltd, and VNPT will also collaborate in the provision of tailored, one-stop services covering networks, system integration and information security.

NTT Com will take a 40% stake in the joint venture and VNPT will own a 60% share. Capitalization will be about 900 million yen, and the company will start with about 60 employees.

NTT Com, VNPT to Set Up Joint Venture in Vietnam

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Shanghai and Bangalore are well-known international development hotspots, but expert panelists at the CoreNet Global Summit in Atlanta, have identified up-and-coming cities that are expected to be the economic hubs of the future.

In a session called “Around the World in 90 Minutes,” panelists picked dozens of cities in Asia, Europe and the Americas that offer a business climate making them ripe for development by growing companies. Over 300 attendees attended the session, part of the corporate real estate and workplace association’s Global Summit meeting.

A prominent Asia expert, Dennis J. Meseroll, Director of Tractus Asia Limited, a location consulting firm, said companies should look to second and third tier cities that he calls “sleepers,” which include Chengdu, China, Orissa, India as well as Ho Chi Minh City/Hanoi, Vietnam.

Despite the attractiveness of exotic new Asian and Eastern European markets, Dennis Donovan, Principal of Wadley-Donovan-Gutshaw Consulting, said North, Central and South America, “continues to be very strong,” for outsourced call centers and manufacturing centers.

Beyond China and India: Ho Chi Minh City A Future Development Hub?

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Ho Chi Minh City’s stunning economic growth this year is a strong indication of the city’s future 2006-2010 socio-economic development plan successes, said experts.

According to a people’s committee report, all 14 socio-economic development targets for 2007 were achieved as of November and the city’s economic growth rate exceeded the average 12 per cent proposed in its 2006-2010 plan.

The city’s gross domestic product (GDP) in 11 months increased nearly 12 per cent in comparison with the 11.5 per cent gained last year. The report anticipates that the city’s GDP by year’s end will reach 12.6 per cent, a record for the past decade.

Experts have said the city’s economic growth saw equal contributions from its key sectors: services, industry and development investment.

The services sector, which grew by 14.1 per cent and accounts for 52.6 per cent of the city’s total GDP. Capital mobilised by banks hit $28 billion, up 73.3 per cent over the same period last year. Total loan balances hit $22 billion, up 67.6 per cent. In addition to the foreseeable development of the city’s retail sales and import/export sectors, tourism boasted an impressive performance of $1.2 billion in revenue, accounting for 98 per cent of the year’s target and up 27 per cent over last year. The first 11 months of this year also saw a large increase in the industrial sector, earning $19.3 billion and up 13.5 per cent over last year. Of that, foreign capital grew by 18.1 per cent followed by private capital at 13.5 per cent.

The city’s agricultural sector was gradually changing its focus to urban and ecological agriculture, a move aimed at reducing labour intensity in agriculture while meeting rising demand for food and eco products, said experts. As of November, Ho Chi Minh City had granted 16,965 trade certificates to newly-established enterprises with a total chartered capital of $7.9 billion, a three-fold increase over last year. As one of the nation’s top FDI earners, Ho Chi Minh City attracted $1.9 billion since the beginning of 2007, $1.26 billion of which was poured into real estate. Despite the city’s robust economic growth, a number of chronic problems were still hindering its economic development, experts stressed.

At a session to review the city’s socio-economic situation in 2007, Prime Minister Nguyen Tan Dung said that economic restructuring remained problematic, skilled and specialised human resources were still far less than demand and administrative reforms had yet to be fully implemented.

“The city’s traffic jams, flooding and social evils are escalating and need to be resolved,” he said. Earlier this month, committee vice chairman Nguyen Thanh Tai said that accelerating GDP growth next year and maintaining the city’s 20 per cent GDP contribution would be the most important tasks; while poverty reduction, education development, infrastructure improvement and transparency would also be prioritised.

By Duong Kieu
http://www.vir.com.vn/Client/VIR/index.asp?url=content.asp&doc=15212

Ho Chi Minh City’s stunning economic growth

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According to an article published by The Bangkok Post in Thailand, Vietnam has attracted a record $15 billion in foreign direct investment so far this year, up nearly 40 per cent from the same period last year, an official said. The amount strengthened booming Vietnam’s reputation as the new Asian magnet for investment, thanks to low wages, high literacy and a youthful population. Of the fresh capital, more than $13 billion come from 1,283 newly licensed projects and the remainder from the expansions of existing projects, said Phan Huu Thang, director of the Foreign Investment Department under the Ministry of Planning and Investment.

“Most of the new projects invest in services and technologies,” Thang said, adding that investors from Asia make up most of the fresh investment capital. South Korea took the lead with $3.68 billion, or 24.5 per cent of the total of newly registered capital, followed by the British Virgins Islands with $3.5 billion, Singapore with $1.55 billion and Taiwan with $1.14 billion. “The figures show that Vietnam is becoming a more attractive destination in Asia for foreign investors,” Thang said. Thang forecast that the total inflow into Vietnam would exceed $16 billion this year, a substantial jump over the initial target of $13 billion.

There are only a few web companies operating successfully here at the moment but, with Vietnam’s business environment expanding as it is, we conclude it won’t be long before all this changes. With this in mind, we have set up a strategic partner in Ho Chi Minh City with the long-term view of gaining market share.In just four days following the launch of this website, it was placed #15 on Google and #2 on Yahoo! for “vietnam web design”. It just goes to show how little the Vietnamese market is saturated with web design companies competing for business.

Vietnam - a surging new market?

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The following post on how to increase website traffic was submitted to ProBlogger by Adrian W Kingsley-Hughes.

I started the PC Doctor blog in May of 2005 and for the first few months my traffic was really low - down in the few hundreds of visitors a day. It was pretty depressing I can tell you and there were times when I thought about quitting.  I knew that the site was in the Google ’sandbox’ and so I either had to keep on plugging at it until it was out or I had to give up.

Fortunately, I decided to keep on posting but in the interim I decided that I was also going to do my utmost to drive traffic to my site manually until Google kicked in. I took a look around at what some of the successful blogs were doing and came up with three tactics that helped to double my website traffic in a month.

1. First, I made the most of Technorati tags.  I tagged every key word in each of my posts. Initially I did this manually but them I discovered a WordPress plugin called SimpleTags that made the job a whole lot easier. I found that by tagging my post effectively they were getting a lot more attention then their untagged counterparts, and as an added advantage I was getting focused, quality traffic to the site.
2. I leveraged my existing website.  I’ve been running my business website for a few years and that was getting modest levels of traffic that was relevant to my blog - so why not try to drive some of that to my new blog? I placed a few FeedBurner headline animator blocks on some of my most popular pages and after a day or so I noticed a significant increase in traffic for 5 minutes worth of work on my part.
3. Finally, I made effective use of trackback links to popular sites. If I commented on a post on another site I would make sure that I set up the appropriate trackback for it. The results from this are varied depending on the site and post that you are linking to but since I liked to comment and interact with the wider blogosphere anyway, it was free traffic.

Using these three simple techniques, I took The PC Doctor blog from a few hundred hits a day into the thousands in less than 30 days. This kept my interest in the site until it came out of the Google sandbox and I started to receive some serious traffic. However, I’m convinced that these actions I took at the early stages have helped me create a loyal and targeted readership that continues to benefit my blog today.

Get more tips on increasing website and blog traffic by subscribing to our RSS Feed

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RSS has become highly valuable and, according to a recent Yahoo survey, only 12% of internet users are aware of RSS and a mere 4% have it.

What is RSS?
RSS is Really Simple Syndication and often described as “a feed” one subscribes to. You have probably seen small, often orange, RSS icons on websites, which icons link to that website’s feed. RSS feeds often include the title of the article and a small excerpt. Viewing someone’s feed is referred to as “aggregation” as you are gathering all of the latest entries. It has become extremely popular with blogs as the headline format comes naturally.

Why should I use it?
Using RSS can save you lots of time on a daily basis. Let’s say you visit a collection of five news sites twice a day. Currently, you visit them one by one in your browser, look for a new story and then go on. Going through all five sites might take 3-4 minutes or more if you find a new article. With RSS, all you do is go into an RSS feed reader, or RSS aggregator, and you will instantly know which websites have new articles and which don’t. You will also be able to see past entries with RSS. If you were to only visit the website, you could miss an article if you don’t visit frequently enough or get bored of seeing the same article if you visit to frequently. RSS fits in perfectly with this scenario. Now, imagine if you wanted to keep tabs on 25 websites. RSS easily proves indispensable. You have probably already used RSS before…Google’s customizable homepage gets your news from RSS feeds, as does My Yahoo.

Using RSS
So now that you’ve got a grasp of the guiding concept behind RSS, you must be eagerly awaiting your first aggregation. First, go out and find a feed to use. If you are using Apple’s Safari browser or Mozilla’s Firefox you can automatically find out if that website has an accessible feed, even before scouring the page for an RSS icon. In Safari a blue RSS icon appears to the right of the URL in the address bar and in the Firefox an orange icon appears in the same location. Clicking on the RSS icon in Safari will load a simple feed reader, where you can click Add Bookmark…on the right pane. The feed will now be viewable in the Safari bookmarks manager under All RSS Feeds.

In Firefox clicking the orange icon will ask you where you want to save the feed. Firefox deals with feeds as live bookmarks. Going to the place where you saved the “bookmark” in Firefox will show a folder with an expand arrow. Clicking on the arrow will show the latest entries on that particular website, with the most recent on the top.

However, your browser might not always find the site’s feed (not all websites have feeds). This is your cue to look for any feed-related items throughout the webpage. Many websites have a FeedBurner feed, often linked to via an icon that looks like a counter, which displays that websites current feed subscribers. Once you find such a feed icon, right click the icon or text link and copy the link location. We will then paste this into a feed aggregator in a little while.
Setting Up and Using an Aggregator
While the in-browser feed readers are convenient they are still quite rudimentary. You should consider switching to a full-fledged feed aggregator for more features and increased usability. There are many feed readers to choose from, each have different levels of complexity and features. There are essentially two types: web-based and application-based. With a web-based aggregator you can check your feeds from any computer but this comes at the cost of limited functionality and speed. With application-based feed readers you get excellent features and speed but lack mobility. You don’t have to decide just yet, I’ll go over configuring both types.

First off, we’ll start with a web-based feed reader. The most best and popular online feed reader, in my opinion, is Bloglines. Sign up for an account and click My Feeds on the top left. Test out Bloglines by adding a few feeds. When you setup Bloglines for the first time, it will suggest a few feeds to subscribe to. I usually do not accept them and just add my own. Below My Feeds should be a Add link that you will click.

You will be on a subscribe page now. If you found the feed on the website you can paste that in here. However, Bloglines has a feature where you can just type in the URL of the website and it will search for feeds. It may find several feeds and other times it will not find any.
screenshot16.jpeg

To avoid confusion about which feed to use, I suggest using the one shown on the website as that is the one they want you to use. Sometimes they will place a link to their FeedBurner feed and forget to remove the old feed. Either way, whether you enter a feed or URL, click Subscribe and use the default options. Do this several times with some more feeds and you will have setup Bloglines. Every time you login you can click My Feeds and instantly find out how many of your feeds have new posts you have not read yet. Unread feeds will be in bold type and have the number of new stories in parentheses. Bloglines provides a simple way to read RSS feeds from anywhere, but is not the fastest and most feature-rich solution.

What is RSS?

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I must admit to being mortified one afternoon in late October last year when our main website www.v9designbuild.com was demoted from a having a Google PageRank (PR) of 5 to that of 3; but it didn’t affect placement and we still retain #1 positions.

No one except Google really knows for sure why PR dropped for some news sites, but it certainly looked like an extension of last September’s paid directory massacre. At the time, Google targeted some well-known sites in the search marketing world and mainstream news too. Sites included heavyweights such as:
* Washington Post (from 7 to 5)
* Washington Times (from 6 to 4)
* Forbes.com (from 7 to 5)
* New Scientist (from 7 to 5)
* Seattle Times (from 6 to 4)

Google reported that: “selling links muddies the quality of our links-based reputation and makes it harder for many search engines (not just Google) to return relevant results.”

“One enlightened reader responded: “The Google conundrum is such that although it doesn’t count its own paid advertising text links results, Google does count everyone else’s…and they affect algorithmic results. In my opinion, that’s the flaw in the model.”

As per usual, one rule for Google and another for the rest of us.

Google’s downgrading

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