Convergence Plus
Friday, September 20, 2019
Infosys sets up tech and innovation centre in Arizona

Plans to hire 1,000 US workers by 2023. Infosys has set up a technology and innovation centre in Arizona, US and plans to hire 1,000 American workers in the state by 2023.

The company, which had in 2017 announced its commitment to hire 10,000 American workers in two years time, said it had surpassed that target. Arizona Technology and Innovation Centre has a special focus on autonomous technologies, Internet of Things (IoT), full-stack engineering, data science and cybersecurity, Infosys said in a statement.

Infosys’ investment in Arizona will amplify top local talent alongside the best global talent to shrink the IT skills gap in the state, it added. Hiring is currently in progress and the centre will move to its permanent location - a 60,000-square-foot facility in the ASU Novus Innovation Corridor by 2020 - and would accommodate up to 500 employees, the statement said. “Infosys plans to hire 1,000 American workers in the state by 2023,” it added.

The inauguration of Infosys’ Arizona Technology and Innovation Centre is an important milestone in the company’s efforts to help American enterprises accelerate their digital transformations, Infosys CEO Salil Parekh said. “We are excited to have completed our commitment to hire 10,000 American workers and we look forward to leveraging and empowering this specialised workforce to bridge the technology skills gap in the market and accelerate the digital agenda of our clients,” he added.

The centre includes a series of labs, showcasing new prototypes in virtual reality, augmented reality and robotic technologies. In addition, it is home to a Makers Space that encourages innovation through 3-D printing and other Makers projects.

Infosys has also announced a partnership with InStride that will allow its employees to complete degree programs and continuing education courses through Arizona State University. (Source: The Hindu BusinessLine)

Intertrust Roars Past 2 Billion Devices With OTT Content Protection for One-Quarter of the Globe

ExpressPlay DRM — World's Most Complete Cloud-based Multi-DRM — Marks Big Year Spanning Support for Hundreds of Millions of Viewers in Major Sports Events and Ecosystem Expansion in India, Europe, U.S., and China

AMSTERDAM at IBC 2019 (Hall 5, Booth 5.A55) — September 12, 2019 — Intertrust, the pioneer in Digital Rights Management (DRM) technology, today announced that ExpressPlay DRM™ has achieved an unprecedented milestone. The first and only multi-DRM technology available across all streaming platforms, DRM, and media formats, ExpressPlay DRM now protects the over-the-top (OTT) TV content for one-quarter of the world’s population, supporting a seamless viewing experience for more than two billion people.

The growth in service population represented by this figure came hand-in-hand with new records on the platform’s ability to handle massive transaction loads peaking over 50,000 requests per second in multi-operator, multi-DRM settings across several continents.

Today’s announcement, at the annual International Broadcasting Convention (IBC) in Amsterdam, also came in conjunction with a major expansion of ExpressPlay DRM’s sister product, ExpressPlay XCA™, which is the world’s first open-standard software conditional access (CA) system for smart TVs and set-top boxes. Operators can use ExpressPlay XCA to bridge the gap between CA and DRM content protection in a single, converged broadcast and broadband service.

ExpressPlay is the only multi-DRM cloud that supports Apple FairPlay DRM, Google Widevine, Adobe Access, Microsoft PlayReady and open-standard Marlin DRM. It is fully compatible with ExpressPlay XCA, which uses Marlin DRM to provide seamless interoperability for hybrid TV operators on mobile, web, smart TVs and set-top boxes. ExpressPlay, which offers integration with leading watermarking technologies to protect early-window 4K/UHD content, also delivered another recent world record as the first DRM used for this application.

“ExpressPlay traces its roots to our pioneering DRM products in the ‘90s, and it is deeply rewarding to see it become the global gold-standard for multi DRM,” said Talal G. Shamoon, CEO at Intertrust Technologies. “As we license our technology to major native DRM platform providers, it’s an honor to run multi-DRM services for the world’s leading studios and service providers, who trust us to deliver flawless, secure services for their valuable content offerings.”

Leading DRM Technology
Protecting both content creators and users in all major broadcast markets, including wide adoption across Europe, the U.S., China, and India, the ExpressPlay platform is geographically distributed for high availability and low latency. It is the leading DRM technology in China and an essential component of nationwide video distribution initiatives in the U.K., Italy and Japan.

In the last year alone, ExpressPlay DRM has supported 23 million concurrent OTT users at a single major International sports event, with a peak handling load of 100 million daily active users for a specific event in one day.

The cloud-based service can enable online media service with robust rights management in a few easy integration steps without any new infrastructure or setup cost. It offers enhanced hardware security that meets Hollywood standards for premium UHD/4K and early-window content, single API access for multi-DRM support, and end-to-end content protection enhanced with session-based video watermarking.

Media and analysts can learn more about ExpressPlay DRM at IBC 2019 in Amsterdam which takes place at the RAI convention venue. Interested parties are invited to the Intertrust booth in Hall 5 (Booth 5.A55), or they can contact to arrange an online or in-person briefing and demo. (Source: Convergence Plus)

RCom Lenders may Get Only ₹10k cr Against ₹49k-cr Claims

ON THE BLOCK are spectrum, towers and fibre assets of RCom and two of its subsidiaries; telcos Airtel and Jio, tower cos, PE firms and ARCs are among the prospective bidders

The assets of Reliance Communications (RCom) and its two units, including spectrum and towers, are expected to fetch ₹9,000- ₹10,000 crore, people familiar with the matter said, likely leaving financial lenders staring at a steep haircut given their combined claims of over ₹49,000 crore.

“The initial valuation shows that the assets should fetch at least ₹9,000-₹10,000 crore, if the insolvency proceedings complete within the next few months,” said one of the people directly involved. “The value of a telecom firm’s assets, especially spectrum, shrinks with time and all approvals need to come in place for a successful sale.”

In the ongoing insolvency process for RCom and its two units — Reliance Infratel and Reliance Telecom — assets up for sale include airwaves in the 850 MHz band—to be used for 4G — in 14 of India’s 22 telecom circles, about 43,000 telecom towers and some fibre.

Those that have shown interest in the assets include mobile phone operators Reliance Jio and Bharti Airtel; tower firms like ATC Telecom Infrastructure; asset-restructuring firms such as Asset Care & Reconstruction Enterprise Ltd and UV ARC; private equity firm TPG Asia VII SF Pte; and India Infrastructure Fund II.

The companies mentioned above did not respond to ET’s queries while TPG declined to comment.

As many as 53 financial lenders have raised claims of about ₹57,382 crore, of which ₹49,223.88 crore had been verified by RCom’s resolution professional (RP), Deloitte.

Top Indian financial lenders include State Bank of India with a verified exposure of over ₹4,800 crore, Bank of Baroda (over ₹2,500 crore), Syndicate Bank (over ₹1,225 crore) and Punjab National Bank (nearly ₹1,127 crore). Top overseas lenders include China Development Bank (nearly ₹9,900 crore), Exim Bank of China (over ₹3,356 crore) and Standard Chartered Bank (Mumbai and London, over ₹2,100 crore).

Another person said that the resolution professional is trying to wrap up the insolvency proceedings by mid-October.

“We are bound by confidentiality obligations and are unable to comment on client-specific matters,” said a Deloitte spokesperson in response to ET’s queries.

The person added that the companies that have expressed interest have started their due diligence into the assets, but the main stumbling block in way of the successful sale of assets as part of the overall insolvency process remains spectrum, the most valued asset.

Like Aircel, another telco that’s undergoing bankruptcy resolution, RCom is embroiled in a battle with the telecom department over ownership of spectrum in the National Company Law Tribunal (NCLT).

The government wants both telcos to return the airwaves, which it regards as a national asset, since they haven’t been paying fees or dues. The telcos say they bought the spectrum at auction and, since it’s within the validity period, the operators have the right to sell it to another party and repay financial lenders, many of which are state-run entities.

RCom holds the licences for 850 MHz 4G spectrum, which will expire in July 2021. Any delay will see its value drop further. Any order in favour of the Department of Telecommunications (DoT) will hit the asset-sale process, and thus, lenders.

In an earlier deal to sell wireless assets to Reliance Jio, which collapsed last year after it wasn’t cleared by the telecom department over unpaid dues, RCom was supposed to sell the spectrum for ₹7,300 crore.

Besides banks, operational creditors such as tower companies, equipment vendors and DoT are facing losses as well. They have claimed nearly ₹30,000 crore in dues, of which over ₹21,000 crore has been verified. For example, in the case of Aircel, the resolution plan has earmarked just about ₹16.5 crore for hundreds of operational creditors, which had claimed about ₹20,000 crore in dues. (Source: Economic Times)

Time to Revisit FTAs to Fire Up Electronics

Union IT minister says whatever the opposition, the country will never compromise on data sovereignty. India should revisit free trade agreements (FTAs) with several countries, as they continue to hamper the country’s plan to emerge as a manufacturing powerhouse for electronics, said Ravi Shankar Prasad, the Union Minister of Communications, Electronics & Information Technology, and Law & Justice.

The country will also not compromise on data sovereignty, Prasad said, as the provision for mandatory data localisation under a proposed data protection law continues to draw criticism from large US technology and finance companies.

“I am keen to push India’s case for strategic electronics, medical electronics, but some FTAs have been done with some countries… I do not wish to take the names of those countries, and I regret to say those FTAs were executed completely disregarding the interest of India,” Prasad said during the ET Startup Awards on Friday. “We have to revisit them in our own way”.

India has a Free Trade Agreement (FTA) with several countries. Under an FTA, each country is required to gradually reduce and eventually eliminate tariffs on the other country’s goods - which also include electronic goods - according to a predecided timeline of implementation. The Consumer Electronics and Appliances Manufacturers Association (CEAMA) said recently that appliances and consumer electronics products should be excluded from the purview of FTAs, to boost domestic manufacturing and promote exports.

Critics of India’s FTAs have reasoned that the agreements signed by India are with production-driven economies, resulting in finished products from these countries being imported into India at a lower cost than what it would have cost to manufacture the same in India.

Prasad, who has won praise for driving the Digital India initiative, said the country had just two factories making mobile phones in 2014, but that has grown to 268 units now.

On the proposed data protection legislation, Prasad said the Bill was a work in progress and that the government was in the process of seeking clarification from some eminent people in the field.

“I can give you some general ideas, and my general idea is, we need to have a balance between data availability, data utility, data innovation, data anonymity and data privacy. We need to have a clear understanding between personal data and impersonal data. Impersonal data must be available for general good, personal data can also be available, (but) duly anonymised,” he added.

India’s stand on data localisation has complicated the already persisting trade issues between the United States and India, with US technology and financial companies such as Facebook, Google, Mastercard, Visa, American Express and PayPal hoping for a liberalised data regime.

“I am aware that some degree of movement is inherent in a data economy, but one thing is very clear, and let me make that statement using the platform of the Economic Times — the government of Narendra Modiji will never compromise on data sovereignty of India, that should be very clear,” he said.

The government’s reasoning is that data generated by Indians should be viewed as a natural resource, which the state must protect through localisation. (Source: Economic Times)

Trai Consultation Paper on Broadcast Tariffs Seems to Suggest Price Control: Industry

Broadcasters, distribution operators feel regulator should let the industry settle down post the new tariff order. A top executive of a large TV network says he is shocked — and somewhat disturbed — with the new consultation paper that the sector regulator, Trai, has come out with. “Can we talk economics and not emotions,” he said requesting anonymity.

“As a regulator, Trai’s role should be to ensure orderly growth of the sector and all the stakeholders. What they did with the new tariff order (NTO) — though a monumental shift in business — was a good framework and a step in the right direction. But now what the regulator is apparently trying to do with the new consultation paper is clearly impinging on (amounting to) price control and unsettling the industry. First Trai should allow the industry to settle down,” he said.

For the uninitiated, the Telecom Regulatory Authority of India (Trai), on August 16, initiated a process to review the new regulatory framework for the broadcasting sector. It has issued a consultation paper seeking stakeholders’ responses on 30 questions covering different aspects related to the NTO that came into force from 1 February 2019.

While broadcast and distribution industry executives are worried and already looking at various options, including legal, some of them have started questioning Trai’s priorities.

“Why is it that the regulator wants consumers to watch a lesser number of channels?” asked another executive. “What do they want to achieve by disallowing bouquet formations, when it is a usual practice across the globe and not just in the TV saturated markets.” he said.

The three main issues that Trai has sought to address with the consultation papers are — whether channel bouquets should be allowed, should a cap on discounts within bouquets be reintroduced, and whether the ceiling price of channels in bouquets that’s ₹19 at present, needs to be re-examined.

Trai is of the view that too many bouquets are being formed by the broadcasters/distributors and the consumer is getting confused and as a result forced to adopt some of the suggested packs of TV channels. This kills the freedom given to consumers to choose desired TV channels.

To this, a senior broadcaster noted that formation of bouquets is a global practice and works in the consumers’ favour.

Bharat Anand, professor of strategy at Harvard Business School has written an entire chapter on ‘why the à-la-carte pricing has not killed the cable bundle’ in his book, The Content Trap.

Anand writes that bundles not only increase revenues for cable operators, they also help viewers by “smoothening prices” across channels for viewers with different preferences. “Bundles provide more to watch, at low incremental cost,” he wrote.

TV executives in India argue that nowhere in the world do consumers only select à-la-carte channels. An insistence on a la carte might mean the price of popular channel could be too high and out of reach.

Also, on the question of discounting on bouquets, the Indian broadcasting Foundation (IBF) said in a statement that the cap on bouquet discounts under the NTO was struck down by the Madras High Court as “arbitrary”. “Further, the global practice in the television and cable industry is the offering of content in bouquets customised to meet the diverse needs of consumers,” IBF said.

Furthermore, according to BARC data, consumers watch 56-84 channels in a quarter. “If one selects that many standalone channels , she will be paying much more,” a broadcaster added.

The IBF has said that promoting a la carte at the cost of bouquets will deny consumers the choice they need in a country like India with such a large and variegated diversity of cultures and languages.

“Smaller as well as niche content channels will lose out and their viability will come under question. Broadcasters will be unwilling to launch new channels and producers will be unwilling to experiment with new content. All this will lead to fewer shows being produced which will have a knockdown effect on downstream production and on employment in the sector,” IBF warned.

HUE AND CRY OVER PRICING Since the new framework established by the NTO came into force, many consumers have seen a spike in their monthly cable/ DTH bills. However, it’s not something which is alarming, points out a broadcaster. In fact, data shows that over the last 10 years, end-consumer ARPU (average revenue per user) for TV services has gone up by around 4% CAGR, which is much less than the rate of inflation.

As per a World Bank report, inflation rate in India has gone up by 7.2% CAGR over the last 10 years. “We are not even beating inflation. Compared to markets like US, where cable bills are $50-75 monthly, here the monthly bill is less than $4. So even if the bill has gone up by say 10% compared to last year, how is it earth shattering?” he said “Look at price of milk or petrol or any other daily commodity and then compare with cable.”

A senior industry analyst added that the basic question is “Should the regulator be talking about the pricing of a commodity, which is not basic?”

Another broadcaster added that in an open market, no broadcaster can price channels absurdly. “Everyone has their P&L and we are not fools. Trai has set up a framework, now allow us the freedom to operate within,” he argued.

Analysis of BARC data sourced from subscribers and consumer data from distribution platform operators shows that there is a 6% drop in total impressions on television between November last year (pre-NTO) and June 2019.

If one analyses data further, there is a 4% drop for free-to-air TV, which was also because many broadcasters converted FTA channels into pay prior to implementation of the NTO, and 2% in case of pay TV.

Further, the total reach of television in India is down by 1%, which is around seven million TV viewers.

As per viewership measurement agency BARC India, impressions are the number of individuals of an audience, averaged across minutes, while reach is the total number of individuals who viewed a particular event/ show for at least one minute.

The biggest issue that the industry has with the Trai is on the timing of the consultation paper.

“Considering that 65% of Indiam households have television, the NTO has impacted two-third of the nation. And Trai wants to make the fundamental changes in channel pricing and bouquet formation even before the industry and consumers have adapted the new regime, which is absurd and against all norms of a stable regulatory regime,” said one of the broadcaster.

IBF, the apex body of TV broadcasters has also condemned the move arguing that any regulatory intervention at this early stage in the implementation of the NTO is not only premature but will have disastrous consequences for the broadcasting industry. (Source: Economic Times)

Trai’s New Consultation Paper on Broadcast Tariffs Spells Trouble for Industry: Experts

Barely 8 months into new tariff regime, Trai has started a process to review framework; some steps can badly hurt industry, fear broadcasters. “We are heading for chaos,” said a top executive of one of the leading broadcast networks when asked to comment on the latest consultation paper by the Telecom Regulatory Authority of India (Trai). It’s a sentiment that is echoed by many in the broadcasting industry after Trai last Friday initiated a process to review the new regulatory framework for the broadcasting sector.

Trai issued a consultation paper titled ‘Tariff-related issues for broadcasting and cable services’, seeking stakeholders’ responses on 27 questions which covered different aspects related to the new tariff order (NTO), which came into force from February 1, 2019.

The three main issues that Trai has sought to address with the consultation papers are — whether channel bouquets should be allowed; should a cap on discounts within bouquets be reintroduced; and whether the ceiling price of channels in bouquets — ₹19 at presentneeds to be re-examined. World-wide bouquets are a standard feature of the TV industry. Consumers across the world opt for them, rather than pick individual channels as the bouquets are cheaper.

Broadcasters and analysts feel that if Trai intervenes in the first two issues — bouquets and cap on discounts within them — then the consequences will be far reaching and many smaller channels and networks will even face an “existential crisis”.

If Trai disallows broadcasters and distribution platform operators (DPOs) — a term used for cable operators and DTH providers — from assembling bouquets, this will severely impact their business model as many smaller and less popular channels will not get enough audiences and lose reach and thus viewership, resulting in a further drop in advertising revenue. Ultimately, they may have to shut shop.

“I don’t think Trai understands the core of the broadcast business. They seem to have already made up their mind and I will not be surprised if they finish the consultation process and open-house discussions by October-November and come out with the amendments to the NTO by end of the year,” said the head of distribution of a leading TV broadcast network.

Experts feel that Trai may direct all the broadcasters and DPOs to implement changes to the NTO from January next year.

Introducing an MRP for channels falls under Trai’s charter, but a cap on discounting of bouquets is tricky and the entire process would be a lengthy one with a lot of legal tangles, said Rohit Dokania, Senior VP for Research at IDFC Securities.

“Trai will try and impose a certain discount rate between a la carte and bouquets of channels; however, since the Madras HC has already called out 15% discount imposed through the earlier tariff order as arbitrary, Trai will have to be very sure of what it does,” Dokania said. He added that removing the option of forming bouquets is against the basic principles of doing business.

Most of the broadcasters, Trai has found out, are offering discounts ranging from 40%-54%, while in some cases it is up to 70%.

While Trai believes that the NTO was envisaged as a policy to give power of selection and choice in the hands of end consumers and this kind of discounting is making MRP of individual channels illusory thereby impacting the a la carte choice of channels by consumers, the Madras High court found the 15% cap arbitrary and set it aside.

Trai fixed ₹19 as the MRP cap for channels under the NTO. However, it has found that broadcasters have kept all the popular channels – 66 – in the top bracket. These consist mostly of Hindi and regional general entertainment channels and sports channels.

Now, if Trai re-examines the pricing, the channels may lose the power to reinvest in premium content, especially when they are facing tough competition from video streaming services.

“Trai has to stop seeing broadcast and digital sectors in isolation. Can the regulator regulate the pricing of a Hotstar or a Netflix? If not, one has to ask, will regulating the pricing of TV help,” asked Rajiv Sharma, co-head of institutional research at SBICAP Securities. “Recent consultations if enforced may bring down the monthly bill, but TV may lose value. Broadcasters won’t be able to earn enough to invest in quality content and may lose out to OTT.”

Sharma said that going back to issues, which have been decided by courts, sends a wrong message to fresh investments. “For people, who cannot afford premium TV, there is an affordable option of DD FreeDish and Trai should make that more robust,” he said.

Another broadcaster, seemingly referring to the upcoming launch of Jio Fiber, stated, “This move makes sense only from a dual-triple play perspective, where a broadband operator is also giving cable and telephony services. So you take the broadband plan and free channels in the basic pack, and for premium content, you subscribe to OTT, via the same broadband.”

All the executives across TV broadcasters and DPOs ET spoke with sounded worried and concerned, and requested anonymity to speak freely as they are first expected to give their responses to the sector regulator.

“Trai started this entire process with the idea that monthly cable and DTH bill will come down as people will select only 15-25 channels, which has not been the case. Contrary to the regulator’s idea, in most cases monthly bills have increased. They have realised that they have created a mess and now blaming the broadcasters and DPOs,” said another top executive of a broadcast business.

If Trai has its way, the broadcast sector will see another disruption in less than a year, and this time may force many smaller and less popular channels and TV networks to shut. The sector has already lost 10-12 million TV subscribers in the last five months (as per various industry estimates) post NTO and industry experts fear that this will kill the sector as distribution revenues will drop significantly at a time when advertising revenues are already under pressure. (Source: Economic Times)

MeitY’s e-Kiosks Target 30m Farmers

With an aim to dispense pensions of eligible farmers easily under the government subsidy scheme, digital kiosks or Common Service Centres (CSCs) under the Ministry of Electronics and IT (MeitY) have set a target of enrolling 30 million small and marginal farmers by August 15.

The pension is dispensed under the Pradhan Mantri Kisan Maan-Dhan Yojana (PM-KMY), which was announced in the budget for 2019-20 and launched by agriculture minister Narendra Singh Tomar on Friday.

“I have asked all village-level entrepreneurs (VLEs) who run over 3 lakh CSCs across India to register at least 100 small and marginal farmers by Independence Day,” said CSC CEO Dr Dinesh Tyagi. “All our CSCs will remain open on Independence Day also to complete the target of registering at least 3 crore farmers by Independence Day.”

Under the PM-KMY, a monthly pension of ₹3,000 will be provided to farmers holding up to 2 hectares of farmland. (Source: Economic Times)

IT cos see more churn amid battle for talent

Attrition Rates Hit 2-Yr Highs for Tech Giants Attrition rates at top-tier IT companies have peaked to a two-year high due to a shortage of suitable digital talent in India and on-site. The April-June quarter is traditionally a high-attrition period. But this year, rates have risen sharply in some companies (see graphic).

Infosys reported an attrition rate of over 23% in the recent quarter ended June — an increase of 300 basis points (100bps = 1 percentage point) from the preceding March quarter. Tech Mahindra’s attrition rate was up 21% from 19% in the year-ago period. At mid-tier IT firm L&T Infotech, the attrition rate of 18.3% was over 3 percentage points higher than the 15% in April-June 2018.

“Historically, when business was relatively stable, we used to have attrition of 13-15%. But today, we see a lot of disruptions happening, a lot of shortage of talent, a lot of new technologies coming into place, a lot of demand for skills,” Infosys COO Pravin Rao said in the earnings call. Infosys said a large part of its attrition was at the lower level and also included involuntary attrition. It added that it is working to correct this in the coming quarters.

Traditionally, employees leave for higher studies or collect bonuses and exit in this quarter. But constraint in supply of the right talent in both Indian and US markets is also leading to a rising churn at IT companies, industry trackers told TOI. “We continue to focus on our workforce strategy and management, such as the announced retention programme to recognise and retain our best talent,” Cognizant CFO Karen McLoughlin said. “Attrition rates increased 20-400bps year-on-year in the quarter and are beyond the comfort range for many companies,” Kawaljeet Saluja of Kotak Institutional Equities wrote in a research note. Though IT companies maintain that this attrition is not impacting project execution, Saluja said it is leading to an increased reliance on sub-contractors to fulfil demand.

Prabhudas Lilladher analyst Aniket Pande said the tightening of H-1B visa norms has led to a talent crunch in the US, and with lesser opportunities for Indian staff to go on-site, voluntary attrition among freshers is also up. Even as net hiring went up across the board in the April-June quarter and utilisation remained stable at an average 80%, finding the right talent for new-age digital projects has been a challenge for IT players. (Source: Times of India)

Mid-tier IT Caught between Shrinking Deals and Rising Costs

LEAN PATCH Spending slowdown in the BFSI sector and rising costs of hiring local talent in the US and Europe take a toll on numbers

India’s mid-cap IT firms have posted their worst set of numbers in the past few years in the just concluded quarter, following cuts in client budgets, deferred projects and rising costs of local talent in the US and Europe.

The slowdown in spending on banking, financial services and insurance (BFSI) has emerged as a key concern, industry insiders said, even as they remain wary of a spillover effect into other verticals.

Margins at Mindtree, which has changed owners, dropped to their lowest in eight years in the June quarter, while growth has been largely flat at L&T Infotech. Persistent Systems reported a 3% drop in dollar revenue, while Cyient posted its worst quarterly numbers in a decade.

The first quarter (April-June) typically tends to be soft for tech firms, analysts tracking the sector said. “There are higher expenses because of H-1B filing costs and wage hikes in this quarter, but this time, the appreciation of the rupee has also hurt the tech firms,” said Harit Shah, senior analyst, Reliance Securities. While margin pressures may ease in the second quarter, it will take longer for revenue to recover, he said. The BFSI sector in the US is facing a slowdown, impacting even large-cap companies. “While BFSI is a larger set that includes wealth management, capital markets, insurance, consumer banking and so on, there are certain areas within that seeing a slowdown — call it insourcing, lower tech spend by some of these larger banks,” said Apurva Prasad, IT analyst at HDFC Securities. “BFSI is a pain point that seems to be emerging.” L&T Infotech’s quarter-on-quarter revenue growth in constant currency terms was 1%, its weakest in the past nine quarters, according to analysts. This was due to weakness in its top banking client and another lender in Africa, they said. “For L&T Infotech, within BFSI there were two clients affected and they called it earlier too. But the real concern across the space is if this macro slowdown can percolate into other accounts and verticals,” said Prasad.

Firms have been hit by unforeseen situations. Cyient was hit by a slowdown in two key verticals — aerospace, and defence and communications. The company will have to overcome issues in its top 20 clients to achieve significant revenue growth, analysts said.

L&T Technology Services was also impacted by a ramp-down in spending by one of its top clients. Revenue at a key vertical — telecom and high-technology – declined $7 million quarter-on-quarter, HDFC Securities said. Analysts are, however, confident that the company will be able to revive profit margins in the coming quarters due to its varied business mix and strong growth in its transportation vertical. Business at Mindtree, which analysts believe is fundamentally strong, is likely to be hit till there is certainty around senior leadership following its acquisition by Larsen and Toubro. Its new CEO is expected to come on board on August 2.

Kotak Institutional Equities said the company can grow revenue if attrition rates are contained. S N Subrahmanyan, a director at Mindtree and chief executive of L&T, however, told analysts in a recent call that he expects deferred deals to return and is confident of a stable second quarter.

Mphasis, however, was able to buck the trend, owing to increased growth from its digital business. The company secured $151million worth deals in its direct international business, of which 80% was in new-generation services, the company said. ( Source: Economic Times)

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