One Thing Today in Tech

The Competition Commission of India has imposed a penalty of a little under Rs. 1338 crore on Google for abusing its dominant position in multiple markets in the Android mobile device ecosystem, apart from issuing a cease-and-desist order. The Commission, which has been investigating Google’s market practices since 2019, also directed Google to modify its conduct within a defined timeline, according to a statement on the competition authority’s website. Google cannot restrict consumers from uninstalling its apps, the authority noted.

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The Competition Commission of India has imposed a penalty of Rs. 1337.76 crore ($161.4 million) on Google for abusing its dominant position in multiple markets in the Android Mobile device ecosystem, apart from issuing a cease-and-desist order.

The Commission, which has been investigating Google’s market practices since 2019, also directed Google to modify its conduct within a defined timeline, according to a statement on the competition authority’s website.

The Commission found that Google enforced multiple restrictive agreements with mobile device manufacturers that “guaranteed that distribution channels for competing search services is altogether eliminated by prohibiting OEMs from offering devices based on Android forks.”

“It ensured that OEMs are not able to develop and/ or offer devices based on forks, which are outside the control of Google.”

“With these agreements in place, the competitors never stood a chance to compete effectively with Google and ultimately

these agreements resulted in foreclosing the market for them as well as eliminating choice for users.”

The Commission noted that “Apple’s business is primarily based on a vertically integrated smart device ecosystem which focuses on sale of high-end smart devices with state-of-the-art software components. Whereas Google’s business was found to be driven by the ultimate intent of increasing users on its platforms so that they interact with its revenue earning service i.e., online search which directly affects sale of online advertising services by Google.”

The value of the fine is provisional and based on data including Google’s revenue in the Indian market, the Competition Commission said in its statement. However, the fine is a landmark decision that puts India alongside the EU in finding that Google has consistently tried and succeeded in eliminating competition using its market dominance.

Earlier this week, more than 40 European rivals to Google's shopping service urged EU antitrust regulators to use newly adopted tech rules to ensure that the internet search giant complies with a 2017 EU order to allow more competition on its search page, Reuters reported.

In India, the Competition Commission has ordered Google to comply with 10 different measures. Among them, Google must ensure that OEMs are not restricted from developing and selling their own version of Android on their devices. And Google must ensure that consumers are easily able to uninstall its pre-installed apps.

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IBM yesterday beat analysts’ estimates for its fiscal third quarter across software, consulting and infrastructure segments, and raised its growth projection for the full year, CNBC reports. The Competition Commission of India has pulled up MakeMyTrip, Goibibo and Oyo for anti-competitive behaviour, fining them $47 million in total; and mid-sized Indian IT services companies are reporting strong growth.

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IBM yesterday beat analysts’ estimates for its fiscal third quarter across software, consulting and infrastructure segments, and raised its growth projection for the full year, CNBC reports.

Earnings were $1.81 per share, adjusted, vs. $1.77 per share as expected by analysts, according to Refinitiv. Revenue was $14.11 billion, vs. $13.51 billion as expected by analysts.

Revenue increased 6.5 percent from a year earlier, according to a statement, CNBC reports.

“With our year-to-date performance, we now expect full-year revenue growth above our mid-single digit model,” CEO Arvind Krishna said in the statement. In July the company said it had expected growth at the high end of the estimate.

India's competition regulator said on Wednesday that it had fined online hotel-booking companies MakeMyTrip and Goibibo and IPO-bound hotel chain Oyo a combined $47 million for anti-competitive behaviour, Economic Times reports.

The Competition Commission of India (CCI) has been investigating the companies since 2019 following allegations by a hotel industry lobby that MakeMyTrip gave special treatment to SoftBank-backed Oyo on its platform.

The CCI has directed MakeMyTrip and Goibibo to amend their market behaviour, fining them about $27 million. Oyo was fined $20 million, according to ET.

Indian Web3 startups have grown to a 450+ community, with 4 unicorns, raising $1.3 billion in total investments, until April 2022, with 170 new Web3 startups registered in 2021-22, according to a press release from India’s software industry lobby Nasscom.

Currently, India is home to about 11 percent of the global Web3 talent, making the country the third largest Web3 talent pool in the world, according to Nasscom.

Persistent Systems, Pune based Indian IT services company, hit the $1 billion annual revenue run rate in the September quarter, the company said in a press release yesterday.

Persistent reported fiscal second-quarter revenues rose 40.2 percent year-on-year to $255.56 million. Revenue increased by 5.8 percent from the first quarter.

Meanwhile, KPIT Technologies, a software engineering services specialist in the automotive sector raised its forecast for the full fiscal year that ends on March 31, 2023.

“Q2FY23 performance has been better than expectations. We have a healthy pipeline with a couple of mega engagements expected to close in the coming 3-4 months,” Kishor Patil, co-founder, CEO and MD of the Pune-based company said in a statement.

“We have thus raised our FY23 growth outlook to 31-32 percent. The organic growth outlook is 200+ bps higher than the higher end of the 18-21 percent outlook at the beginning of the year,” Patil said.

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Apple yesterday released a new iPad with its A14 chip, and an iPad Pro running on its M2 processor. Microsoft is laying off some staff, Wall Street Journal reports, and the company is planning a new data centre in India, according to Economic Times. Cloud startup funding in Europe, the US and Israel fell significantly in the September quarter, global VC firm Accel said in a report. And electric scooter maker Ather Energy has raised more money.

Notes:

Apple yesterday introduced a new iPad with an all-screen design featuring a 10.9-inch Liquid Retina display. The new iPad runs on Apple’s A14 Bionic chip, and the company promises all-day battery life.

Apple yesterday also launched its new iPad Pro which is equipped with its most powerful processor, the M2 chip. The new iPads are available to order now, with availability in stores beginning Wednesday, Oct. 26.

Microsoft laid off more employees this week, becoming the latest tech company to show signs of concern about future demand amid a global economic slowdown, Wall Street Journal reports.

Meanwhile, Microsoft is planning to build a hyper scale data centre near the western Indian city of Pune, Economic Times reports.

Facebook’s parent Meta admitted defeat on Tuesday after Britain’s competition regulators issued a final verdict ordering the company to sell Giphy, the animated image-making company it had acquired, CNBC reports.

More than 40 European rivals to Google's shopping service urged EU antitrust regulators this week to use newly adopted tech rules to ensure that the internet search giant complies with a 2017 EU order to allow more competition on its search page, Reuters reports exclusively.

Ather Energy, an electric scooter maker in Bangalore, has raised $50 million in a funding round led by its existing investor Caladium Investment, Economic Times reports, citing a company filing with the Registrar of Companies.

Cloud startup funding in Europe, the US and Israel fell significantly in the September quarter, global VC firm Accel said in a report on its website yesterday.

“If you look at the total capital raised by cloud companies in Europe, Israel and the US this year to date, there’s not been a drastic change with total funding reaching $74 billion, just 12 percent lower than last year,” Accel’s Philippe Botteri, Will Sheldon and Richard Kotite, said the report.

“However, if you zoom in on Q3, the numbers show a very different picture with a sharp 42 percent decline,” they write, in the post, titled Accel 2022 Euroscape: Reset.

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Reliance Jio Infocomm, the wireless business of Indian conglomerate Reliance Industries and the country’s biggest mobile carrier, has chosen Nokia as a major 5G supplier, the Finnish telecom equipment maker said yesterday, Reuters reports. Biocon is looking to tap a $700 million market via a Japanese alliance for two of its biosimilar products. And Flipkart is launching a metaverse space called Flipverse in partnership with Polygon-incubated eDAO.

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Reliance Jio Infocomm, the wireless business of Indian conglomerate Reliance Industries, has chosen Nokia as a major 5G supplier, the Finnish telecom equipment maker said yesterday, Reuters reports.

Reliance Jio, India's biggest mobile carrier with more than 420 million customers, announced the launch of its 5G services on Oct. 4, starting with four cities.

Nokia will supply 5G radio access network equipment in a multi-year deal, according to Reuters.

Cognizant Technology Solutions has named two new executives to its leadership team, one from Infosys and the other who previously did much of his work at Accenture, according to an SEC filing from the US-based IT services company.

Ravi Kumar S, who until recently was president at Infosys, will join Cognizant on Jan. 16, 2023, as president, Cognizant Americas. Prasad Sankaran, a former Accenture executive, will start at Cognizant on Nov. 1, 2022, as the company’s new head of the software and platform engineering practice.

Biocon Biologics, a subsidiary of Bangalore-based biopharma company Biocon, has entered into an out-licensing agreement with Japanese pharmaceuticals company Yoshindo for commercializing two of its pipeline biosimilar assets, bUstekinumab and bDenosumab in the Japanese market, according to a company press release.

Flipkart, Walmart’s Indian e-commerce business, yesterday announced the launch of Flipverse—a metaverse space where consumers can discover products in a photorealistic virtual destination and shop on the Flipkart app.

Flipverse will offer an interactive shopping experience for consumers, giving them access to brands, supercoins—loyalty points—and digital collectibles.

Byju’s, India’s most valued startup which is under the scanner for its long delay in declaring its financials to the government, has $250 million from its existing investors, the ed-tech company said in a press release.

The loss-making company aims to achieve group-level profitability by March 2023, according to the press release.

Fitbit, which Google acquired in January 2021, is getting more closely integrated with the internet search giant, 9to5 Google reports.

A minor update to Fitbit for iPhone rolled out yesterday, but the bigger change is that the smartwatch and fitness tracker companion app is now published under Google’s App Store account, according to 9to5 Google.

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India’s Prime Minister Narendra Modi, yesterday, launched 75 Digital Banking Units (DBUs) in 75 different districts across the nation, as the government moves to bring banks to the doorsteps of citizens in far-flung areas. These units are brick-and-mortar outlets that will offer a variety of services to customers—all digitally. They will also inculcate digital financial literacy and awareness of cyber security in digital financial transactions. A self-service mode will be available round the clock at these outlets.

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India’s Prime Minister Narendra Modi, yesterday, launched 75 Digital Banking Units (DBUs) in 75 different districts across the nation, to boost financial inclusion in the country.

“We have given top priority to ensure that banking services reach the last mile,” he said. “We not only removed the physical distance but, most importantly, we removed the psychological distance,” Modi said, according to a government press release.

Prosus, a Dutch-listed technology investor, said on Friday it has agreed to sell its Russian online marketplace Avito for 151 billion roubles ($2.46 billion), to Kismet Capital Group, Reuters reports.

Horizon Worlds, Facebook parent Meta’s flagship metaverse for consumers, is failing to meet internal performance expectations, according to The Wall Street Journal, which has reviewed company documents including internal memos by employees.

Meta initially aimed to reach 500,000 monthly active users in Horizon Worlds by the end of the year, but the current figure is less than 200,000, according to the Journal.

Netflix will introduce its ad-supported plan called Basic with Ads in the US on Nov. 3, for about $7, and the plan isn’t available in India, Mint reports.

Workers at a second Apple store in the US have voted to unionise, The Verge reports. At the Penn Square store in Oklahoma City, 56 workers voted for and 32 against unionising with the Communications Workers of America.

In June, workers in Maryland voted to unionize in association with the International Association of Machinists and Aerospace Workers.

Avataar Venture Partners, which has backed unicorn software startups such as Amagi and Zenoti, has launched its second fund with a corpus of $350 million, three years after the firm launched its first fund, Economic Times reports.

Meanwhile, venture debt provider Alteria Capital, which has backed Mensa Brands and Dunzo, has launched its third fund with a first close of Rs. 1,000 crore ($125 million), largely from domestic investors and soft commitments from institutions.

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Infosys, yesterday, raised the lower end of its revenue projection band for the current fiscal year, but lowered the upper bound of its operating margins – capturing an industry-wide trend amid a potential recession in the Indian IT services companies’ biggest markets. Overall digital technologies related services continued to grow strongly, but the company also saw strong demand for its core IT outsourcing services, CEO Salil Parekh said yesterday.

Notes:

Infosys, yesterday, raised the lower end of its revenue projection band for the current fiscal year, but lowered the upper bound of its operating margins estimate – capturing an industry-wide trend amid a potential recession in the Indian IT services companies’ biggest markets.

India’s second biggest IT services company reported revenues rose 4 percent for the three months ended Sep. 30 from the previous quarter and 18.8 percent from a year earlier, in constant currency terms. The Bangalore company said it had won $2.7 billion in large contracts, the biggest haul in seven quarters. More than half of this was “net new,” according to Infosys.

Infosys defines a large deal as any order worth $50 million or more in value over the life of the contract.

“While concerns around the economic outlook persist, our demand pipeline is strong as clients remain confident in our ability to deliver the value they seek, both on the growth and efficiency of their businesses. This is reflected in our revised revenue guidance of 15-16 percent for FY23,” Infosys CEO Salil Parekh said in a statement.

In July, Infosys had forecast revenue growth in the range of 14-16 percent for the year that ends March 31, 2023.

Parekh, yesterday, also signalled the sustained shift to the cloud that started picking up during the Covid pandemic. During Q2, the company saw more than $1 billion in cloud services revenues, he said.

Overall, Q2 revenues rose 13.9 percent in reported terms to $4.6 billion from the year earlier period. Revenues attributed to digital services accounted for 61.8 percent of overall sales and those grew at 31 percent during the quarter in constant currency terms, Parekh said.

Q2 operating margins expanded by 150 basis points sequentially as the company saw strong demand for its core IT outsourcing business as well, and attrition – meaning staff churn – trended downward for the third quarter in a row, on an annualised basis. Margins were lower by 2.1 percent in comparison with Q2 of FY22.

Infosys continues to have the highest attrition rates among the top Indian IT companies. Q2 attrition was 27.1 percent versus 28.4 percent at the end of the previous quarter and 20.4 percent a year earlier. The company ended Q2 with 345,218 employees, reflecting a net addition of about 10,000 recruits.

And in the backdrop of the overall macroeconomic environment and operations seeing an increasing proportion of staff returning to the office, Infosys changed its margin projection for the fiscal year to 21-22 percent from its July estimate of 21-23 percent. CFO Nilanjan Roy expects the company to end the year with margins closer to the lower end of the range.

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HCL Technologies, yesterday, beat fiscal second-quarter revenue expectations and increased its guidance for the full fiscal year, signalling demand remains strong for its services in cloud, engineering, and digital technologies amid a global economic slowdown. At Wipro, Q2 revenues matched street expectations, but profits for the September quarter fell nearly 10 percent versus the same period a year ago.

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HCL Technologies, yesterday, beat revenue expectations and increased its guidance for the fiscal year, signalling demand remains strong for its services in cloud, engineering, and digital technologies amid a global economic slowdown.

The company’s shares were higher by more than 2 percent in early Mumbai trading. Shares at Wipro, however, fell as much as 5.4 percent after the company reported a 10 percent decline in profits.

HCL Tech’s revenue for its fiscal second quarter rose 3.8 percent in constant currency terms, versus the first quarter and 15.8 percent from the year-earlier period. Revenues rose 1.9 percent in reported terms to $3,082 million from $3,025 million, India’s third-biggest IT services company said in an investor release.

Analysts at Kotak Securities, for example, were expecting HCL Tech to report a 2.9 percent increase in revenues in constant currency, on a sequential basis.

“Our bookings and pipeline continue to be very strong,” chief executive C Vijayakumar said. The company added $2.4 billion in new contracts in Q2, a six percent increase over the previous quarter and 16 percent from a year earlier.

Revenues for the full fiscal year that ends March 31, 2023, are now expected to be in the range of 13.5 percent to 14.5 percent, HCL Tech said, surprising analysts who were expecting it to retain its July projection of a 12-14 percent increase over FY22.

At fourth-ranked Wipro, revenues were in line with analyst expectations, increasing 4.1 percent quarter on quarter to $2.8 billion for Q2 and 12.9 percent from a year earlier, in constant currency.

India’s top IT companies continue to be highly profitable, but margins are under pressure across the sector due to attrition rates that are twice as high as last year. HCL Tech reported operating margins of 18 percent for Q2, compared with 19 percent a year earlier, but higher than the previous quarter’s 17 percent.

Profits, for the Noida headquartered company, for the three months ended Sep. 30 rose to 7 percent to Rs. 34.89 billion from the year-earlier period. At Wipro, the Q2 operating margin was 15.1 percent versus 17.8 percent a year earlier. And profits fell nearly 10 percent to Rs. 26.5 billion rupees for Q2 from Rs. 29.3 billion a year earlier.

Attrition, or staff churn, remains high at both companies, at 23.8 percent at HCL Tech and 23 percent at Wipro, on a 12-months basis, reflecting the trend in the industry. Top-ranked TCS, on Monday, reported attrition of 21.5 percent. Infosys, India’s second-biggest IT company reports its earnings after markets today.

Apple and Samsung Electronics are among the companies that will upgrade software for their 5G-enabled smartphones in India by December, Reuters reports.

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The International Monetary Fund is downgrading its outlook for the world economy for 2023, citing multiple factors including Russia’s war against Ukraine, chronic inflation pressures, punishing interest rates and the lingering consequences of the Covid pandemic. Indian American entrepreneur-led Icertis, a contract LCM SaaS specialist, has tapped Infor’s Deanna Lanier as chief strategy officer. And early-stage investor Nisarg Shah is seeking tech-led startups at Kettleborough VC.

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The International Monetary Fund is downgrading its outlook for the world economy for 2023, citing multiple factors including Russia’s war against Ukraine, chronic inflation pressures, punishing interest rates and the lingering consequences of the Covid pandemic, Associated Press reports.

The 190-country lending agency on Tuesday pared its July estimate of 2.9 percent by 20 basis points to 2.7 percent. The IMF left unchanged its forecast for international growth this year — at 3.2 percent, almost at the half of last year’s 6 percent expansion, according to AP.

“The worst is yet to come,″ IMF chief economist Pierre-Olivier Gourinchas said. Three major economies — the United States, China and Europe — are stalling. Countries accounting for a third of global economic output will contract next year, and therefore 2023 “will feel like a recession″ to many around the world, he said, according to AP.

India’s IT services industry, one of the country’s biggest exports sectors, sees the US, Britain and Europe as its biggest markets and top executives such as Rajesh Gopinathan, CEO of Tata Consultancy Services are seeing clients engaging in scenario modelling more on the downside than on the upside, while demand currently remains strong.

TCS yesterday missed some analyst estimates for its fiscal second-quarter revenue growth on a sequential basis.

Icertis, a contract intelligence and management platform provider, has recruited Deanna Lanier as chief strategy officer, reporting to Chairman and CEO Samir Bodas.

Lanier will help Icertis expand into new geographies, customer types, and industry verticals, according to a press release.

Lanier joins Icertis from Infor, a leading provider of industry-specific cloud software, where she was most recently senior vice president of strategy, growth, and partnerships. Before Infor, Lanier held leadership roles at Adobe, McKinsey, Microsoft, and KMPG. She will be based at Icertis headquarters in Bellevue, Washington.

Kettleborough VC, an early-stage venture capital firm led by seed investor, Nisarg Shah, has launched its first fund at $5 million to invest in technology-centric startups specifically led by serial entrepreneurs and domain experts, according to a press release.

The firm was launched as a solo general partner fund by Shah in late 2021, according to the press release, but he has been active as an investor since 2018, according to his LinkedIn profile.

So far, Kettleborough has backed five companies via this fund including Zippmat with Matrix Partners India and Zephyr Peacock, Zocket with Kalaari Capital, and Bytelearn with Leo and Chiratae, and is closing two more transactions with Infoedge Ventures and Kae Capital in the coming month.

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Tata Consultancy Services reported quarterly earnings yesterday that show India’s biggest IT services company is still seeing strong demand for its services with an order book of more than $8 billion garnered during its fiscal second quarter. The rate of growth, however, seems to have moderated, with the more than 600,000-strong company growing at less than half the pace at which it grew last year from one quarter to the next. Shares were little changed in early Mumbai trading.

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Tata Consultancy Services reported quarterly earnings yesterday that show India’s biggest IT services company is still seeing strong demand for its services with an order book of more than $8 billion garnered during its fiscal second quarter.

The rate of growth, however, seems to have moderated, with the more than 600,000-strong company growing at less than half the pace at which it grew last year, from one quarter to the next.

Shares were little changed in early Mumbai trading.

TCS reported its fiscal second quarter revenues rose to $6.877 billion for the three months ended Sep. 30, which is a 1.43 percent increase over the April-June period, missing estimates at some top brokerages in Mumbai.

Analysts at ICICI Securities were expecting a 1.5 percent increase for TCS, while those at Kotak Securities had projected a 2.5-3.5 percent sequential increase for India’s top IT companies. In Q1, TCS had sequential growth of 1.25 percent, the lowest in at least six quarters.

In comparison, the Mumbai headquartered crown jewel of the Tata Group grew revenues at an average quarter-on-quarter rate of 2.8 percent in the fiscal year that ended March 31, 2022.

Demand for cloud services which had shot up last year, following the Covid pandemic, could now be growing at a slightly slower rate as businesses around the world are returning pre-Covid ways of work, including asking employees to get back to the office.

Clients are “preparing for a more challenging environment ahead,” TCS CEO and MD Rajesh Gopinathan said in a press release yesterday. Demand remains “very strong,” he said.

Revenues for Q2 rose 15.4 percent in constant currency from the same period a year earlier. Profits for the quarter were at $1.3 billion, which was the same as for the year-ago period. Operating margins narrowed by 160 basis points to 24 percent from Q2 of FY22.

During the quarter, TCS booked orders worth more than $8 billion, which is the same as the value of contracts won in Q2 last year. Some of the contracts it won came from customers such as Sainsbury’s, Catalent, PostNord, Bane Nor, Northern Powergrid, Prorail, Tap Air Portugal, and Boots.

The company added close to 10,000 recruits to end the September quarter with 616,171 employees. In comparison, the company added close to 20,000 recruits during the same quarter last year.

Attrition, or staff churn, was at 21.5 percent at the end of Q2 on a 12-months basis, compared with 11.9 percent a year earlier. “Attrition has peaked in Q2, and we should see it taper down from this point, while compensation expectations of experienced professionals moderate,” Milind Lakkad, TCS’s chief human resources officer, said in the press release.

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Tata Consultancy Services, India’s biggest IT services company, will be first off the block in reporting fiscal second-quarter earnings results when it reports its numbers after markets in Mumbai today. Analysts at brokerages in India expect growth to continue, and the high staff churn too in the sector. The rate of growth, however, definitely seems to be headed for a slowdown. Infosys, India’s second-biggest IT company, will report its earnings on Oct. 13.

Notes:

Tata Consultancy Services, India’s biggest IT services company, will be first off the block in reporting fiscal second-quarter earnings results when it reports its numbers after markets in Mumbai today.

While TCS offers no projections, the numbers and the top executives’ commentary should indicate the impact of the ongoing global economic slowdown. Analysts at brokerages in India expect growth to continue, and the high staff churn too. The rate of growth, however, definitely seems to be slowing down.

“The revenue growth of Indian IT companies is expected to continue in Q2,” Research Analysts Sameer Pardikar and Sujay Chavan write to clients in a note on Oct. 4.

Concerns about the slowdown – and a possible slackening of the demand that had jumped because of the Covid pandemic – have already sent the shares of the top Indian IT companies lower by more than 25 percent this year, as part of a global tech-led selloff.

The S&P BSE Information Technology Index – which includes companies such as TCS, Infosys and Wipro as well as smaller companies such as Mindtree and KPIT Technologies – is down 26.2 percent since the beginning of 2022.

“The demand environment is expected to be strong in the second half of the current calendar year due to continued deal momentum led by sectors like BFSI, insurance, and retail, but we need to be watchful on how macro, as well as geopolitical risks, play out,” in the second half of the current fiscal year that ends March 31, 2023, the analysts write.

They expect Bengaluru’s Infosys, the second largest Indian IT company, to report the most growth among the top five leaders, at a 3.5 percent quarter-on-quarter increase in revenues in dollar terms. The ICICI analysts expect TCS to report 1.5 percent sequential growth and 1.2 percent for HCL Technologies and 2.5 percent for Wipro.

The outsourcing business at Accenture, the world’s biggest professional services and consulting company, is often seen as a proxy by analysts for how demand is shaping up for companies like TCS and Infosys.

Accenture’s outsourcing business, which was 46 percent of its revenues in its fiscal fourth quarter that ended Aug. 31, rose 16 percent year on year in dollar terms, and 23 percent in local currency, according to the company’s press release on Sep. 22.

For its fiscal year 2023, Accenture expects revenue growth in the range of 8 percent to 11 percent in local currency. In comparison, revenues rose a record 26 percent in local currency and 22 percent in dollar terms for FY22. The company’s forecast factors in a negative 6 percent foreign exchange impact on its US dollar numbers in its current fiscal year.

Among India’s top IT companies, one data point of interest will be Infosys’s forecast for its full fiscal year. Most analysts are expecting the company to maintain the 14-16 percent projection the company made in July. Infosys will report its second-quarter results on Oct. 13.

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