Short-term contracts give mid-cap IT cos new lease of life

With the duration of outsourcing deals getting shorter, deals worth nearly USD 85 billion are up for renegotiations this year, reports CNBC-TV18’s Shreya Roy.

Midcap IT players may get a new lease of life. With the duration of outsourcing deals getting shorter, deals worth nearly USD 85 billion are up for renegotiations this year, reports CNBC-TV18’s Shreya Roy.
Over the last few years, uncertain times have forced IT companies to go in for more short-term contracts. For mid-cap IT companies, this may have been a blessing in disguise.
Data from outsourcing advisory firm TPI says that around 700 contracts will be up for renegotiations this fiscal year, compared to 530 last year.
“There is a significant reduction in the tenure of contracts as they were originally signed. Compared to 10 years ago, when 500 of these were being done, there are 1000 a year. The tenure has gone down to five years instead of seven, so a lot of deals are naturally coming back to the market as renewals. In itself, this is a very large opportunity,” said Siddharth Pai, partner and MD at TPI India.
For many IT players, this may be just what the doctor ordered. After all, renewals account for almost 65% of the outsourcing market. Advisory firm Everest estimates that by October 2013, deals worth nearly USD 85 billion will be up for renewal.
These include a contract between HP and Bank of America, a mega deal from Shell group which is currently with AT&T, HP, and T-Systems, a blue cross blue shield deal with Dell and Manu Life's deal with IBM.
Many of these contracts are expected to be broken up into smaller chunks, as outsourcers are looking increasingly towards multi-sourcing. Analysts say this could work in the favour of the smaller players, especially those like Mindtree and Hexaware, which have been focusing on developing niche capabilities to help differentiate from larger players.

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Excerpts from India Business Hour on CNBC-TV18 Watch the full show »

Hexaware Technologies :Riding High! --nirmal bang,

Riding High!
Hexaware Technologies Limited (HTL) is a mid-sized IT company mainly catering to the capital markets (BFSI) and the airline (transportation) sector. It also focuses on enterprise software provided by PeopleSoft and Oracle. Recent large client wins has bought back the focus on this company which has good expertise in the niche areas. 


Investment Rationale

 Improved Revenue visibility due to large wins in the past 5 quarters

The deal wins of over $ 625 mn which HTL has gained in the past 5 quarters is commendable. HTL’s efforts of mining the existing clients in the gloomy days are paying off now reflecting in the incremental revenue streams it has earned. These long term deals give enough revenue visibility for CY12. In addition, HTL is negotiating almost 4 deals above $25mn which are in the pipeline.

 Margins moving northwards – room for further heights
EBIDTA margins have improved 812 basis points in the past 5 quarters led by drastic control in the operating costs. The company has in addition utilized its offshorablity lever in its advantage by moving almost 14% of work offshore during the same period. Currently, onsite: offshore mix stands at 53:47, utilization in early 70’s and plans to hire freshers would further aid the margins going forward. We expect HTL to report EBIDTA margins of 20% + in CY12E and CY13E.

 Proficiency in niche segments paying off
HTL earns 60% of its revenues from the Capital Markets and Travels industries and almost 30% of revenues come from enterprise solutions in terms of its service lines. In enterprise solutions, 60-65% of its revenues are from PeopleSoft where other software vendor’s focus is less.

 Guidance Revision of 20% on USD revenues for CY12E

On the back of good deals won recently, the company has revised the revenue guidance in USD terms to 20%. We feel this is a little conservative and the company can easily beat the guidance for CY12E.
Valuation & Recommendation

We expect HTL’s revenues to grow at a CAGR of 25% and adjusted profits to grow at a CAGR of 21% over CY11-CY13E. Margin improvement would remain under focus and we expect HTL’s EBIDTA margins improving by 313bps to 21.2% in CY13E from 18.03% in CY11. At CMP, the stock is trading at 10.4x and 8.6x for CY12E and CY13E respectively. On the back of improved financials and good revenue visibility, we recommend a BUY on the stock, assigning a target multiple of 11x for CY13E EPS with a price target of Rs. 147 which is a potential 28% upside.

Risks to our Rationale:

 Concentration in Discretion spending Revenues
Hexaware derives more than 50% of its revenues from Enterprise solutions and Business Intelligence and Analytics which could get affected in economic downturn. However, the recent deal wins re-affirms the revenue visibility for the company for CY12E.

 Industry Risks of wage pressures, rupee appreciation and competition
Rupee depreciation has acted in favor of the company and Industry per say. Any severe reversal of the rupee trend would affect the prospects of the firm.

 Exposure in the European Region
The company has 28.4% exposure in the European region and few of the major deals have been signed with clients in this region. Looking at the current economic scenario prevailing in the Euro zone, any delay in commencement of these deals or cancellation may impact the margins severely.

Valuation & Recommendation
We expect HTL’s revenues to grow at a CAGR of 25% and adjusted profits to grow at a CAGR of 21% over CY11-CY13E. Margin improvement would remain under focus and we expect HTL’s EBIDTA margins improving by 313bps to 21.2% in CY13E from 18.03% in CY11. At CMP, the stock is trading at 10.4x and 8.6x for CY12E and CY13E respectively. On the back of improved financials and good revenue visibility, we recommend a BUY on the stock, assigning a target multiple of 11x for CY13E EPS with a price target of Rs. 147 which is a potential 28% upside.

Hexaware Q2 net rises 48% on higher revenues

Software service provider hexaware technologies has reported a 48 per cent increase in net profit at Rs 89.03 crore for the second-quarter ended june 2012 against the same period last year.

Click here to read more…

Hexaware bets on UK, new verticals to lead mid-tier IT growth

Infosys, TCS and Wipro may be getting cautious in their outlook, but not hexaware technologies

.

After nine quarters of positive growth, the mid-tier leader is confident of a 20% year-on-year (yoy) growth in dollar revenues for fiscal 2013.

 

 

 

Configuring Oracle Unified Directory (OUD) 11g as a Directory Server

I used Oracle Unified Directory (OUD) Version 11.1.1.5.0 during my test deployment locally here. I tried to collect as much information possible in this post for configuration.

Ideally, there are three possible configuration options for OUD:

• as a Directory Server
• as a Replication Server
• as a Proxy Server

Directory Server provides the main LDAP functionality in OUD. Proxy server can be used for proxying LDAP requests. And Replication Server is used for replication from one OUD to another OUD or even to another ODSEE (earlier Sun Java Directory) server. You can my previous posts on OUD here and here.

In this post, we will talk about configuring OUD after installation as a Directory Server. You can read about OUD installation in my previous post here.

Once installation is completed, you will find following files in $ORACLE_HOME Directory.

-rwxr-x---  1 oracle oracle 1152 May 17 11:16 oud-proxy-setup

-rwxr-x---  1 oracle oracle 1482 May 17 11:16 oud-proxy-setup.bat

-rwxr-x---  1 oracle oracle 1180 May 17 11:16 oud-replication-gateway-setup

-rwxr-x---  1 oracle oracle 1510 May 17 11:16 oud-replication-gateway-setup.bat

-rwxr-x---  1 oracle oracle 1141 Aug 10 16:50 oud-setup

-rwxr-x---  1 oracle oracle 1538 May 17 11:15 oud-setup.bat

In this listing, .bat files are used in windows. So, In Linux (that is what I am using), we will be using following files.

• oud-setup – To configure Directory Server
• oud-replication-gateway-setup – To configure Directory Replication Server
• oud-proxy-setup – To Setup Proxy Server

You can run the script shown below.

$ ./oud-setup
OUD Instance location successfully created - /u01/oracle/Middleware/Oracle_OUD1/../asinst_2
Launching graphical setup...

The graphical setup launch failed.  Check file /tmp/oud-setup-8836874387532698932.log for more details.

Launching command line setup...

Oracle Unified Directory 11.1.1.5.0
Please wait while the setup program initializes...

What would you like to use as the initial root user DN for the Directory
Server? [cn=Directory Manager]:
Please provide the password to use for the initial root user:
Please re-enter the password for confirmation:

On which port would you like the Directory Server to accept connections from
LDAP clients? [1389]: 389

ERROR:  Unable to bind to port 389.  This port may already be in use, or you
may not have permission to bind to it.  On UNIX-based operating systems,
non-root users may not be allowed to bind to ports 1 through 1024
On which port would you like the Directory Server to accept connections from
LDAP clients? [1389]:

On which port would you like the Administration Connector to accept
connections? [4444]:
Do you want to create base DNs in the server? (yes / no) [yes]:

Provide the base DN for the directory data: [dc=example,dc=com]:
Options for populating the database:

    1)  Only create the base entry
    2)  Leave the database empty
    3)  Import data from an LDIF file
    4)  Load automatically-generated sample data

Enter choice [1]: 1

Do you want to enable SSL? (yes / no) [no]: yes
On which port would you like the Directory Server to accept connections from
LDAPS clients? [1636]:

Do you want to enable Start TLS? (yes / no) [no]: yes
Certificate server options:

    1)  Generate self-signed certificate (recommended for testing purposes
        only)
    2)  Use an existing certificate located on a Java Key Store (JKS)
    3)  Use an existing certificate located on a JCEKS key store
    4)  Use an existing certificate located on a PKCS#12 key store
    5)  Use an existing certificate on a PKCS#11 token

Enter choice [1]:
Provide the fully-qualified host name or IP address that will be used to
generate the self-signed certificate [ut1ef1]:

Do you want to start the server when the configuration is completed? (yes /
no) [yes]:

Setup Summary
=============
LDAP Listener Port:            1389
Administration Connector Port: 4444
LDAP Secure Access:            Enable StartTLS
                               Enable SSL on LDAP Port 1636
                               Create a new Self-Signed Certificate
Root User DN:                  cn=Directory Manager
Directory Data:                Create New Base DN dc=example,dc=com.
Base DN Data: Only Create Base Entry (dc=example,dc=com)

Start Server when the configuration is completed

What would you like to do?

    1)  Set up the server with the parameters above
    2)  Provide the setup parameters again
    3)  Print equivalent non-interactive command-line
    4)  Cancel and exit

Enter choice [1]: 3

Equivalent non-interactive command-line to setup server:

oud-setup \
          --cli \
          --baseDN dc=example,dc=com \
          --addBaseEntry \
          --ldapPort 1389 \
          --adminConnectorPort 4444 \
          --rootUserDN cn=Directory\ Manager \
          --rootUserPassword ****** \
          --enableStartTLS \
          --ldapsPort 1636 \
          --generateSelfSignedCertificate \
          --hostName ut1ef1 \
          --no-prompt \
          --noPropertiesFile

What would you like to do?

    1)  Set up the server with the parameters above
    2)  Provide the setup parameters again
    3)  Print equivalent non-interactive command-line
    4)  Cancel and exit

Enter choice [1]: 4
No configuration performed. OUD Instance directory deleted.
$

Then you need to run the oud-setup with the options provided for creating the directory server.

$ ./oud-setup           –cli           –baseDN dc=example,dc=com           –addBaseEntry           –ldapPort 1389           –adminConnectorPort 4444           –rootUserDN cn=Directory\ Manager           –rootUserPassword ******           –enableStartTLS           –ldapsPort 1636           –generateSelfSignedCertificate           –hostName ut1ef1           –no-prompt           –noPropertiesFile

OUD Instance location successfully created – /u01/oracle/Middleware/Oracle_OUD1/../asinst_2

An error occurred while parsing the command-line arguments:  An unexpected error occurred while attempting to initialize the command-line arguments:  Argument “bat” does not start with one or two dashes and unnamed trailing arguments are not allowed

Here, the issue is with the rootUserPassword value. Since I put * here, it replaced with all the files in the local directory, so it failed. Replace it with the required password for the “cn=Directory Manager” as shown below.

$ ./oud-setup           --cli           --baseDN dc=example,dc=com           --addBaseEntry           --ldapPort 1389           --adminConnectorPort 4444           --rootUserDN cn=Directory\ Manager           --rootUserPassword pass_t3st           --enableStartTLS           --ldapsPort 1636           --generateSelfSignedCertificate           --hostName ut1ef1           --no-prompt           --noPropertiesFile
OUD Instance location successfully created - /u01/oracle/Middleware/Oracle_OUD1/../asinst_2

Oracle Unified Directory 11.1.1.5.0
Please wait while the setup program initializes...

See /tmp/oud-setup-5822533240188214866.log for a detailed log of this operation.

Configuring Directory Server ..... Done.
Configuring Certificates ..... Done.
Creating Base Entry dc=example,dc=com ..... Done.
Starting Directory Server ......... Done.

To see basic server configuration status and configuration you can launch /u01/oracle/Middleware/asinst_2/OUD/bin/status
$  cd bin
$ ./status

>>>> Specify Oracle Unified Directory LDAP connection parameters

How do you want to trust the server certificate?

    1)  Automatically trust
    2)  Use a truststore
    3)  Manually validate

Enter choice [3]: 1

Administrator user bind DN [cn=Directory Manager]:

Password for user 'cn=Directory Manager':

          --- Server Status ---
Server Run Status:        Started
Open Connections:         1

          --- Server Details ---
Host Name:                ut1ef1
Administrative Users:     cn=Directory Manager
Installation Path:        /u01/oracle/Middleware/Oracle_OUD1
Instance Path:            /u01/oracle/Middleware/asinst_2/OUD
Version:                  Oracle Unified Directory 11.1.1.5.0
Java Version:             1.6.0_26
Administration Connector: Port 4444 (LDAPS)

          --- Connection Handlers ---
Address:Port : Protocol               : State
-------------:------------------------:---------
--           : LDIF                   : Disabled
0.0.0.0:161  : SNMP                   : Disabled
0.0.0.0:1389 : LDAP (allows StartTLS) : Enabled
0.0.0.0:1636 : LDAPS                  : Enabled
0.0.0.0:1689 : JMX                    : Disabled

          --- Data Sources ---
Base DN:     dc=example,dc=com
Backend ID:  userRoot
Entries:     1
Replication: Disabled

$

Now, your newly created OUD Directory Server is running in the machine. You can check this with the ldapsearch command.

$ ldapsearch -h localhost -p 1389 -D “cn=Directory Manager” -w ebs_t3st -s sub -b “dc=example,dc=com” “(objectclass=*)” cn
dn: dc=example,dc=com

$

LDAP Search command will return one entry as shown above.

Here are some of my Observations:

• If you want to use the port 389/636 for your Directory Server, then you need to run the setup using root user. Then you need to use start-ds and stop-ds commands using root user only.
• There are six scripts to setup OUD components (three for unix/linux and three for windows environments)
• You can setup a new TLS based certificate as part of configuring a new Directory Server.

Okay, thats all for now. We will meet in another post. Until then

Read More about Oracle Unified Directory