They're still big and still six in number. But analysts in the us no longer talk about the Big Six of it services-IBM, ACS, Accenture, CSC, EDs and hp- with as much awe and reverence they would have a couple of years ago. Yes, they're big in revenues-India's largest, Infosys, is still less than half the size of the smallest of the six, ACS ($4.3 billion in 2005). But now look at the market caps: Infosys: close to $17.5 billion. ACS? $7.5 billion. CSC? A little over $10 billion.

The message between those numbers is crystal clear: Mega-revenues aren't something yesterday's much-touted Big Six would be proud of, because they are an obvious reflection of their high-cost base. And that further tells in their low single-digit profit margins-as against 25-30 per cent for India's tier I of it services. It also shows in their stagnating market values: EDs' market cap hasn't made a significant move up in the past two years. Infosys has more than doubled its stock capitalisation in that period.

As close to $100 billion of mega-outsourcing contracts come up for renewal in the next two years, and as customers gradually begin to realise the benefits of unbundling contracts into selective, single-process, (relatively) smaller deals, the Big Six have a lot to lose to their Indian counterparts. Consider, for instance, this hypothetical situation: The largest global deals in outsourcing at one time included IBM-JPMorgan ($5 billion), EDs-Bank of America ($4.5 billion), Siemens-BBC ($3.6 billion) and HP-ABB ($3 billion). Now if all these clients decide to move even a tenth of the total value of these contracts to multiple Indian it and it-enabled services firms, that's an upside of $1.6 billion, roughly the size of one Infosys.

Sounds improbable? Hardly. JPMorgan felt IBM wasn't doing justice to its $5 billion outsourcing contract, and duly terminated it. Lightning struck again when Dow Chemical and EDs called off a $1.4 billion contract. Small wonder one section of Indian it estimates the addressable market over the next two years (including renewals and fresh contracts) at $45-50 billion. What also works in Indian it's favour is the emergence of Europe as a market for outsourcing services, with the continent accounting for 49 per cent of the value of major outsourcing contracts in 2004 (the us took 44 per cent). Other than IBM and Accenture, the Big Six has a limited presence in Continental Europe (HP is a relative newcomer, CSC and EDs are more present in the UK than in the continent, and ACS isn't there at all).

If there's one industry that doesn't need big-ticket global acquisitions to be global, it's Indian it services.

A Matter Of Self-interest

Manmohan Singh, George Bush: Deal time

It was during prime minister Manmohan Singh's visit to Washington last July that the American President, George W Bush, first mooted the concept of a civilian nuclear deal. If India, he reasoned, was willing to separate its military and civil nuclear facilities and accept the safeguard measures of the International Atomic Energy Agency, the us would allow the South Asian giant gain access to civilian nuclear technology, including fuel and reactors.

If President Bush is able to get the deal ratified by the us Congress, India could be recognised as a nuclear power state without actually signing the nuclear non-proliferation treaty and be able to shop for enriched uranium and other nuclear fuel from any part of the world.

The US offer may seem charitable, given the fact that the US was the first to impose sanctions on India after it conducted its nuclear test in 1998, but it is not. Hawkish observers may see the move as an effort by the us to position India as a counterweight to China, but the "historic N-deal" signed on March 1 may have more to do with the us economy's energy security than a tweak in the dynamics of global power play.

With a population of more than a billion and an economy growing at 7 to 8 per cent every year, India's demand for oil has not only been growing at 5 per cent or more every year but is likely to accelerate even more in the years to come. That can pose threats to the us economy, which is dependant on cheap oil to keep the wheels of its industry moving and help its citizens maintain relatively luxurious lifestyles. The journey of China (and now India) from economic poorhouse to powerhouse has an inherent impact on us energy security. Growing oil imports by the two can push the price of oil even higher than the record levels they are already at now. Both countries also have comfortable forex deposits that give them the capacity to pay for their growing oil import bills.

By freeing up nuclear fuel supplies for India's civilian nuclear programme, the Indo-US deal, President Bush is only ensuring the continued prosperity of his own economy dependent as it is on the availability of abundant and cheap oil. Greater generation, distribution and use of nuclear power for India's own energy requirements could well be the panacea for the us economy of the future.

The Fight For The Golden Goose

Ratan Tata, Kumar Birla: Crossed wire

Telecom is it. It is probably the fastest growing business in India, very profitable to boot, and the valuations of those telcos that are listed on the stock exchanges reflects this (as this magazine goes to press Bharti Tele-Ventures is valued at over Rs 77,000 crore and Reliance Communication Ventures, the amalgam of Reliance Infocomm, Flag, Reliance Communications, and Reliance Telecom, at Rs 35,438 crore at the time of listing). That's a pretty significant change from the late 1990s when investors, Indian and foreign, were convinced that the Indian telecom story was a pie-in-the-sky and sold their stakes in telcos to cut losses.

Today, everyone wants a piece of the action, and would love nothing more than doing someone else out of a piece of the action. Take the case of the on-going spat of the Tata Group and the Aditya Birla Group over Idea Cellular. A year ago, both groups were undecided on what they were going to do with the business. Now, both want to control the company and allegations about the with-holding of information, the violation of licence norms and the like are flying fast and thick. Interestingly, Idea has just turned profitable and with seven million customers and impending launches in three circles, the best may be ahead, just ahead, for the company.

The light sparring that has broken out between Hutchison and Essar also seems to be prompted by similar concerns. The latter seemed to have all but given up on telecommunications in the late 1990s and effectively sold out to Hutch. Then, courtesy several acquisitions, mergers, and a restructuring, Essar clawed its way back to become the single largest shareholder in Hutchison Essar. However, it is not too happy about Hutchison discussing a possible stake-sale with Egypt's Orascomm. Although the stake is to be sold in Hutchison International, that would translate into a beneficial stake in Hutchison Essar. The dispute couldn't have come at a worse time: Hutchison Essar is set to make an initial public offering sometime this year.

Ironically, India's telecom regulator, TRAI, and the department of telecommunication, DOT have been called upon, in both cases, by the parties concerned to look into violations of the country's telecom regulations. Not too long ago, TRAI and dot were every telco's common enemy. But with India emerging the hottest telecom market in the world (some 2 million subscribers are added every month), that seems to have changed.