Last week saw hilarious spoofs by the likes of the BBC and Google for April Fool’s day. This week however, has been a little on the quiet side. sourcingfocus.com has a sneaky suspicion that everyone has jetted off to sunnier plains for the Easter holidays (note to ed.; I am not passing any judgment).
This has of course had no effect on the quality of the news that has been pouring into sourcingfocus.com this week. So with eggs, bunnies and other Easter fun aside, let’s see what has been happening in the world of outsourcing.
Another dark cloud looms over the Indian outsourcing industry. According to a Reuters report, three executives at Satyam have been arrested for alleged involvement in the company’s recent accounting fraud.
The three individuals have not been named, but the Central Bureau of Investigation (CBI), India’s main investigative agency, said in a statement that it had arrested the vice president, senior manager and assistant manager in the company’s finance department on Sunday. How deep will the fraud go? Only time can tell…
Moving swiftly on to more positive news; CSC has been awarded a 10-year managed information technology (IT) services contract by the UK Identity and Passport Service, an executive agency of the Home Office responsible for issuing UK passports and ID cards. The agreement has an estimated value of £385m.
CSC will upgrade the existing application and enrollment system with new capabilities to process applications for passports and ID cards. This upgrade will allow customers to apply online; will improve background checking; will provide a new system for reporting lost and stolen passports and ID cards; will provide customer support for updating personal data; and new IT and telephony systems.
This agreement is just one of the many ITO contracts the Weekly Round-Up has reported on in the past weeks. However, Compass Management Consulting has warned that corporates rushing to outsource their software development to make short term savings risk significant long term losses in productivity.
Compass has noted that current economic pressures have created the strongest driver for streamlining software portfolios and replacing aging systems since the year 2000. Nevertheless, studies of operations, where the full life cycle of application development has been outsourced, have shown productivity drops of up 60 per cent, as poor knowledge of the business function affects efficiency of the development. These losses are particularly high when development is outsourced to an offshore location. The message? Do your research and know your objectives!
Nigel Hughes of Compass explained, “Complexity of the application environment is a major driver of overall cost escalation in IT. Top performing organisations are already taking advantage of the economic crisis to replace legacy systems, modernise the application portfolio, streamline operations and reduce costs”. According to Compass, many organisations are overestimating the level of savings that outsourcing or offshoring can deliver. To check out a more in-depth explanation, take a look at, the ‘Outsourcing all IT can lead to productivity drop’ article.
So, it has been a mixed bag of news this week. At least we have a nice four-day weekend to process it all; even if it is sitting in the back garden pretending we are on sunnier shores (can you tell I am not jealous?).
Happy Easter and see you next week.
