Industry news

GXS has announced that it has acquired RollStream, a software-as-a-service (SaaS) leader of enterprise community management. This acquisition accelerates GXS’s strategy to speed and simplify the integration of global business communities. By combining the RollStream solution with GXS Trading Grid®, the world’s largest integration cloud, GXS expects to enhance the performance of global business and supply chain operations for its customers. The acquisition deepens GXS’s long-term commitment to the Social Supply Chain, a vision that brings together information flows and information workers to break down barriers hampering supply chain efficiency.

“Our customers realise they need a balance of people, process and technology to compete on a global scale, and they know that the human side of B2B integration matters,” said Bob Segert, CEO, GXS. “RollStream is one of the more innovative startups to enter the B2B integration market in recent years. At GXS, we are firm believers that integration belongs in the cloud and the RollStream acquisition enables us to accelerate this vision.”

The acquisition builds upon the companies’ business partnership that began in 2009 and helps accelerate the rollout of RollStream’s products across the GXS portfolio. The GXS RollStream service is available today and will be internationalised and available with local language support by first quarter 2012.

RollStream’s SaaS platform benefits global procurement teams by:

- Accelerating supplier setup by up to 60 percent, from months to weeks.

- Simplifying social exception handling and supply chain collaboration.

- Improving supplier contact accuracy with self-service updates.

- Providing a single source for sales forecasts, supplier communications, and project rollouts.

- RollStream is also known for its Web 2.0 user experience and interface, developed on the Ruby-on-Rails (“Rails”) Web development framework.

Terms of GXS’s acquisition of RollStream were not disclosed. Both companies are based in the Washington DC area.

Martyn Hart, Chairman of the National Outsourcing Association (NOA), has commented on the leaked documents between Cabinet Office Minister Francis Maude and the Confederation of the British Industry (CBI) which suggest that the government is scaling back plans to use the private sector to deliver public services.

“The National Outsourcing Association (NOA) is interested to learn of the leaked documents suggesting that ‘wholesale outsourcing’ of public services would be ‘politically unpalatable’.

“It’s clear that the jury is still out on how effectively charities and social enterprises can deliver public services, and it would be a surprise if the government is able to achieve the level of cost reduction it is seeking by just using charities and social enterprises, particularly as most of the examples of this we’ve seen of this working already have been small and isolated.

Perhaps this will mean an increased opportunity for service providers to deliver outsourcing in a number of different ways, and we could see more examples of joint ventures and partnerships as a result?

“Nonetheless, it’s clear that apart from outsourcing or shared services the government has few other options and they can still play a significant role in adding value and helping to drive down costs for the public sector. Perhaps the government should work to identify the areas where outsourcing can best add value, and use this as the basis for determining which services are outsourced or shared?”

Data Shows Resurgence of Business Process Outsourcing

Fueled Solid First Quarter in European Sourcing Market

1Q11 EMEA TPI Index: BPO total contract value hits 2-year high

TPI, an Information Services Group company and the largest sourcing data and advisory firm in the world, today released data showing relative strength in the outsourcing market in Europe, the Middle East and Africa (EMEA) during the first quarter, primarily as a result of the recovery of business process outsourcing (BPO) and some significant mega-deals awarded in the region.

The 1Q11 EMEA TPI Index recorded total contract value (TCV) of €8.1 billion, down 28 percent quarter-on-quarter but just 5 percent year-on-year, making it one of the stronger first quarters of the last decade. In comparison, with just €14 billion in TCV awarded, the global market turned in its worst first-quarter performance in a decade.

The BPO segment awarded €3.2 billion in TCV, more than triple the total during both the prior quarter and the first quarter of 2010 and the highest in two years. While that total included a €2 billion Contact Centre deal in Saudi Arabia, BPO contract volume still rose by 65 percent.

“The resurgence of BPO activity during the first quarter of 2011 is a very encouraging sign for the outsourcing market in EMEA,” said Duncan Aitchison, Partner & President – EMEA, TPI. “If the tempo of awards continues throughout the year, BPO activity will easily surpass the region’s 2010 results.”

Now in its 34th consecutive quarter, the TPI Index provides a quarterly snapshot of the sourcing industry for clients, service providers, analysts and the media. It is the industry’s authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider metrics.

Overall, despite the drop in TCV, the number of contracts signed during the first quarter remained steady year-on-year in both EMEA and globally, reflecting the ongoing trend toward smaller awards.

Following an unprecedented surge in the fourth quarter, mostly in the Nordics, restructuring activity in EMEA returned to normal historical levels, dropping 76 percent quarter-on-quarter. The decline in restructurings, defined as contracts that are renewed, restructured or renegotiated, hurt IT outsourcing (ITO), which recorded just €5 billion in TCV in the region, down 52 percent quarter-on-quarter and 36 percent year-on-year.

However, a decline in restructurings means awards of contracts for new scope of outsourcing activity represent a larger part of the market. New-scope TCV in EMEA reached €7.4 billion in the first quarter, up 48 percent year-on-year and down just slightly quarter-on-quarter.

Among sectors, Telecom & Media and Energy accounted for 66 percent of TCV in EMEA during the first quarter of 2011, predominantly due to the award of large deals. Financial Services, usually one of the region’s strongest sectors, dipped quarter-on-quarter, accounting for just 8 percent of TCV.

“The outlook for the rest of 2011 suggests a healthy level of contracting activity and a modest amount of restructuring in the mix,” Aitchison said. “Overall, we are cautiously optimistic about next quarter and more bullish about the second half of 2011.”

Britain’s outsourcing industry is now almost as big as the financial services sector, generating more than £200 billion a year, according to new research by Oxford economics released today. The industry accounts for 8 per cent of the UK’s total economic output.

The report, commissioned by the Business Services Association, encompasses services including information technology and data services, which is the largest contributor to Britain's annual output. This line of business currently employs 340,000 people and makes a net contribution to the economy of £24.7 billion.

The outsourcing industry is also a huge contributor to the Governments coffers, paying £35 billion a year in taxes – equal to 12 per cent of the total take from business and personal taxes. The outsourcing sector is now the second-biggest employer, behind retailing, accounting for 3.1 million jobs, equivalent to 10 per cent of the British workforce.

Bindi Bhullar, director of global IT services provider HCL Technologies, said:

“Successful outsourcing projects have previously been seen so as the elephant in the room. Until now, there has been a reluctance to openly discuss the core benefits outsourcing brings to the UK economy. t is great to finally see credible research highlighting the significance of IT and IT-related BPO into context. The industry has clearly come a long way since the Y2K projects of the 1990s. This report shows how IT outsourcing has fully developed into a mature market.

“Thanks to this maturity, organisations now have access to new talent, advanced technologies that can deliver additional benefits, and most notably, faster time to market for new applications and upgrades alike.”

The research comes as welcome news to the outsourcing industry, which has been in the spotlight recently as a result of the governments drive to cut costs and reshape public services.

HP Enterprise Services has been chosen for a single-award firm-fixed-price, indefinite delivery/indefinite quantity contract worth up to $2.5 billion over a four-year base period with two three-year option periods by the National Aeronautics and Space Administration (NASA).

HP will provide end-user desktop services and devices that will increase NASA’s efficiency and allow its employees to more easily collaborate in a secure computing environment.

As a part of NASA’s Agency Consolidated End-User Service (ACES) Program, HP will modernize NASA’s entire end-user infrastructure by delivering a full range of personal computing services and devices to more than 60,000 users. The modernization is expected to deliver significant productivity gains and cost savings to NASA.

“NASA personnel use IT to support NASA’s core business, scientific, research and computational activities,” said Michael Sweigart, procurement officer, Shared Services Center, NASA. “HP will provide, manage, secure and maintain these essential IT services for the agency.”

Under the ACES contract, HP will provide a variety of Computing Seat, Tier 2/3 Service Desk Support and Collaboration Services to more cost-effectively manage NASA’s end-user infrastructure at all NASA sites across the United States. Computing seat and cellular seat services are designed with security and collaboration capabilities to help the NASA team safely share information.

“The ACES contract will help evolve NASA’s IT environment to a centralized, adaptable IT infrastructure to enable economies of scale, agency-wide visibility and improved management and security,” said Dennis Stolkey, senior vice president and general manager, U.S. Public Sector, HP Enterprise Services. “HP will build on our deep industry, infrastructure and end-user services expertise to support this significant work for the agency that is pioneering the future in space exploration, scientific discovery and aeronautics research.”

The contract will be managed at the NASA Shared Services Center in Stennis, Miss., and will serve all NASA centers and facilities.

Shareholders approve Capita's acquisition of health and government divisions of Tribal Group.

Tribal shareholders have approved the acquisition, by the Capita Group Plc of the health and government divisions of Tribal Group Plc and the acquisition has now completed.

The cash consideration of £15.8 million on a cash-free, debt free basis for the acquisition includes a deferred consideration of up to £2.5 million. The acquisition adds key new capabilities to Capita's health and consulting businesses, details of which were included in Capita's announcement of 11 April 2011.

PricewaterhouseCoopers affiliates agreed to pay $25.5 million (15.3 million pounds) to former Satyam Computer Services Ltd investors to settle U.S. litigation over the audit of the Indian outsourcing company.

The settlement came four weeks after PwC agreed to pay a record $7.5 million U.S. penalty over its auditing work for Satyam.

In papers filed late Friday in the U.S. District Court in Manhattan, lawyers for the investors wrote that the accord followed mediation and was an "excellent result" for their clients.

Satyam's founder and former chairman Ramalinga Raju had in January 2009 revealed that what was once India's fourth-largest outsourcing company had fraudulently inflated revenue, income and cash balances by more than $1 billion over five years.

The fraud is sometimes known as "India's Enron," referring to the U.S. energy company that collapsed in 2001.

Tech Mahindra sets up BPO operations in Philippines

Tech Mahindra, India’s fifth largest software exporter and part of the US$ 11.1 Billion Mahindra Group, announced its plans to set up BPO operations in Philippines. The company recently signed a multi-million dollar deal, as one of the preferred BPO partners for strategic outsourcing with a leading full-service telecommunications company in the Philippines. The deal is spread over a period of 3 years.

Tech Mahindra will provide the client with contact center support for sales and back office, customer care and technical support for their wireless postpaid, landline and broadband customers. The end-customer mix will include both retail as well as high-end business customers of the client. Tech Mahindra has set up the contact centre at Manila to enable and deliver these services to the client and has already recruited over 600 associates locally.

The past year also saw Tech Mahindra foray into the African geography and the company has opened centers in seven African countries to serve clients in the region. The operations have already been commenced in Nigeria, Zambia, Malawi, Ghana and Gabon, while Congo DRC and Congo B are expected to start operations within the next few months.

Mr. Sujit Baksi, President - Corporate Affairs & BPO, Tech Mahindra, said, “Philippines is not only a key market for us, but also a strategic location from where we plan to service our global clients. We look forward to strengthening our presence in Philippines through our engagement with one of the leading players in the Philippines telecom industry and will actively support our client’s innovative plans to address the mobile telephony and broadband services market. Similarly, Africa is also one of our key growth markets and we have opened centers in seven countries to serve our clients in the region. We are excited to bring our best practices in customer service, which would accelerate growth for our clients in this region. Backed with global telecom experience and streamlined processes, Tech Mahindra will help clients enhance end-customer experience.”

ExlService Holdings, Inc. a leading provider of transformation and outsourcing services, has announced that it has signed a definitive agreement to acquire Outsource Partners International, a leading global provider of finance & accounting outsourcing services. With this acquisition, EXL establishes itself as one of the leading third-party service providers in global F&A outsourcing.

Rohit Kapoor, President and CEO of EXL, stated, “I am extremely excited about EXL’s acquisition of OPI. OPI is one of the largest pure-play providers of complex F&A outsourcing in the market today. OPI has over 3,700 professionals globally, approximately 80 clients, and an extremely talented management team. By combining EXL’s F&A outsourcing and transformation capabilities with OPI’s end-to-end F&A outsourcing capabilities and proprietary platforms, we will assemble a comprehensive set of F&A solutions. These solutions will be of tremendous relevance to the CFO’s organization.

"The acquisition furthers EXL’s strategic objective of leveraging technology and proprietary intellectual property in our solution offerings. We will also firmly establish our onshore outsourcing presence in the U.S. while enhancing our European and Asian delivery footprint. OPI’s and EXL’s cultures are aligned and customer centric. Our respective high-touch relationship management models are highly complementary and by combining forces we will be able to provide our clients with a broader range of transformation and outsourcing solutions. I am extremely pleased to welcome the entire OPI team to the EXL family, and we look forward to an exciting and successful future.”

As the recession begins to fade, companies have a renewed interest in developing innovative strategies to increase revenue, enhance working capital and retain their most valuable assets - clients. The days of aggressive labor arbitrage and transaction cost reduction are a thing of the past, replaced with intelligent cost management practices, optimized business process management and the utilization of advanced analytic tools to drive the business forward. The new lever being pulled today is achieving breakthrough business value and performance by aligning people, process and technology in unique ways.

Most viable organizations realize they have highly efficient processes that streamline efforts and significantly reduce costs. Though most have cracked the efficiency code, they are unaware that there is an effectiveness goal that can drive even greater business value.

While each function or department in an organization optimizes their part for efficiency, there are key inflection points where potential leakage can occur and hamper the overall effectiveness of the processes and ultimately business performance. In addition, most companies don’t have a sense of how good or bad their processes are and how much value is being leaked.

Knowing greater business value can be attained through both efficient and effective business process management is the first step toward optimized business results. Understanding the complete process end-to-end, and all of the critical connection points, creates levers for increased effectiveness. This, coupled with the availability of critical data and benchmarking against similar processes cross industry, crystallizes the road to true business effectiveness.

A solid and detailed plan, that leverages efficiency and drives effectiveness, one that is tailored to the client and implemented in a modular fashion delivers significant business results. In 2009, Genpact launched a structured and scientific methodology for managing end-to-end business processes called Smart Enterprise Processes [SEPSM] which delivers two to five times the impact on improved cash flow, increased margins, revenue growth and other targeted financial and operating metrics. We support our clients in their quest toward true effectiveness using process as an underutilized lever.