Industry news

The UK economy will grow by less than expected in 2011 but growth in 2012 will be better than predicted, the British Chambers of Commerce forecasts.

The group downgraded its forecast for UK GDP growth in 2011 to 1.4% from a December forecast of 1.9%.

The BCC said the downward revision was due to an unexpected fall in 2010's fourth quarter GDP.

Interest rates

In its forecast, the BCC increased its estimate for unemployment for early 2012 to 2.65 million, up from 2.6 million.

However, the business group raised its prediction for growth in 2012 to 2.3% from 2.1% in December.

At the weekend, David Cameron gave a speech at the Conservative Party spring conference in Cardiff highlighting the importance of the private sector to the UK's economy.

He pledged to stand behind entrepreneurs and stand against what he called the "enemies of enterprise".

"While we support efforts to reduce the UK's deficit, these measures alone will not deliver a sustainable recovery," he added.

The BCC said it believed that the Bank of England would raise interest rates in May from the current historical low of 0.5%.

But the group warned that such a move could be premature at this stage of the economic cycle.

'Difficult task'

Separately, financial services firm PricewaterhouseCoopers (PwC) issued a report suggesting that the monetary policy committee (MPC) of the Bank of England should not raise interest rates before the economic recovery is secure, despite concerns over inflation.

"The MPC faces a difficult task in balancing upside risks to inflation against downside risks to growth," said John Hawksworth, PwC's chief economist.

"Our own judgement, however, is that the MPC should not be increasing rates until it is clear that the recovery is secure," he added.

"We do not believe that it needs to increase interest rates immediately to meet its target of a 2% CPI inflation rate in two years time."

Source: http://www.bbc.co.uk/news/business-12672276

Some 40 per cent of public sector organisations will use shared services in 2011, according to a study by CIO research forum K2advisory.

The study surveyed 106 senior managers and directors in the public sector in January 2011.

Of this 40 per cent, nine per cent said the coalition's programme of public sector cuts detailed in its Comprehensive Spending Review (CSR) had spurred them to opt for shared services.

"The CSR is absolutely driving this growth," said Sarah Burnett, lead analyst at Ovum for the public sector.

"This fact that you can generate economies of scale through joint procurement and joint running of services, means that growth is just going to continue throughout 2011," she added.

K2advisory's research indicates that there are enough strategically focused public sector CIOs for shared services projects to work without requiring external leadership.

However, it also suggests that once completed, it is unlikely that a CIO will become "head of shared services", unless he or she has management experience outside of the IT department.

K2advisory believes this holds true even when IT is the sole shared service.

Burnett suggested that shared services programmes require a leader who primarily is not focused on keeping the different bodies involved happy.

"These projects require long-term commitment, and they need strong leadership," said Burnett.

"These leaders need decisions to be made for the better of the shared services, not to keep individual managers happy," she added.

"There is no point in having a head of shared services who has to consult with separate bodies – they need to have decision-making power."

Source: http://www.computing.co.uk/ctg/news/2031800/public-sector-bodies-shared-services-2011#ixzz1G0FckRFl

Fujitsu announced it will support Virgin Media in its residential and business installations and help provide engineering services. The multi-year contract begins this month, with Fujitsu's Transition Team ensuring a seamless integration of Fujitsu services over the coming weeks.

Fujitsu is playing an integral part in Virgin Media’s commitment to a great customer experience throughout the join journey and beyond. Fujitsu technicians will work in partnership with Virgin Media to deliver an outstanding installation experience to customers in Scotland, North East England and Northern Ireland. Fujitsu will also help Virgin Media to streamline its post-install operational processes by providing residential and network engineering support

The new contract further deepens Fujitsu’s current successful relationship with Virgin Media, having already supplied residential and network engineering and business installation services as well as providing cabinet and business Customer Premises Equipment (CPE) solutions.

Andy Stevenson, chief executive officer, Fujitsu Telecommunications Europe Limited, said “Fujitsu is delighted to have been able to respond to Virgin Media's requirements with a compelling and competitive proposal. We have a proven track record with Virgin Media, providing innovative and efficient solutions, and this further strengthens our relationship. With the signing of this contract we are looking forward to developing our partnership by delivering this service platform more effectively and efficiently for the benefit of Virgin Media’s customers.”

Paul Buttery, chief customer and networks officer at Virgin Media, said “This is one of the largest operational transformations we’ve undertaken with our field partners and we’re looking forward to Fujitsu’s support in delivering an outstanding customer experience. We’re continually improving our services and our field partners help us deliver a great experience by contributing core expertise and a real understanding of the Virgin Media brand.”

Salmat this afternoon confirmed 742 full-time equivalent staff located in Sydney and regional Australia will be laid off by May, unless a new contract is landed by the company.

“Salmat has been notified by Telstra that Telstra no longer requires the provision of certain call centre services from Salmat,” the company said. “The notification covers the bulk of the call centres services Salmat currently provides to Telstra.”

The company said 330 positions will be cut in Sydney's Surry Hills by April 30, with another 107 cut in Bundaberg, Queensland, and 142 in Wagga Wagga, NSW, in the same period. There will also be 163 positions affected in Geelong by May 31.

The company said nearly all of the staff are tied to the Telstra contract.

Its shares were down 25 cents, or 6.1 per cent, at $3.87 in afternoon trade.

Salmat said earlier its earnings before interest, tax and amortisation would drop by between $4 million and $5 million in the second half of the financial year. Its full year EBITA guidance had been cut by $5 million to between $87 million and $92 million.

The company said it maintained a close relationship with Telstra, with Salmat continuing to provide the telco with customer communication services and Telstra providing it with telephone services.

Telstra said the tender process for the new contract would not be completed for a few weeks.

"Calls handled by unsuccessful participants in this competitive process will be gradually wound down before moving to another specialist call centre provider," said a spokeswoman for Telstra.

"Telstra uses a mix of call centers, both here and overseas, and will continue to use partners in Australia, once the process is complete."

Source: http://www.theage.com.au/business/700-jobs-lost-after-telstra-axes-contract-20110307-1bkf2.html?from=age_sb

Meredith joined SJ Berwin from Kemp Little in 2007, when the City firm set up a bespoke outsourcing practice as part of its ­commercial group.

Although his exit will bring the experiment to an end, head of ­commerce and technology Jeremy Schrire insists that the firm will retain its outsourcing expertise.

“It was a standalone [practice] doing significant projects for our clients,” said Schrire. “We’ll continue to do it, but as part of a suite of offerings that we have for all commercial clients, not as a standalone practice.”

Meredith will be joined at his new firm by legal director Andrew Sutherland, who also arrives from SJ Berwin.

In the latest in a string of large outsourcing deals by energy companies, the UK division of French utilities company EDF has announced a £100 million IT support deal with IT services supplier Capgemini.

Under the contract, Capgemini will provide IT support and desktop services to 15,000 EDF users. The contract is guaranteed for three years, with an option to extend it by a further two.

The work is a new contract win for Capgemini, which replaces EDF's existing supplier Computacenter. But Capgemini has worked with EDF for a decade on other systems including CRM applications, e-procurement tools and the software it uses to monitor and maintain its nuclear generation facilities.

A number of European energy suppliers have announced large outsourcing deals recently. Earlier this week, British Gas' parent company Centrica signed a £250 million deal with Hewlett-Packard, which has also won big contracts from E.ON and BP.

Last month, Dutch oil giant Shell entered into a €300 million contract with Logica, which will operate its fuel card loyalty scheme for businesses.

So why is the energy sector rushing to outsource? It is not for want of profit, which doubled for both Centrica and Shell in 2010.

A spokesperson for Centrica told Information Age earlier this week that its deal with HP had been motivated in part by the uncertainty facing the company and the industry. It had selected to procure utility computing services and a private cloud environment from the IT giant to allow it to scale resources according to fluctuating demand.

Besides the continued economic uncertainty facing all businesses, the energy sector has also yet to see the long term impact of world government's energy efficiency initiatives. IT outsourcing is one way to mitigate the risk associated with that ambiguity, by sharing the burden of IT investment with a third party.

"The energy world is facing unprecedented uncertainty", said Nobuo Tanaka, executive director of the International Energy Agency at an event in London in November 2010.

"It is hard to overstate the growing importance of China in global energy," he added. "How the country responds to the threats to global energy security and climate posed by rising fossil fuel use will have far reaching consequences for the rest of the world."

Source: http://www.information-age.com/channels/it-services/news/1606513/energy-sectors-outsource-spree-goes-on-with-edf--capgemini-deal.thtml

The City of London Corporation has signed a deal with Accenture worth up to £12.5m to deliver a new procurement shared service centre.

The service will undertake procurement and procure-to-pay functions across all divisions of the City of London.

The deal should save the City of London more than £30m over five years, according to Mark Lyons, Accenture's UK and Ireland managing director for health and public service, who added that the company's fee would be tied to savings made.

Chris Bilsland, the City of London Corporation's financial director, said the more the corporation saves, the more Accenture will be paid.

"If Accenture hits all their targets and provide both transformational savings, and quality, then we will pay them somewhere in the region of £12.5m," he said.

"We are looking to save money, and we think we can drive better bargains. The new system will help us do this. Also, by making procurement more streamlined we hope to become more customer efficient," added Bilsland.

It is hoped that this unified procurement function will help the City better execute the latest techniques, such as category and demand management, as well as improved cost management.

Accenture said change management will be essential to the transformation programme, and it will provide training to both the City staff involved with the project, and those who will be running it once implemented.

City of London will have 40 people working on the project alongside 20 from Accenture.

"As an organisation, we employee 3,500, and it is expected that this new system will be used by each and every one of them at some point or other," said Bilsland.

Source: http://www.computing.co.uk/ctg/news/2031399/city-london-signs-accenture-centralise-procurement#ixzz1G0EayflZ

As BT announces plans to introduce a high-speed internet network in Northern Ireland by 2012, new research shows that fully exploiting technology can drive job creation, growth and productivity across the whole economy.

The e-Skills UK report highlights the vital role the technology sector has to play in creating new employment opportunities and underpinning economic recovery.

The research, ‘Technology Insights 2011’, shows that despite the recent recession and ongoing high levels of unemployment, demand for IT professionals in Northern Ireland has increased over the last year, with 16,000 people currently employed in the IT & Telecoms professional workforce – representing just over 2% of total employment. 60% of these IT & Telecoms professionals are employed in the IT & Telecoms industry itself, while the remainder are spread across every other sector of the economy.

And the report shows that this demand is set to continue apace. Employment in the IT industry over the next decade is forecast to grow at an impressive 3.17% per annum, nine times faster than the Northern Ireland average, with over nine thousand new IT & Telecoms professionals needed over the next five years. This year alone, the IT & Telecoms professional workforce will require over 1,800 new entrants to keep up with demand. Almost half of these will be individuals employed in other occupations moving into IT & Telecoms, while 16% will need to come directly from education. The remainder will be drawn from other sources such as those re-entering the workforce after a career break, or from a period of unemployment.

The report also demonstrates that technology is the most powerful lever Northern Ireland can employ to drive growth and innovation across the whole economy. Technology is at the heart of every sector, underpinning the economic contributions of almost every business and the majority of future job creation. Whilst the IT & Telecoms industry alone already contributes in excess of £0.8 billion per annum to the economy, 1.4% of Gross Value Added, ‘Technology Insights’ finds that by exploiting the full potential of technology, the rest of the Northern Ireland economy could also be boosted by an additional £0.7 billion over the next 5 to 7 years.

But alongside this, the research identifies some worrying trends. The proportion of IT & Telecoms professionals under 30 in the UK as a whole has declined from 33% in 2001 to only 19% in 2010, as the sector increasingly favours experienced workers from other sectors over young recruits from the education system. At the same time, the proportion of those over 50 has almost doubled to 17%. The research also shows that gender remains a significant issue with women making up just 22% of the IT & Telecoms professional workforce in Northern Ireland.

The Capita Group Plc has announced the acquisition of Talis Information Limited for a consideration, on a cash-free, debt-free basis of £18.5 million, plus up to a further £2.5 million depending on TIL's profit performance in the year to 31 March 2012.

TIL made an operating profit, on a pro forma basis, of £3.5 million on turnover of £7 million for the year ended 31 March 2010.

Paul Pindar, Chief Executive of Capita said: 'The acquisition of Talis Information Limited will enable Capita to offer a wider set of services to the further and higher education markets and to local authorities, where we have a strong client base.'

TIL employs 42 staff, all of whom are based in Birmingham.

A report titled 'System Error : Fixing the Flaws in Government IT' published by the Institute for Government thinktank, states that despite spending around £16 billion per annum, Whitehall and Westminster often see IT as a necessary evil: a risk to be mitigated rather than an opportunity to be exploited.

Information technology should be a transformational force, a tool to enable government not only to improve public services but to dramatically improve the relationship between citizen and state.

System Error: fixing the flaws in government IT sets out the case for a new approach to IT in the public sector, and recommends tackling two important aspects simultaneously:

1.platform - delivering government-wide efficiencies of scale and interoperability

2.agile - facilitating rapid response and innovation at the front line.

System Error has been welcomed by government CIO Joe Harley: "As Government CIO I find the report very helpful. The approach to platform and agile is useful and constructive. Government has a large and complex IT estate and the majority of it works efficiently and effectively. However, we are always looking for ways to improve and this report has a number of very useful recommendations for us to consider as we formulate our ICT Strategy. I look forward to working with the Institute in the future."