Industry news

CSC have announced that the U.S. Air Force awarded the company a task order to provide analytical and technical support to its 24th Air Force Cyber Command, located in San Antonio, Texas. Awarded during CSC’s fiscal 2011 second quarter, the task order has a one-year base period and four one-year options. The order was issued under the Information Technology Enterprise Solutions-2 Services contract, which CSC won in 2006.

Under the terms of the order, CSC will provide technical and analytical support in areas relating to command and control, planning, implementing, and executing the Air Force cyberspace mission. CSC will support the development and implementation of tools and procedures for network defense and warfare operations, as well as related integration of network support and exploitation capabilities and functions. Work on this task order will be performed at Lackland Air Force Base in San Antonio, Texas, under the direction of Wiley Hill, CSC’s local lead executive.

“As a trusted leader in providing global cybersecurity solutions, CSC is honored to support the evolution of the Network Warfare Operations mission to a cyberspace capability for the 24th Air Force,” said Harold C. Smith, vice president and general manager of the Intelligence Group for CSC’s North American Public Sector. “Our mission is to ensure the Air Force’s cyber command is confident in the integrated processes, procedures, data, and systems to support its air, space and electromagnetic spectrum operations.”

In the first of four articles, Tim Palmer, expert in HR Transformation and the Co-Chair of the European HR Outsourcing Association at PA Consulting Group, outlines how HR Directors should consider their options for sourcing HR services, and not blindly succumb to commonly-held beliefs about HR outsourcing.

HR cannot be immune to the pressures that today apply to every other part of an organisation, and there is a need to find the right way to deliver the required services for the best value for money. The reality is that if HR doesn’t assess its own options, in this climate, someone else will probably do it for them. Rather than having a sourcing strategy forced upon the HR department from elsewhere, it is better for HR directors to proactively assess alternative strategies, from the creation of internal shared services to outsourcing. HR can get ahead of the game and present its own strong opinion on the best way forward.

Key to success is to have clear goals

This might sound as if outsourcing is being advocated for use in all situations; in fact the opposite is true. Outsourcing is not something that should be done lightly. Do it well, and it is a great way to achieve strategic goals that might not be otherwise available. Do it badly, and it has the potential to cost you more money and more grief than you ever thought possible.

Being realistic, outsourcing will not solve all the issues facing an HR organisation; and it is rarely possible to achieve every requirement in one outsourcing solution. Outsourcing cannot deliver lower costs and better service and new systems and lower risk; but, done well, it can deliver one or two of these goals and provide quantifiable value to the organisation. Good outsourcing involves trade-offs, and HR directors need to be honest about their true objectives, so that they can understand what they have to play with.

So how to move forward? The outsourcing market is awash with ‘bumper sticker’ advice about the pros and cons of various approaches. From impossibly over-optimistic return on investment figures to dire warnings about loss of control, these simplistic and ill-founded myths are adding unnecessary confusion.

In fact, despite the perceived complexity, HR outsourcing is a relatively simple thing. The HR director has to determine the strategic goals; and the organisation must decide whether or not it is prepared to have a third party working to support the delivery of those goals. Taking the outsourcing route is not a software selection exercise or something to be worn as a badge of honour. Deciding whether or not to outsource HR should be a sound, sensible decision taken with all of the necessary facts at your disposal.

Next week, Tim Palmer examines the first two specific myths about HR outsourcing, and why they are not to be believed.

For more information visit www.paconsulting.com/sourcing

How can you measure the value of outsourcing key elements of talent management such as recruitment if you don’t clearly understand what you are trying to achieve through it?

Traditionally businesses have seen outsourcing and, in particular, recruitment outsourcing in relatively simple terms, often bound up with a focus on reducing costs and boosting procedural efficiency. However, over the past few years we’ve seen more and more HR directors understanding the case for using outsourcing in a more strategic way and accepting its value throughout the whole of the talent management chain. Effective implementation of this approach calls for the strategic planning of workforce management to ensure that the management of talent aligns directly with a company’s business goals. But how can this be executed in practice?

The key seems to be a challenging, but nevertheless essential, combination of the ‘big picture’ with a detailed road-map. And realising the big picture means looking at the context the organisation operates in now, and perhaps more importantly, will operate in over the coming years.

Markets change more rapidly today than perhaps at any other time in human history. And that means most businesses need to be re-evaluating their offerings on a continuous basis with obvious consequences for the composition of the workforce. Look for example at Telefónica O2 diversifying into such areas as healthcare and financial services, parts of GE developing consultancy expertise or, at a more extreme level, Nandan Nilekani of Infosys claiming that his company’s role now is not to produce technology but to ‘redefine the boundaries of the possible’. And all this means that the skills-sets which made companies successful in the past may be redundant in the bright new future.

Of course predicting the future is not an easy matter. Anyone who watched the BBC programme ‘Tomorrows World’ in the 1960s or 70s may still be wondering what happened to the robots, routine space travel and three hour working days. But the need to at least make an educated guess at future business direction and what capabilities your workforce will need to make it happen is not something that any serious enterprise can afford to ignore.

Defining the nature of the likely ‘next’ workforce will allow organisations and their outsourcing partners to work out the best ways to reach out to the individuals who will make it up. This will almost certainly mean more imaginative methodologies than traditional advertising or use of recruitment agencies. Instead it will mean careful development of the employer brand and the building of communities through social media to build pipelines of talent that can be drawn upon as specific roles become available.

The challenge for HR professionals and outsourcers alike will be to create plans and structures that are both detailed yet flexible enough to adapt to constantly changing needs. A daunting challenge perhaps, but one that simply must be met.

Paul Daley, director at recruitment outsourcing and talent management specialist, Ochre House. www.ochrehouse.com

Towards the end of last year, FusionExperience ran a series of interactive webinars providing insight and guidance into important issues relevant to operations and outsourcing.

In the first webinar we set out the importance of having a good operations strategy and gave detailed guidance on the level of resources to be devoted to developing and updating one. When considering operating model strategy, two questions are clearly prominent on the participants’ minds, namely why to have one in the first place, and why or when should it be reviewed. Answering these will identify the key elements that a good operations model must contain. Examining what happens if you don’t have an operating strategy can start to answer this, namely sub-optimisation, urgency winning over importance and inefficient allocation of resources.

The second webinar looked at the importance of managing the outsource suppliers that are an increasingly large part of most asset management operations. Outsourced service provision is central to the operation of almost all asset management firms. The basic rationale for outsourcing across all industries is that the benefits of scale outweigh the additional management costs of acquiring services from suppliers.

The third webinar looked at important techniques for Managing Major Change, focusing on techniques for achieving momentum and coherence at the fuzzy front end of projects. Change in asset management is constant and pervasive; new products must be launched to respond to changes in customer preference, service features must be added in line with demand for more tailored service and service levels need to be continually upgraded to keep pace with customer expectations, at ever lower costs.

However the change process can fail if some basic tenets are not followed; requirements must be properly understood, scope must be fully defined and accurate estimates of the resources required must be produced. Moreover stakeholders must be fully engaged and the acceptance criteria defined.

Our final webinar entitled ‘Managing Operations’ covered measures companies can take to improve operations. It is through operations that companies deliver services and brand. Good operations will deliver to expectation, are flexible and allow for the rapid launch of new products and new services. By contrast, poor operations will undermine a brand, will consume management resources dealing with failure, and will divert financial resources away from other areas of the business.

Operations consist of a company’s people, its technology, and its process. If operations are important it therefore follows that they should be managed. In the webinar we looked at a framework for process management described by the Capability Maturity Model Integration for Services (CMMI). This is a model used globally by many large organisations to drive cost reduction and improvement in services delivery. The CMMI model is a progressive model, with each level describing in detail the process goals to be achieved, and the practices required to improve them.

Whilst the webinar targeted the asset management sector, the issues raised were sector agnostic. The reason we held these webinars was to impart some of the knowledge at FusionExperience have garnered over many years and hear from other back office professionals who shared their opinions and asked some often challenging questions. We have written up the findings of the webinars, which can be accessed at Sourcingfocus.com, our media partner’s website. These can be viewed at http://www.sourcingfocus.com/index.php/search/results/8c749bd8a1c7bae36e39218ebd80920d/

Gordon Easden, Financial Services practice head.

Hampshire County Council aims to shave £900,000 off its annual IT bill by reorganising its IT services unit and reducing contract costs.

The cuts come as part of the council’s efforts to deal with a £55m hole in its 2011/12 budget. The council also plans to axe 1,200 jobs as part of its cost cutting.

"There can be no debate over whether or not we make cuts, the withdrawal of government funding to meet the national debt leaves us without that choice,” said Ken Thornber, leader of Hampshire County Council.

As part of the IT savings, the council will merge its Culture, Communities and Rural Affairs department with its Property, Business, Regulatory Services and IT department.

It also hopes to improve its productivity through better use of IT. It expects to be able to make a saving of £1m through improving its support and administration functions and enabling more employee self-service.

Recently, Hampshire teamed up with Dorset County Council to develop a joint ICT strategy.

That collaboration was expected to save Hampshire somewhere between £2m and £5m in IT costs over the next three years.

As part of the shared services arrangement, the councils share computer centres, business continuity, technical expertise and technical services. A joint management board was established to explore possible savings on major IT systems, shared contracts and procurement and a joint support and service desk.

"In order to meet the current and future financial challenges we have undertaken a comprehensive review of how the council operates and of all its services and we are now embarking on a change programme that is of an unprecedented scale,” added Thornber.

Source: http://www.computing.co.uk/ctg/news/1938184/hampshire-council-aims-gbp900-savings

Accenture and Carlsberg have agreed to a five-year contract for the provision of application services to the European operations of Carlsberg Breweries A/S.

Under the terms of the agreement, Accenture will support a range of application services in a co-sourcing agreement managed by Carlsberg. The services will support Carlsberg’s “Business Standardisation Programme” which aims to enable future growth through the introduction of common business processes, and an enhanced ability to share best practices across its European operations.

Application services will be delivered in areas such as incident management and problem management, and a 7-step improvement process for incident/problem management. In addition, Accenture will support service validation, test management and request fulfillment.

The contract complements an agreement announced in April 2009 by Accenture and Carlsberg Breweries A/S, under which Accenture supports Carlsberg's SAP and Microsoft software implementations in Europe, and the delivery of a common enterprise resource planning platform.

“The choice of Accenture to help us support BSP reflects their proven experience in delivering similar application services in the consumer products industry and the flexibility it offers in helping us to achieve the aims of our BSP,” said Kenneth Egelund Schmidt, Vice President CIO at Carlsberg A/S.

“This contract underlines Carlsberg’s drive for optimization and continuous improvement,” said Henrik Rasmussen, senior executive in Accenture’s Consumer Goods and Services practice. “The services to be implemented under this contract will help Carlsberg to benefit from a standardized delivery of application services, which is crucial to achieving high performance.”

The two companies will work together to deliver the services through Accenture’s Global Delivery Network, using one of Accenture’s centers in Hyderabad, India, and local service management at Carlsberg in Copenhagen, Denmark.

The application services that will be delivered will be based on the Information Technology Infrastructure Library (ITIL) version 3, which represents a first for the consumer products industry. ITIL is a series of documents, originally created by the Office of Government Commerce, a governmental department in United Kingdom, to help implement an efficient framework for IT Service Management.

IBM says its net income and revenue were stronger than expected in the fourth quarter amid a pickup in services signings, a key part of IBM's revenue stream and an area of concern for some analysts.

Net income rose 9 percent to $5.26 billion, or $4.24 per share, topping analysts' projections for $4.08 per share. In the year-ago period, IBM earned $4.81 billion, or $3.65 per share.

Revenue rose 6 percent to $29.02 billion. Analysts expected $28.18 billion.

Many analysts have been worried about a drop in IBM's outsourcing business in recent quarters as rivals gained ground. In the latest period, IBM's signings of new outsourcing contracts rose 24 percent. The company's total backlog of services deals was $142 billion.

Source: http://newsok.com/ibms-net-tops-street-outsourcing-deals-pick-up/article/feed/236024#ixzz1BTQiYEwh

Chinese education and comms

The theoretical attractions of outsourcing to China are obvious: a large population of capable graduates, excellent communications and transport infrastructure, and a supportive government keen to promote foreign investment. But are those factors enough in the increasingly congested offshoring marketplace?

To date, global firms have tapped into Chinese outsourcing by focusing on regional demand. For example, Capgemini's foundation client for its Guangzhou operations a decade ago was Dairy Farm, the Hong Kong-based, pan-Asian retailer that operates through brands such as Ikea and 7-Eleven.

To this type of operation were added global firms with extensive activities in Asia, such as Unilever and Syngenta, plus a number of large Chinese firms - but the picture has remained fundamentally regional.

The pattern applies equally to other global outsourcers such as Accenture, Genpact, or Infosys, as well as China-centric organisations such as Bleum, and M&Y Global Services. In all cases the strategy has been one of targeting Chinese or global organisations looking for...

But in Capgemini's new centre, there was also something new on display: Chinese resources processing for US and European operations. There was no fanfare for this development. Like other outsourcers, Capgemini's focus is on giving clients access to a global network of centres, in which the location of delivery becomes almost irrelevant.

Nevertheless, it is happening. BPO and IT outsourcing are being carried out in China for global operations, and that means China is finally becoming an option in the global services marketplace.

Price comparison with India

Just how important a role it will play will depend on several factors, not least price. If outsourcers can offer their China services at or near the price of offshoring to the subcontinent, China will emerge as the de facto global outsourcing alternative to India.

But if outsourcing to China is more expensive than the competition, it will need to find a niche specialism to attract global business - such as a focus on specific technologies or business processes. If this is the case, it is not yet clear in IT or BPO terms what these specialisms would be.

Equally, the depth of China's language skills is unproven. Official figures may claim 300 million English speakers in China but the reality is that the number of fluent speakers makes up a small fraction of that figure. The impressive line-up of English speakers fielded by new delivery centres, such as Nanhai, could represent the crème de la crème, rather than a ready reservoir of foreign language talent.

Because of this relatively unproven linguistic dimension, it seems global sourcing to China in the short term will focus on non-voice work, such as development and transactional tasks that do not require a high level of spoken foreign language skills.

Issues of security, politics and ethics

Finally, there are lingering questions about security, politics and ethics, but these do not appear likely to derail China's emergence as a global sourcing location. Concerns about intellectual property haven't stopped the world's largest technology firms, such as Microsoft and SAP, investing in major R&D centres in China. IP security appears to be a risk organisations can effectively manage.

Recent controversies, such as those regarding Google and the Nobel Peace Prize, remind Western businesses and politicians that China is different. But such controversies have not stopped and will not stop the flow of traffic to the East.

China is, of course, a magnet for hyperbole. It is easy to be seduced by the scale of its resources and ambition. But the underlying fundamentals are in place.

With its world-class infrastructure, work ethic and maturing talent pool, it now seems a question of when - rather than if - China will emerge as a key global back-office location. The evidence is mounting. China is coming to an outsourcing deal near you soon.

Paul Morrison leads Alsbridge's BPO and shared services advisory practice

Source: http://www.silicon.com/management/cio-insights/2011/01/17/outsourcing-is-china-the-worlds-new-back-office-39746820/

India still leads the global IT outsourcing market and its advantages over other regions are still distinct. The Indian domestic market has undergone a transformation over the past decade — rising from the periphery to emerge as a viable, high-potential opportunity for the country's IT-BPO sector.

Labour or cost arbitrage does not drive the domestic BPO market like in the global outsourcing market. It's the need to scale rapidly, greater focus on core competencies , enhanced productivity, heightened competition and reduced time to market that is driving domestic demand.

While, the large enterprises with substantial resources have always outsourced a part of their operations, the mid-size and small organisations have been unable to explore this opportunity. With the increasing global competition, the small and mid-sized businesses are being forced to restructure their operations.

To remain at the helm of innovation and be competitive, SMBs are looking at focusing on their competencies and quality rather than spending time and money on backhand operations verticals in which they lack expertise.

The growing competition and market needs are driving companies to search for experts to offload functions beyond their know-how. However, there now seems to be shift in the services that are outsourced. The outsourced services are now the areas that require experts. This is not only helping organisations save time and gain value for money but also helping them scale up by capitalising on their proficiency.

The BPO industry today stands at an interesting inflection point. Service providers are now adding the knowledge component into the mix in an attempt to deliver greater value. Top players have improved by listening, learning and following client's 'real' requirements. They make it a point to 'hear' the real problems and follow them to develop new solutions . The knowledge component is enabling a more value-added role, directly impacting the client's business objectives.

With greater buyer awareness about offshoring knowledge services and increasing service provider capabilities, the share of knowledge services in the overall market will continue to grow. At the same time, the nature of 'knowledge' services is quite distinct from traditional IT and BPO, and viewing these merely as additional services may not work. Unique practices, processes and formulas are developed after thoroughly following client requirements.

Outcoming is the continuous process of following client requirement intelligently and delivering exactly what the client wants.

Outcoming has added a new dimension to outsourcing. Trends towards open standards, interoperability and consolidation have opened up a new set of possibilities and challenges. In the hardware industry, these trends are instantiated in virtualisation, cloud computing and 'blades'.

In the software industry, these trends show up in software as a service (SaaS), service-oriented architecture (SOA), open source and 'composite applications' . In IT services, these trends manifest in the push towards shared services, 'deskilling' and global sourcing.

For the incumbent vendors in these categories, it points towards M&A and consolidation, the blurring of traditional product categories, a confusing world of 'co-opetition' , and too often, threats of commoditisation.

Outcoming is at the intersection of the convergence of these historical trends and enterprising, demanding customers that see the potential of a new set of solutions. There are diverse aspects of the new outcoming market applicable to the IT/BPO industries.

Solve hard end-to-end operational problems

Don't slice up the problem into convenient chunks and take responsibility for part of it. Outcoming requires the seamless blending of software, hardware, research , consulting, analytics, process knowledge, financing and operations.

It is not a question of automation vs people. The answer is to solve the problem efficiently — sometimes combining a leading-edge research asset with low-cost manual data entry or an artificial intelligence algorithm packaged in the same project with a third-party courier service. Sometimes, for an MNC, it involves 'stretching' core competencies and working with local partners in non-traditional categories to complete the value chain.

Think small

Cross-functional solutions should not be 'mega-projects' or over-engineered . Bring together IT, consulting, industry expertise, research and operations in small, focused packages aligned to solve precisely the specific end-to-end operational challenge. High value is created by thinking small.

Output vs input focus

Value is migrating from detailed BoM-oriented contracts filled with input requirements designed by technical specialists into macro-driven , CEO-oriented outcome-aligned SLAs.

Shared risk for applied innovation

Overengineering or 'bleeding-edge' technology risk. The world is focused on innovation , but vendors need to rethink what it means. It is not shipping over the latest chunk of code from the research lab; rather it is delivering the benefit of that innovation and carrying the risk of applying it.

We learn together

The world isn't flat. It is local. There is no such thing as 'global expertise' — rather there is the extraordinarily challenging balance of combining true world-class skill and experience with local market insight and requirements.

eBusiness on demand

The delivery of IT/ ops/consulting in an integrated package aligned to the client business model. An enterprise whose business processes — integrated end-to-end across the company and with key partners, suppliers and customers — can respond with speed to any customer demand or market opportunity.

Over the last decade, India Inc has developed and exported several new management paradigms — offshoring, bottom-of-pyramid, world-is-flat, and jugaad-style creativity. The newest one to be added to the list is outcoming. The dynamics of outsourcing are changing rapidly.

Consolidation among outsourcing companies, creation of larger providers offering a broader range of services and emergence of niche providers is making outcoming a 'strategic imperative' of outsourcing . Outcoming is creating a big opportunity for India, which is well placed to capture a proportion of future growth.

Source: http://www.sourcingmag.com/offsite.asp?A=Fr&Url=http://timesofindia.indiatimes.com/tech/careers/job-trends/Indian-outsourcing-industry-on-the-cusp-of-change/articleshow/7306544.cms

Strong demand for smartphones, particularly in the United States, is helping Carphone Warehouse overcome tough economic conditions, it said as it nudged up its full-year earnings forecast.

Chief executive Roger Taylor told Reuters on Tuesday sales of mobile phones based on Google's Android software had been the highlight of Christmas trading, while smartphones were becoming more popular in the market for prepay phones, which augured well for future growth.

"A good product cycle is outweighing the economic headwinds," he said, adding interest in tablet computers like Apple's iPad could also sustain demand this year.

Retailers across Europe and the United States are worried rising commodity prices and steps to cut government debt, like higher taxes, could weigh heavily on consumers.

However, firms selling must-have products continue to thrive, as highlighted by luxury group Burberry, which also nudged up full-year earnings expectations on Tuesday.

Carphone, Europe's biggest mobile phone retailer, said earnings for the year ending March would be at the top end of a range of 13.5 to 14.0 pence a share.

The group, which owns 50 percent of a venture with U.S. electricals retailer Best Buy as well as a 47.5 percent stake in Virgin Mobile France, said revenues at European stores open at least a year rose 0.7 percent in the 13 weeks to January 1, its fiscal third quarter.

That was just below analysts' average forecast of a 1 percent rise, according to a company poll, with a 2.3 percent increase in Britain offset by a weaker performance elsewhere in Europe, particularly in Spain.

Connections at U.S. joint venture Best Buy Mobile were up 33.6 percent, above the forecast increase of 25 percent, and Carphone said its share of full-year profit from that business would be 90-100 million pounds, compared with its previous estimate of 85-95 million.

"Carphone remains our top pick in mid-cap retail, combining high growth, zero capex U.S. expansion through Best Buy Mobile and a stable category-killer European core benefitting from an exceptionally strong smartphone and tablet cycle," Citi analysts said in a research note.

At 9:33 a.m. Carphone shares, which have more than trebled in value since demerging from telecoms group TalkTalk in March, were up 0.1 percent at 385.5 pence, valuing the business at about 1.8 billion pounds.

Carphone said the six Best Buy megastores in Britain, which are also part of the venture with its U.S. partner, were producing encouraging results, though it gave no details.

The megastores face stiff competition from established electrical goods groups Dixons and Kesa.

Virgin Mobile France added a net 74,000 customers in the third quarter, Carphone added.

Source: http://uk.reuters.com/article/idUKTRE70H0XX20110118