Industry news

According to those close to the issue, a growing number of companies are at an increased risk of fraud due to outsourcing critical functions to third parties.

And the risk is greatest, it turns out, in the very locations to which a growing proportion of work is being outsourced - the world's emerging markets.

"Fraud risks in emerging market countries are on the increase - but we're not seeing a trend that suggests that businesses have recognised the danger," says Neal Ysart, senior manager for forensic services at PricewaterhouseCoopers.

"What's more", he adds, "the tightening economic conditions of recent years mean that many of those businesses have also reduced the resources available to protect themselves from fraud."

Yet identifying fraud - during audits, for instance - isn't always easy, as managers at the outsourcing supplier can try to control information to which a forensic team has access.

"We had one client who failed to recognise that the internal audit team they sent to India was being fed with favourable information, and was being introduced to staff who had well-rehearsed answers ready and waiting," he says. "This meant that they had a false degree of comfort that the risk of fraud was well controlled-and it came as a shock when problems started to surface."

In short, he says, they had totally failed to recognise that their visit was being choreographed-and as a result missed the opportunity to identify problems at an early stage.

"The key problem," says Michele Edwards, fraud analytics global market lead at Atlanta, USA-headquartered PRGX, a specialist procurement analytics firm, "is that outsourced operations, combined with a tough economy that puts businesses under pressure, has provided an opportunity that can prove too tempting to resist."

"As companies move operations overseas, the risks of entering into a relationship with a corrupt third party - or a third party with corrupt employees - increases," she notes. "Companies simply aren't putting in place the controls and procedures that will identify and prevent fraudulent activity."

As a result, businesses such as PricewaterhouseCoopers and PRGX are receiving a growing number of calls to carry out checks on vendors in places like China and India. Yet prevention-as always-is better than cure, and both Edwards and Ysart acknowledge that firms could do more to protect themselves when establishing outsourcing relationships in the first place.

"It really reinforces the importance of putting in place good governance within an outsourcing relationship at the start," says Alistair Maughan, a partner at international law firm Morrison & Foerster. "To do otherwise is to ignore the possibility that fraud might occur - which is an unrealistic assumption."

Yet according to PRGX's Edwards, companies are still entering into outsourcing relationships without building into contracts the right to carry out audits - or even assessing suppliers' own anti-fraud controls, or codes of employee conduct.

Indeed, "a supplier's fraudulent employees pose a greater risk than many firms imagine-and one that they do relatively little to protect themselves from," warns Mike Pierdes, a partner with law firm Pinsent Masons.

"Under English law and that of many other jurisdictions, unless it is expressly specified in the outsourcing agreement that the outsourcing supplier is responsible for the fraudulent activities of its employees, the supplier could potentially argue that any fraud was carried out by the employee outside his or her scope of employment, and that therefore there is no vicarious corporate responsibility," he notes.

His advice? "Outsourcing agreements must specify that the supplier is responsible to the customer for the fraudulent activities of its employees-which isn't the law, and must be negotiated," he says. "The contract should also ensure that fraud is stated as an uncapped liability, and typically the customer should seek an indemnity from the supplier on this type of loss."

Source: http://www.procurementleaders.com/news/latestnews/4007-growing-threat-outsourcing/

The National Outsourcing Association organised a well attended and informative masterclass aimed at relationship engagement on Tuesday 5th October.

The masterclass, part of the NOA's life cycle model, was introduced by Board Member, Adrian Quayle, with the aim of providing some helpful advice and case studies on maintaining a positive outsourcing relationship.

Derek Parlour, Head of Commercial, National Rail Enquiries, gave an insight on their transition from being a single sourced organisation to a full multi-sourcing model with risk aligned with control and capability.

Mr Parlour said: “You need to manage cooperation, suppliers come to us and we work together in partnership. You have to spend time and manage the relationship as it is vital for success, innovation days can help.”

National Rail Enquiries found a single sourced model expensive, slow to change and all of the risk was put on the supplier. A multi-sourced model gave them numerous benefits such as the enthusiasm and knowledge of specialists, shorter contracts with agreed exit clauses and risks were shared which allowed the supplier to be feel relaxed about changes.

Iain Simmons, Senior Associate, Reynolds Porter Chamberlain LLP, is an experienced outsourcing lawyer and gave some advice on the importance of getting the contract right.

“One trend we are seeing is that customers want more detail than less in their contracts. Clear contracts avoid disputes. Focusing on the contract before it is delivered results in all parties knowing what to expect and are in agreement with no surprises. Disputes are obviously bad for business.”

From the masterclass, it was established that clear roles and responsibilities are essential in maintaining a positive relationship. A lack of the bigger picture can also lead to a misalignment of expectations. Innovation and brainstorming days are some ways in which clients proactively manage their relationship with their suppliers.

Sanjay Pritam, Partner, Reynolds Porter Chamberlain LLP, has many years of experience advising companies in industrial, media and insurance sectors on a broad range of commercial contract issues.

Mr Pritam said: “Relationships are fundamental to NOA success. A strong contract is a great tool for smooth outsourcing. Pricing, scope and legal risks are all highly integrated. One change will affect the others therefore joined up thinking along with a balanced contract is key for strong effective relationships.”

Adrian Quayle concluded the masterclass with the announcement of the British Standard on Collaborative Business Relationships (BS11000), to be released later in October. BS11000 is a voluntary British Standard to support collaborative business partnering and is the first milestone in the advancement of an International aka ISO Standard.

Next year’s Call Centre Expo will move to The National Hall, Olympia, and will take place on 11th–12th October 2011.

Commenting on the plans, Publishing & Event Director, Jonathan Collins, said, “We’re very excited about what a move to London will mean for our exhibitor community. It delivers the exhibition right to the heart of the action with an easily accessible location for both exhibitors and visitors – both UK and overseas – alike. Although the move requires significant financial investment from UBM, we feel that this move guarantees a successful future for Call Centre & Customer Management Expo for many years to come.”

This year’s event was held last month at Birmingham’s NEC with over 200 exhibitors and 5,000 industry professionals.

Attendees’ main areas of interest/investment at the show has continued to evolve, demonstrating a widening need for customer management solutions both technical and people based, as well as confirming the importance of traditional and new call centre technology solutions.

The top 10 areas included: CRM (34%), Performance Management (34%), Call Recording (34%), Quality, Monitoring/Analysis (28%), Staff Motivation & Incentives (27%), Workforce Management (25%), Computer Technology Integration (24%), Call Centre Hardware (24%), Training, Learning & Development (23%) and Automated Call Distributor (22%).

Running alongside the exhibition and for the first time was the two-day conference. With 23 sessions taking place, popular speakers included Neira Jones from Barclaycard, Nick Lane from Orange and Lynda Campbell from British Gas.

The free workshop programme attracted over 630 attendees over the 2 days. Keynote speakers included Don Peppers, Brad Cleveland, Lord Digby Jones and Natalie Calvert.

This is what some of the visitors and exhibitors had to say:

“Met my objectives – strong keynote speakers with cutting-edge insight of industry direction,” Head of Customer Service, Carbon Trust.

“I found everything I was looking for and some more I didn’t know I needed! Excellent event, will definitely be back next year!” Resource Planning Manager, gem.

India is the outsourcing IT hub for companies around the world.

The multi billion industry of IT outsourcing to India has emerged out of one and only one advantage it offers to companies bringing IT jobs to India and that is the cost benefit. Foreign companies outsourcing PHP development to India can get the same quality PHP application developed from a PHP developers at a much lower price.

Another advantage is that though the price remains low quality remains unmatched. This is because in the past few years PHP development in India has gained lot of popularity as a booming career opportunity resulting in the opening of many training institutes teaching basic and advance level PHP. The institutes through certification ensure that the developers who have trained under them have gained knowledge which makes them apt for the current PHP market.

Apart from private institutions there are many government and private colleges where PHP is included in the curriculum as part of technical courses. Also India is a hub to world renowned IT colleges like IIT, pass out from these colleges are considered to have the best knowledge in the subject and are immediately hired by companies involved in PHP development in India and when these PHP developers code an application the application is ought to be the best.

Lastly communication is not an issue while working with companies for PHP development in India as most of the PHP developers working for them are sure to know English and have the ability to clearly communicate with clients. Many companies take special measures to ensure that communication is not a hindrance by providing special training in communication to their PHP developers.

Similarly there are many other benefits of PHP development in India which stakeholders can expect by outsourcing their projects for PHP development.

Source: http://www.addpr.com/articles/technology/42248.html

The chief executive of Microsoft is coming to the UK to explain the multi-billion dollar bet that the world’s biggest software company and a poster boy for corporate America is making. Steve Ballmer will bound into a lecture hall at the London School of Economics on Tuesday 5th October in evangelical mood.

The wager? That the era in which companies pay to have software installed on computers is drawing to an end. That services such as sending emails, using documents, managing calendars and updating spreadsheets will no longer be tied to an individual computer but be accessible everywhere via the internet, and that companies will only pay for how much they use. And, finally, that many businesses will no longer bother having their own computer networks at all. Welcome, then, to the world of cloud computing.

The phrase, in which the word cloud is used as a metaphor for the internet, has been generating gigabytes of excitement among technologists, developers and futurologists for the past three years. The best analogy to bust the jargon, say experts, is to consider how homes get their electricity. Few have their own generators on the premises - instead people call on an electricity provider to power up a microwave, turn on a kettle or light as a room as they need to.

In the era of cloud computing, businesses will treat computing services in the same way, sharing networks with other companies and paying only for what they use. Technology watchers say it’s as fundamental a change as the advent of mainframe computers in the 1960s, the development of servers and the arrival of the internet itself.

“The shift to cloud computing is huge. It’s one of those shifts that happen in technology once a decade or so,” said Sarah Friar, an analyst at Goldman Sachs in San Francisco. “It’s not something that anyone of any size can afford to ignore.”

And it’s no longer just the preserve of theory, either. It’s shaping strategy in boardrooms, has fuelled the boom in technology deals this year and will help define the technology industry’s next generation of winners and losers.

All of which explains why Ballmer will be in London talking clouds. Although the lecture hall will be crammed full of students, his real audience will be the vast sweep of businesses in the UK and Europe - both big and small - who are planning their IT budgets for the next few years. For North America has led the way on spending on cloud computing, accounting for 58pc of total spend this year, according to research firm Gartner, compared with 24pc for western Europe.

The numbers Microsoft gives suggests its bet is a real one. By next year, the Seattle-based company plans to be spending 90pc of its annual $9.5bn research and development budget on cloud computing. It already has a range of web-based software products, including Office Web Apps and Windows Azure, and 70pc of the 40,000 of its staff who work on software are in this field.

But sceptics wonder whether Microsoft’s enthusiasm resembles that of the evangelist who is still trying to convince themselves to really believe.

“The prevailing wisdom is that Microsoft has been dragged kicking and screaming into the cloud by Google,” said David Smith, who tracks the industry for Gartner. Google’s web-based drive into Microsoft’s heartland of e-mail and word processing has been aggressive, and the search engine says it can provide it at less than half the price. There’s no doubt that cloud computing’s embrace by Microsoft is not a completely warm one.

Stephen Elop, who ran Microsoft’s division that sells software to businesses until he left last month to head Nokia, has called cloud a “constructive disruption”. The division enjoys a 64pc profit margin and has, in the eyes of critics of the software giant and its Windows operating system, been a licence to print money.

The majority of Wall Street analysts expect those margins will come under pressure as Microsoft provides more lower-cost web-based alternatives and competition increases. But if the company had been a reluctant convert, the camp which still doubt its seriousness is dwindling.

“Historically they were pushed into it but now they are full embracing it,” said Colin Gillis of BGC Partners. “They are a cloud-first company.” Microsoft, which declines to break out the profits it makes from cloud computing, argues that it should generate more revenue as it looks after companies’ networks and provides more support.

Whether you believe Microsoft was pushed or jumped, its decision will prove influential. “Moves by tech bell-weathers including Microsoft - with Azure and Oracle with Fusion Apps - to embrace the cloud suggests that we may be close to the tipping point in the shift,” according to analysts at Bank of America-Merrill Lynch. Those that are leading the adventure into cloud will enjoy tailwinds that have helped catapult cloud to the top of the in-tray of anyone who has decisions to make on IT spending. The global recession and, in the West at least, the fragile recovery is subjecting that spending to greater scrutiny than ever before. The cost of sending information over broadband has dropped, while the explosive growth of smartphones and netbooks has opened up the potential customer base for employees using applications when on the move. Global sales of cloud computing services climbed 21pc to $56.3bn last year, according to Gartner.

The research firm is forecasting that the size of the market will grow to $150bn in 2013. Given the potential size of the prize, it’s unsurprising that the evolving market is a ferociously contested one in Silicon Valley, with some surprising names in it.

There’s Google, which has been in it from the start, but so too has Amazon.com. Best known as a book retailer, Amazon developed web-based computing services as it sought to make more efficient use of its servers to cope with peak demand in the run-up to holidays. Founder and chief executive, Jeff Bezos, has said its web services business could become as large as its retail one.

There’s also a host of fast-growing, smaller companies including SalesForce.com and VMware. Long-established technology company, Oracle, is developing a range of products aimed at businesses, while Hewlett-Packard’s recent $2.35bn takeover battle for 3Par, which provides data storage, shows that the elements like data storage needed for cloud computing are in demand. “The M&A we’ve seen is a direct offshoot [of the growth of cloud computing]. We’ll see more and more deals, both offensive and defensive,” says Friar of Goldman Sachs.

While the worst economic slowdown since the 1930s may be paving the way for radical change, the expansion of cloud computing faces hurdles. It’s not yet generating significant amounts of money for any of the providers. Smith cautions that “there isn’t concrete evidence that this is going to be a large profit machine for many of these companies”.

Perhaps as significantly, customers are twitchy about security. Storing commercially sensitive data and handing over vital business functions such as email to someone else is unlikely to be immediately appealing to many; add in the fact that your data may be stored on the same servers as that of a rival and the anxiety intensifies.

A recent survey by research firm Vanson Bourne, found that 52pc of companies cited security when explaining why they were steering clear of cloud computing. In America, the Government Accountability Office found that the federal government’s increasing reliance on cloud computing was generating risks. The local government in Los Angeles, for example, has requested that all its email stay on Google’s data centres in the US as part of a deal it signed with the search engine.

“We haven’t had a high-profile, public data cloud exposure yet,” says Gillis at BGC Partners. “That hasn’t happened [but] there will be bumps along the road.”

The reasons for chief technology officers to rush to convert are far from clear-cut, particularly when one of the benefits for companies typically touted is a much smaller internal IT department.

None of which has stopped Toby Redshaw, the chief information officer of UK insurer Aviva. He put the network of the FTSE100 company in the cloud because it’s “faster, better and cheaper”.

The last of these three holds particular appeal at the moment. Google and Microsoft are fighting a ferocious battle across America as they compete to offer cheaper services to cash-strapped states.

With spending cuts looming in Britain over the next 12 months, local authorities are also likely to provide a new front in the long-running fight between the two companies.

But it’s not just about the price. Experts say the ability for companies to radically increase or cut their computing power quickly is attractive, and can generate cost savings of its own. Investment banks, for example, make a surge in demands on their networks when option trades are calculated at the end of each quarter, but that paid-for computing capacity typically lies unused the rest of the time.

While companies and governments harbour legitimate concerns about the security of their data, individuals appear less worried. Consumers that are increasingly likely to have a either a Blackberry or an iPhone are playing a pivotal role in prompting companies to offer web-based software and for business customers to consider adopting it.

One leading technology analyst says that this is the first time in which an individual’s technology at home has a good chance of eclipsing that on offer at their workplace. For example, people are already used to downloading web-powered apps or accessing files online through a smartphone.”The consumer has got used to the cloud,” says Gillis of BGC Partners. “A lot of technology has been driven by the consumer and this is no different.”

And it’s something that employees are increasingly coming to expect from the companies they work for. SalesForce.com has developed a tool called Chatter for employees to discuss issues and projects at work that’s designed to mimic the nature of conversations on Facebook. Redshaw from Aviva says that the ability of employees to share files and documents has generated almost 5,000 collaborations across the company.

Ballmer will know that using web-based applications will be second nature to most of his audience on Tuesday. He’ll also know that technology waits for no one, not even for the billionaires at the top of Microsoft. Time will tell whether the world’s biggest software company and its rivals can find their sunnier future up in the clouds.

Source: http://www.telegraph.co.uk/technology/microsoft/8038312/Cloud-computing-will-Microsoft-and-its-rivals-find-a-silver-lining.html

Central government is wasting millions of pounds because of the outdated way in which it manages the tendering process for large-scale IT projects, making a mockery of the coalition's bid to cut wasteful spending, according to benchmarking firm ProBenchmark.

The company analysed major public sector contracts and found that, when existing contracts are re-tendered, up to 80 per cent of the time the buyer has no desire to change supplier owing to the complexity and costs involved.

However, the outdated re-bidding process used by central government teams means that costs can run to £8m for a single contract, and the whole process can drag on for 18 months or more.

ProBenchmark claimed that the total cost of re-tendering in the current round of public sector cuts will be at least £200m, far more than any savings that may be delivered.

"Nobody benefits from the current tendering process," said ProBenchmark director Simon Scarrott. "The government doesn't get a cheaper deal, and the vendor doesn't give a better price. It's a one-size-fits-all, not an intelligent, selective process."

Scarrott argued that the government needs to adopt a new approach to managing the re-tendering process for its outsourcing contracts, which involves researching the market price for a particular contract and establishing whether the current supplier is market-compliant.

This would save time and money, he explained, being only a fraction of the cost of a full tender process, which typically involves drawing up a long list of potential providers that is eventually whittled down to one, even if there is no intention of switching to another outsourcing provider.

"Historically there is a community of procurement professionals who are self-employed and do very well out of extending the tendering process," Scarrott said.

"If you create a procurement process that rewards long, slow and often, that ' s what you'll get and that's what we have."

However, the government is moving in the right direction, according to Scarrott, although it may take some time to get there.

"There is a move towards a central intelligence for buying and procurement, and that the Office of Government Commerce is pushing towards it is a plus," he said.

"There is a momentum towards acting in a more grown up and cost-efficient way, but there are years of prejudice and legacy to overcome."

Source: http://www.computing.co.uk/v3/news/2270849/government-wasting-millions

The global technology company IBM is giving its resources to fresh IT firms in India by offering them different technologies and solutions free of charge. The whole thing is part of the global Entrepreneur Initiatives Program.

Under this initiative, the fresh companies can benefit from the following:

• Work side by side with scientists and technology experts from IBM Research in order to develop new technologies.

• Take advantage of dedicated IBM project managers to assist in the product development.

• Join a new social networking community to connect with other entrepreneurs and more than eight million professionals from around the world.

• Access IBM’s software portfolio, industry frameworks and other technologies through a cloud computing environment.

The computer giant, with the help of 40 venture capitalists, has initiated the process to shortlist such business ventures, which are zero to three years old, but have the potential to grow and serve global customers. Around 140 start-ups will be invited to a forum organized by IBM in order to discuss how to overcome the start-up phase.

Indian virtual offices, for example, are already being used by foreign entrepreneurs, as they are aware of the technology potential the people have there. This way they can operate from home without hiring staff or committing to a lease and yet being able to make cheap calls to India in order to communicate with their employees.

The company chief operations officers for India have stated that they already have a portfolio of offerings and solutions, but this is on an enterprise level. When it comes to smaller entities, they face a challenge. This is why they are trying to go even lower down the food chain, where innovations happen. The forum will work as an enabler for the start up companies which generally don’t have the ability to use enterprise insight.

As a matter of fact in the last years India have proven to be competitive on the freelance market by offering a very good price-quality ratio. However, their IT specialists rarely had the opportunity to develop them self out of the freelancing market. Many of them even went abroad in order to seek career opportunities. Perhaps, with the IBM initiative, one day the Indian emigrants won’t have to call India anymore to hear their families, because they will be able to return and have a great chance finding a job in a prosperous IT company.

Every great idea has a beginning.

Source: http://www.media-cn.com/ibm-invests-in-indian-outsourcing.html

Apple could surpass energy giant Exxon as the most valuable company in terms of market capitalisation.

According to The Associated Press, as soon as the total value of the iPhone maker's shares edges above those of Exxon's, Apple will take over the top spot in the Standard and Poor's 500.

The S & P 500 has been widely regarded as the best single gauge of the large cap US equities market since the index was first published in 1957, and is used by most professional money managers.

Billions of dollars invested in funds that track the index will have to shift their holdings to reflect Apple's new weighting according to AP's David K. Randall.

Apple's rise to the top suggests the market no longer holds traditional manufacturers, or those who rely on business spending or natural resources, in higher esteem than tech companies, Randall adds.

"If Apple becomes more valuable than Exxon, it will be only the second time that a growing technology company which doesn't pay dividends will make up the greatest share of the S&P 500," Randall reports. "The first, Microsoft Corp., held the position for two years in the late 1990s during the boom that made personal computers a staple in households around the world."

Randall adds, Apple shares cost around £4.42 just ten years ago, yet on Friday 1st October closed at £178. Apple has approximately £31.6 billion in cash sitting on the company's balance sheet

Source: http://www.cio.co.uk/news/3242265/apple-may-overtake-exxon-as-worlds-most-valuable-company/?olo=rss

Firstsource Solutions , a leading global business process outsourcing (BPO) provider, today announced a five-year outsourcing partnership with Barclaycard, the UK-based credit card and consumer lending business of British bank .

The customer service contract will involve Firstsource managing Barclaycard's credit card and payment businesses beginning November 1, a company statement said here.

In February 2008, Firstsource had signed a five-year outsourcing agreement with Barclays US credit card business.

The latest partnership is part of Barclaycard's ongoing programme of improving business efficiency and providing a quality service to customers. Firstsource will manage the majority of the services, currently provided by the Teesside centre as well as a related payment servicing team located in Wavertree (both sites in the UK), it said.

Source: http://www.bpovoice.com/news/topics/firstsource-signs-5yr

The use of Cloud Computing in the United States public sector has continued to gain traction, with confirmation the Midwest State of Minnesota is to take its communication and collaboration activities into the Cloud through a deal signed with Microsoft.

Minnesota’s Office of Enterprise Technology (OET) announced the State would receive an Enterprise-level Unified Communications and Collaborations platform through Microsoft’s Business Productivity Online Suite (BPOS), the first US state to move towards a large collaboration and communication suite in a private cloud environment.

The move by Minnesota falls in line with the increasing use of Cloud Computing applications on both sides of the Atlantic, across multiple divisions of the US and UK’s respective public sectors. Recent moves in the UK have seen the NHS implement Cloud-based workload management tools, the continual move towards the G-Cloud initiative. Meanwhile Los Angeles has migrated council workers over to Google Apps, and the Federal government continues to drive forward with its own Cloud programmes in a bid to realise a range of efficiencies.

The partnership, which the OET enthusiastically called ‘historic’, aims to bring a series of functionality and productivity upgrades to the State, and also enhanced security and cost efficiencies. The move is expected to greatly reduce redundancy and save Minnesota millions in upgrade investments and ongoing costs in the process. The company has also confirmed the privacy of state government data will be ensured through a dedicated Microsoft environment and delivered online through a direct connection to Minnesota’s secure network.

“As states battle growing deficits, they are continually being asked to do more with less,” said Gopal Khanna, Minnesota’s state chief information officer. “Rethinking the way we manage our digital infrastructure centrally, to save locally across all units of government, is a crucial part of the solution. The private sector has utilized technological advancements like cloud computing to realize operational efficiencies for some time now. Government must follow suit.”

“Minnesota is leading the way by looking holistically at the broad productivity opportunities and cost savings afforded by moving to the cloud with Microsoft,” said Gail Thomas-Flynn, vice president of state and local government at Microsoft. “Governments small and large are looking to us to help bring security, privacy, and scalability to their IT consolidation choices. Because shrinking budgets and increased expectations are both realities, states are wise to explore how a move to the cloud makes long term strategic and business sense.”

Counties across Minnesota are already using Cloud Computing applications, and the deal has already been seen as a significant and positive move by the State’s local government. “We currently consume cloud-based services for key financial business applications,” said Marilyn McCarter, CIO of Scott County, Minnesota. “This agreement creates a tremendous potential opportunity for counties.”

Source: http://www.publictechnology.net/sector/local-gov/us-state-migrating-microsoft-s-cloud-offering