Industry news

IBM could see its permanent workforce of 399,000 staff shrink by three-quarters over the next seven years.

The company would then re-hire the workers as contractors for specific projects as and when necessary, a concept dubbed "crowd sourcing", according to a report by Personnel Today.

Tim Ringo, head of IBM Human Capital Management, is quoted as saying that by 2017, there will potentially be just 100,000 people working full time on a permanent basis at the firm.

“I think crowd sourcing is really important, where you would have a core set of employees but the vast majority are sub-contracted out," he added.

Managed IT services supplier Calyx Group has been placed into administration after struggling to pay its debts.

Geoff Rowley and Phil Armstrong, joint administrators for the group and partners at restructuring firm FRP Advisory LLP, said that Calyx Group was carrying a debt on its balance sheet “in excess” of its annual turnover of around £75 million.

“The group went into administration after it was unable to repay a secured creditor,” said Rowley.

Meanwhile, Calyx Goup’s Irish divisions have also been placed into receivership, under the responsibility of Tom Kavanagh of Irish insolvency firm KavanaghFennell.

According to a statement from FRP Advisory, the administrators are looking for a buyer of the business, but as yet, no redundancies have been made.

“We’re hopeful of finding a trade buyer,” said Rowley. “While we undertake this exercise, the business will continue to run as normal, with no interruption to customer service.”

Calyx Group has more than 500 employees in the UK, Northern Ireland and Ireland.

The company has provided managed IT services to customers including Royal Holloway, University of London, Barclays, Hays Recruitment and retailer Matalan.

NextiraOne, has signed a contract to deliver two new state-of-the-art Data Centres for the market-leading yogurt manufacturer, Müller Dairy. The project has been designed with clear environmental considerations in mind, and includes carbon-reducing technologies for cooling and power supply in two new dedicated facilities.

NextiraOne’s Intelligent Business Services Division designed, planned, project managed and implemented the complete overhaul of two Data Centre environments for Müller Dairy, at its UK headquarters and dairy in Market Drayton, Shropshire. The new Data Centre infrastructure has extended existing facilities which have remained operational throughout the project.

The works included the construction of new walls, raised modular floors and suspended ceilings, general power and lighting, the installation of new fire detection and suppression systems, APC InfraStruXure In-Row cooling solutions, server and network racks and structured cabling, all of which support Müllers Local Area Network, (LAN), Wide Area Network (WAN) and Network Storage equipment in each room. To assure business continuity, each room will be supported by a centralised Uninterruptible Power Supply (UPS) and generator back-up system. The system also includes an APC InfraStruXure Central Management server, which monitors environmental conditions within the Data Centres and can provide usage trends and early warning of conditions that could lead to system failure.

The aim of the new Data Centres is to maintain and improve system availability as Müller Dairy’s demands on its ICT continue to grow. Once the installation is complete NextiraOne will provide ongoing support and maintenance under a five-year Operational Support Agreement (OSA), including a single number support line to the NextiraOne Welcome Centre that handles all fault logging and manages the fault to its successful conclusion, telephone support and hardware support where required and also scheduling of preventative maintenance visits.

Under the contract NextiraOne’s Intelligent Building Services Division has carried out a phased implementation, extending and refurbishing one room at a time, so that the business-critical operations of the dairy could continue throughout. All the business processes, including the manufacturing of 5 million pots of yogurt per day and the handling of customer calls and enquiries through the company’s Contact Centre are controlled through the company’s ICT services, housed in the existing Data Centres.

One of the key factors built into the design is the ability to support Müller Dairy’s strategic aim of reducing its carbon footprint. NextiraOne has incorporated new energy-efficient technologies into the Data Centres, including energy efficient cooling systems that reduce power consumption by directly cooling IT equipment, instead of the room. The installation of a highly efficient centralised UPS system, which utilises Isolated Gate Bipolar Technology (IGBT), will also reduce power consumption, whilst improving business continuity.

NextiraOne won the contract because it was able to provide a solution that was fit for purpose whilst also demonstrating that its carbon reduction aspirations matched those of Müller Dairy. The company has a dedicated Intelligent Building Services Division which has a positive target of delivering carbon reduction solutions to its customers. NextiraOne is also a member of the 2degrees Network, a collaborative problem-solving and innovation service for sustainable business that helps organisations respond to the opportunities and challenges of climate change and the transition to a low carbon, resource-constrained economy.

“NextiraOne has the expertise in building Data Centre projects and we were impressed with the environmental awareness they are bringing to the project - entirely in keeping with our own carbon reduction strategy,” commented Stephen Kane, Head of IT at Müller Dairy UK.

Steven Skakel, Managing Director UK & Ireland at NextiraOne, said: “Müller Dairy has a very clear approach to its environmental responsibilities and we are delighted that it recognised our own commitment to carbon reduction in choosing NextiraOne to build its new Data Centres. Our Intelligent Building Services Division is at the leading edge in terms of delivering carbon-reducing solutions and the new technologies in power supply and In-Row cooling equipment that make a dramatic difference to a company’s ability to reduce costs and carbon.”

New findings from a report by the market research and strategic consulting firm Pierre Audoin Consultants (PAC) demonstrates that sales from IT outsourcing services will have increased by approximately EUR 4.5 billion in the DACH region in 2010 compared to 2005. Over the same period, the share in overall IT spending - an important indicator of the maturity of the outsourcing market - has risen from 9 to 13 percent.

According to the PAC report, which focused on sourcing trends and supplier positioning in Germany, Austria and Switzerland, established players in this market segment have not all been benefiting to the same extent from the positive trend. A comparison of the years 2005 and 2009 shows that most of the established providers have lost market share, partly to individual competitors, but mostly to a large number of “newcomers“.

A services market segment like outsourcing, which is heavily dependent on economies of scale, is normally dominated by a few large providers. The top 5, for instance, account for nearly 45 percent of the market in Germany; in Austria, they hold almost 70 percent. The remainder of the market is highly fragmented, with the number of outsourcing providers approaching 100 in the DACH region alone.

In the overall DACH region, IBM ranks first, closely followed by T-Systems (excluding captive group revenue). HP, Siemens SIS (also excluding captive revenue) and Atos Origin follow by some margin.

The positioning in the individual countries varies, though. In the Swiss market, IBM leads with a market share of nearly 19 percent, followed by Swisscom IT Services, HP and T-Systems. Accenture and CSC rank 5th and 6th. In Austria, on the other hand, Siemens SIS - with a market share of 23 percent - is clearly ahead of its major competitors, IBM, Raiffeisen Informatik, HP, and T-Systems.

In Germany - by far the biggest market - T-Systems still ranks first, with a market share of almost 13 percent, albeit very closely followed by IBM. HP, Siemens SIS, Atos Origin and Fujitsu are the challengers with the largest sales volumes.

It is remarkable that Infosys, an Indian player, has made it into the top 20 outsourcing providers in the DACH region. In Switzerland, the company even ranks 7th.

A few outsourcing giants clearly dominate the market. However, the evolution of the market shares of the leading suppliers since 2005 shows that this dominance has actually been dwindling.

HP, for instance, has gained quite some share in all markets after taking over EDS. When looking at HP’s performance from a pro-forma perspective (i.e. 2005 figures including EDS), though, HP has distinctly lost shares in some markets.

IBM has maintained its positioning in Austria and Germany since 2005, while slightly losing market share in Switzerland.

T-Systems has lost market share to competitors in all three countries. Siemens SIS has gained some share in Switzerland as well as in Austria over the period considered; in its home market, however, Germany’s second “local hero“ has also lost some share.

Swisscom IT Services has improved its position in its home market, Switzerland. Raiffeisen Informatik has also slightly gained market share in Austria.

Atos Origin has expanded its share in the Swiss outsourcing market while losing ground in Germany and Austria. CSC, too, has gained ground in Switzerland while seeing its share slightly fall in Germany.

Capgemini’s market position has remained largely unchanged over the period in question.

In many cases, companies starting from a rather low revenue base, but constantly generating growth above market average, have gained market share. These include, for instance, Accenture, Computacenter or Wincor Nixdorf in Germany. Fujitsu has also gained further ground particularly in Germany; even from a pro-forma perspective - including TDS and Fujitsu Services - the supplier has expanded its market share.

The big players have also lost quite some share to the growing number of “new” suppliers. Above all, some Indian providers have established themselves in the outsourcing area. In Switzerland alone, as many as four India-based players (Infosys, TCS, Mahindra Satyam and Wipro) are among the top 20 outsourcing providers.

Moreover, the challengers include niche suppliers specializing in one or a few services, industries or regions. There is also a large number of service providers that are normally not considered as outsourcing players, but that offer various kinds of operational services. They include the growing number of hard- and software companies offering their products “as a Service’’, as well as “e-business’’ players such as Google and Amazon; in addition, there are telecom operators with an expanding IT services business, systems suppliers pushing into the managed-services market, and highly specialized BPO providers.

“The market will continue to be dominated by a few “outsourcing giants” and we even expect individual providers to strengthen their positioning as a result of ongoing consolidation“, says PAC analyst Karsten Leclerque. “On the other hand, the progressing diversification of the services available on the market will increase the share of the market that a rising number of suppliers will carve up among themselves. The cake has been growing, but the individual slices have been shrinking“.

Tata Consultancy Services (TCS) has become the second-largest insurance business process outsourcing (BPO) provider in the UK, after winning two deals worth £250 million (around Rs1,800 crore). UK-based Capita is the number one player in this space.

Diligenta, a subsidiary of TCS, had yesterday announced that it had acquired Unisys Insurance Services (UISL) from Unisys Corporation, in lieu of which the company received business worth £250 million for the next six years. With this, Diligenta won business from Phoenix Group (earlier known as Pearl Group) and Old Mutual International. Phoenix Group is an existing customer of Diligenta.

Diligenta is already in talks with a few more insurance players for similar deals. “The cycle time for deals to materialise in case of Diligenta is six months to a year, especially for similar deals. So, in the next 12-18 months, we will have something to share. But winning these deals validates our strategy,” said Phiroz Vandrevala, chairman of Diligenta and executive director at TCS.

TCS, the country’s largest information technology (IT) services provider, took almost four years to develop a platform for the insurance segment in the UK. “We did not want to do a lift and drop kind of work in this space, and we wanted to partner in transformational work. It has taken four years to develop the platform. There was skepticism around this platform, but in April this year, we went live with two million policies for Phoenix,” said Vandrevala. For TCS, the UK is an important market, contributing 15 per cent to its revenue. TCS headcount in the UK will touch 2,000.

TCS started its journey in the UK insurance space in 2005, when it acquired the life and pension operations of Pearl Group under a 12-year £486-million BPO deal.

Diligenta now has three clients — Phoenix Group (additional extension to its earlier contract), Old Mutal International, and National Employee Savings Trust (NEST). In March, TCS had bagged a 10-year £600-million contract from Personal Accounts Delivery Authority (PADA) to administer the NEST scheme, but the deal is under the UK government scanner. Vandrevala said, “So far there is no change. In October, the government will take a final call on the overall IT deals. We will come to know about this only then.”

With these new contracts and an existing £486-million deal with Phoenix Group, analysts feel that TCS’ strategy is paying off. “I think TCS took a risk when it signed the deal with the Pearl Group in 2005. But if Indian IT firms want to break into the big league, they will need to take such risks. Also, with this win, they get much more flexibility,” said Vikram Gulati, director, Quantum Step, a UK-based research and advisory firm.

With these deals, TCS is also hopeful that the UK subsidiary will break even by the end of this financial year. “The work on the new contracts starts immediately. We are hopeful that by the end of this fiscal, we will break-even,” said Vandrevala. Diligenta reported a net loss of Rs56 crore in 2009-10 on a turnover of Rs456.2 crore, against a net loss of Rs41 crore on revenues of Rs527 crore in 2008-09.

TCS shares today closed 1.59 per cent down at Rs843.55 on the Bombay Stock Exchange.

Source:http://www.bpo.biz/bpo-news-blog/2010/09/06/tcs-is-now-the-2nd-largest-insurance-bpo-provider-in-uk/

The government is to initially cut its IT and outsourcing costs by £800m following meetings with its main suppliers, according to reports.

The new government targeted IT suppliers in an attempt to squeeze costs out of existing and future contracts.

In July minister for the Cabinet Office Francis Maude met the chief executives of the government's top 19 suppliers to start "renegotiating with them across everything that they do for government to get the cost down".

Progress is being made but some supplier offerings are going down better than others.

A source close to the negotiations said the government is making progress. He said suppliers that are offering standardised services and asking the government to make it easier to deal with them are offering big savings. "These suggestions are going very well." But he said suppliers that are just cutting prices and asking for extensions are not.

One attendee at the original meeting told Computer Weekly the government asked for immediate savings this year and ongoing cost reductions. He added that no numbers were mentioned.

A Cabinet Office spokeswoman said the £800m figure has not come from the government. She said the government has not yet completed the process. "It will run into hundreds of millions of pounds, but it is too early to say," she said.

Source: http://www.computerweekly.com/Articles/2010/09/06/242615/Government-IT-suppliers-agree-to-intial-163800m-cost.htm

Wipro Technologies the global Consulting, System Integration and Outsourcing business of Wipro Limited (NYSE:WIT), today announced an initiative with Oracle to jointly deliver a Warranty Management and Analytics solution for the Industrial Manufacturing, Automotive and High Tech industries.

This combined solution will leverage Wipro’s deep industry expertise and Oracle’s Siebel CRM applications to help streamline the warranty management process across OEMs and their suppliers, dealer service providers, and contract manufacturers to help reduce warranty expenses and fraudulent claims.

“Around 4 percent of warranty claims are fraudulent, making it one of the biggest challenges that the industry is facing today,” said John Barcus, Vice President, Manufacturing Industry Business Unit, Oracle. “We believe there is an immense opportunity to reduce these losses and an effective product warranty management solution is pivotal in helping reduce fraud-related losses. Wipro’s strong domain expertise in the Manufacturing, High Tech and Automobile industries and experience in development and deployment of Siebel CRM applications makes it a powerful partner for this solution.”

“Wipro is excited to work with Oracle in developing the Warranty Management solution to help our customers manage their claims more efficiently and accurately,” said N. S. Bala, Senior Vice President, Manufacturing Industry SBU, Wipro Technologies. “We believe that a streamlined warranty process and analytics will allow customers to better predict their warranty exposure and better manage their warranty reserves. The solution will be hosted for demonstration at Wipro’s state-of-the-art Oracle Lab, OZONE allowing our clients to see the solution before their own infrastructure is up and running.”

Wipro is a leading Oracle services provider, rated by independent industry analysts as a leader in Oracle services, Wipro provides services from rack to stack across Oracle product suite.

Source:http://pr.watblog.com/2010/09/wipro-joins-with-oracle-to-deliver-domain-solution-for-industrial-manufacturing-automotive-and-high-tech-industries/

It seems analyst were right as to who would win the bidding war over global provider of utility storage 3PAR. But with $115bn annual revenue –compared with Dell's $53bn - this should come as no surprise.

Indeed, given HP’s size and global presence, it is also likely to obtain a return on investment than Dell would have been able to get.

The definitive agreement HP and 3PAR have entered into sees HP purchase 3PAR, for $2.35bn. The transaction has been approved by the boards of directors of both companies.

The decision comes after a couple of weeks of intense bidding where the price of 3Par shares escalated from $18 (when Dell made its original offer on 16 August) to $33 per share which HP will pay in cash.

HP’s cash tender offer commenced on 27 August 2010 and it is scheduled to expire at 12:00 midnight, New York City time on 24 September 2010, subject to customary tender offer conditions being satisfied.

The merger will speed up HP’s Converged Infrastructure strategy and drive growth in key storage markets and strengthen its storage, server and networking product offering.

The final closing of the acquisition is expected to occur by the end of the calendar year. As for the termination of the previous agreement with Dell, 3PAR paid Dell the required $72m fee.

Hitachi Europe and Green Data Systems (GDS) have announced the opening of a highly energy efficient data centre in Deventer, The Netherlands. It will be opened on 23 September this year.

Both firms entered a strategic partnership earlier this year to collaborate on and deploy highly energy efficient data centres.

GDS, one of the investors in the ECO2DC initiative, is planning to develop the most energy efficient data centre in Europe, based in The Netherlands. ECO2DC is a leading data centre services provider aiming to build and operate the most energy efficient data centre in Europe.

GDS pursues energy efficiency in data centres and provides customers with optimal data centre capacity, cooling, managed services, SAN, security, server, software and data storage technology as well as services for green data centres and resellers in European countries such as Belgium, Germany and The Netherlands.

Hitachi's modular type data centres are thought to be an effective solution for energy efficiency.

In 2007, the Hitachi Group launched its energy efficient data centre project, which was driven by the increasing demand for IT equipment and facilities in data centres and the need to lower the environmental impact of this technology.

Hitachi later developed a modular data centre solution, which has been available in Japan since January 2009. The solution optimises the configuration of the cooling units to obtain the highest level of power efficiency in a high-density arranged data centre.

A couple of days ago, the Metropolitan Police Service (MPS) renewed its pay and pensions outsourcing contract with Logica, a £10m deal.

The extension will give the MPS the opportunity to introduce organisation-wide electronic payslips, overtime and expenses for the first time, as well as providing staff with greater use of self-service IT systems.

Similarly, reports suggest that UK-based Diligenta, the insurance and pension outsourcing unit of Tata Consultancy Services (TCS), has been approached by two prospective clients for outsourcing contracts worth more than £100 million each.

But it doesn’t stop there. A couple of days back Alliance Boots announced its decision to outsource part of its pension plan, which according to reports, could see the pharmaceutical retailer and wholesaler, offload about £300m of retirement fund liabilities to Pension Corporation, a specialist buyout vehicle.

As part of the plan, Boots has closed its UK defined-benefit pension schemes to future accrual for active members. Whether this is a cost cutting measure or not, Boots is not the first – and it’s unlikely it will be the last – to decide to reassess and reorganise its liabilities.

Last year, Barclays Bank decided, despite initial opposition from its staff, to axe the final-salary pension schemes for existing members.

Pension consultancy Mercer suggests that deals like that closed by Boots are part of a trend that has been increasing over the last 12 months.

It seems that after three years of living in a difficult financial environment, the City folk are trying to come up with new ways to keep their jobs resulting in innovative products. Which is good, as long as we don’t see another mess like the one that ensued from the sub-prime and CLO market crisis…

Concerns from the outsourcing industry may stem from the Government’s decision to apply the consumer prices index (CPI) instead of the retail prices index (RPI) for the price indexing of public sector pensions. The result of this has been an uncertain environment for public-to-private outsourcing exercises although the implications for outsourcing projects will depend to an extent on whether bulk transfers have been agreed or not.

What is certain is the emphasis on pensions in relation to outsourcing will likely become more prominent as the Government’s cost cutting measures begin to be rolled out. It will be a bumpy ride ahead.