Industry news

According to reports, the government of the Indian state of Tamil Nadu has revealed a special policy offering capital and training subsidy to rural business process outsourcing (BPO) units.

While Tamil Nadu is an important Information and Communication Technology (ICT) hub, the BPO industry's presence is mainly limited to Chennai, Madurai and Coimbatore.

With the ICT industry now expanding to smaller cities, towns and into villages the state government felt the need for a comprehensive Rural BPO policy to increase employment opportunities in the rural areas.

The decision seeks deepen penetration of the sector in the state, specific policy initiatives to attract BPO units to rural areas are necessary.

The Tamil Nadu government IT department will facilitate the process by liaising with interested institutions wishing to pursue a partnership with BPO units.

Also, a subsidy of 15% would be supplied on capital investments such as cost of hardware and equipment to any rural BPO unit that had been functioning at least three years and directly employing a minimum of 100 trained people.

New rural BPO units needing to train its operational staff, a training subsidy of Rs 1500 per month per person for three months would be provided by the government.

The policy anticipates will promote entrepreneurship amongst rural youth benefiting faculty and students of educational institutions.

Global provider of advanced application and product development services Luxoft, has opened its technical development centre in the UK.

Located in Welwyn Garden City, near London, the new facility is a significant investment in the company’s growth strategy and further expansion of its global delivery capabilities.

The Luxoft Development Centre has been set up to provide product realisation services for large telecom equipment vendors.

One of Luxoft’s major partners, Avaya, will help kick off the opening of the development centre by continuing its relationship with Luxoft at the UK facility, jointly working on the development of Avaya’s IP Office product range.

Luxoft’s Centre opens with a team of over 50 highly skilled engineers, with capacity for growth. With a larger presence in the UK, Luxoft will be able to better serve existing UK-based customers such as Deutsche Bank, UBS and Areva, as well as establish new partnerships in the region.

The full portfolio of services to be provided by the Development Centre includes: software engineering, complete product development, detailed trouble shooting of equipment, as well as customer support services and account management for UK–based customers.

Luxoft’s new facility complements current delivery sites located in Eastern Europe and Southeast Asia, enabling the company to offer blended onshore / offshore delivery capabilities to deliver highly skilled innovations and developments, cost effectively and with a customer-centric approach.

Electricians at St James’ Hospital Dublin are staging a one-day stoppage as a dispute over outsourcing work escalates.

Members of the Technical Engineering and Electrical Union (TEEU) will walk off the job the hospital after no agreement was reached at the Labour Relations Commission (LRC).

Union leaders confirmed emergency life and limb cover will be provided during the industrial action, but warned the technical services department will be affected.

This is the third stoppage by members at the hospital since the beginning of the month.

On 10 August, talks over outsourcing the work of electricians in the Technical Engineering and Electrical Union adjourned after three hours with no significant progress made.

The dispute is over management moves to reduce the role of electricians on site. Outside contractors have been brought in without prior agreement with the TEEU under agreed procedures. The union is concerned about health and safety, as well as job security issues resulting from the contracting out of services.

Other craft workers at the hospital, including members of Unite and UCATT, have refused to pass the pickets, leading to the effective closure of the Technical Services Department at St James’s hospital during the stoppages.

Transport for London (TfL) has published a tender for the provision of average speed cameras for a project it plans to trial, according to the notice published in the Official Journal of the European Union on 10 August 2010.

The government department said that the cameras will be used to "enforce average speed limits in urban areas", according to GC News.

The notice is a pre-qualification questionnaire (PQQ) and that there are no concrete plans in place yet, however it will form part of a wider project currently being undertaken with four London boroughs.

More announcements are expected to be made post-October.

The speed camera notice was published three days after TfL cancelled a tender for road traffic predictive modelling software due to tighter spending measures being introduced at the organisation.

Wessex Water cites commercial and technical reasons for dropping sewer-based fibre-to-the-home (FTTH) rollout, although a pilot project was completed.

The project will be completed using micro-trenching and digging up roads as a way to avoid the rollout "coming to a halt”. Borough Council has given planning permission for these techniques to be used.

Network supplier i3 Group was planning to deliver the FTTH service for Bournemouth residents through sewer systems owned by Wessex Water.

In a released statement i3 indicated that "citing technical issues as a reason is misleading in respect to the viability of the i3 Group's FS System, a patented method of laying fibre in ready made ducts including sewer pipes."

But the reasons for the change in plans remain vague at best.

Meanwhile, Scottish Water has recently signed a non-exclusive framework agreement with i3 to expand operations across Scotland. The utilities provider is working with i3 Group to allow a similar sewer-based FTTH project in Dundee.

Global IT services & solutions company ITC Infotech, fully owned subsidiary of ITC Ltd, is working with Oracle to provide Loyalty & Marketing based BPO services.

As per the BPO initiative agreement, ITC Infotech will have the non-exclusive license to use the Loyalty & Marketing programme solution offered by Oracle.

Oracle’s cutting edge offerings will support ITC Infotech in providing customers loyalty, marketing & customer relationship management (CRM) solutions in an outsourced business process model.

ITC Infotech is the first system integrator company globally to implement Siebel Loyalty for the airlines industry, for the hospitality industry, and for a coalition loyalty across hospitality & retail companies.

Along with its partner(s), ITC Infotech, can also provide services in the areas of loyalty strategy and program design, rewards and fulfillment, analytics, partner management, hosting, etc.

This new partnership with Oracle will allow ITC Infotech to expand its services to the BPO market globally.

Swansea City and County Council is seeking a four-year framework agreement to check the condition of technology. The agreement will be accessible to all public sector bodies across Wales and would be worth between £4-12m.

The framework agreement for the supply of an Information Technology Health Check (ITHC) and associated services, would enable compliance with security best practice guidelines and the requirements of GCSx Code Of Connection (CoCo) 4.1 and PCI-DSS accreditation.

The majority of public sector networks are currently accredited to handle protectively marked information up to level 3, ‘restrict’, but some members may have a requirement to test their network at higher levels.

Compliance with PCI-DSS, a payment card industry standard, will also be covered by the deal.

The contracts will be awarded principally on supplier and service quality (60% of the weighting), followed by price (40%).

Vendors have until 8 September to request participation; up to seven suppliers will be invited to bid.

The woes of debt-laden integrated services group Connaught continue.

More than £400m have been wiped off the value of Connaught after it warned on 25 June that public spending cuts would see its revenues fall by £80m this year.

Lloyds Banking Group a junior member of a lending syndicate led by Royal Bank of Scotland, confirmed on Wednesday night that it would not start selling off loans. A debt-for-equity swap with the banks remains a possibility.

Investor confidence in the firm suffered after Barclays sold its entire debt exposure of £19m ($29.7m) for about 37% of face value.

Breeden European Partners, Parvus Asset Management and Norges Bank, which manages the Norwegian Government Pension Fund Global, have sold down their stakes. Toscafund, which has built a stake over the past month, is also believed to have reduced its holding.

Deloitte is investigating Connaught's accounting policies while a new management team has been set up to lead an attempted turnaround. The firm’s CEO, Mark Tincknell, and its finance director, Stephen Hill, left the business in early July.

According to reports, the Department for Business Innovation and Skills (BIS) has predicted that the renegotiation of its Elgar contract will save £5m this year.

Elgar is an outsourcing contract to supply and manage IT equipment and core services put in place by the former Department for Trade and Industry. Fujitsu receives about £28m annually under the terms of the deal.

The renegotiations with supplier Fujitsu were completed last autumn, and "resulted in savings of £50m a year over the life of the contract," from 1 April 2009 to 2014.

The department's resource accounts for 2009-10 say that it renegotiated the contract to remove the majority of the 'technology refresh' element.

BIS will now pay for new hardware directly from its own capital budgets for the remainder of the contract period.

Alex Blues, Head of IT Sourcing at PA Consulting Group, comments on Africa's rising popularity as a offshoring destination.

According to the 2009 A.T. Kearney Global Services Location index, Africa has become one of the fastest growing offshoring destinations in the world.

• Egypt is the 6th most popular location moving up from 13th,

• Ghana has moved from 27th to 15th,

• Tunisia 26th to 17th,

• Senegal 39th to 26th,

• Morocco from 36th to 30th

• And interestingly South Africa has moved the other way from the 31st to 39th.

Looking at Africa it is important to realise that you can divide the country into three areas, firstly Northern and Saharan Africa, the up and coming West and East African countries and then Southern Africa, particularly South Africa.

Northern Africa

Egypt has become a much more popular destination as American giants such as IBM and EDS have both had operations here for some time and interestingly, Wipro and Infosys have been expanding into Cairo, thereby taking advantage of the availability of low cost well qualified people. Egypt, like Morocco, also has huge support from the government to expand this ability which is key to sustainable success.

Moving along the African coast, then Morocco has rapidly found its presence as a supplier of outsourcing services to the French market. Until recently, Morocco’s outsourcing market had focused on call centres, but its expansion into banking/ insurance, telecommunications and information technology is being supported by infrastructure investment and the development of four outsourcing hubs at Fes, Marrakech, Tangier and Casablanca. A good example of increased presence is Capgemini’s recent investment in Morocco, providing sourcing services to the French market. Tunisia meanwhile is looking to emulate Morocco’s success.

West and East Africa

Kenya is heavily promoting itself as an offshore destination. As part of Kenya’s strategic plan called ‘Vision 2030’, BPO (Business Process Offshoring) has been selected as one of the six main economic pillars. With this is mind, Kenya hopes to quickly become one of the top three destinations in Africa, and government goals by 2012 are to create 7500 jobs in the BPO industry of which 5000 will be located in BPO parks.

Countries in West Africa, particularly countries like Ghana and Senegal, are growing from a very small base and outsourcing in these countries is quite often done by providing outsourced services to other West African or Central African countries. However these countries are ones to watch for the future.

Southern Africa

Moving further south, to South Africa, 5-6 years ago this was a very popular destination particularly for call centres and for financial service applications, especially in and around Cape Town and to a lesser extent Johannesburg and Durban. Interestingly, the reason for the decline is an increasing concern about the increasing value of the rand, as the economic case becomes less compelling and concerns about infrastructure deterioration grow.

Like Egypt, South Africa has looked to partner with India. The reason for this is that India is geographically closer to Europe than South Africa by roughly four hours but the time zone difference in Africa is no more than two hours + or – GMT.

In all, we are seeing much more complex relationships, with countries such as South Africa for the UK market and Morocco for the French and Spanish markets, providing first line support with India providing second and third line support, making Africa one of the fastest growing offshoring destinations in the world.