Industry news

IT solutions provider LuraTech has opened a subsidiary in the UK appointing Gary Hodkinson as managing director.

Hodkinson possess an important track record of successfully establishing companies in the document conversion market. His previous positions include European partner manager at ActionPoint (subsequently purchased by Captiva and EMC), and the MD for Paradatec Ltd.

The Luratech has its headquarters in Berlin, Germany and offices in the USA and provides integration platforms and production-level document conversion software solutions.

Founded in 1995, the company provides two major product lines are the LuraDocument PDF Compressor Enterprise - a production grade application for compression, conversion to PDF(/A), OCR, classification and form data extraction, and DocYard - a complete platform integrating all the functions of document conversion in workflows, which can be managed centrally.

Gaming specialist William Hill Online (WHCL) is to establish a new telephone betting operation based in Gibraltar; the move will also see the firm close the group’s telephone betting subsidiary in the UK, William Hill Credit Limited (WHCL).

The company’s existing telephone betting business made losses of £1.8m in 2009, while it expects a small operating loss in the first half of this year.

The move is expected to result in cost savings of approximately £4-7m per annum expected to commence from the start of 2011. However, it added the move would cost a one-off cost of £7m.

The agreement will see business processing outsourcing (BPO) and customer management outsourcer Vertex, take over the Sheffield-based call centre currently run by WHCL and that William Hill Online will also manage customers from Gibraltar. Customers will be able to use their telephone betting account for online transactions.

WHCL’s second call centre in Leeds will close, with all staff being offered alternative positions.

William Hill will continue to have a substantial presence in the UK and Ireland, including more than 2,300 licensed betting offices and around 16,000 employees.

Spanish restaurant and retail operator Grupo Vips, has picked UK telecoms operator BT to renew its current communications network.

The five-year contract valued at €8.2m includes the migration to the new iVPN service, and the highly advanced voice and data services needed between all of its restaurants across Spain, including TGI Friday’s and Starbucks.

It also comprises voice and data services via BT’s iVPN service for Grupo Vips’ 350 establishments including six restaurant chains and 10 fine dining restaurants, and more than 10,000 employees.

The new contract builds on the existing relationship between BT and Grupo Vips and is expected to directly contribute to the efficiency and quality of their communications, their management and the efficiency of their cost structure.

The government has sacked the supplier responsible for delivering the £750m e-Borders contract, due to serious concerns about the running of the much-delayed programme and confidence in the US defence and security firm’s ability to address these delays.

It has been reported that the project was singled out for early attention by the cross-government “efficiency and reform group” headed by Francis Maude at the Cabinet Office and Danny Alexander, chief secretary to the Treasury.

While, immigration minister Damian Green said in a written statement to Parliament that Raytheon Systems has been in breach of contract since July 2009 and extensive negotiations had failed to produce a resolution.

The Government now is seeking for a supplier to replace Raytheon and, according to reports, Raytheon's sub-contractors on the project, which include Detica, Qinetiq, Serco and Accenture will also be changed.

The Home Office signed the deal with Raytheon, lead contractor in the Trusted Borders consortium, in November 2007.

The programme is designed to track the movement of people in and out of the UK's borders, and will involve checks being made against incoming passengers at their point of embarkation to see if they are on police and security watchlists.

The project was initiated by the Labour government, but has always been supported by the Tories. At the time the agreement was valued at more than £650m.

In his fourth installment on 'critical intangible' in the sourcing process Alex Blues, Head of IT Sourcing at PA Consulting Group considers the advantages and disadvantages of either being prescriptive or open to market influences in dealing with suppliers.

This is the fourth in a series of blogs about the role of ‘critical intangibles’ in the sourcing process. Critical intangibles are the fine details that are often overlooked by those concerned with the pricing and the legal framework of a sourcing relationship, but which have the potential to make a significant difference in the outcome of the sourcing relationship.

Today, I would like to consider the advantages and disadvantages of either being prescriptive or open to market influences in dealing with suppliers. If you want to be driven by process, then being prescriptive is definitely for you – you tell a supplier exactly what you want in terms of scope, service levels or even price. Then the role of the supplier is just to respond and answer the questions.

On this basis you can easily set-up an evaluation matrix, you decide on how you will weight different factors and you agree a scoring system. The result is an ‘apples with apples’ comparison and you make your decision based upon clear quantitative criteria. This can work extremely well for commodity type sourcing arrangements. However, many organisations are not looking at prescribing the solution, especially in complex situations, they are looking for outcomes.

In such cases it is better to describe what the solution will deliver and let the market use its skills and experience to help shape and define the solution. One of the reasons for considering outsourcing in the first place is because you believe that the market understands the solutions better than you, so why tell the market what to do to. You will not get an ‘apples with apples’ comparison, but you will receive a range of solutions - some perhaps more innovative than others - that can be evaluated against the outcomes you require.

This may make the financial comparisons more complex and it may make the contract construction somewhat more complicated, but it will without doubt be much better for the business and offers the potential for suppliers to provide innovative approaches that you might not even have considered.

Credit Suisse Asset Management in Germany has outsourced its fund administration business to Société Génèrale Securities Services (SGSS); under the terms of the agreement SGSS will provide Credit Suisse Asset Management in Germany with comprehensive fund administration services including front-office services (ASP), funds administration and reporting services.

This new model allows Credit Suisse to implement a more flexible organisation to meet the requirements of an increasingly complex and continuously changing market and regulatory environment.

As part of the new set up, SGSS will acquire the legal structure of Credit Suisse's Asset Management Kapitalanlagegesellschaft mbH which it will incorporate into its existing local structure, SGSS Deutschland KAG mbH.

The transaction is expected to close on 30 September 2010, subject to local regulatory approval. Credit Suisse (Deutschland) AG's Private Banking will not be affected by the transaction. The Portfolio Management, Client Services and Fund Distribution will also stay unchanged.

In Germany, SGSS is responsible for €62.2bn under administration through nearly 500 funds and benefits from more than 50 years of experience in the fund administration industry.

The Taxation and Customs Union Directorate General (DG TAXUD) has awarded Accenture a three-year IT systems management and development contract valued at approximately €49.3m.

The agreement will support the European Commission’s CUST-DEV2 programme, which is designed to introduce a harmonised, centralised and paperless customs system (eCustoms) across the EU by 2013.

Under the terms of the contract, Accenture will manage the existing customs systems at DG TAXUD as well as the specifications of the Trans-European Systems.

Additionally, Accenture will work with DG TAXUD on the development and management of new customs applications and systems in the scope of the eCustoms initiative.

Accenture will draw on its extensive experience working with customs agencies around the world and its High Performance Customs framework to support the program.

The contract was awarded following an invitation to tender issued by DG TAXUD and based on Accenture’s competitively priced bid and experience working with customs services. It also includes the option for two one-year extensions.

Vivansa, a Belgian technology company specializing in the customs industry, will work as a subcontractor to Accenture.

UK bank Northern Rock has chosen Symantec solutions as part of its customer and corporate data protection strategy.

The bank has employed Symantec's PGP Universal Gateway Email, which encrypts data at the gateway. The system ensures data is protected from unauthorised access in transit over the public Internet and at rest on a recipient's mail server.

The product has since been rolled out to all email users within the organisation, allowing them to communicate securely with customers, partners and regulatory authorities.

Northern Rock has 75 branches throughout the UK, as well as postal, telephone and internet operations.

Symantec was selected as Northern Rock's vendor of choice following a rigorous competitive tender.

Based on total contract value (TCV), the second quarter of the year was down 13.5% quarter-on-quarter but it did show a 20% (quarter-on-quarter) improvement in terms of volume, according to data released by sourcing data and advisory firm TPI.

The 2Q10 Global TPI Index, which measures commercial outsourcing contracts valued at $25m or more, recorded TCV of $18.1bn in Q2 2010, down about 13% both sequentially and year-on-year.

Results for H1 2010 indicate that despite sluggishness, clients continuing to look to outsource to improve operations and enable innovations such as cloud computing.

During the first half of 2010, the global market TCV of $38.9bn remained flat with a year ago following the unprecedented surge in contract restructurings during the first quarter. In the second quarter, restructurings accounted for 20% of TCV, in line with historical trends.

The market in the second quarter exhibited particular softness in Europe, the Middle East and Africa (EMEA), Asia Pacific and IT outsourcing (ITO).

In EMEA, however, quarterly TCV fell both sequentially and year-on-year, 21% and 14%, respectively. Meanwhile, in Asia Pacific, TCV increased 5% sequentially in the second quarter but dropped 73% year-on-year. While the Americas saw second-quarter TCV decline 9% over the first quarter of 2010 but increase 21% over the second quarter of 2009.

By scope, ITO TCV during the second quarter fell nearly 30% sequentially and 23% year-on-year. First-half ITO TCV of $29bn, fueled by the large contract restructurings of the first quarter more than by second-quarter performance, rose 5% over the year before.

The quarterly TCV of contracts for business process outsourcing (BPO) rose 60% over the first quarter of 2010, which was one of the worst on record in this segment, and 20% over the second quarter of 2009. But overall BPO activity remained weak by historical standards, with the greatest growth in contracts valued at between $10 million and $25 million.

Finally, by industry, the Global TPI Index found declining activity in financial services, manufacturing and telecom & media, even in the more robust Americas region.

These three sectors are as critical as ever to the outsourcing market, and their relative sluggishness restrained overall market growth in both the second quarter and the first half of the year.

In contrast, the travel, transportation and hospitality industry saw impressive gains for the second straight quarter, and the retail sector, with four successive halves of growth off a small base, remained another industry to watch, as retailers continue to experience top-line revenue pressure and pursue cost reductions from sourcing.

UK comms regulator Ofcom has granted Tech services company Logica UK a new ICT outsourcing contract.

The contract is for an initial four year period with a possible one year extension, representing a Net Present Value (NPV) positive outcome of £10m over the 5-year term.

Ofcom forecasts an annual saving of £1.5m, representing an £7.5m saving over the 5-year contract term through to 2016.

The refresh and simplification of Ofcom’s existing ICT infrastructure will bring technical improvements that will increase resilience, drive environmental sustainability and lower its operational costs over duration of the contract.

Similarly, the new service is expected to reduce Ofcom’s ICT carbon footprint by 60% over the duration of the contract, which will be achieved by cutting the number of data centres and servers it uses in half.