Industry news

Indian outsourcing companies should create ombudsman roles and put in place 'whistleblower' policies so that employees can report concerns about how the business is being run. Those are just two of the recommendations that India's NASSCOM (National Association of Software and Service Companies) is making in a report released today.

The NASSCOM Corporate Government Report outlines best practices that aim to establish high standards of probity and corporate governance within the Indian IT services and business process outsourcing (BPO) industries. It has been produced by NASSCOM's Corporate Governance and Ethics Committee, established last year against the backdrop of the Satyam scandal and chaired by Infosys founder, non-executive chairman and 'chief mentor', NR Narayana Murthy.

Among the key areas the report focuses on is company structure, and in particular, the independence of non-executive directors from a company's executive management.

The report also recommends that companies adopt a 'code of conduct' with customers, in areas such as data security and intellectual property protection, and also with employees, including promoting learning, equal opportunities and appropriate grievance handling.

Commenting on the report, NR Narayana Murthy said, "The IT-BPO sector goes beyond just regulatory compliance and involves robus governance practices and ethical behaviour, which not only hinges on the functioning of the board, but also on how various, interconnected building blocks of the ecosystem work together. I am convinced that, with these guidelines, the Indian IT-BPO industry will become the flag bearer for the best practices in corporate governance across sectors."

Patni Computer Systems today announced that it has been awarded a multi-million dollar, five-year contract to provide policy administration services to Universal American, a leading US health insurance company.

As part of the deal, Patni is to acquire CHCS Services, a wholly owned subsidiary of Universal American. The acquisition creates a new hub for Patni in Pensacola, Florida and establishes a new line of business for the company as a Third-Party Administrator (or TPA) in the insurance and healthcare sectors.

Commenting on the development, Patni CEO Jeya Kumar said, "This represents the largest win in the company's history and this strategic acquisition of CHCS Services, Inc is a strong validation of Patni's differentiated micro-vertical strategy. This move takes on dual significance for Patni in terms of growing our global Life and Healthcare Insurance business as well as establishing us as a TPA."

In addition to its new, Pensacola-based hub, Patni's onshore delivery capabilities in North America also include centres in Bloomington, Illinois and El Paso, Texas, as well as a nearshore centre in Mexico.

Wipro, Tech Mahindra, IBM and HP are among the companies rumoured to be in negotiations with Telecom Corp of New Zealand for an outsourcing contract potentially worth up to $1 billion, according to reports in India's Economic Times.

"We are in early stages of reviewing our partnership arrangements and as such have asked several vendors to present us with options to review," a Telecom Corp spokesperson told the paper.

The deal is set to replace a $1.5 million IT infrastructure management contract signed with EDS (now owned by HP) in 1999, which expires this year.

According to outsourcing advisory firm TPI, 2010 will be a big year for contract renewals and renegotiations. Analysts at the firm expect between $10 billion and $12 billion in annual contract value due to expire this year to be renegotiated.

Mobile Telesystems (MTS) has become the first Russian mobile phone operator to outsource its core network operations to a specialist provider.

The company has chosen Nokia Siemens Networks (NSN) to handle the daily operation and maintenance of its entire mobile network across central Russia as part of a five-year managed services deal. Under the terms of the contract, MTS will transfer around 250 employees to NSN.

“Entering into a managed service agreement with Nokia Siemens Networks will allow MTS to substantially optimize network operations and increase efficiency while keeping service experience high for our customer base," commented Aleksander Popovsky, director of MTS Russia.

While the deal represents Russia's first full operation and maintenance managed services contract, it's an increasingly popular approach among mobile operators elsewhere in the world. NSN currently handles 240 managed services contracts in mobile and fixed networks, servicing more than 300 million subscribers. In March last year, it announced it would assume responsibility for Orange's mobile network operations in the UK, which serves 15.9 million customers.

“While managed services projects have already proved their efficiency worldwide, in Russia the experience of such project implementation will be unique and innovative," said Popovsky. "That is why we'll attentively follow up the progress in its development under local conditions. In the future, this will allow us to make the decision on introducing this approach to other regions.”

The Cloud Industry Forum, an organisation established with the aim of promoting trust, security and transparency within the sector, has launched its draft Code of Practice for public consultation.

CIF members met in March to agree the final content of the draft Code, with the goal of introducing a system of certification for cloud providers in the UK. Work on the Code began in October 2009 and CIF is now asking "end users, providers and other stakeholders" to participate in the consultation process by downloading the draft CoP and providing feedback.

"We firmly believe that the market needs a credible and certifiable Code of Practice that provides transparency of Cloud services such that consumers can have clarity and confidence in their choice of provider," said Andy Burton, Chairman of CIF and CEO of web hosting company Fasthosts. 


“Organisations seeking to use Cloud services need a straightforward form of certification or ‘Code of Practice’ for potential suppliers that will accurately define the services offered, standards of operation and security,” he added.

To register an interest in being a participant in CIF, or to download a copy of the CIF Code of Practice, visit www.cloudindustryforum.org

IT services provider 2e2 is to aquire systems integration company Morse for 51p per share, in a deal announced at the London Stock Exchange today.

The newly combined company plans to offer managed services, hosting, unified communications, data management, security, business application solutions and cloud computing services.

"There is an excellent fit between the two companies. [The deal] consolidates 2e2's position as one of the UK's leading vendor-independent IT services providers," said 2e2's non-executive chairman Eric Priestley. He added that he expects significant benefits to come from "cost synergies" and cross-selling opportunities within the enlarged customer base.

Private equity-backed 2e2 is strongest in the UK public sector. Earlier this month, it announced a three-year, £4.3 million deal to build and support a new ICT infrastructure for the London Borough of Waltham Forest. Morse's strongest vertical, meanwhile, is financial services.

The deal values Morse at close to £70 million.

Two years ago, I thought a cloud was something that appeared when you least wanted it to and obliterated the sun. Now, everyone is talking about The Cloud – private clouds, public clouds and so on. All in all, clouds are changing the way that computing happens.

So when late last year I heard another new term - the 'Intelligent Client' - I started to consider whether that expression, too, will become common parlance throughout the industry within the next year.

I first thought that I would like to know what an ‘Unintelligent Client’ is (no jokes, please!).

But then I heard people talking about more about it, and even about ‘thin’ and ‘thick’ intelligent clients. In recent weeks, I have even had a number of clients asking me about what an intelligent client is, whether should they become one, and how?

So what is this all about?

For years, we have heard about retained organisations – the small division of the outsourced function that remains within the client business, acting as an interface between client and supplier to ensure a high level of service. We have also heard about the need among organisations that have a range of suppliers to have a retained organisation structured correctly for best mutual effect.

The term 'Intelligent Client', which seems to be coming out of the public sector more than the private sector, suggests that, if we are to be optimal providers, and deliver the correct level of services to our customers and clients and be effective in receiving services, then we shouldn’t have separate retained organisations for HR, Finance and IT, and perhaps other functions, too. What we should be doing is taking a much more holistic look at how we shape our organisation.

So the Intelligent Client is very much a vision of a new organisational structure.

It requires an appreciation of what core competencies are needed internally to service the new structure; to what level they currently exist in the company; and what organisational designs (or re-designs) are required to ensure that these competencies can be exercised to the fullest extent, but with the lowest overheads.

Perhaps the most important questions to ask, and to ensure are answered before embarking on this course of action, are how will the new intelligent client manage each supplier, provide the necessary subject matter expertise and manage clients and customers?

So I am interested to gather feedback as to whether people are hearing this term being used, and if it is being widely realised as a concept. Will ‘Intelligent Client’ be as pervasive a term by the end of 2010 as cloud computing has been at its start?

The UK’s premier member body for outsourcing, the National Outsourcing Association (NOA) has opened its seventh annual awards for entry.

Companies that believe they have undertaken outstanding work, surpassed results or shown a constant focus on sourcing best practice, are encouraged to submit their entries by the 9th of July 2010.

The awards, which consist of 16 categories, range from BPO contract of the year, through to offshoring location are anticipated to prove even more popular this year, with more entries than ever expected as the outsourcing industry continues to boom.

The awards winners will be announced later on in the year at a gala dinner ceremony at the exclusive Park Plaza Riverbank hotel on the 21st of October.

Martyn Hart, Chairman of the NOA, commented,

“Over the last six years, the NOAAs have become a landmark in the acceptance of outsourcing as an essential business practice and recognise the efforts of companies or people who have shown excellence in the field of outsourcing.”

He continued, “These awards are a great way for industry professionals to come together and celebrate success in outsourcing. Outsourcing has remained relatively steady during 2009 despite the recession and this positive performance should be acknowledged. Looking forward, 2010 promises to be an interesting year, with the predicted uptick in the private sector set against inevitable cost cutting throughout the public sector. Though nothing is set in stone, it remains clear that following best practice will continue to increase the possibility of outsourcing success, whether for business enhancement or business necessity.”

Outsourcing has established itself as a strategic management practice that leading companies around the globe are increasingly using for high-value, knowledge-based processes, according to survey results from the International Association of Outsourcing Professionals (IAOP).

Released today, the results of the IAOP global membership surveys conducted with support from Accenture over the past 18 months, show outsourcing is a thriving competitive industry that is being used strategically with increased C-suite decision making. The industry is also rapidly adopting technology such as cloud computing and Software as a Service (SaaS) according to responses from the association’s members.

“Increasingly, companies are outsourcing to do more than cut costs but to add value, increase business flexibility and prepare for future growth,” said IAOP Chairman Michael Corbett. “Companies that are using outsourcing are poised to emerge from the current economic crisis stronger.”

The estimated $6 trillion* global outsourcing industry also expects continued growth. A January 2010 poll of members showed 56 per cent of respondents planned to increase outsourcing activities in the future, up from 47 per cent who answered a September 2009 poll.

Some of the key findings include:

 Outsourcing Becomes More Strategic: Strategic issues are playing an important role in outsourcing decisions at most companies. In January, about 50 per cent of respondents indicated that greater business flexibility and preparing the company for future growth have become more important reasons for them to use outsourcing.

 C-Suite Driving Decisions: Outsourcing decisions are being made at higher senior executive levels, the results show. Two-thirds of respondents indicated in January 2010 that senior executives were increasingly involved in outsourcing versus only 13 per cent who said that senior executives were less involved.

 Smarter, Skilled Profession: Knowledge-based outsourcing is becoming more important to companies and the industry is filling this demand. In both the fall of 2009 and January 2010, 40-plus per cent of respondents indicated that the outsourcing at their organizations was increasingly focused on knowledge-based activities compared to less than 30 per cent who said they were increasing the outsourcing of lower-skill level positions.

 Rapid Technology Adoption: Cloud computing and SaaS are being examined by 88 per cent of outsourcing customers surveyed in January and 66 per cent of providers are exploring these technologies for the delivery of services to their customers.

 Bundling Services: This January, 45 per cent of survey participants stated that their company was more focused on bundling services with fewer outsourcing services providers versus 18 per cent who indicated that they were doing more multi-sourcing.

Jetstar Airways, an Australian low-cost airline and arm of Qantas, has signed an application development and BPO deal with Zensar Technologies.

Through the deal, Jetstar hopes to 'improve overall IT quality across its business, to achieve quantifiable operational and financial improvements and enhance the delivery of services to its customers'.

Zensar VP of Sales, J. Parthasarathi said, “Customers are increasingly focusing on consolidation, cost optimization and value-added services, while at Zensar we bring the best practices to build a strong delivery ecosystem that goes beyond typical customer-vendor relationships – our relationship with Jetstar is built on these principles and we intend to partner with Jetstar in addressing customer requirements for business continuity in the future."