Industry news

The global procurement outsourcing (PO) market grew apace in 2009 with new contract signings and extensions increasing 30 and 90 percent respectively, according to a new report from Everest.

Everest projects the PO market will grow in excess of 20 per cent this year and reach nearly US$1.3 billion in annual contract value (ACV).

While overall PO market activity increased last year average contract values fell. Everest says this is due to ‘conservative buyers signing smaller contracts because of the prevailing uncertain economic conditions’. In the longer-term the consultancy expects these buyers to grow the scope of their PO engagements and in turn fuel future market growth.

Other predictions outlined in the report include: the SMB segment investing more in single-process PO contracts with suppliers offering new platform-based offerings such as SaaS and buyers beginning to favour transaction-focused contracts with an end vision of ‘source-to-pay’ (S2P).

“Buyers in last year’s down economy were averse to risk and thus inclined to start small and adopt sourcing-centric approaches to generate quick savings,” said Katrina Menzigian, VP, BPO Research.

“Buyers are now poised to expand sourcing-focused contracts into transactional services. Contracts that exploit the synergies between Finance and Accounting Outsourcing (FAO) and PO, especially in the procure-to-pay areas, will see increased market traction.”

Readers can click to view an extract of the Procurement Outsourcing Annual Report 2010.

Mahindra BT Investment Co has sold its entire 8.07 per cent stake in IT company Tech Mahindra to US-based communications firm AT&T, it has been reported. The deal cost an estimated $34.5 million.

As per the terms of a 2005 agreement with Tech Mahindra, formerly Mahindra British Telecom, AT&T was granted options over approximately 9.9 million shares. AT&T has since decided to exercise these options.

It's Ada Lovelace Day - an international day of blogging to celebrate the achievements of women in technology and science.

It's an annual event, held in honour of Augusta Ada King, Countess of Lovelace - the only child of Lord Byron and his wife Annabella and the author of the first computer programmes for Charles Babbage's Analytical Engine. This year, the goal is to get 3,072 people to blog about their tech heroine - but when it came to identifying a high-profile female executive from the outsourcing industry to write about, I have to admit I drew a blank.

Perhaps I'm wrong (and I'd certainly like to be corrected if I am). Perhaps the world's leading outsourcing companies are stuffed with impressive, high-flying women working at senior levels. But if they are, they're keeping quiet about it. I meet with and interview countless senior outsourcing executives every year, but looking back through my email archive, I can't find a single invitation to meet a female executive working at a worldwide level in the industry.

It's certainly true that women make up a significant of portion of the rank-and-file of outsourcing employees. Take, for example, India: in 2008, a joint study by Nasscom and the Indian Institute of Management - Ahmedabad (IIM-A), entitled 'Crossing the Digital Barrier: Leadership issues for women in the IT-BPO sector', estimated that women employees make up 42% of entry level positions in the Indian IT sector.

But it seems that these women - for various reasons - do not progress through the ranks. That same study revealed that around 50 per cent of mid-level women employees surveyed felt felt that there were no programmes related to leadership development skills targeted for women.

More recently, a survey from India's Associated Chamber of Commerce and Industry of India (Assocham) threw further, depressing light on the lack of progress, as reported in 'The Hindu' newspaper. Some 773 Indian women working across a wide range of sectors were asked to rate their job satisfaction on a scale of 1 to 10, where 10 was highly satisfied. Criteria included communication and information flow in their organisation; their degree of motivation from their current job; the career opportunities open to them; and job security.

While women in public-sector organisations reported a satisfaction rate of 7, women in the BPO/KPO sectors reported a satisfaction rate of just 4.

Commenting on the findings, Assocham president Dr Swati Piramal said that women in the BPO/KPO sector, "feel a lack of personal growth and development, since they perceive less room in the decision-making process and less flexibility in working hours, besides pressures to perform and deliver targets."

The problem's not confined to India. And it's certainly not confined to the outsourcing industry. The technology business as a whole faces a major challenge. And - as Ada Lovelace Day seeks to highlight - far more needs to be done to inspire young women to embark on technology careers and to subsequently progress through the ranks.

So this is my challenge for Ada Lovelace Day 2011: To meet and interview the most inspiring, senior-level woman working for a global outsourcing company that I can identify over the course of the next 12 months. Any suggestions will be gratefully received!

United Technologies Corporation (UTC), a technology provider to the aerospace and building industries, has extended its global IT outsourcing agreement with CSC for a further five years. The extension adds over $1.5 billion in value to the existing contract, which now runs until December 2019.

Under the new contract, CSC will continue to provide IT infrastructure support for UTC in 22 countries, supporting 110,000 desktops as well as UTC’s server and mainframe requirements.

Nancy Davis, UTC vice president and CIO, said: “CSC has demonstrated the technology service capabilities needed to address our requirements, especially in our aerospace and commercial marketplaces around the world.”

Software giant, Microsoft, will begin outsourcing general legal work to India after signing a deal with legal process outsourcing (LPO) company CPA Global, it has been reported.

CPA has confirmed that it will be taking on ‘multi-jurisdictional legal research’ for Microsoft, but could not give further details. Microsoft has outsourced intellectual property (IP) work to CPA since 2005, although no lawyers work on the IP team.

Venu Nair, a CPA spokesman, told the Law Society Gazette that CPA plans to expand its Indian workforce from 600 to 1,000 by the end of 2011, and that the south Indian cities of Bangalore, Hyderabad and Chennai are being considered as locations for a new CPA office.

A new type of outsourcing is quickly emerging – dinner dish outsourcing (DDO). DDO is for those hosting a dinner party and who do not have the time or talent to cook up an impressive menu for their guests.

D'Lish, a DDO pioneer, is a meal preparation studio geared toward customers who come in to make a number of main courses to take home to their freezer for later use. This particular DDO provider also offers individual meals (as well as appetizers, sides or desserts) for takeout in dinner-party-size portions.

Amanda Babichuk, founder of D’Lish, explains "The guilt goes away when the convenience factor comes in. It's the end of the week and your energy is sapped. We have that extra oomph when your creativity is waning."

US-based prepaid debit card provider, UniRush LLC, has appointed Firstsource in a three year outsourcing agreement.

Under the contract, Firstsource will provide customer care management services to all UniRush cardholders including, call centre and back office management. In addition the BPO provider will also support the company’s e-care work stream.

According to Ram Palaniappan, general manager at UniRush, the partnership is expected to provide UniRush with ‘increased operational efficiency, cost competitive solutions and better risk mitigation’ in a bid to help support the company’s expanding US footprint.

More than one third of banks expect to invest in new IT by mid-2010, new Gartner research has indicated.

Almost two thirds will either keep doing “business as usual” or look for incremental efficiencies, while only two per cent of banks still expect to dramatically cut IT budgets.

Gartner research vice president Peter Redshaw told Computing: “Although the focus is still on cost control and optimisation, financial services firms have been saying recently that they are planning for growth and preparing their IT for a different business model”.

Research carried out by the sourcing data and advisory firm TPI today indicated the number of outsourcing contracts awarded globally is set to rise in 2010, as organisations look for new ways to optimise critical business operations after the recession.

According to TPI’s predictions, the growing acceptance of cloud computing, an increasing interest in multi-sourcing, and the emerging focus on governance and risk management will fuel the rise of outsourcing contracts in 2010.

The report, entitled TPI Momentum Market Trends & Insights 4Q09 Annual Report, also found 422 outsourcing contracts valued at $15 billion are expected to expire in 2010, a 40 per cent increase over the total contract value of last year's and the highest level in five years.

However the research also found that only slightly more than one-third of outsourcing proposals directly met buyers' objectives in 2009, down from nearly half the year before.

John Keppel, partner and managing director at TPI Research commented on the findings: "The question on many outsourcing professionals' minds entering 2010 was whether the fourth quarter of last year was the typical end-of-year bounce or the beginning of a recovery in the industry, we believe it was both. With the outlook of the global economy still uncertain, clients are clearly turning toward smaller, lower-risk transactions that focus on short-term cost savings."

At least £25bn can be saved for the public purse by restructuring procurement and using more shared services and outsourcing.

The public sector could save £15bn in procurement and another £10bn through outsourcing if it follows radical plans outlined in a report released by the Institute of Directors today.

“The economic situation demands immediate action to reduce public expenditure through implementing the proposals in this paper. There is a lot of talk among politicians about the need to introduce efficiencies into the public sector, but very little detail on how this will be done. The report we publish today provides a vital needed blueprint,” said Miles Templeman, IoD director general.

According to the Institute different departments and bodies are allowed too much autonomy and simply allowed ‘do their own thing’ where procurement is concerned.

“Despite some areas of excellence and good collaborative initiatives, the majority of public procurement spending is so fragmented that huge potential savings are being missed every year. This is because most of the public sector still organises itself on the “corner shop” model, with the majority of purchasing organised in small scale silos,” the report claims.

As a consequence departments are constantly ‘reinventing the wheel’ and having to deal with contract terms and conditions, procedures, processes and interpretations of procurement law; leading to a large duplication of effort.

"This is absolutely true, but the government has tried this previously with OGC although it hasn't been a great success. Having said this, some local initiatives have been successful, so rather than try and do it in one bite, government should try the 'eat an elephant approach' and encourage units to get together that have common issues. They could use Treasuries budgetary controls to give organisations that band together and make savings then get the "saved" money back for more projects," said Martyn Hart, chairman of the National Outsourcing Association.

The IOD recommends that Centralised buying organisations be created to ‘handle all key supplier relationships and all national and major contracts on behalf of the whole public sector’.

National Outsourcing Association members and those working in the public sector can attend a dedicated Public Sector Forum dedicated to transformation through outsourcing and shared services. Interested parties can sign up here.