Industry news

Samlink Ltd, a leading Finnish IT banking services provider, has signed a seven-year, 55 million Euro strategic outsourcing agreement with IBM. Under the agreement, IBM will manage Samlink's infrastructure services across its data centre environment, enabling Samlink to focus on core IT banking service activities.

Samlink hopes the contract will cost efficiencies whilst providing improved business flexibility, reliability, availability and security.

Heikki Sirve, Chief Executive Officer of Samlink commented: "We provide IT and product development services for our clients in the Finnish financial industry. To be successful, our clients need high-quality and cost-efficient services. The partnership with IBM will enable us to raise our services to the next level."

Contact centres are struggling to cope with the increased number of channels, a report has indicated.

Three-quarters of contact centre managers interviewed for the poll said agents were expected to use up to five different software applications to handle customer enquiries – a number which is on the rise.

The survey of 90 contact centre managers was carried out by technology provider Corizon across the UK.

“Each channel increases the complexity of an agent’s desktop exponentially,” argues Emma Chablo, Corizon marketing director.

“As a result of the demand for new contact channels, desktop environments are littered with dozens of different screens with agents scrambling between them to find the right answer.

“This is hampering customer service operations, making it difficult for many contact centres to achieve the quality of service customers want.”

Is Malaysia set to become the global centre of a new breed of Islamic finance outsourcing services? Recent research from ValueNotes, a Pune, India-based research firm suggests that this is the case.

Otherwise known as Shari'ah banking, Islamic finance is a system of banking consistent with the principles of Islamic law (or Sharia), which prohibit the payment or acceptance of interest fees for the lending and accepting of money, as well as investing in businesses that provide goods or services contrary to Islamic principles.

In its recent research, ValueNotes points out that the rapid growth of Islamic finance in the past 30 years has sent global banking giants, such as HSBC and Standard Chartered, scrambling to develop their own offerings for Muslim clients. The result is that Islamic finance is now offered in more than 75 countries worldwide. Total assets invested in this way, meanwhile, totalled between $750 billion and $800 billion in July 2009, according to a study conducted by the Federal Reserve Bank of San Francisco. By 2010, they should reach a staggering $1 trillion.

ValueNotes analysts think Malaysia is well-positioned to tap into the outsourcing needs of banks that offer Islamic finance services. Along with Iran and Saudi Arabia, Malaysia is one of the leading players in Islamic finance. The country currently has 17 registered Islamic banks, so there are plenty of people there with skills and experience to offer.

There are other positive signs, too. Maveric Systems, a software testing service provider, recently launched its own Malaysian operations in order to offer services in the Islamic finance domain. Along with setting up a center in Malaysia, the company has also partnered with Malaysia University of Science and Technology (MUST) to roll out courses and training modules in line with Islamic finance and software testing.

Overall, the Malaysian outsourcing industry has been growing 15% annually and will reach $1.1 billion for 2009, growing to $1.9 billion by 2013. Apart from a few small research companies offering services such as data collection and data processing to Islamic banks, Islamic finance is one of the niche segments in Malaysia that, as yet, remains untapped, say ValueNotes' researchers.

By Alex Blues – Head of IT Sourcing at PA Consulting Group

At PA Consulting Group, we are always looking to find best practice in and around the sourcing marketplace. As a result, we have found that it can often be useful to step back from traditional practices and ask the WHY question and challenge what has always been conventionally been accepted as best practice.

An area PA has recently focused on is the difference in, and potential overlap between, the role of the lawyer and the role of an adviser when concluding a sourcing deal. In recent weeks, there have been numerous comments highlighting the extremely high fees that rack up when law firms and advisers ‘help their clients’.

When striking a sourcing deal, an organisation is clearly going to be looking for a single outcome that is sensible, sustainable and achieves the overall business objectives. So why is it that in numerous instances the sourcing advice (sourcing strategy and SLAs), and the legal side of the contract are chosen and handled by two separate organisations?

For example, the lawyer is chosen by the legal department and the sourcing advisor is chosen by the procurement department or by the wider business. These two separate organisations are often thrown together in courtship without any clear view or guidance on how they are going to work together moving forward.

So who is co-ordinating the overall outcome? Who is looking at the roles of each function? And who is making sure that the client is not paying twice for these services? There is a substantial overlap between what the law firm deems is its responsibility and what the adviser believes is theirs, particularly if the respective parties have not previously worked together.

Therefore, for large, complex sourcing transactions, there should ideally be one single contract, highlighting comprehensible outcomes and including both legal advice and sourcing advice, enabling absolute clarity and avoiding any overlap. The client organisation is then fully reassured and protected and can clearly articulate the pertinent risks and desired deliverable under this one contract.

Public sector outsourcing has been a much spoken about issue of late. It has been widely reported that 2010 will see government agencies needing to follow the private sector’s example and use outsourcing to both cut costs and better deliver the services the public expects. However, a report this week from Deloitte has questioned local councils’ ability to manage IT outsourcing contracts effectively. The research also claims that councils' mega-outsourcing days are numbered. So where are councils’ going wrong and why does this mean the demise of large IT outsourcing deals?

Interest in public sector outsourcing has piqued recently for numerous reasons. A perfect budget-squeezing storm seems to be encircling the sector and outsourcing and even offshoring look to be vital solutions. One of the biggest drivers has been the recession which has sparked a wave of prudency in the sector. The government’s huge debts from the banking bailout mean there are harsh budget cuts to come, whether Tory or Labour. Increasingly it seems, government agencies will be looking towards outsourcing as a method of maintaining services whilst cutting costs. Bringing in outside skills will also be an important factor in increased adoption. But it is lack of skill in outsourcing itself that Deloitte is looking at.

The Deloitte report, 'Taking Control of IT', which is based on Deloitte's experience of advising local councils, explains that local council IT departments' have a tendency to outsource problematic technical functions which results in their outsourcing projects rarely being successful. Costi Perricos, author of the report, observes that councils have for "too long" viewed IT as a "black art that is better performed by external contractors”. The report emphasises that local councils need to change their overall approach to IT rather than hoping outsourcers can step in and solve all their technical problems. To those of us in the outsourcing industry this appears commonsensical in its essence.

Greg Jones, Senior IT Sourcing Advsior, PA Consulting Group agrees that the report highlights an “oft-repeated mantra in the sourcing industry” which is that a company, public or private, should never outsource a problem. Jones explains that this is one of the most fundamental pieces of guidance that can be given. More accurately, he says, it should perhaps be read as “don’t outsource a problem you don’t understand.”

However, Jones does not think this will spell the end for large ITO deals. He says all that is required is “a change of attitude and renewed emphasis on the business leading the transformation, and appreciating precisely why the deal is being pursued and what deliverables are being looked for.” This is not, however, a belief held by all in the outsourcing industry.

Alistair Maughan, Partner at Morrison Foerster LLP, on the other hand anticipates that megadeals are generally coming to an end. He explains that there has been “much more focus on multisourcing and best-of-breed outsourcing projects.” He describes that outsourcing is a casualty of the recession with the typical outsourcing deal being “more about cost saving and surviving the recession than about strategic positioning.”

Controversially Anwen Robinson, managing director of ERP software firm Agresso, thinks that local councils have been duped buy some outsourcing providers. He laments; “unfortunately many external consultants have seen local government as a bit of a cash cow and have delivered unwieldy, often unsuitable systems which subsequently demanded expensive support contracts to make necessary changes. You have to question whether or not they had the best interests of the customer at heart.”

Although the Deloitte research has opened a can of worms when considering local councils and IT outsourcing, it by no means predicts the end of public sector outsourcing. It outlines that outsourcing still has the potential to “lower operational costs” and bring in much-needed “expertise and capacity to transform”. Local councils’ must remember that building an effective corporate IT capability is not the job of the outsourcer. Outsourcers provide a skill but the management of that contract needs to be kept within the council. Local authorities need to provide “vital input from its service areas into defining, training and testing systems” insists the report.

The report has highlighted an important bugbear in public sector outsourcing. Outsourcing can be effective but only if it is not seen as the answer to all problems. Public sector bodies clearly need a new approach to outsourcing for 2010 and beyond. Only by acknowledging the mistakes of the past and working to understand how outsourcing can be, and has to be, a big part of the public sector going forward.

The Environment Agency of England and Wales has signed an ITO contract with Capgemini that will aim to reduce IT carbon emissions by around 50 percent within the next few years.

It is widely accepted that IT usage globally contributes to two percent of the total carbon dioxide emissions, equivalent to that usually attributed to aviation. For these reasons, the Environment Agency has contracted with Capgemini to ensure that this service can be reused by Government and other public sector organisations.

Further green measures will include reduction, reuse and recycling of hardware, while all disposals will be done under strict Waste Electrical and Electronic Equipment (WEEE) regulations. It is the first time that a comprehensive set of green measures has been formally set within a U.K. IT contract.

In designing a framework with environmental measures built in from the outset, such as equipment purchase, its delivery and use on the desk, through to its ultimate disposal, the total cost of IT purchase and operation should be reduced. The result is that public sector organisations and businesses can not only improve their environmental performance, but also can make long-term cost savings.

Graham Ledward, Director of Resources at the Environment Agency said: “This contract not only aims to exceed the Government’s sustainable IT targets, it also sets a high standard for environmental performance which we hope that other public sector organisations and businesses would wish to reflect.” Ledward continued, “The real message of success is that a green IT contract can be frugal, cost-effective and environmentally beneficial. The Environment Agency is not only reducing its carbon emissions, it’s also saving money in the long term. We will effectively do more for less.”

Why is Friday the 13th unlucky? Yes, it is Friday and it is the 13th day of the month. Not that the Round Up is superstitious, but your imagination does tend to run away from you on such days. The BBC has reported that experts at the Glasgow Science Centre are looking into the global phenomenon of Friday the 13th to determine if there is any science behind the superstitions. Sound a little crazy? Just stay with me on this.

The Glasgow Science Centre has said that it is a mix of superstitions - Friday being the unluckiest day of the week and the number 13. Since when has Friday ever been the unluckiest day of the week, I hear you cry! The Round Up will have to agree with you on that one.

But what has Friday the 13th have to do with outsourcing? If you asked someone to list a few factors that impact business performance, fear of Friday the 13th, probably wouldn't show up on the list. But perhaps it should. An article on Entrepreneur.com revealed a report that showed nine percent of Americans are Friday the 13th phobic, and further studies show that $800 million to $900 million in business revenue is lost on that ominous date. Not something to be sniffed at then.

Keeping this in mind, could the release of the report ‘Taking Control of IT’ by Deloitte this week have any link to the bad luck that is associated with superstition. From the outset it is a bleak report for local councils’ and IT outsourcing, however, on closer inspection it just advises the revision of how ITO contracts are managed. Instead, the report could be described as the ‘seven deadly sins of outsourcing contract management.’

That is as far as any indication of bad luck in the outsourcing industry goes. The rest of the week has been full of positive news. Freelancer.com surpassed half a million outsourcing projects within the micro-outsourcing market place. Also, the Environment Agency of England and Wales has signed an ITO contract with Capgemini which aims to be the ‘greenest’ in government.

On reflection things look pretty positive. So I believe it is not an oxymoron to bid you farewell and ‘happy Friday the 13th’.

Unilever, a leading global provider of foods and home and personal care products, has signed an IT outsourcing contract with Unisys Corporation. Under the terms of the agreement, signed for an initial four years, Unisys will provide a range of IT management and support services for more than 60,000 Unilever employees across North America, Latin America, the Caribbean, Europe, Russia and Central Eastern Europe.

A central part of the contract is to enable Unilever employees, who use mobile and consumer technologies for business, to have quick access to productivity tools wherever they work or travel. Support will be delivered from service centres across the world, including Budapest and Bangalore among others.

Peter Opalka, vice president of Global Client Services at Unilever commented: “We selected Unisys as our key partner for end-user support services because of the company’s proven service delivery capabilities and innovative roadmap for evolving desktop services to provide our workforce with anywhere, anytime access to tools critical to their business productivity."

Congestion on the UK’s increasingly contended public internet infrastructure is threatening customer relationships for 30 percent of enterprises, according to research from fibre network provider Geo.

Geo surveyed IT and network professionals in large private and public sector organisations across the UK on whether they felt they could access sufficient bandwidth for their businesses and their experience of network slowdowns and outages. The research showed that 30 percent of businesses experienced slowdowns and faults. In fact, 27 percent of those surveyed said there was potential for them to lose a customer. A further two percent actually reported losing a customer.

70 percent of respondents reported losing at least one hour of operational time per week to poor network performance, wasting more time than the average daily UK commute (54 minutes, according to WorkWiseUK). Furthermore, 29 percent of these lost a day (7.5 hours) or more every week to slow network speeds or faults. This trend, which was acknowledged by IT and network professionals working for some of the country’s biggest banks, manufacturers, retailers, life insurers and local authorities, could cost the UK’s economy millions of pounds in lost productivity each year.

Geo’s research suggests that these alarming slowdowns in blue chip networks are caused not, as some anecdotal evidence suggests, by staff using social networking applications over corporate connections, but by the sheer volume of business that is now transacted online. While nine percent of network professionals cited HD video applications such as telepresence and web conferencing as being a notable drain on company bandwidth, nearly 40 percent said slowdowns were simply caused by overall increased demand for data services.

Mark Ryder, director of enterprise for Geo, said: “These disturbing results call into question many telcos’ claims that they provide businesses with the 99.999 percent uptime to trade effectively. Moreover, the news that faults and slowdowns do erode relationships between businesses and their customers suggests that UK enterprises must act to resolve this now.”

Rio Tinto Alcan, an international mining group headquartered in the UK, has signed a three-year application support services contract with CGI Group Inc., a provider of information technology and business processing services. The contract includes the option of renewing for a further two years.

CGI will maintain Rio Tinto Alcan’s application portfolio that supports its back-end operations including finance, sales, maintenance, HR, procurement, payroll, and HSE (health, safety and environment) functions.

Jacynthe Côté, Chief executive, Rio Tinto Alcan commented: “We are pleased to extend our more than 25-year partnership with CGI. As one of our primary IT providers, they share our passion for excellence and achieving solid business outcomes.” Côté continued, “We also share a strong presence in Quebec, and this partnership reflects Rio Tinto Alcan’s commitment to advancing sustainable economic development within its operating communities.”