Industry news

Now it’s the turn of the smaller ISV to reap the benefits of offshore outsourcing. Tapping cheaper labour overseas isn't just for large companies anymore as small and mid-sized businesses are increasingly taking up outsourcing and offshoring. If you are looking for a highly flexible workforce that is readily trained in the current broad spectrum of multi discipline technologies, then outsourcing can provide a valuable resource.

A good starting point to finding the right offshore outsourcing partner is to talk to your peer groups, your customers and other technology partners to get a feel for their experience both good and bad. A potential outsourcing partner needs to be able to demonstrate real knowledge and experience. It is therefore, absolutely crucial that you conduct a thorough due diligence. Interrogate their level of experience in the market place and ask if any of their staff have been onshore before and to site previous projects and customers. Examine their human resource department to look at their staff turnover and ascertain what their cultural appreciation is like, particularly if they should need to come onshore to a customer site in the latter stages of a project.

As an ISV, you may well be considering two distinct types of engagement:

• Development of your product

• Development work on a customer project.

Time, effort, quality and resulting costs are ‘unknowns’ to start with and need to be seriously evaluated.

Ideally, start with a low value, low input project to test the company’s ability and the processes. Before embarking on a project it is essential that you set out clear areas of responsibility, understand where their services start and end. Find out if they are a truly customer focused organisation and are committed to quality. Ideally both the ISV and the outsourcing partner should be jointly responsible for the risk so agree up front on how you both want to share the value of the project.

I found that two of the main issues were quality and consistency across all disciplines in order to maintain the required standard of work. It is important to have well defined and easy to follow processes that are very clearly documented. You also need to step up to the management challenges and be prepared to closely supervise a project’s progress. Don’t sit back and expect your outsourcing partner to guess what is needed.

When you generate an outsourced team, try to keep them on the project as continuity for your customer is paramount. Visit the offshore teams regularly to make them feel part of your organisation. When you tread carefully there is no reason why you can’t achieve great value from offshore outsourcing and gain the benefits that have traditionally been the domain of the big boys.

Symetra Financial, a leading US provider of employee benefits, has extended its IT outsourcing agreement with ACS.

ACS has provided a full range of IT infrastructure services including data centre, help desk, and voice and data networks for Symetra since 2004. ACS will also continue to provide output and content management services, as well as a variety of cross-functional services including security, asset management and disaster recovery.

"ACS enables us to provide high quality IT services at predictable costs," said Troy Olson-Blair, chief information officer for Symetra Financial. "Extending our long-standing relationship allows us to maintain IT industry best practices, incorporate continuous technological innovations and increase service capabilities to our customers."

Under the renewed contract, ACS will continue to provide full IT infrastructure services, as well as utilise new technological innovations including the ACS Management Platform, an offering that provides best-in-class service management capabilities to clients.

Eversheds, the well known international law firm, has taken the decision to outsource its documentation processes to Exigent. As part of the move 95 secretarial jobs will be cut in the UK. The move follows four previous staff reductions at the firm, that is suffering as a result of the recession and severely depressed property sector.

The firm has taken the decision to offshore to cut costs after completing a pilot with Exigent at its Cambridge office. Eversheds will begin rolling it out across its UK offices between now and Christmas.

Eversheds managing partner Lee Ranson said: “The pilot was designed for us to evaluate how outsourcing works on the ground. We then went back to the business to discuss exactly how it would work across the firm. It will affect offices differently,” He added, “This is something that was taken up in other professions a long time ago. The legal profession is just starting to look at this now.”

This week has truly been one for highs and lows. We have seen summer turn to winter, then to autumn, and as I’m writing this, back to summer again; where will it go next? The sporting world too has had its fair share of peaks and troughs. We’ve had English women’s football triumphantly thrust into the main sports pages on reaching the final of the European Championships only to be severely put back in their place with a 6-2 hammering from Germany. England’s men thankfully racked up the familiar score of 5-1 (remember that Germany?) against Croatia sending them off to South Africa’s world cup next year. Finally to just about break even in sporting success, Andy Murray added to Britain’s historic tradition of almost doing well in Tennis tournaments seeing another grand slam pass him by in the shape of the US Open. Ah well – rest assured Federer and Nadal will give us a show in the final. What has this all got to do with outsourcing you’re probably asking by now. Well, as fate would have it it’s been a week of ups and downs for sourcing industry too.

There has been a steady flow of outsourcing contacts as per usual such as the CSC’s new deal with the US postal service.

The BPO giant will take responsibility for the management of the Postal Service’s (USPS) Mail Transportation Equipment Service Centre. Under the terms of the contract, CSC will provide program management, quality assurance, technical support and third-party logistical services for the USPS repair facilities.

With recent strikes and general disgruntlement over pay amongst the ranks at the UK’s Royal Mail, the Round-up wonders how big a part similar outsourcing deals will play in the institution’s future.

Another interesting deal from across the pond came from Global Pharmaceutical Services (GSPI). The pharma giant has taken the decision to outsource clinical development to India. GPSI has entered into an exclusive partnership with Abridge Clinical Research Pvt. Ltd, a research and development company located in Mumbai, India. The new deal will see Abridge take responsibility for the monitoring of clinical studies, auditing, quality assurance, design and conduct of clinical studies, faster patient enrolment, in-country sponsor representative, medical writing, data management, bio statistical services, and regulatory support.

Clearly one more for the positive pile and another victory for the high-end outsourcing sourcingfocus.com is so fond of talking about. Expect to see a few more ‘men in white coats’ knocking around Mumbai in the coming months.

Continuing up the roller-coaster is this week’s clear outsourcing industry winner. Malaysia reports, with barely restrained delight, that its outsourcing industry is going great guns. Their still nascent market is expected to reach US $1.1 billion this financial year and looks set to hit US $1.9 billion by 2013. It’s great to such positivity coming from the lesser-used outsourcing destinations. The roundup waits with baited breath for figures from some of the other ‘newish’ upstarts to see how areas in Africa and other areas of Asia are faring.

Bringing us back down to earth at the end of the week is news the Eversheds is slashing yet more jobs as it feels the full force of the property slump. It’s obviously bad news for the company and its employees that it’s having to cut more staff. Exigent will be the main happy ones in this arrangement as they take up the slack left by over 90 legal secretaries leaving the firm.

Whether it’s a good thing or not that the UK headcount has been reduced to such an extent remains to be seen, though surely survival is better than being a martyr against globalisation. Feel free to discuss in our forum topic. Either way the legal industry is increasingly realizing the benefits of LPO and the industry itself is changing quite dramatically in its wake.

The last big positive of the week that should give us all hope are the growing murmurings about economic recovery. We’re not out of a recession by a long way but the media agenda and business confidence is clearly undergoing a shift. Let’s hope the murmurings have some substance, property picks up, Eversheds recovers and can support both its clever associates, partners and its increasing offshore workhorse.

With that rallying call to those fabled ‘green shoots of recovery’ I think we can call it a week. Enjoy the weekend!

Global Pharmaceutical Services Inc. (GPSI), a provider of research and development support to the worldwide pharmaceutical and biotechnology industry, has outsourced some clinical development to India.

GPSI has entered into an exclusive partnership with Abridge Clinical Research Pvt. Ltd, a research and development company located in Mumbai, India. "We are delighted in working with such an experienced company like Abridge Clinical as their expertise and core values are very similar to those at GPSI," according to Dr. Garland A. Johnson, Senior Vice President, GPSI.

"India has become the hub of clinical research, as sponsors and Contract Research Organisations (CROs) from the USA can benefit from this relationship due to fast recruitment, good quality and cost effectiveness. In today's scenario of recession, India has become the favourite place for outsourcing the clinical studies. We are delighted to be working with GPSI in the offering of these services," as stated by Dr. Emran Khan, Director of Abridge.

The new deal will see Abridge offer Contract Research Organisation (CRO) selection for specific clinical programs, monitoring of clinical studies, auditing, quality assurance, design and conduct of clinical studies, faster patient enrolment, in-country sponsor representative, medical writing, data management, bio statistical services, and regulatory support.

The US Postal Service has awarded a contract to provide technical and management support to CSC. The BPO giant will now be responsible for the management of the Postal Service’s (USPS) Mail Transportation Equipment Service Centre.

Under the terms of the contract, CSC will provide program management, quality assurance, technical support and third-party logistical services for the USPS repair facilities. CSC has provided management and logistical support for other MTESCs across the nation for more than ten years.

“CSC is proud that the Postal Service continues to count on us to support their operational needs and the direct mailing industry,” said Alan B.

Weakley, president of CSC’s North American Public Sector Applied Technology Group. “CSC delivers distinct services and solutions to address dynamic logistics and supply chain challenges and enable our customers worldwide to improve readiness, increase speed and lower costs.”

The contract, signed for a three year base period with a two year option, has an estimated total seven-year value to $46 million.

Vertex has announced the appointment of Gurpal Singh as the Chief Operating Officer (COO), Vertex India, with responsibility to oversee India operations of the Company, drive business transformation across customer engagements and aid in making headway into the domestic BPO market. He will be reporting into Keshav Gaur, CEO Vertex India.

Gurpal’s appointment has been made to enable Vertex to concentrate on its plans for increasing impetus on India business and strengthening its pursuit into the domestic BPO market.

Expressing his pleasure on Gurpal’s appointment, Vertex India Chief Executive Officer Keshav Gaur said, “Gurpal’s inclusion in the India leadership will allow the Company an added advantage in aligning our strategy of our operations for the domestic market and steer forward our growth journey. Gurpal’s appointment will help us in making inroads in the company’s next growth and development phase. In Gurpal, Vertex has found a leader with strong execution skills and proven ability to build high performing teams.”

Prior to joining Vertex, Gurpal has been the Acting Country Head and Director, Human Resources at Fidelity Business Services. He has also held senior roles at GE Capital, Hutch, IBM Daksh and JobsAhead.

On his appointment, Gurpal commented, “Vertex has exceptional potential due to its strong global presence and reputation. I am delighted to join Vertex at this crucial stage in the organisation’s exciting chapter in the domestic market. I am looking forward to my association with Vertex.”

"It's better to be a mouse in a cat's mouth than a man in a lawyer's hands". The words of this old Spanish proverb sprung to mind the other day when I saw the results of a recent survey of outsourcing companies, customers and consultants, published by the International Association for Contract and Commercial Managers (IACCM). It claims that nearly 60 per cent of companies agreeing complicated outsourcing deals fail to complete the contracts underpinning the agreements.

At least some of the blame for non-completion can be pinned on the lawyers involved, according to IACCM chief executive Tim Cummins. "[Lawyers] often cause delay or divert negotiations onto areas that seem to others irrelevant – and which may eat up time and cause the contract to be incomplete," he says. "Lawyers need to get more involved in understanding desired outcomes and ensuring the contract is fit for purpose."

Cummins added that incompleteness can - and does - derail valuable deals. "Some result in the relationship falling apart. But in most cases, it creates claims or disputes, or simply causes significant delay. These factors undermine the expected benefits – in terms of cost factors for both parties, but often also with regard to new sources of value or innovation."

On the flip-side, there are plenty of excellent lawyers doing sterling work on behalf of both outsourcing customers and their providers, according to The Legal 500, a guide to the UK legal profession and the country's top lawyers. Now in its 22nd year, this year's Legal 500 includes (for the first time) a section on lawyers specialising in outsourcing deals.

So which law firms lead the field? Here's a quick guide to the companies that Legal 500 publishers Legalease rate as being in the first and second tiers:

Baker & McKenzie LLP

Recent work: Advised Telefonica O2 on its pan-European telecoms service agreement with Deutsche Post World Net; worked with Siemens on its proposed ITO for the Environment Agency.

Key players: Richard Hawtin, Duncan Reid-Thomas

Bird & Bird LLP

Recent work: Acted for the Environment Agency on outsourcing its IT infrastructure; advised Mobile Broadband Networks following its formation as a joint venture.

Key players: Graeme Maguire; Mark Leach; Chris Holder

DLA Piper UK LLP

Recent work: several mandates for central government (the NHS in particular), as well as advising on a series of major public procurements for the Personal Accounts Delivery Authority.

Key players: Kit Burden, Mark Crichard, Mark O'Conor

Field Fisher Waterhouse LLP

Recent work: New instructions from BP and Orange in outsourcing, and public sector outsourcing is a key strength.

Key players: Simon Briskman, Paul Barton, Tim Davies, Hamish Sanderson

Pinsent Masons LLP

Recent work: Home Office, MoD and Cabinet Office

Key players: Kate Rees, David Isaacs, Iain Monaghan

Allen & Overy LLP

Recent work: Particular strength in financial services sector, with clients including BNP Paribas, GE Capital and JPMorgan. Acted for HBOS on the renegotiation of its voice and data service outsourcing contract with BT.

Key players: Ian Ferguson, Claire Wright

Herbert Smith LLP

Recent work: Acts for Transport for London (TfL) on its PFI contract.

Key players: Mark Turner, Christopher Rees

Latham & Watkins LLP

Clients/recent work: Advises large financial institutions, including Deutsche Bank, HBOS and Lloyds TSB as well as UK blue-chip corporates, including Diageo, BskyB and Alliance Boots.

Key players: Gail Crawford, Andrew Moyle

Mayer Brown International LLP

Recent work: Advises on multi-jurisdictional ITOs and BPOs. Acted for Unilever on the outsourcing of international computer services. AT&T is a longstanding outsourcing client.

Key player: Peter Dickinson

Millbank, Tweed, Hadley & McCloy LLP

Recent work: Has advised the NHS, Reed Elsevier, Invensys and ProSieben. Asset management outsourcing clients include JPMorgan, Citibank and Mellon. Advised AstraZeneca on its global applications maintenance outsourcing.

Key players: Laurence Jacobs, Sean Keaton

Morrison & Foerster (UK) LLP

Recent work: Advised HMRC on its £80 million outsourcing contract with CapGemini. Conducts supplier-side work as a member of TCS panel. Other clients include Lloyds TSB and, more recently, Investec.

Key players: Alistair Maughan, Jon Edgell

There are plenty of well-known and respected names in the third tier, too, including Addleshaw Goddard LLP (clients include the Department of Health, the MoD and the NHS), Berwin Leighton Paisner LLP (Arup, Ascent and Veolia), and Bristows (Capgemini, Gap, MTV, Cerner and Diageo).

The new 'Outsourcing and Procurement' section of The Legal 500 makes for interesting reading, and I'd strongly recommend you take a closer look. Outsourcing contracts are extremely complex - and getting more so all the time.

But in the words of a personal hero of mine, the US essayist, philosopher and poet, Ralph Waldo Emerson [http://en.wikipedia.org/wiki/Ralph_Waldo_Emerson]: "The good lawyer is not the man who has an eye to every side and angle of contingency, and qualifies all his qualifications, but who throws himself on your part so heartily, that he can get you out of a scrape."

Revenues from the Malaysian outsourcing industry are expected to reach US $1.1 billion in 2009, according to a joint publication by Outsourcing Malaysia and ValueNotes. The industry is also expected to grow at a CAGR of 15 percent to reach US $1.9 billion by 2013.

Currently, IT outsourcing services in Malaysia have a greater share of the overall outsourcing market, followed by BPO services; while knowledge services outsourcing, still in its nascent stage, has a smaller share.

The industry body puts the country’s impressive outsourcing growth down to government support, domain knowledge and industry expertise in BFSI, oil & gas and logistics arena. The body says it is also attracting sizeable nearshore contracts from Asian markets like China, Japan, South East Asia and the Middle East due to its multi-cultural and multi-lingual capabilities.

Arun Jethmalani, CEO at ValueNotes, a specialists outsourcing research firm, commented, “Companies in the BFSI, oil & gas and logistics sectors, which had set up operations in Malaysia decades ago, are leveraging the country’s multi-lingual ability and domain expertise in these verticals to set up IT and BPO centres in Malaysia.”

Suheil Patel, analyst and co-author of the report, explained that Malaysia has been recognised as one of the preferred destinations for outsourcing, but it also faces some challenges. “One of the major challenges for the Malaysian outsourcing industry is to overcome constraints with regards to scalability. The total number of employees in the industry is roughly comparable to the number of new hires by a leading Indian IT outsourcing service provider.”

According to Boddy Bobby Varanasi, an outsourcing consultant, one of the key concerns for the outsourcing industry in Malaysia is the need to move up the value chain to offer high value services as opposed to highly commoditised services in IT or BPO.

He continued, “Strand Aerospace Sdn Bhd is a prime example of a Malaysian company moving up the value chain in outsourcing. The company specializes in computer-aided stress testing for engines of Boeing and Airbus.”

The report, presenting the competitive landscape of service providers in the Malaysian outsourcing industry, can be purchased here “Outsourcing in Malaysia: Scaling New Heights”. The publication features in-depth insights and analysis, including the competitive standing of Malaysia as an outsourcing destination, and future trends and challenges faced by the industry.

Wipro Technologies, has developed a new initiative aimed at strengthening the consulting and customer management skills of its frontline employees. The EAS (Enterprise Application Services) Consulting Academy aims to go beyond training to inculcate the right engagement behavior at an early stage that will go beyond improving customer satisfaction.

The academy offers a six month certification programme to all Wipro employees who are involved in delivering consulting solutions to its clients. The program includes a combination of class room sessions followed by implementation of the learnings at the client workspace.

The EAS consulting academy has received positive responses from clients, with some getting actively involved as faculty at the academy and acting as "guides" to pre-assigned students throughout the training period.

Joe Simon, CIO, Viacom, commented "It is great to see Wipro making these strategic investments into consulting, inspite of the prevailing economic conditions."

The program will be run by Wipro's Corporate Human resource Development in conjunction with Enterprise Application Services business unit as well as eminent academicians and luminaries from the industry. The study will be facilitated through case studies, anecdotal learning interspersed with rigorous assignments in all areas. Wipro plans to certify around 300 consultants globally in the current financial year. The first batch of 60 consultants will get certified by September 2009.