Industry news

Affiliated Computer Services (ACS), has announced that it will supply an intelligent ticketing system for the first tram system in the Persian Gulf region, marking the company's first major contract in the Gulf. This follows ACS’ new Dubai offices opening in May this year.

The Persian Gulf's first tram line will have 13 stations and will be equipped with a 100 percent contactless ticketing solution, fully compatible with all public transport in the Emirate, including buses, metros, trams and waterbuses.

ACS’ public transport division, ACS Transportation Solutions Group, was selected to provide the ticketing solution by Alstom, which is building the tram system for the Dubai Roads & Transport Authority (RTA).

Under the terms of its contract with Alstom, ACS will supply all the ticketing equipment including validation terminals, control terminals and vending machines capable of issuing and recharging contactless cards and selling single-use contactless tickets. ACS will also develop a central management system that interacts with the RTA system, which assists with disseminating fare-setting rules, monitors customer data, manages restrictive lists and security keys, and distributes revenues.

Remy Redeuilh of Alstom, commented, "We selected ACS to provide a state-of-the-art ticketing system compatible to Dubai UAFC requirements. With high passenger flows expected on the Al Sufouh Light Rail Transit system, this new ticketing technology will play a critical role helping address congestion and traffic flow.”

Dr Pepper Snapple Group (DPS), a leading producer of flavored beverages, has signed a five year contract with HCL Technologies Ltd. (HCL), a leading global IT services provider, to provide IT application and infrastructure operations and management. HCL will deliver application support and maintenance, and manage and monitor infrastructure support and operations.

"After evaluating a number of global service providers, we selected HCL due to the strong team and comprehensive technical solution tailored to our business needs. With its Axon acquisition, HCL also offers deep SAP capabilities, an area of importance to us," said Virginia Guthrie, CIO and senior vice president of information technology for Dr Pepper Snapple Group.

The five-year engagement is expected to assist DPS in application support and maintenance, end-user computing, integrated service desk and network management. HCL will also deliver managed print services for DPS. The services will be delivered through HCL's partnership with Xerox.

Phones4U has signed a deal with Fujitsu Technology Solutions to drive cost out of its IT operations and support new growth plans. As part of a delivery partnership with Tata Consultancy Services, Fujitsu will implement a new PRIMERGY BladeFrame data centre solution.

In 2008 TCS made a joint bid with Fujitsu and delivered an innovative option whereby TCS would continue to manage the new, dynamic infrastructure but Phones4U would retain ownership of IT assets. This new model will be initially applied to the two Phones4U data centres housing its critical Siebel retail platform.

Steve Johnson, Director of IT strategy at Phones4U explains: “Fujitsu BladeFrame delivers a cost-effective hardware solution that supports open systems and delivers significantly reduced operating costs. Crucially the technology means we can dynamically reuse capability for development and testing of new services and gives us scalability for long-term growth.

“Fujitsu’s approach and the consequent costs have been consistent throughout the process. It has been flexible enough to deliver what we want without sacrificing quality and the engagement with other parties has meant a joined-up, integrated solution.”

Steve Taylor, IT Managed Services Director, Phones4U commented “The nature of this deal has allowed Phones4U to test our multi-party sourcing model in action. FTS, TCS and a couple of our other partners have worked together in a very effective way through the procurement and the implementation phases of this work. We see this as a model example of how our sourcing model will work in the future. FTS played a central role in the process and we expect the project to deliver significant benefits to our business.”

Hello to all and thanks for supporting sourcingfocus.com’s ongoing foray into the world of new media. If you have any ideas for what you would like to see happening on sourcingfocus.com, the newsletter or our twitter feed, please get in touch.

To increase the value of the sourcingfocus.com twitter feed we will be tweeting as regularly as possible from the most important outsourcing industry events. Today one of the team will be providing updates from the Inaugural Sri Lanka Forum, finding out more from this emerging outsourcing destination

If you are interested in hearing what is being said at this seminal event, tune in from 08:45-15:00 today. Alternatively you can follow and comment on the event hashtag at #SLASSCOM.

See you there!

BT Group and Tata Communications Ltd., two of the world’s largest providers of voice and IP services, have signed a voice services agreement as part of a global supply arrangement.

Through the five-year agreement, Tata Communications will become BT's primary supplier of International Direct Dial (IDD) and other voice termination services outside BT's own footprint countries and BT will become Tata Communication's main distribution channel for its IDD traffic into the UK, eventually expanding into other markets across Europe.

By providing each party with access to additional capacity and flexibility, the contract will allow BT and Tata Communications to benefit from each others’ strengths as they develop and grow their businesses in their respective markets.

Brian Fitzpatrick, MD of BT Wholesale Markets, said: “Tata Communications is a leader in the international wholesale voice business, making them a perfect partner to help us achieve additional economies of scale to those of our own. We look forward to maximising the opportunities this relationship presents to both organisations as we expand our portfolio of wholesale products and services and ultimately strive to become even more competitive with our pricing.”

BT will also have access to Tata Communications' routing capabilities and on-line management systems providing greater economies of scale that aims to improve BT's competitiveness in the international calls market.

HP will be the official technology provider for the upcoming Plastiki expedition led by adventurer and environmental storyteller David de Rothschild and his organisation Adventure Ecology.

HP joined the Plastiki expedition as the voyage’s official technology provider to inspire people to rethink waste as a resource. The Plastiki, a one-of-a-kind 60-foot catamaran created out of reclaimed plastic bottles, self-reinforced PET (polyethylene terephthalate) and recycled materials, is making its momentous voyage across the Pacific Ocean later this year.

HP will equip Adventure Ecology and the Plastiki crew with the technology needed to make the 10,000-mile expedition from San Francisco to Sydney. HP also collaborated with Adventure Ecology on its interactive activity and educational centre, Plastiki Mission Control.

“This partnership is not only of great significance due to the long-term mission of Adventure Ecology to promote and influence smarter ‘Planet 2.0’ ways of working, but also because of the exciting opportunity for us to help support HP’s ongoing commitment to reducing the environmental impact of its products, services and operations" said David de Rothschild, founder, Adventure Ecology. He continued "It is our shared vision to create a smarter, more sustainable ‘Planet 2.0’ way of living, through inspiration, education, storytelling and the empowerment of individuals. This partnership has all the right ingredients to create the agents of change that will help to sculpt our future”.

The Round-Up has just realised that during many months of pondering over outsourcing news and destinations there is one rather large region that has been inexplicably untouched. Well known for there vast exploits in new technology, tea and sushi, China and Japan seem to be emerging IT markets that have yet to be focused on.

Indian information technology services IT firms are increasing their focus on the Asia Pacific region, particularly China, in an effort to tap into the IT market and use it as a strategic base to enter the USD100 billion a year Japanese IT market. The industry lobby group, National Association of Software and Services Companies, Nasscom, estimates the Japanese IT services market at USD108 billion, and India’s share at USD11.5 billion. Around 8 to 10 percent of this work is offshored, with at least half of that going to China.

So sorry for missing you out China and Japan. There are just so many up and coming destinations for the Round-Up to keep up with!

So in true Round-Up fashion it is now time to look at what has been reported this week on sourcingfocus.com.

Satyam revealed its new brand identity, Mahindra Satyam. It came as a result of Tech Mahindra acquiring a 31 percent stake in Satyam.

Vineet Nayyar, Executive Vice Chairman of the Satyam Board, described, “This is a significant milestone towards the recovery of the company. We are optimistic that this new brand will re-energise the organisation and will be well received by all our stakeholders.”

It seems I am back onto all things Indian. So in that vein, this week saw more Indian related outsourcing news on sourcingfocus.com. IDEA Cellular, India’s third largest private telecom services provider, has signed a Rs.1,450 million outsourcing agreement with Firstsource Solutions, a global BPO services provider.

Firstsource Solutions will provide customer management interaction services including customer service, billing, and new product information. It will deliver services to IDEA from its centre in Coimbatore, Tamil Nadu India. Firstsource will be providing these services for IDEA’s Kerala and Tamil Nadu customers in English, Malayalam and Tamil.

Now I am sure the Round-Up is going to receive a plethora of comments remarking on the overwhelming amount of outsourcing destinations that I have not mentioned. Please, comment away, I am only human but will endeavor to examine as many destinations as is possible.

Until then, enjoy the sun – a sweltering 33 degrees in the UK (I am not

complaining…yet). And enjoy yet another week.

BT, and CERT-In, an organisation established under India’s Ministry of Communications & Information Technology, have signed the MOU in a bid to address the increasingly complex problems associated with computer security and computer-related crime in India.

The MOU was signed by Sudhir Narang, BT’s India Managing Director and CERT- In Director, Dr. Gulshan Rai.

Commenting on the significance of the MOU with CERT-In, Mr. Narang , said, “BT is committed to help organisations around the world and in India secure their information which is their most critical asset. The MOU is a significant step forward in this direction. Both BT and CERT-In recognise that along with the benefits of increased computer connectivity, there are a host of new risks with computer hackers exploiting the vulnerabilities in the software and computer system.”

As a part of the MOU, both BT and CERT-In have identified a common goal to work together to address these problems. The scope of the MOU includes technical co-operation and information exchange, knowledge sharing, emergency response and coordination, executive information exchange and training as well as customer education and outreach.

Commenting on the association, Mr. Rai of CERT-In said, “BT is a giant in the area of communication. This Memorandum of Understanding will help in capacity development, particularly training our manpower for implementing the best security practices and understanding techniques and technology for enhancing security of the networks.”

With this MOU, BT and CERT-In will work to combat security threats such as unauthorised access, event monitoring, log correlation, managed security services, phising and other cyber crimes. This unique association with CERT-In brings significant benefits to computer and Internet users all across India.

IDEA Cellular, India's third largest private telecom services provider, has signed a Rs.1,450 million outsourcing agreement with Firstsource Solutions, a global BPO services provider.

IDEA Cellular, an Aditya Birla Group Company has over 45 million subscribers across 17 service areas in India.

Firstsource Solutions will provide customer management interaction services including customer service, billing, and new product information. It will deliver services to IDEA from its centre in Coimbatore, Tamil Nadu India. Firstsource will be providing these services for IDEA’s Kerala and Tamil Nadu customers in English, Malayalam and Tamil.

Mr. Navanit Narayan, Chief Service Delivery Officer of IDEA Cellular, commented, “Firstsource brings a wealth of knowledge and expertise in running large customer support operations for global telecom service providers and has the ability to help us manage our rapid growth in the service areas of Kerala and Tamil Nadu. We believe our customers will benefit from their service capabilities”.

This week's landmark bankruptcy filing by General Motors is just the latest example of recession-driven retrenching across industries, a trend casting a shadow on outsourcing companies with large client bases in the hardest-hit industries. Depending on restructuring terms, outsourcing firms may be at risk to have large, long-term, ongoing revenue streams rejected in bankruptcy or terminated by an acquiring entity after a ‘fire sale’ purchase. You only have to look at the lists of the top 50 creditors for each of GM and Chrysler to see recognizable outsourcing service providers with a great deal at stake.

One can trace the beginning of the outsourcing sector’s current challenges to the financial meltdown last year, as bankruptcies and sell-offs of leading financial services institutions began to jeopardize outsourcing providers’ revenue from these customers. This was compounded by early termination of outsourcing agreements as the industry eliminated redundant service contracts in newly consolidated firms.

Wall Street's shake-up was followed in short order by crises in the auto manufacturing sector, typified by recent dramatic ownership changes and organizational revamps at Chrysler and GM. From information technology services, transaction processing and customer service to parts delivery and facility management, each of these hard-hit industries relies extensively on outsourced services.

Bankruptcies and reorganizations are having a profound effect on some outsourcing firms because these service providers typically invest in technology, facilities and other assets early in long-term outsourcing contracts, expecting to recover these costs in later years. The vulnerability in this strategy emerges when ongoing revenue streams are cut off in bankruptcy or other circumstances without allowing for a complete recovery of providers' early-term investments. This lost investment compounds the loss of expected revenue from having long-term agreements terminated early.

The net result is that we may begin to see a sort of "domino effect," given the interdependence of the IT and outsourcing sector on the industries it serves, such as financial services and auto manufacturing. Companies in the current environment would be well-advised to not only perform thorough due diligence on existing and potential suppliers and partners, but also to prepare contingency plans in the event access to key suppliers, distributors or business critical software and services is jeopardized. In our practice, colleagues and I advise managers pursuing outsourcing to meet commercial and financial objectives to bear in mind the risks associated with outsourcing – especially long term arrangements – and factor these risks into their decisions and plans. We also urge them to revise the thinking around certain contract terms that might be appropriate in light of the new economy.

While the larger and more well-diversified outsourcing providers should make it through this downturn, smaller and mid-tier providers that are focused on limited service offerings or a single vertical market could face difficulties, even bankruptcy themselves, if revenues decline to levels triggering loan covenants, for example, or simply fall too far below the operating costs of supporting customers.

The last six to twelve months have brought massive changes in the global economy, making it even more critical for organisations to pay careful attention to new risks confronting the outsourcing industry at the same time they evaluate its ability to transform their business. This does not mean that companies should forego an outsourcing if there are significant commercial benefits. However, it does shift the cost-benefit analysis for outsourcing and demand an increased level of diligence and planning. This advice applies equally beyond the sourcing context to any key supplier relationship.