Industry news

AT&T, one of the largest communications holding companies, has extended Alcatel-Lucent’s contract for end-to-end multivendor network integration for AT&T U-verse.

The AT&T U-verse portfolio brings together U-verse TV, U-verse high speed internet and U-verse voice services all delivered over AT&T's Internet Protocol (IP) network using Alcatel-Lucent’s Triple Play Service Delivery Architecture (TPSDA).

Under the agreement, Alcatel-Lucent will continue to provide end-to-end multivendor network integration for AT&T U-verse, including Microsoft Mediaroom Internet Protocol television (“IPTV”) software platform.

The service agreement includes solution program management, third-party management, network engineering, solution testing/validation and deployment services.

National Grid has signed £207 million worth of deals with Cable & Wireless for a new data network.

Under a 15 year, £108 million contract, the supplier will create and run an optical fibre network, which handles data for core operations, for National Grid.

Another five year, £99 million contract, covers a managed service for the energy company’s telecoms network.

Cable & Wireless will provide the relevant telecoms services, as well as a dedicated network management centre on a National Grid site. It will also supply technical support and incident management, and new network and performance management tools.

CSC has selected Steria, the European IT services provider, to provide BPO services as part of a high-profile government contract with the UK Identity and Passport Service (IPS).

Steria will provide services to manage the front-end of passport application, including essential data verification and validation processes. The BPO service will complement the technology platform to be introduced by CSC and, in the future, may also be used in the National Identity Service, for the provisioning of identity cards.

Jim Vincent, head of Steria's central government practice, commented, "The IPS provides a valuable service to British citizens, so we are very pleased to work with CSC on this project".

The business services sector will suffer dearly from the recession; more than half of the jobs it gained during the last five years will be lost over the next five years. Among all of the subcategories, advertising is set to be the worst hit, according to a new report from the Centre for Cconomics and Business Research (CEBR)

Business services jobs increased by 616,000 from 2003 levels to 2008 levels. However, there will be 311,000 fewer business services jobs in 2013 compared to 2008. Those sectors that rely on the investment cycle, discretionary budgets and public sector spending will suffer the most.

The business services sector has been one of the strongest performing components of the UK economy during the recent expansion. Indeed, this sector alone contributed around one third of all new jobs created and five per cent per year GDP growth since New Labour came to power in 1997. But the credit crunch and current recession have brought a reversal to that trend.

The report anticipates that employment in the sector will be eight per cent lower in 2013 compared to the peak in 2008. Meanwhile, output in the sector will fall dramatically – by over five per cent in 2009 – before sluggishly recovering and not even reaching its 2008 peak by 2013.

According to the authors, the worst hit sector will be advertising. As noted by the Advertising Association, this sector was already losing revenues last year: revenues in 2008 were down by 3.9 per cent year on year compared with a 4.6 per cent increase in

And that trend is set to continue as both recruitment and display advertising are reeling from the effects of the recession. As a result, 15,000 advertising jobs will be cut over the period from 2008 to 2013.

The recent and continued deterioration of public finances is also going to have a significant effect on the business services sector. As one of the biggest sources of demand for business services, public sector spending contributes a significant portion of revenues for the business services sector. With public sector expenditure set for cutbacks from 2010 onwards, the prospects for business services necessarily diminish as well.

Arek Ohanissian, one of the report’s authors, commented: ‘Though most sectors in the UK economy will suffer from the recession, the dramatic reversal of fortunes for the business services sector from strong performance to significant losses would have been hard to imagine even at the onset of the financial crisis.’

The report did hold some positive predictions however. The IT services sector was predicted to return to growth following a brief dip in 2010, growing beyond pre-recession levels again by 2013.

Is the European market turning its back on the converged provision of IT services/telecoms by telecom vendors in Europe? That's the interesting question recently posed by analysts Kata Hanaghan and Katy Ring at the Bathwick Group.

The research firm publishes the Bathwick Services Index (BSI), which tracks the quarterly fortunes of European IT service providers - and noted an interesting trend in the first quarter of 2009. Among the European-headquartered companies tracked by the BSI, two providers of converged IT and telecoms services showed serious signs that they were struggling and both are divisions of big-name telcos.

The first is BT Global Services, identified as the division dragging BT Group into a loss for the year. The other poor performer was T-Systems, the IT services subsidiary of Deutsche Telekom.

"The challenge is that for decades, and still to the present day, the businesses of a telecoms company and an IT services company are very different. And the oft-foretold technology-based convergence of the two is taking a very long time to arrive, especially in how IT departments in buy-side organisations are structured," say Ring and Hanaghan.

"However, it does seem ironic that, at the point when the majority of buy-side organisations are developing a virtualised IT infrastructure requiring the convergence of network, server and application systems and skills, providers that might seem especially well-placed to provide and manage such an infrastructure (and deliver services across it) may be divested by their parent companies."

With the second quarter's Index due to end next week, the two analysts will be no doubt be looking for improvements in the performance of these two companies.

The current financial woes at BT GS, they point out, have predominantly been caused by the mis-management of two mega-outsourcing contracts in the UK (widely believed to be the NHS and Reuters contracts). "The management team is now different, new contract management processes are being introduced and the division is being restructured with the aim of returning the division to profitability," they point out. T-Systems, they add, has a very good dynamic services offering but needs to dramatically ramp up its customer base for these and other services, in order to compensate for reduced captive revenues from its parent company.

The suggestion is that these problems are specific to the two companies in question. It may be too early to attribute them to an inherent flaw in the model of delivering converged IT and telecoms services - but it does seem that, to date, that this model has been slow to gain acceptance.

Increasing economic pressures affecting the retail industry means companies in Western Europe and North America will increasingly look to outsource technology and business processes in a bid to cut costs, and focus on core skills. This is according to a new report by independent market analyst firm, Datamonitor. The report, “Retailing in a Recession:

The Opportunities for Outsourcing“, looks at the business processes retailers are outsourcing, and why.

“To survive or succeed in the downturn, retailers will be looking for efficient ways to generate revenue by managing the demands of the customer, while at the same time making cost savings across the organization”, says Christine Bardwell, retail technology analyst with Datamonitor and the report’s author. “Many are looking to technology and services to help cut the cost of managing inventory, non-critical business processes and store operations. Although retailers are outsourcing in a recession, the types of contracts have changed; large scale infrastructure overhauls are less common. Instead retailers are requesting a mixture of services on lower value contracts, or transformational deals over longer periods of time.”

Cost reduction is the main driver for outsourcing in recession-hit retail

In the current uncertain environment, the priority for a retailer will be to protect margins. In a climate of falling sales, while facing cost and finance pressures, retailers are battling to keep afloat. As such, cost cutting has become their main priority and any option for reducing loss is being considered.

“Cutting down on staff and inventory, the two biggest costs for a retailer, will be the principal areas of focus”, says Bardwell. “Cuts in these areas offer a two-fold opportunity for outsourcers as retailers will be looking to service providers to help cut costs across the business; and will also be short of staff, or having trouble managing correct stock levels so will look to outsourcers to provide the solution.”

Previous experience and small capital expenditure makes retailers reluctant to outsource

One of the biggest current hurdles to outsourcing is the industry-wide reduction of capital expenditure (capex) in retail. As capex must go a lot further than a year ago, retailers now require outsourcers to offer flexible payment structures, for instance by offering shorter-term contracts with monthly payments.

The shift from capex to operational expenditure frees up capex for more pressing issues. Previous experience with service contracts has caused retailers to doubt whether the benefits of outsourcing outweigh the challenges that can arise. Barriers to outsourcing include the unrest caused by offshoring jobs, language barriers, and retail sector expertise requirements.

Retailers require, strong, flexible partnerships that can evolve with their business

According to Datamonitor, retailers will expect outsourcers to not only know the demands of the retail industry, but also the challenges of their particular retail sector. As such, a service provider must endeavour to understand the nature of the business in order to work in partnership with the retailer. Outsourcing is not a silver bullet but with flexibility of services, payment schemes and contracts, the relationship between retailer and service provider will be a happy and successful one.

The report also assesses the key suppliers of infrastructure technology outsourcing (ITO) and business process outsourcing (BPO) to the retail sector. IBM is the top outsourced service provider to retail, with 14% market share but the report says this could be set to change as competition in the space heats up.

“The recession is pushing retailers to consider outsourcing in order to achieve cost saving and enhanced operational efficiencies. But competition in the services space is strong,” commented Bardwell.

Retailers are looking for more than just a supplier; they need a partner. A service provider that takes strides to understand the pulse of the organization will win over.”

The European Commission has awarded Sword Group, a leading international IT services vendor, a €69 million four year framework contract for the provision of IT services for the Commission’s Seventh Framework Programme (FP7).

The FP7 has succeeded the Commission’s FP6 framework programme and is responsible for allocating €53.2 billion in research, education and innovation grants in the coming seven years. Under the terms of the contract Sword will be responsible for a variety of processes including: Developing customised Information Systems, providing technical support and maintenance and enhancements of existing FP7 IT applications.

This contract sees a significant expansion in the service Sword currently provides to the Commission and the company expects to grow its onsite team of technical resources in the Commission by around 100 percent.

This latest contract is one of a number of recent public sector contract wins for Sword Group.

Satyam Computer Services Limited, the global consulting and information technology services provider, has unveiled its new brand identity, Mahindra Satyam. This comes after Tech Mahindra acquired a 31 percent stake in Satyam.

Speaking on the rebranding initiative, Mr. Anand Mahindra, Vice Chairman & Managing Director of Mahindra Group, commented, "Customer centricity, high standards of corporate governance, and unimpeachable ethics form the cornerstones of the Mahindra Group. This rebranding exercise symbolises an amalgamation of the Mahindra Group's values with Satyam's renowned expertise.”

Vineet Nayyar, Executive Vice Chairman of the Satyam Board, added, "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”.

Tata Consultancy Services, the Indian-owned IT services company, is opening a third global delivery centre in Queretaro, Mexico. TCS expects to hire 500 professionals during the current financial year for its new centre.

At the new Global Delivery Centre, TCS will provide advanced IT services, consultancy, test factory, business process outsourcing, contact centre, IT infrastructure solutions, industrial and engineering services, and solutions based on TCS products to existing and potential customers.

Since TCS established operations in Mexico in 2003, the company now serves more than 30 local clients in addition to international clients across various industries, including telecom, finance, banking, manufacture and retail.

During the opening ceremony, Ankur Prakash, director of TCS Mexico, Central America and the Caribbean said, “This new facility reinforces our global leadership position in Mexico and will help underpin the accelerated growth that we want to sustain in this country and region by delivering certainty of outcomes to our customers.” He added: “We remain committed to Mexico and we continue to invest in developing the skills of the IT professionals here and generating high quality employment in the industry, given our ability to retain and nurture talent.”

AVG, the global internet security company that protects home and business computer users against viruses and web threats, has chosen ntl:Telewest Business to deliver a telecoms system for customer support at its new UK headquarters.

ntl:Telewest Business, part of the Virgin Media group, has installed its IP Voice service to help AVG to create a unified communications system quickly and cost-effectively as it continues to expand its operations.

“Our frontline customer support personnel are vital to the continuing growth of our business,” said Michael Foreman, Managing Director, AVG. “ntl:Telewest Business had the appetite to help us meet our relocation timescales and the sophisticated network services we needed to create a better contact centre environment.”

AVG relocated from premises in Barnbygate, Newark, Nottinghamshire to purpose-built offices on the town’s Glenholm Park business park early this year.