Industry news

Whitbread PLC, the UK’s largest hotel and restaurant group, has signed a new four-year data and voice networks contract with Fujitsu Services. As part of the contract, Fujitsu will be responsible for providing secure, managed voice and data networks and VOIP across all Whitbread’s corporate locations, hotels and restaurants.

Mark Fabes, business support systems director at Whitbread, comments: “Over the last five years, Fujitsu has modernised and managed our entire data and voice networks, providing a secure, high quality service. In the current economic climate, a reliable and robust data network is critical to our operational optimisation and ensuring we provide the best possible experience for our customers across all of our brands. The availability of our network and the readiness of the data it provides underpin all of our business activity.”

eTelecare Global Solutions, a global BPO provider, has acquired of The Phone House Limited, a South African BPO subsidiary of Talk Talk Group Limited, the telecommunications division of The Carphone Warehouse Group. As part of the acquisition eTelecare also secured a three-year BPO contract with Talk Talk Group customers in the United Kingdom.

“A key component of our corporate strategy is to address the large UK contact centre market,” said John Harris, President and CEO of eTelecare. “We are pleased to have this opportunity to acquire The Phone House centre because it provides an offshore delivery platform to serve the UK market and establish an important new business relationship with the Talk Talk Group.”

Essex County Council (ECC) plans to award a multi-billion pound contract to either IBM or TI systems, The Times Reports today.

In an interview with the times, Lord Hanningfield, the Shadow Transport Secretary, revealed plans to outsource the majority of ECC’s back office processes to the tune of £5.5 billion over eight years. The deal is hoped to deliver savings of at least £200 million. ECC will decide who will deliver the contract next month.

The full article can be seen here:Councils poised to hand running of care and education to private firms

Europcar, a European provider of passenger car and light utility vehicle rentals, has extended its ITO agreement with Unisys Corporation.

Under the new contract, Unisys will continue to deliver IT services to Europcar employees in locations throughout Europe, including Europcar’s headquarters across seven countries – Belgium, France, Germany, Italy, Portugal, Spain and United Kingdom – and 1,800 commercial agencies.

The IT services to be delivered include: management and support services for desktops and other IT infrastructure; creation of master software images for Windows and Linux desktops; and technical assistance for resolution of service events.

Kurt Deli, information officer at Europcar, said: “Through its management of our IT infrastructure and equipment, Unisys has consistently provided high-value outsourcing services that help make Europcar’s employees more productive and better able to serve our customers efficiently. The new contract is further recognition of that valuable capability.”

Financial details of the deal were not disclosed.

Aviva, the worlds fifth largest insurance group, has signed a $1billion (£700 million) contract with EDS who will provide data centre services for the next 10 years.

Under the agreement EDS will be transforming and managing two data centres located in Norwich, England. These centres will be used to service Aviva’s operations in the UK, India, France and Ireland and should be operational by July this year.

Igal Mayer, UK general insurance CEO at Aviva commented, “After a thorough evaluation, we chose EDS over other global service providers because of its collaborative approach.” Mr Mayer also added that the data centres will “increase operational efficiency and lower costs.”

300 Aviva employees are set to be transferred to EDS to help deliver the services however this comes at a time when EDS employees are facing possible pay cuts after costs cutting measures were announced by HP.

Capita has posted robust results for 2008. Against the odds the company increased turnover by 18 percent up £336 million on 2007. Operating profit was also up £320.9 million on the previous year.

The company has also increased its total dividend for the year by 20% to 14.4p and returned £69 million to shareholders through share re-purchases

In a statement the company signaled its intention to make various new acquisitions in 2009 building on the 12 it made in 2008. Through acquisition Capita hopes to build organic growth in new markets.

Satyam is prepared to sell 31 percent new shares to a strategic investor, The Mint newspaper reported on Friday.

According to the paper, Satyam’s board met on Thursday to discuss possible acquisitions but no statement was issued after the meeting.

Quoting a company executive, The Mint said Satyam's board wanted a winning bidder to buy a mandatory further 20 percent share in the company. No further details have been announced

The full report can be found at Reuters.

Interest in outsourcing has risen by nine percent amongst participants in EquaTerra’s ‘Outsourcing Service Provider Performance and Satisfaction Study 2008-09’. 63 percent of participants – all UK organizations – indicated they would be looking to outsource more in 08-09 over 54 percent in 2007.

The main reason indicated for choosing to outsource more was to leverage further cost savings due to pressures of the downturn. 80 percent of participants had this aim, up 11 percent from 2007.

Phil Morris, Chief Operating Officer of EquaTerra EU and Asia Pacific, interpreted the growing interest as a warning for vendors, “These study results clearly demonstrate that service providers with existing IT outsourcing contracts are unable to rest on their laurels. As price becomes a more immediately pressing attribute than satisfaction, clients will seek opportunities to consolidate their IT service provider portfolio in an effort to gain economies of scale and drastically reduce spend levels.”

Following Springboard’s report on the growth of the Indian IT market, the EquaTerra results offered a further boost to the country. ICT services as delivered from India were being used by 89 per cent of respondents. Service levels in the country also appear to be improving, with the gap in client satisfaction between India and ‘traditional’ service providers such as CapGemini, HP and Logica closing.

The study focused on over 400 UK outsourcing contracts held by over 125 of the top IT spending organisations in the country. The total annual value of the contracts included in this study is over £8 billion, accounting for approximately two-thirds of the total UK outsourcing market in terms of annual contract value.

Readers can get a copy of the report by contacting:

Melissa Gardiner

Director of Marketing EU/Asia Pacific

E:melissa.gardiner@equaterra.com

India's Economic Times (ET) has reported that local outsourcing giants, such as TCS, Infosys and Wipro, are preparing to tender for an estimated '$2-3 billion' of new Whitehall outsourcing deals as the UK government struggles to get troubled technology projects back on track.

The ET reports that as well as the usual suspects – the NHS Programme for IT, for example – HMRC will also be outsourcing more work as the department plans to make it mandatory for medium to large enterprises to file tax information online by 2011.

If so, then TCS has picked a challenging time to lay off over 100 of its 4,000-odd UK staff as it optimises UK operations. Sources say that the company has made most of its UK marketing team redundant, plus a number of consultants.

Many people who have lived through previous recessions will be familiar with a particular approach to cost-cutting: the marketing team is first to go, which undermines opportunities for new business, closely followed by anyone in the heart of the organisation whose skills come at a price.

Occasionally, the latter means slashing experience and wise heads out of the enterprise in an effort to retain low-cost bums on seats. For some reason, this keeps shareholders happy.

While I'm sure this does not apply to TCS, what such an approach sometimes creates is a top-heavy organisation that doesn't value experience, can't attract new clients and whose lower-cost employees are often demotivated and lacking in immediate leadership.

That said, it's the route most companies choose in a downturn. Few ask what shape they might be in when business picks up. (Or as a colleague at a doomed publishing company once said, "He who swerves first loses.")

Also slashing local onsite operational costs, claim various reports, are Wipro and Infosys.

A homegrown company, meanwhile, joins the queue of providers scenting new business at Whitehall.

Capita last year saw revenues rise by nearly 18% to £2.44 billion as it increased its share of the local outsourcing market to over 25%. The company has already inked contracts worth over £600 million this year and has a potential deal pipeline of over £3 billion.

Capita chief executive Paul Pindar believes that the deterioration in UK public finances will drive new government commissions. “Over the next two or three years we are going to see a significant increase in opportunities coming from central government,” he said recently.

So, outsourcers are lining up to benefit from Whitehall's immediate challenges, and claiming this is because the government lacks consultancy expertise.

But why is no one asking why so many government programmes are running disastrously over budget and over-schedule? As the Public Accounts Committee has heard many times already, it is because there is a surfeit of consultants awash in government cash, not a lack of them, but little expertise in Whitehall in how to manage the everyday terms of these escalating deals.

The top ten leading IT vendors cornered a 39 percent share of the highly fragmented £3.36 billion Indian IT Services Market in 2008, according to a report from Springboard Research. According to the report, the top three players, IBM, Wipro and TCS, took up a quarter share of the market, while the top ten ranking had many players with near one percent market share.

In terms of growth, Wipro led the established Services vendors with an over 43 percent growth in 2008 over the previous year. Satyam and HCL Infosystems registered second and third highest growth rates respectively, both growing well above the overall market growth rate of 18.6 percent.

“The overall market showed clear preference for vendors with end-to-end services portfolio, execution capabilities and the ability to combine software, hardware and consultancy,” said Sudip Saha, Research Analyst for IT Services at Springboard Research. “Big multinational players leveraged their ability to invest to corner a major chunk of the infrastructure outsourcing market, while large Indian vendors proved their mettle in the systems integration and application development markets,” Mr. Saha added.

However, speaking to sourcingfocus.com, Sudip commented that the country’s smaller players are also doing very well.

“The dominance of the larger players is actually down on previous totals. It was at around 50 percent for a time and now is down to 39 percent. Smaller players are still growing at around 45 percent a year which is two and a half times the worldwide average.”

According to Springboard’s research, the market in 2008 saw an overall increase in the average deal size of contracts where buyer enterprises are not only using IT vendors as technology providers but as business partners, providing them with means of competitive differentiation.

“Indian outsourcing is moving to create higher-value relationships where things are more quantifiable. The days where India could sell on price alone are gone – the market is too mature for this. Vendors are looking to become partners and create new risk and revenue-sharing relationships. This move towards high-value, business partner relationships is the future of Indian IT.”

The Springboard report, “India IT Services – Competing for Tomorrow’s Market”, is a companion document to Springboard’s earlier report “Indian IT Services Market and Forecast, 2007-2011” and is part of Springboard’s annual Asia Pacific IT Services Market Canvas subscription service.