Industry news

Amid talk of an acquisition for embattled outsourcer, Satyam Computer Services, reports from Reuters suggest the company may have up to a fifth fewer staff than it reported. The original report, exposed in India’s popular daily the Economic Times, suggested that Satyam’s headcount could have been inflated by 15-20 percent, citing unnamed sources.

According to the newspaper the Serious Frauds Investigation Office believes Satyam's headcount could have been inflated to siphon off money as salary payments for non-existent employees.

"Since a major chunk of the costs were actually salaries, a minor distortion in the number of employees could change the personnel expenses significantly," the paper quoted the source as saying.

The speculation comes at a difficult time for the company prior to a possible acquisition deal by Larsen & Toubro (L&T), India’s largest engineering and construction conglomerate. The company has appointed Japan's Nomura to advise on a possible deal after expanding its holding in the company to 12%. After spending US $140 L&T reportedly plans to merge its ITO business L&T Infotech with Satyam.

It is currently uncertain as to whether the staff speculation will affect L&T’s plans.

The Department of Health has signed a two year contract extension with Atos Healthcare, a business division of Atos Origin, to continue managing the electronic booking system, Choose and Book.

Atos Healthcare together with its long-standing partner, Cerner Corporation, a supplier of healthcare information technology, designed, developed and now manages the Choose and Book service to provide patients with increased choice and improved access to NHS services.

Don Trigg, Managing Director for Cerner Limited, said, “We are pleased to continue our support and commitment of the national Choose and Book system through our partnership with Atos Healthcare.”

Indian industry trade body Nasscom is on day two of its three-day annual conference, where the message has been “prepare for the worst, hope for the best”. It seems to have opted for the latter, despite attendance and sponsorships being 20% down on last year.

Last week, the organisation released figures for the Indian IT software and services market, which show that aggregate revenues for the sector are expected to reach $60 billion by the end of fiscal 2009. Export revenues are predicted to show healthy growth of 16-17% – reduced from earlier predictions of 20%.

Forrester and Gartner analysts are less upbeat about India's domestic prospects, suggesting that overseas firms are moving much faster to exploit the local market as a source of future growth.

India will account for just $34 billion of the $1.66 trillion global IT services market this year, according to Forrester, while the global market for goods and services will fall three percent this year.

The local Indian market is, despite the boom in outsourcing and services to the west, almost a green-field site, with just two percent of the local population owning a PC.

Such statistics are manna from heaven for at least one American company. Speaking at the event, Cisco's chairman and CEO John Chambers delivered his customary evangelical sermon about the strength and innovation of the networking behemoth.

I have witnessed similar Chambers speeches at other events: he walks among the crowd and bestows his beneficence upon the implicitly humble, meek and lowly. It can be truly unnerving.

Some of the audience were less than impressed, with Nasscom's own blogger describing Chambers as a “robot” struggling to access a hidden message in his head.

Others complained that he didn't talk about India's potential at all – the supposed subject of the speech – but simply came down from the Mount with his ancient stone tablets, presumably with smoke and electrical sparks issuing from his ears.

But the real message was clear, as it always is: “we are here to sell to you”. Cisco has expanded aggressively into India, investing more than $1.2 billion in the past four years. The company aims to make Bangalore its global HQ outside the United States.

One local official understood the message for local Indian suppliers. "The IT industry has looked outwards. Now it is time to look inwards," Commerce Minister Kamal Nath told delegates.

Governor of the Bank of England Mervyn King has used the launch of the Bank's inflation report to talk about the "paradox of policy" in the UK's finances, and how the services sector is at the heart of the economy.

Speaking this morning in the City, King said that increasing the supply of money in the UK meant adopting policies that would in normal circumstances damage the economy – the paradox of the times in which we live.

King said that the UK economy will shrink by four percent in 2009 if interest rates stay at their current level, and inflation will fall to 0.5 percent in two years. This puts into sharp relief his comments in 2008 that the UK economy "needed" to slow down.

World trade shrunk by 10% in the final quarter of calendar 2008, said King.

There is a fault line in the international money markets, said King, who claimed that the Bank had for a long time been pointing this out. However, this does not explain why the downturn, when it came, seemed such a surprise to the UK's financial sector.

"I'm not paid to forecast the future," he said in response to a question about the unexpected "shock" of the downturn.

The UK is now in "a deep recession", he said, and a further easing of monetary policy is needed. This may mean a shift towards quantitative easing – the modern version of printing money.

King said this may be discussed at a future meeting, and that interests rates did not need to fall to zero for it to be considered.

Of the falling interest rate, King said that savers were not responsible for the credit crunch, but no one seriously believed that raising interest rates to increase the value of people's savings would help the UK economy.

In future, new policy instruments should curb explosve growth in the financial sector, said King, who emphasised that there is no reason why high unemployment should be the price of poorly regulated financial services.

New figures released this morning put unemployment at 1.97 million.

Despite all the bad news, King said there was reason for optimism and the international bailout packages designed to increase liquidity and the credit supply "will work". The results, however, may not be seen until next year.

It seems, then, that King is attempting a public double-header: saying that he saw the flood but, Canute like, was surprised it did not recede when he put up his hand to stop it.

There is also a worrying double-speak in today's discussions about the bailout packages in the banking sector. These were specifically designed to ease the logjam of credit in the short term; now King is saying up to 18 months may pass before we see real change.

The fact remains, however, that if banks can supply no credit, then they have no role.

The modern banking culture is surely to blame: we value debt more highly than good sense: customers with dozens of maxed-out credit cards score more highly than people with a healthy bank balance and zero debt. High street banks have begun to see themselves as high stakes dealers – like the Masters of the Universe in Bonfire of the Vanities – not as custodians of the public's purse.

• Sir James Crosby has resigned as deputy chairman of the FSA, after yesterday's revelations in front of the Select Committee concerning the sacking at HBOS of Paul Moore, a risk management official who says he warned the bank that it was fatally exposed and taking on too much risk.

It has emerged that Crosby sacked the official in person. HBOS has said today that the sacked official's allegations have "no merit", in an attempt to deny board-level culpability for the high levels of risk in the banking sector.

Sir James Crosby has been one of Gordon Brown's closest and most trusted economic advisors.

The U.S. Department of Homeland Security's Federal Emergency Management Agency (FEMA) has awarded Accenture a US $58 million contract to provide program-management and business-architecture services for the agency's Flood Risk Mapping, Assessment and Planning ("Risk MAP") program, which is designed to help reduce the nation's vulnerability to natural hazards. The competitively bid contract has a one-year base period and four one-year options.

Through collaboration with state, local and tribal entities, the Risk MAP program will provide an integrated national assessment of flooding risks based on digital flood-hazard data and Web-accessible data. This information will enable communities to develop action plans and make informed risk-management decisions that reduce the loss of life and property.

Under the contract, Accenture will work with FEMA's mitigation directorate to manage the Risk MAP program, including the work and activities of multiple organizations across several other Risk MAP contracts; integrate the work and activities of other contractors with FEMA's efforts; design and implement a nationwide communications and outreach strategy; and foster partnerships with key FEMA stakeholders.

"The work we'll be doing with FEMA on Risk MAP aligns with our commitment to helping our clients serve their clients — in this case, people who live in areas that are prone to weather-related issues," said Jerry Briggs, managing director of Accenture's U.S. federal practice.

Cisco and Tata Consultancy Services have entered into a strategic alliance to develop and deliver Information Technology (IT) services to help customers build or evolve next-generation data centres by taking advantage of the network as a platform. Under the agreement, TCS will build a new technology practice focused on Cisco’s industry-leading data centre networking and security solutions. The companies also announced the formation of a ‘Cisco Technology Lab’ at the TCS campus in Chennai, India. This announcement was made at a press conference attended by John Chambers, Chairman and CEO for Cisco, and S. Ramadorai, Chief Executive Officer and Managing Director for TCS.

“Customers are demanding greater dynamism from their IT infrastructure and application environment to address current challenges and to capitalize on opportunities whenever and wherever they emerge,” said N Chandrasekaran, Chief Operating Officer and Executive Director of TCS. “This strategic alliance will take advantage of Cisco’s industry-leading data center networking solutions and TCS’ global network delivery model to help our customers increase the efficiency and agility of their IT operations.”

The TCS and Cisco strategic alliance will initially focus on India as well as mutual enterprise customers in the United States and the United Kingdom in the key verticals of banking and finance services, telecom, and government as well as small and medium-sized business.

Unisys Corporation today announced that its Germany subsidiary has won a European-wide tender to manage and modernise the IT infrastructure for the Bavarian State Ministry of Justice and Consumer Protection. The three-year outsourcing services agreement includes options for two additional yearly extensions.

Under the terms of the new contract, Unisys will replace existing PCs and printers with more powerful and state-of-the-art models and will provide services to improve the organisation’s server and overall network efficiency. Upgrades to the ministry’s IT infrastructure will include new virtualisation technologies to better manage storage capacity across the organization and enable faster and more efficient operations.

These expanded services are designed to help the ministry reduce risks, improve infrastructure availability and efficiency, and lower costs and energy consumption.

This contract extends the relationship between Unisys and the ministry that began in 2002. Over the course of its work, Unisys has deployed a full-service IT infrastructure at more than 200 sites, modernised more than 14,400 workplaces and implemented 78 peripheral server centers.

“Demands on the judiciary are growing every day – for example, having to provide electronic-justice communications or finding new ways to improve services for our citizens,” said Walther Bredl, director of Information and Communication at the ministry. “We understand that continuous, managed enhancement of our IT infrastructure is key to delivering these services. We have extended our relationship with Unisys, our long-term outsourcing services partner, because Unisys creates innovative solutions that best meet our individual business needs and provides the best value for the money.”

Nationwide Building Society has announced the successful migration of their cheque processing function to Unisys. This is a key aspect of the seven-year BPO engagement that Nationwide awarded to Unisys in December 2007.

Nationwide is the world’s largest building society and the U.K.’s second largest savings and mortgage provider.

Following completion of the live migration in December 2008, Unisys is now managing the majority of Nationwide’s cheque processing operations through to 2015.

David Rigney, Nationwide’s group operations director, said, “The migration process was very smooth and there was no disruptive effect on our business.”

Tata Consultancy Services has completed the ERP implementation of Cochin Port Trust to enable the south Indian port to become the country’s first ePort.

Christened ‘e- thuramugham’,the project integrates the port’s operational, financials, real-estate and human resources systems on an Integrated Port Information System and will provide a real time interface with customs, port users, banks and the port community system of the Indian Ports Association.

Mr. N. Ramachandran, chairman of the Cochin Port Trust, said, “I am extremely happy to see the speedy implementation of e-thuramugham in record time of 10 months. With this, we will be enabled and empowered to closely monitor performance, improve operational efficiency and provide higher standards of service to the shipping and export-import community.”

Hiscox, the international insurance specialist, has signed a five-year BPO deal with RESPONSE for a variety of sales and customer services. To deliver the services RESPONSE has designed and implemented a bespoke CRM system based on the popular software, RELATIS.

Steve Langan, Managing Director for Hiscox UK said: “We are one of the first insurers to adopt Direct Commercial Insurance and, as an organisation; we are looking to develop stable partnerships with our suppliers and ensure our customers receive a quality service. We are confident that RESPONSE can offer us the high standard of customer service and technological expertise we need to take our customer contact solutions to the next level. We look forward to developing our partnership and working together over the coming years.”

Financial terms of the contact have not been disclosed.