Industry news

  • 6 Mar 2009 12:00 AM | Anonymous

    Much to the umbrage of those languishing at the foot of the rankings, the launch of Brown and Wilson’s ‘2009 Black Book of Outsourcing’ has put offshoring and the risks involved, perceived or otherwise, firmly back on the news agenda.

    This year’s report, ominously titled ‘The Year of Outsourcing Dangerously’, takes the 50 best recognised offshoring locations and ranks them in the Safest and Riskiest 25. Taking into account ten factors that could conceivably affect offshoring operations, and therefore end-user’s businesses, the report aims to give those involved in outsourcing an idea of the threat each country poses to business continuity.

    Some of the big winners in the report include Singapore coming in at number one in the ‘Safest’ category followed closely by Dublin, though of course coming complete with its higher European price ticket. The current bellwether of Africa, Egypt comes in at number ten but the rest of the continent is dismissed by Brown and Wilson in one sentence “The entire continent of Africa still poses serious dangers to business continuity and is recommended to be avoided.”

    But what stall can today’s potential outsourcers really set in these rankings as cost pressures of the recession intensify?

    Dinish Goel of TPI, commented, “That would really depend on what parameters and criteria have been used in arriving at the ranking. Further, generic rankings, while relevant, do not necessarily apply in the same rank order to a specific client situation.”

    The report itself is extensive having surveyed 3010 end-user executives during the later half of the year, 448 of these were then included within the analysis and 125 offshore locations were selected to feature in the report based on employee counts. So while vendors and industry watchers may be surprised at some of the countries’ positions, the results reflect the views of a sizeable chunk of the end user marketplace.

    Kit Burden, a Partner at the DLA Piper law firm, recommended a common sense approach in light of the report, “Some destinations are generally recognised as being relatively "safe" for example the nearshore options such as Czech Republic, Poland, Ireland and further afield options such as India and the Philippines, and insofar as the rankings reflect this, they are worthwhile to support the basic sourcing decision.”

    But most advisors sourcingfocus.com spoke with were quick to add that the Black Book and other similar surveys can only take a potential outsourcer so far and need to be considered alongside other factors.

    “Most users of outsourcing tend to be more sophisticated nowadays in their offshoring decisions and consider many more factors when making their decisions,” said David Skinner, from the Global Sourcing arm of Morrison and Foerster. “Most advisors nowadays will give extensive insight and analysis on offshoring locations beyond what a report can divulge.”

    Another reoccurring theme was that of perception over reality – whether civil unrest and terrorist attacks were actually causing problems for outsourcers. In one case sourcingfocus.com spoke with a Kenyan call centre that continued to operate without hitch during last year’s civil unrest around Nairobi; meanwhile global media outlets conveyed an entire country in turmoil. Likewise Mumbai languishes at number 42, surely suffering from last year’s terrorist attacks. sourcingfocus.com heard no reports of Mumbai’s attacks affecting outsourcing operations.

    “There is a lot of scaremongering but the reality is that there are very few instances of impacts upon offshoring or outsourcing,” commented Kit Burden.

    Nevertheless those that spoke to sourcingfocus.com were keen to convey the importance of spreading risk.

    “It’s important that end-users look at the supplier, not just the location. Most of the big suppliers will have delivery locations worldwide now and will be able to handle any problems,” said David Skinner. Also adding, “A good thing about assessing risk in offshore locations is that it gets end-users asking the right questions of suppliers. It makes companies do things correctly.”

    Prudence it seems will be a key theme in offshoring throughout 2009. But while the report predicts a shift in preference towards nearshoring, stating that offshore vendors without sufficient nearshore representation would face problems securing contracts, this was not echoed by experts.

    “The cost pressures are simply too acute,” says Kit Burden. “So long as the destinations in view "pass muster" at a basic level, they will not be seen as being so risky as to justify foregoing the cost advantages otherwise on offer.”

    Chris Tiernan, Managing Partner of Grosvenor Consultancy Services LLP, explained the choice ultimately does come down to cost but it’s not as simple as a direct comparison, “The issue is the balance of what might happen if risks materialise against the cost of taking steps to address them.” He also said that the costs involved should be assessed and worked out in the outsourcing contract. “Interestingly a deal with these contractual stipulations was signed just two weeks after the Mumbai incident, the client having been there while they were still clearing up after the incident,” he added.

    This common sense approach was supported widely but Andy Gallagher, head of sourcing at Compass Management Consulting, recommended further due-diligence and contingency planning. “Contingency planning is an issue which many clients choose to brush away in the drive to minimise costs. The Satyam case in India was a dramatic reminder of the need for some contingency capability on the client side of outsourcing deals in order to minimise risk and keep systems running.”

    David Skinner of Morrison and Foerster summed things up succinctly “Of course there are risks but these are often exaggerated by the media. Although, those dependent on just one location for their offshoring should have cause to be worried. The report should prompt all those who aren’t doing things correctly to assess their arrangements and put the necessary measures in place to protect themselves.”

  • 5 Mar 2009 12:00 AM | Anonymous

    The Isle of Man Government has worked with Micro Focus, a UK provider of application management and modernisation service, to remove its dependence on its ageing mainframe. The project comprised largely of moving complex mainframe applications to new platforms without impacting ongoing government services.

    The new mainframe is expected to deliver maintenance costs savings of up to £1.5 million over the next six-years and to achieve a positive Return on Investment (ROI) in less than 12 months. The Government also hopes the deal will free up resources to deliver more services in other areas for the citizens of the Isle of Man.

    Allan Paterson, Director of Isle of Man’s Information Systems Division commented: “We have a far-reaching vision for comprehensive, fully integrated, online government services on the Isle of Man, and moving to modern, flexible and cost-effective Windows platforms is a key element of our IT strategy. Advanced development tools from Micro Focus enabled us to migrate our critical COBOL applications from the mainframe to our strategic platform rapidly, in a highly cost-effective manner and without impacting the quality of our services.”

  • 5 Mar 2009 12:00 AM | Anonymous

    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.”

  • 5 Mar 2009 12:00 AM | Anonymous

    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.”

  • 4 Mar 2009 12:00 AM | Anonymous

    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

  • 3 Mar 2009 12:00 AM | Anonymous

    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.

  • 3 Mar 2009 12:00 AM | Anonymous

    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.

  • 27 Feb 2009 12:00 AM | Anonymous

    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.

  • 27 Feb 2009 12:00 AM | Anonymous

    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.

  • 27 Feb 2009 12:00 AM | Anonymous

    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

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