Industry news

  • 29 Aug 2008 12:00 AM | Anonymous

    EquaTerra, the outsourcing consultancy, expects the Chinese HR outsourcing industry to be worth more than £41bn by the end of 2008, according to a new report by the company. The firm also predicts rapid growth of up to 25% in 2008 and 2009.

    The report, written by EquaTerra’s Shanghai-based consultant, Vibhash Ranjan,  provides a snapshot of the maturing human resource outsourcing (HRO) market in China today and an expert analysis of current and future trends.  Some other interesting points highlighted in the report include:

    Drivers of growth

    · The recent spectacular growth in the Chinese economy is compelling foreign owned organisations based in China to adopt sophisticated HR related practices.  Factors influencing the growth of HRO include rising labour costs, new types of employee supplemental benefits and a rise in the focus on employee engagement and talent management.  

    Market Growth

    · In 2008 and 2009, the HRO market is expected to expand by at least 25 per cent.  However, due to the prevailing operational complexities in China, most multinational companies choose to adopt the services of Chinese HR service providers such as FESCO or CIIC.

    Differing drivers of change

    · One of the key reasons that Chinese organisations will choose to implement a HRO strategy is to free up the HR department from transactional and administrative tasks and let them focus on strategic tasks of planning and management.

    Important markets

    · The adoption of HRO in China has traditionally been driven by multinational client companies which account for over 90 per cent of the number of deals and total contract value. As these companies have their major operations based in Shanghai, Beijing and Guangdong regions, these three areas account for approximately 85 per cent of the market.

    Future outlook

    · To date, China still does not have enough skilled manpower to meet the growing demand of the HRO services market. This will lead to wage acceleration for providers, margin erosion and raiding other providers (especially of benefits administration and compensation providers) for resources. Ultimately, the dominant provider players will be those companies that can obtain and retain quality delivery people.

    The full whitepaper can be seen here: Human Resource Outsourcing in China

  • 29 Aug 2008 12:00 AM | Anonymous

    Trustmarque Solutions, a UK software licensing company has won a two-year contract, worth over £4 million, to supply encrypted and non-encrypted hardware and software to the Ministry of Defence (MoD).

    The deal, which follows the consolidation of the Defence Equipment and Supply (DE&S) procurement framework, will also see Trustmarque supply the MoD with anti-virus software from security vendor, McAfee.

    Robert Cornish, MoD Key Account Manager for Trustmarque, commented on the deal: “Under the contract, we will be able to supply the MoD with everything they need, from desktops and laptops, to software and all associated licences. This means we can bring the same savings through leveraging our long-established hardware relationships, as we have done historically for their software purchases, using our twenty years of experience establishing ourselves in this market.”

    The DE&S consolidation comes as part of a wider strategy to formally merge the DE&S with the Office of Government Commerce (OGC), which is an independent office of HM Treasury, established to help Government deliver best value from its spending. To this end, the DE&S is collaborating heavily with the OGC to ensure their procurement methods are in line with one another, to make the eventual merger as seamless as possible. In the long term such an arrangement will provide continuity across the whole of government.

  • 28 Aug 2008 12:00 AM | Anonymous

    Tech Mahindra, the largest independent India-based telecommunications IT services provider, has decided to acquire an equity stake in Servista, a leading European systems integrator.

    As a part of the agreement, Tech Mahindra will be Servista’s exclusive delivery arm for the next three years and will also help Servista develop its European IT offshoring business.

    Ben Andradi, chief executive officer, Servista Ltd said, “We are delighted to enter into this highly complimentary relationship with Tech Mahindra that will deliver the huge benefits of Indian offshoring to the European market place”.

  • 28 Aug 2008 12:00 AM | Anonymous

    EADS, a global aerospace and defense service company, has selected Atos Origin as a preferred supplier for engineering services. The selection has consolidated a 15 year relationship between the companies in France and Spain.

    Atos will now be added to the EADS’s list of 28 global partners after making it through the company’s rigorous tender process involving 2,000 vendors. Atos is now EADS preferred supplier for engineering services which covers the purchase of more than €2 billion in engineering services a year.

  • 27 Aug 2008 12:00 AM | Anonymous

    Infosys has announced that it has agreed terms for a cash offer for UK-based SAP consulting company, Axon Group. The £407 million deal could be completed as early as November 2008.

    Commenting on the transaction, Kris Gopalakrishnan, CEO of Infosys said, "We are excited about this acquisition. We hold the management and employees of Axon in high regard and look forward to welcoming them to the Infosys Group".

  • 27 Aug 2008 12:00 AM | Anonymous

    HP today announced that it has completed its acquisition of EDS, creating a leading force in technology services.

    The acquisition is, by value, the largest in the IT services sector and the second largest in the technology industry, following HP's acquisition of Compaq, which closed in 2002.

    Mark Hurd, HP chairman and chief executive officer, commented "This is a historic day for HP and EDS and for the clients we serve".

  • 26 Aug 2008 12:00 AM | Anonymous

    Health Net Inc, one of the largest managed health care companies in the US, has taken on IBM in a five-year managed services and IT infrastructure deal. The contract, estimated to be worth over US$300 million, will see IBM manage Health Net's entire IT infrastructure.

    Under the terms of the contract IBM will provide Health Net with full IT infrastructure management services including: data centre services, IT security management, help desk and desk-side support.

    James E. Woys, Health Net's COO, said, "This is an important step in making Health Net more competitive and a key component of our operations strategy to increase our capabilities while reducing administrative costs and improving efficiency. By partnering with IBM, Health Net will receive benefits including reduction of IT costs and operational risk while gaining access to IBM's global resources and technologies."

    Health Net expects to derive substantial cost savings and increased data centre reliability from the deal. However, no projected savings have been released.

  • 26 Aug 2008 12:00 AM | Anonymous

    The US Coast Guard (USCG) has awarded Unisys a contract to provide IT support services to the 'USCG Finance Center', which manages financial services for the organisation and multiple US Department of Homeland Security (DHS) agencies. The contract extends an existing agreement held between the two companies since 2003.

    The contract, which could be worth upto US$ 24 million, will be played out in an initial five month period followed by four one-year options, exercisable at the government’s discretion. The estimated value of each option year is between $5 million and $6 million.

    Under the agreement Unisys will continue to provide functional and technical support for the USCG Finance Center’s Core Enterprise Suite, a comprehensive financial and procurement system used by major U.S. Department of Homeland Security agencies, including the USCG, the Transportation Security Administration, and the Domestic Nuclear Detection Office. The Core Enterprise Suite serves as the financial infrastructure for many of the nation’s most important homeland security initiatives.

    The system processes invoices and payments to thousands of DHS vendors and suppliers, as well as expense reimbursements for more than 100,000 personnel. It also manages agency asset reporting, and provides updated budget information to DHS. Unisys support services help the Coast Guard achieve the high performance and full time availability of the mission-critical system’s core financial management applications and technology, including Oracle Financials, Oracle databases and UNIX servers. The Unisys team also will help to support the DHS data centers and to install, manage and support disaster recovery solutions for the Core Enterprise Suite.

    Tom Conaway, Managing Partner at Homeland Security Unisys Federal Systems, commented "The USCG Core Enterprise Suite is vital to the day-to-day operations of the USCG Finance Center, which supports many of our nation’s most important homeland defense initiatives. Unisys is pleased to continue our work with the center, providing IT support and expertise that enables the complex and extensive accounting infrastructure to meet evolving requirements and to be managed efficiently and effectively”.

  • 26 Aug 2008 12:00 AM | Anonymous
    Instead of my usual diatribes and digs this week, I offer you more of an extended 'think piece'.

    One obvious trend of the past few years has been how societal changes have impacted on business expectations, while another has been how Web 2.0 technologies have transformed customer expectations, and how people interact with each other.

    The end result is that information – and therefore change – moves at Internet speed, while technology gives people unprecedented means to talk about things and to organise themselves into groups or information-sharing communities.

    Ultimately, these twin strands of change meet and challenge the enterprise, especially as the downturn deepens and news travels ever faster in our always-on, wireless world.

    What this means for the enterprise and for public sector organisations is that, yes, you can communicate faster and across multiple channels with your customers – if you are canny enough to recognise those channels, deploy them, and integrate them with other channels – but, equally, customers can talk about you and how you are getting it wrong.

    The fact they want to do so readily, swiftly, and in vast numbers is why Bebo, Facebook, Google, Yahoo, YouTube, MySpace, LinkedIn and the like are each worth billions dollars. And yet many companies beieve this has nothing to do with them.

    It was ten years ago that I interviewed several music industry CEOs about the threat to their business from the Internet: none saw it coming; all saw it as a marginal influence.

    I think I was the first journalist to recognise that the Internet was not a technology issue for them, but a problem of intellectual property on the one hand, and a means to share and interact directly with consumers on the other.

    The music industry is founded on intellectual property, not sales, and yet none of them had even considered the problem. Meanwhile, just outside their doors, a tidal wave of change and chatter was about to engulf them.

    In a short space of time, all that apparently irrelevant chatter online can build into a seriously loud noise: witness how data and hardware losses across several government departments have swiftly discredited the Home Office (and its head), the Ministry of Defence, HM Revenue & Customs, the DVLA, and also those organisations' private sector outsourcing partners.

    The most recent of those has been PA Consulting, whose professional reputation has been sullied all too publicly by one person mislaying a USB datastick of criminals' details.

    Today, millions of people are discussing the failures of a company that, just a week ago, most had never heard of. Add to that another (often overlooked) factor: yesterday's news is no longer wrapping today's fish and chips. It's stored on a chip and a searchable archive. Bad news travels fast, but today it lasts forever.

    In effect, whoever last held that memory stick – smaller than a cigarette lighter – was holding a company's and a government's reputation (perhaps even a nation's security) in his or her hand, together with the means to ignite it.

    The bigger problem for government now is how that same chatter is building into a negative campaign against ID cards, for example. A few isolated incidents have come together to create a huge strategic problem for Whitehall.

    And yet it was all so predictable, and obvious to even the most casual observer. In the background, mass data storage had become a commodity anyone could buy for a few pennies on the high street, and carry around on a key fob. Why did no one in government even consider the implications?

    It's no surprise, then, that many companies are realising that it is no use reacting to change long after the event; it is far better to predict it, or to be in the vanguard of it (rather than jogging along breathlessly behind, complaining about the disruption).

    Any ten-year-old could have told your enterprise that MySpace, YouTube, Bebo, Facebook and the like would have a massive impact on your business, for the simple reason they have changed our expectations of a/ how we communicate with each other and b/ how technology ought to be easy and intuitive – indeed, almost invisible – to use.

    Why then have so many companies sought to immure themselves behind vast, unwieldly, cumbersome onsite enterprise applications even as the rest of the world has become faster, leaner, more nimble, and more online?

    The good news is that Gartner, among others, has identified the problem too. As IT-based devices and technologies become more personal in scope and application, social issues will become increasingly important to product success, says the analyst giant.

    To identify and react to major societal shifts and trends, Gartner predicts that by the end of 2010, 15 percent of US and European businesses will have formalised societal trendwatching as a corporate discipline.

    “A connected enterprise must understand the connected society in which it resides,” says Scott Nelson, managing VP at Gartner.

    “Most firms wait until societal trends have overwhelmed them before they try to react. Slowness to respond can cost firms incredibly large sums of money and may drive them out of business all together.

    “Businesses will require anthropological and psychological input into system development to ensure that entire systems consisting of technology and people are viable, and to help evaluate how changes in employees’ and customers’ lifestyles will affect business,” he concluded.

    This is analyst-speak for anything that millions of people are using and discussing today probably affected you yesterday, and is certainly something you should listen to today.

    Of course, the danger that many organisations run into is trying to determine which trends to watch, says Gartner. The lessons of the past decade suggest it is often the apparently innocuous ones as much as it is the headline-grabbers: multi-gigabyte data storage on a stick (that least sexy of technologies) has undermined several pillars of central government.

    Gartner says it recommends giving responsibility to a group to watch societal trends and to focus on the following points to maximise short-term and strategic decisions while positioning the business for the future:

    • Social factors will become increasingly important in business and commercial systems. Adopt a human-centric design perspective. Watch these factors on an ongoing basis.

    • Appoint staff to review systems and working practices to identify legal, ethical and social risks.

    • Conduct an opportunity/threat analysis to identify product and service opportunities enabled by the connected society.

    • Understand and exploit network effects in products and services.

    • Explore the opportunities to use network effects and the connected society to solve business and government problems in new ways.

    • Privacy is a way of life and a business strategy decision, not a technical issue. Appoint a privacy officer.

    Now, this is all very well and hardly rocket science, you'd think, but analysts make a good living selling the obvious to the cash-rich.

    So I have one piece of advice for free: it's not the technology, it's the people. Put them first, think about them first, and the rest follows much more easily.

    Many companies in the 1990s employed so-called 'futurologists' to devine a gilded future for their employers. The reality is that most were glorified marketing people who existed to place their employer's brands in the vanguard of sexy, technology-assisted change. And yet almost none of them identified the bleeding obvious at the bleeding edge, and none of them saw the kind of issues that have undone so many organisations, markets, and businesses in recent years.

    So get real, people: that piece of kit in your hand... who uses, how, and why? What are the implications of this? Why do people enjoy using Google and Facebook, but hate using your bespoke enterprise system?

    See, it's not difficult, is it?

  • 22 Aug 2008 12:00 AM | Anonymous
    As I explored in a recent blog, the Philippines has an enviable track record in the offshore call centre industry, where the workforce's English skills have long given it a competitive advantage.

    However, the Philippines has ambitions beyond its niche in voice services, with a planned expansion into other lucrative BPO areas – legal services would be a logical option if they are not already on the list.

    The aim is achieving annual BPO revenues of $12-13 billion by 2010, consolidating the Philippines as the world's third most popular BPO destination.

    This comes as the Philippine Software Industry Association (PSIA) predicts that the US – where PSIA has been conducting coast-to-coast roadshows – will outsource as many as 60,000 jobs to the country over the next two years.

    The challenge, then is clear: contact centre seats are not highly skilled roles, and analysts predict that the Philippines will need to find 420,000 additional workers to become the BPO destination it aspires to be.

    Indeed, Ovum analyst David Mitchell says that more specialist skills will be difficult to produce without significant government support and investment in education.

    That support could come from the proposed Department on Information and Communication Technology (DICT) in the Philippines, and if the focus is shifted to premium skills charged at premium rates.

    One area where the Philippines has been hothousing skills beyond voice services (and within its burgeoning number of technology parks) is the emerging field of software as a service (SaaS). This has been typified to date by US customer service and CRM SaaS companies such as RightNow, NetSuite and Salesforce.com. The Philippines, then, has identified a significant market opportunity over the next decade.

    Even so, the challenge remains a difficult one, with even the most optimistic estimates saying that 70% of BPO revenues will still come from the call and contact centre industry.

    That means significant problems stored up for the future and a growing tension within the local economy. As India has discovered, being a centre of excellence means wage inflation, and so while 30% of the Philippines' BPO revenues may come from highly skilled, premium rate services, the majority will still be tied up in a service industry where low cost is one of the main advantages.

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