Industry news

TCS has signaled its intention to buy Citigroup’s BPO arm, Citigroup Global Services with an offer of US$505 million offer for the India-based captive. In addition to the sale, TCS will also take over outsourcing services for Citi and its affiliates to the value of US$2.5 billion over a period of nine years.

The agreement builds upon the existing relationship between Citi and TCS whereby TCS provides application development, infrastructure support, help desk and other process outsourcing services to Citi.

Don Callahan, Chief Administrative Officer, Citi said: “This is a great transaction that benefits all parties – Citi, our customers, our employees and TCS. Our customers require access to increasingly complex processing solutions and this relationship will achieve a ‘best in class’ technology model that capitalises on both CGSL’s expertise in financial services and TCS’s expertise in process optimisation. TCS will offer CGSL stronger growth potential and superior continued services to Citi clients around the world. This transaction is expected to help reduce operating expenses related to business processing and will allow us to focus on our core financial services competencies.”

The acquisition will broaden TCS’s portfolio of end-to-end IT and BPO services in the global Banking and Financial Services (BFS) sector. TCS’s claims that its enhanced scale and expertise will provide service improvements to Citi and Citi’s customers.

The parties expect to close the transaction in the fourth quarter of 2008.

T-Systems, a provider of IT outsourcing and development services has announced an innovative new project launch for TUI Travel. Delivered in partnership with Tiscali, customers of TUI Travel are now able to experience the sights and sounds of a potential holiday destination using a new WiSH application (web in shops service), which enables video streaming to the desktops of over 1000 travel agents across the UK.

TUI Travel commissioned T-Systems because it wanted to develop an in-store travel experience unique from its competitors allowing them to view their holiday destinations properly before booking. Tiscali’s involvement was necessary to ensure the necessary amount of bandwidth could be achieved to deliver destination videos to TUI’s customers.

Dominic Taylor, Service Manager for T-Systems in the UK, commented, “This really was a key strategic implementation for TUI Travel and the success of the project would define whether WiSH should or could be considered for roll out to other European countries. Tiscali was involved from an early stage, once it became clear that BT wasn’t flexible enough to provide a solution to meet the requirements of the WiSH project.”

The initial rollout to over 600 Thomson / Lunn Poly stores was completed in just four months and the roll out to 360 First Choice stores took less than three months.

Cotswold District Council has signed a five-year ITC support contract with Steria. The contract, worth £2m, aims to improve the effectiveness and overall efficiency of the ICT support services for the council's 500 staff.

Under the terms of the contract, Steria will provide a wide range of ICT support services, ranging from desktop and server support to application development and business continuity. The partnership aims to reduce the council's overall ICT spend by 15% helping to free up funds for investment in front line services.

Mike Brown, Cotswold District Council's ICT Services Manager says "Steria has a strong pedigree in handling local government and public sector transformation initiatives. Its experience will prove invaluable to us as we implement a service improvement roadmap to continually identify new ways to exploit ICT for business benefit. This will ensure that ICT is providing effective support for the council and that we in turn deliver the best possible services to our customers."

The programme will be deployed by a combination of three onsite service delivery staff at the council's main offices in Cirencester, supported by other Steria consultants as required.

Management consultancy Accenture plans to cut 300 to 400 jobs, many of which are predicted to be in IT. The company is currently carrying out a consultation process to determine exactly where the jobs will be lost.

In a statement the company said the cuts were to "balance the skills of our workforce" rather than a response to the credit crisis.

A spokesperson for the firm said, "Managing supply and demand of our resources remains a top priority. We are taking steps in the UK to balance the skills of our workforce against client needs.

"Given this, we expect a workforce reduction of approximately 300-400 people in certain skill sets where we have excess capacity.”

Convergys, a leading provider of outsourcing customer and HR management, announced plans to acquire the privately-held Ceon Corporation, a company specialising in the development of product lifecycle management and fulfilment software for communications service providers.

The deal is expected to deliver various synergies for Convergys along with a number of new BPO services that it will offer under the name of ‘Convergys Enterprise Product Management Solutions’. Convergys hopes the acquisition will aid the management of its clients’ product lifecycle, shorten time to market for new service offerings, improve quality and reduce the overall costs associated with managing a large product portfolio.

“As service providers launch new convergent services to differentiate themselves from their competitors, their product management requirements become increasingly complex,” commented Bob Lento, president of Information Management for Convergys. “Ceon’s product management assets are at the heart of our strategy to help our clients more effectively manage new and advanced value-added services, introduce these services quickly, and evolve these new offers at market speed.”

The deal, which was first heard of in January this year, is expected to be complete at the beginning of 2009.

EDS will manage end-user computing for the Nordic region’s largest messaging and logistics operators.

Posten, one of the Nordic region’s largest messaging and logistics operators, has commissioned the recently acquired EDS, to host the company’s end-user computing environment.

Under the terms of the agreement, EDS will host information technology workplaces , including desktop, email, service desk and other standardised services. The contract, which begins in July 2009, will see EDS rollout to all Posten offices, including Posten Meddelande AB, Posten Logistik AB and Strålfors.

“For Posten, a flexible, cost-efficient, standardized and stable IT environment is a critical factor,” said Joss Delissen, Chief Investment Officer, Posten. “The EDS solution with HP, combined with the Microsoft alliance, is well positioned to meet our needs.”

Financial details of the contract were not disclosed.

As I write, the Colorado sun is rising on the fir-racked mountains, and glinting off the lake below – brighter even than a CNN spotlight off Sarah Palin's spectacles. The setting? No, not Walden Pond, but the RightNow user conference at Broadmoor (the Springs resort, not the prison).

A bull's head* is pinned above the hotel entrance, and yesterday several jeeps full of customers went bear-spotting in the hills.

Anyone thinking this might be one of my legendary metaphors for the stock market would be right. Last night there was a hoedown; this morning there are sore heads (there I go again).

In an hour's time the SaaS company's CEO Greg Gianforte will gather analysts and journalists (none of whom drink, that would be madness at this altitude...) for what's billed as a 'fireside chat'; in fact, it's a press briefing off the main conference hall, replete with pre-submitted questions.

But that won't stop me asking about RightNow's Q3 payment-terms statement yesterday, issued while customers were straining for a glimpse of the grizzlies in the world's biggest back yard.

Gianforte said that negative cashflow from operations in the quarter is “primarily due to a lengthening of payment terms and slower cash collections.”

RightNow expects to reduce its full year guidance for cash from operations. “We are seeing more contracts with periodic or annual payment terms and slower cash collections which we believe are both being driven by recent economic conditions,” he said.

In other words, customers are holding onto cash for longer and not paying up front.

SAP's profit warning also hit the market yesterday, and the buy/sell notices are being rewritten for Salesforce.com's stocks even as I speak.

This double whammy of negative news pulled tech stocks down, with bleak news from the client/server enterprise behemoth, and from its leaner, meaner cloud-computing rivals.

What we are witnessing, of course, is the economics of fear: the more we fear an outcome, the more we act to make it happen. It's a form of 'butterfly effect', one small causal movement whips up a tornado of effect.

You know that when a company such as General Electric issues statements that its short-term finances are solid (in fact, propped up by Warren Buffet) then the economy has been turned on its head and is being spanked until all the loose change falls out. (Indeed, the White House is now funding short-term debts.)

So it's time to concentrate on the real economy, and stop obsessing about share movements. There have been 23 bear markets in the past 75 years or so; we are in them one-third of the time.

Stop hunting those bears: they have bigger teeth than you. If you leave them alone, they will leave you alone.

* OK, I admit it: it's a bison.

The US Navy has awarded EF Johnson Technologies a US$48 million contract to design, test and implement a Navy-wide Virtual Perimeter Monitoring System (NVPMS).

Michael Jalbert, President and CEO of EF Johnson Technologies, commented: "Our NVPMS solution has the potential to provide naval vessels, installations, expeditionary forces and TSA sites with a broad set of monitoring, communication and surveillance tools to support physical intrusion detection, chemical and radiological attack, and other asymmetric threats to base personnel and base infrastructure."

As the economic crisis deepens in the UK, further bad news comes with the announcement that the UK services sector has declined at a record rate, along with employment within the sector and expectation for its future.

This is worrying news indeed, as since the 1980s, the UK economy has been rebuilt around the services sector, along with banking, finance and the media. It is also worrying as a drop-off in demand for services, and a decline in services growth, means less money in the economy, and costs being slashed.

This news, coupled with spiralling property prices has cast further gloom over what's known as 'the real economy' – everything not on the rollercoaster ride of stocks and shares profits and losses.

That said, this could be the impetus the bank of England needs to make a more significant cut in interest rates, rather than the cheese-paring fractional cuts of recent history.

Royal Mail has taken on leading ITO provider, CSC to deliver a national mobile service to 25,000 delivery vehicles in its letters and parcels operation. CSC will lead the team delivering the service which includes Blackbay, a provider of mobile workforce solutions.

Royal Mail hopes that the rollout will “provide increased quality of service to customers by allowing them to view the status of their tracked deliveries in near real time via the Web.” Another benefits is the reduction of paper-based systems which have traditionally been used in the delivery of the post. The service will also provide Royal Mail delivery staff with the ability to map routes and exchange messages with their base locations.

Robin Dargue, CIO at Royal Mail Group, commented: "Working with CSC to deliver this innovative, key service will help Royal Mail to continue to meet the growing needs of our customers, increasing our efficiency and service in this area of our expanding business in an increasingly competitive marketplace,"

The deal marks a diversification of the two companies’ existing relationships. CSC has worked with Royal Mail Group since 2003 and is responsible for the maintenance of its 42,000 desktop computers and management and development of its servers, mainframes and IT processes. CSC also develops and maintains applications and provides a range of professional services supporting business critical systems.

The fiscal value of the deal was not disclosed.