Industry news

The purchase of Citigroup Global Services by TCS, the captive BPO delivery arm of the Citigroup bank, is likely to be the first of many, according to Tony Rawlinson, MD of Financial Services at EquaTerra. In a statement Rawlinson hailed the acquisition as a ‘fantastic move’ and predicted that the purchase will be replicated by other banks and service providers.

“In one fell stroke, this makes TCS a strong player in the banking BPO market with an acquisition on attractive commercial terms”, he said.

“Even before the credit crunch and then the global market meltdown, there was a definite trend developing in this area” he explained “Banks were asking themselves ‘are we in banking or running back office captives?’. They weren’t helped by the fact that they were looking to cut their costs due to losses sustained through investment in the sub-prime market. At the same time, service providers have matured enough to be able to take on the types of services which the financial services sector were looking to offload quickly. Although there will be a limited window of opportunity for offloading captives, I suspect we will see a few more sizeable deals like the Citigroup / TCS one done”, he explained.

In the same statement Rawlinson highlighted other likely trends for the industry, such as the shift in power from banks to service providers in terms of what services are actually outsourced. He also expects service providers to develop “utility” services across multiple banks using their scale to develop common platforms that can be leveraged by numerous banks.

While Rawlinson highlights the trend towards banks selling their captive operations, he adds “others will elect to keep certain process sets depending on their view of competitive advantage”.

Just weeks after HP announced plans to make 24,600 staff redundant over the next three years, the company has confirmed that 3,000 of these will be ex-EDS jobs from the UK market.

The job cuts, one of the biggest UK IT job losses in recent history, form part of a worldwide cutback that will see HP drop approximately 9,300 staff across the EMEA region.

The company previously described this as a ‘redeployment of staff’ and has provided no new statement about the losses.

Harman International Industries and Wipro Technologies, the global IT services company is launching a joint embedded engineering centre in India. The new Harman India Development Centre will operate from Wipro’s existing Bangalore and Chennai facilities, complementing an earlier agreement which outsourced Harman’s global IT infrastructure services to Wipro.

Beginning with about 250 employee resources through this engagement, Harman plans to grow its resource footprint in India to more than 1000 person-years by 2011, significantly strengthening its global engineering capabilities.

The India development centre will broaden and optimize Harman’s engineering footprint for developing audio and infotainment solutions across the automotive, consumer, and professional markets. Wipro will also bring a wide range of capabilities to Harman’s solutions. Services delivered from the centre will include both software development and related hardware engineering for Harman’s portfolio.

“This new venture in India is an important milestone for enriching our portfolio of cutting-edge engineering solutions,” said Dinesh C. Paliwal, Harman’s Chairman and CEO. “Wipro’s proven development and project management expertise will complement our company’s core audio and infotainment skills to deliver innovative customer solutions and make us more competitive. This expanded capability and capacity will also position Harman to better serve large emerging market opportunities in Asia.”

The Harman India Development Centre was formally commissioned in Bangalore on September 2 in ceremonies joined by Dinesh C. Paliwal and Suresh Vaswani from Harman and Wipro respectively.

ACS has extended its relationship with United Technologies (UTC), a provider of technology and support to the building and aerospace industries, with a finance and accounting contract valued at US$41 million for the next three years.

The extended contract, for the next three years, will see ACS continue to provide domestic finance and accounting (F&A) services, including accounts payable, travel and expense reporting, payroll and related accounting functions to UTC

Anupam Tantri, Assistant Controller for Shared Business Services at UTC, commented:

"ACS has supported UTC's F&A operations for more than three years, enabling UTC to focus on key business areas and objectives, including systems and process enhancements."

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.