Industry news

Small businesses and outsourcing are not always obvious bedfellows, but new research has revealed a prejudice against smaller enterprises that has implications for the outsourcing industry, not to mention the economy as a whole.

As the UK's economic woes deepen, with inflation heading towards five percent, BT Business and Cisco have commissioned independent research among procurement managers within 250-plus employee businesses to determine what they look for from small-business suppliers (companies with fewer than 250 employees) when awarding contracts.

The research has revealed a bias against small business suppliers in favour of their larger competitors, especially in economically turbulent times.

Top-line statistics from the research include these findings:

• 40 percent say they would be less likely to choose a small business supplier in a slowing economy;

• 42 percent would select a larger supplier over a smaller one, believing that big enterprises are a safer option in the long run - even though both may offer the same products or services;

• Almost half (48 percent) have lengthened their payment periods or would consider doing so as a result of slowing economic conditions;

• 52 percent of private sector businesses believe that SME suppliers are less competitive than their larger counterparts;

• 53 percent expect a better overall service from SMEs than they do from larger business - increasing the pressure on small suppliers.

The research also investigated procurement managers' attitudes to outsourcing and how this might impact on their decision-making when selecting a new supplier.

Of significant interest to the outsourcing industry are the following key findings:

• Forty percent of those questioned admitted that what a supplier chooses to outsource would be a major factor in their decision.

• Just over one quarter (26 percent) claimed they would prefer to work with a company that does everything in house;

• One in four said they would be concerned if a supplier outsourced its customer service.

So, with smaller businesses both powering the economy and feeling the sharpest pinch from rising costs, and with many outsourcers seeing the downturn as an opportunity, we have a more highly combustible situation than many realise.

If small businesses choose to seek third-party help or customer service to cut their own costs and hedge against uncertainty, but major customers walk away because of it, then this area of high pressure could worsen 'the perfect storm'.

Infosys Technologies Ltd. has announced that it has commenced work on its second campus at Pocharam in Hyderabad, India.

The campus will be spread over 447 acres with a total investment of £154m. The facility is expected to seat over 25,000 people and will be completed over a period of 10 years.

As a part of its drive to become carbon neutral, Infosys is designing this campus on best-in-class sustainability principles to achieve energy efficiency, water sustainability, preservation and promotion of biodiversity and effective waste management.

Mr. N. R. Narayana Murthy chairman of the board and chief mentor at Infosys commented, "We are delighted to commence work on the new campus”.

Transport for London (TfL) is to terminate a £100m per year Oyster contract.

The contract with Transys will end after a two year notice period.

In an official statement, TfL explained, "The Mayor and Transport for London are convinced that any new contract will deliver enhanced services for less money, driving significant savings."

Shashi Verma, TfL's director of fares and ticketing, commented, “Transport for London is committed to delivering value for money across all of its services. As part of this, we are looking at more cost effective ways to manage and develop the Oyster card system. We expect to save millions over the next few years.”

Bharti Airtel Limited (Airtel) have selected Oracle to optimise their national fibre optic network.

Jai Menon, director of customer service and information technology at Airtel, stated, "we have used Oracle's technology, business applications and communications industry applications for 10 years. The new network discovery and reconciliation product will enhance Airtel's network utilization leading to improved customer satisfaction".

Bhaskar Gorti, senior vice president and general manager, Oracle Communications, commented "Airtel's implementation of Oracle Communications Network Integrity will be one of the first with such a widespread scale and complexity".

One hundred CIOs of UK companies have been surveyed on green issues in IT outsourcing.

Seventy Six percent of CIOs surveyed by Fujitsu held the viewpoint that the carbon footprint of outsourced IT operations should still count towards the overall footprint of their organisation. Almost a quarter believe the opposite and expect the contracting company to become responsible.

The research also showed that significant numbers of IT departments are not yet even measuring the contribution of IT to their own organisation’s carbon footprint.

With this in mind, Fujitsu is keen to open an industry wide debate on this issue in a bid to gain consensus. They are looking for agreement on a common set of principles governing the ownership of the carbon footprint of outsourced IT.

Sapient announced that it has acquired London-based Derivatives Consulting Group Limited (DCG), a provider of derivatives consulting and outsourcing services to the financial market.

The addition of DCG will increase Sapient’s ability to address derivatives and operations issues.

Sapient president and chief executive officer Alan Herrick commented, “Today's volatile markets and increasingly strict regulatory environments make this an opportune time to add DCG’s capabilities to our trading and risk management (TRM) practice”.

Cameron Munro, co-chief executive officer at DCG said, “This acquisition makes perfect sense for our clients and our organisation".

Glasgow-based customer contact centre outsourcer Response has won a new three-year deal with Sky.

Under the new contract, Response will deliver a variety of sales and customer service activities on behalf of Sky.

Dave Rumble, Sales Operations Director for Sky commented,“As an organisation, we look to create long-term partnerships with suppliers that can deliver flexibility, additional value and certainty for our customers. “We believe that we have found this in Response, and we look forward to working together over the upcoming months and years.”

Citi, Credit Suisse, Goldman Sachs, Lehman Brothers and Merrill Lynch have selected SWIFT to develop and operate a centralised pre-settlement matching solution.

The new solution is set to reduce cost and risk for prime and executing brokers of processing hedge fund trades globally.

Today, discrepancies between trade details submitted to prime brokers by hedge funds on one hand, and their executing brokers on the other, are a source of considerable operational risk.

The brokers have agreed to oversee and provide transparency to the market on the evolution of the project.

Gottfried Leibbrandt, Head of Markets at SWIFT, commented “We are delighted to have been chosen by this group of major prime brokers to provide a pre-settlement matching solution to the equity and fixed income markets, in addition to our existing FX matching capabilities.”

News reaches sourcingfocus.com that the Government has finally appointed a new CIO for the NHS, together with a new director of system delivery for the £12.7 billion National Programme for IT (NpfIT).

It has been six months since Richard Granger quit his role, after a controversial tenure that saw him lambasting suppliers and railing against what he called the “privacy fascists” who criticised the scheme's data security. Meanwhile, elements of the project slipped further and further behind schedule.

Christine Connelly, former CIO of Cadbury Schweppes and a head of IT at BP, will be CIO from September, while Martin Bellamy becomes director of programme and system delivery, and head of Connecting for Health. Bellamy's track record is in the public sector with the Department for Work and Pensions.

The newly split role makes sense organisationally, and also demonstrates yet again the Government's fondness for mixing private sector acumen with public sector tradition.

However, the challenges facing Connelly and Bellamy are extreme, and apparently escalating.

Since Granger's departure, much has changed: Fujitsu has walked away from its southern area deal after contract renegotiations stalled; some NHS Trusts have also walked or are going it alone, while others have expressed frustration at being coerced into working with preferred key suppliers.

Questions have been asked in the House, while Whitehall's Public Accounts Committee has heard tales of acrimony and dispute between client and supplier. Where elements of the scheme have gone live, some have done so successfully, while others have caused chaos and confusion.

Beyond that, morale is low; the Government's data handling culture and management have been exposed as inadequate and, at best, primitive, while economic growth is flattening out, perhaps heading towards a full-blown recession.

Clearly, the dynamic duo of Connelly and Bellamy will need to be crusaders for the cause as well as enforcers, good people managers, and sensitive negotiators.

If nothing else, this ambitious and, in many ways, ill-considered scheme has demonstrated that it, more than any other outsourcing deal, is about people, not about technology. We wish them luck!

Trinidad and Tobago award a multi-million dollar government contract to Fujitsu and Telecommunications Services of Trinidad and Tobago (TSTT). The ITO contract aims to improve the online communications facility of government services.

The network will be built on leading edge technology supplied and supported by a consortium led by TSTT and Fujitsu. Mervyn Eyre, CEO of Fujitsu in the Caribbean, commented "This is an IP-based network, similar to what supports the world wide web".

The creation of “GOVNETT” is in keeping with the Government’s commitment to having 50% of its services accessible online by 2009, with additional services being continuously added thereafter.

Ms. Arlene McComie, permanent secretary in the Ministry of Public Administration added, “This is a very significant initiative which in addition to giving the public easier access to government services, it will also enable more direct communication with agencies and in so doing make these institutions more accountable”.