Industry news

A new IBM consulting offering aims to help clients lower their environmental impact, increase efficiency and reduce costs.

Dave Lubowe, global leader of IBM’s operations strategy consulting practice, commented, “There’s a fundamental truth to understanding and improving any aspect of a company’s performance – if you can’t measure it, you can’t manage it. This applies as much to a company’s energy and water consumption as it does to anything else, and our new offering can help clients apply this principle to make their businesses greener.”

Business leaders acknowledge the advantages that come from proactively addressing corporate social responsibility (CSR), such as green issues. An IBM global CSR survey of more than 250 executives showed that 68 percent of them are already focusing on CSR activities to create new revenue streams and 54 percent believe CSR gives them a competitive advantage.

East Midlands based Payroll and Business Solutions UK (PBS) is extending its service into Asia for the first time.

PBS is to provide a complete payroll service for Aastra Telecom and Laing Infrastructure Management, both of which are extending their workforce in India. Laing is working in developing countries to expand local infrastructure services. Aastra is expanding its sales team across the world.

Pam Pindar, managing director of PBS, said, “International outsourcing is a rapidly growing area as businesses look to cut their back office costs whilst maintaining consistency for their employees."

Cincinnati Bell Inc. has renewed its contract with Convergys for five years, extending the relationship for more than 10 years.  The new contract, which runs until 2013, also contains two one-year renewal options.

As part of the contract renewal, Convergys will continue to provide relationship management services and will also provide hard wired and wireless application development and maintenance services.

Brian Ross, chief operating officer of Cincinnati Bell commented, “Cincinnati Bell is pleased to extend its long-standing relationship with Convergys, we will continue to advance customer relationships while achieving important cost reductions in our business.”

Genpact Limited today announced that it acquired a delivery center in Guatemala City from GE Money, a division of the General Electric Company, on August 15, 2008.

The facility is Genpact’s first in Guatemala and will provide services to GE Money from the facility.

Juan F. Ferrara, Genpact’s business leader for the Americas, commented, “We are excited about our newly expanded presence in the region. Our new facility enables us now to offer services to our global clients from both Guatemala and Mexico."

Charlie Crabtree, senior vice-president & COO for GE Money, said, "GE Money is delighted to introduce our global servicing partner, Genpact, to the Guatemala market place.”

Despite current economic concerns, worldwide IT spending will exceed $3.4 trillion in 2008, an increase of 8 percent from 2007 spending, according to Gartner. Analysts said much of this growth is based on the decline in the U.S. dollar.

Jim Tully, vice president and distinguished analyst at Gartner, commented, “The U.S.-led economic downturn shows no sign of causing a recession in IT spending. In subsequent years we will see reduced growth, but the fundamentals remain strong. Emerging regions, replacement of obsolete systems and some technology shifts are driving growth.”

Gartner analysts said there are important strategic issues facing the IT industry and that, “Organisations are switching from company-owned hardware and software assets to per-use service-based models. This will impact the industry in various ways. The projected shift to cloud computing, for example, will result in dramatic growth in IT products in some areas and in significant reductions in other areas."

The BBC’s outsourcing deal with Capita is producing significant savings according to a BBC spokesperson.

Despite some initial difficulties, the BBC is confident that the outsourcing of the majority of its HR processes, in the £100 million contract with Capita, will produce significant savings and streamline its HR services.

The spokesperson also added that, ‘as in any deal there are some teething issues, however we are confident that these will be smoothed out and we will continue to see significant savings’.

Siemens Energy has won a major contract from Fluor Ltd. to connect Greater Gabbard offshore wind farm to the British power grid.

The volume of the order for the grid connection is approximately EUR84 million. The Greater Gabbard project will be the world’s largest offshore wind farm.

Siemens will also supply 140 wind turbines for this project, which will be constructed 25 km off the coast of Suffolk in the UK.

Udo Niehage, CEO of the Power Transmission Division of the Siemens Energy Sector, said, “Siemens Energy has a unique wind power portfolio. Not only do we manufacture and supply high-tech wind turbines, we also efficiently connect wind farms to the grid”.

As I mentioned a couple of weeks ago, Africa as a continent has tremendous potential for growth through outsourcing, with many of its countries offering excellent English, French and other European language skills, good standards of education, a strong cultural affinity, and near-European timezones.

However, Africa as a whole has suffered from the perceived political and economic instability of a handful of its countries, and from the perception of it having a uniformly poor infrastructure and an ailing overall economy.

Good news, then, that Nigeria is taking steps to change that perception and grab a slice of the IT and BPO pie.

The Nigeria Export Promotion Council (NEPC) has announced its intention to expand the country’s business and information technology outsourcing capacity, and to reposition the NEPC itself to harness the potential of Nigeria's services sector.

Acting executive director Aliyu Lawal, said: “Over the years, NEPC has been aggressively promoting the development of our local products for export, but in recent times, we have discovered that there is even more money to be made from the export of quality services from the country.”

Lawal said he recognised that innovation and efficiency are crucial to the growth of new service industries, especially those enabled by online communications.

The NEPC clearly sees the need to talk to Nigeria's friends and neighbours to expand the initiative elsewhere in Africa. The local 'Bridges Across Borders' scheme was set up by the International Trade Centre to encourage cross-border trade in services within a multilateral trading system, and Nigeria will host the fifth event under the banner in October this year.

As I said in the same recent blog, Africa as a whole has been taking a number of small steps (if not yet giant leaps) towards being a centre for offshore BPO services. Ghana, Morocco, Egypt and Senegal are all on analysts’ radar, with Nigeria, Kenya and South Africa also becoming increasingly vocal about the potential for growth.

Although South Africa's progress has stalled against its relatively modest BPO targets, lets hope other countries in the region have greater success. What's needed is a demonstration of a robust local infrastructure together with governments that talk up their skills and potential.

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”.