Industry news

PricewaterhouseCoopers LLP, the world’s largest professional services firm, has outsourced its bureau payroll service to Logica. The deal will see Logica provide a pay-as-you-go BPO (Business Process Outsourcing) service for 18,000 of Logica’s employees and pensioners.

The deal, to begin in December this year, marks the first win of this kind for Logica since it announced its partnership with Oracle to offer Oracle Human Capital Management (HCM) as part of its own outsourced HR & payroll service. Logica’s pay-as-you-go model negates the need for PricewaterhouseCoopers to pay the traditional upfront software licence fee.

Patricia Taylor, Director of HR and Payroll BPO Services at Logica said: “We’re seeing a real demand for BPO pay-as-you-go services from current and potential customers. This type of offering means that premium services based on a market leading product like Oracle HCM are no longer just available to large enterprises – they are accessible to all. Many organisations will now find that they can positively change the way they deliver HR and payroll services to their employees”.

Zurich Financial Services Group, the global financial services company, has signed off on IT services contract extension with the Computer Sciences Corporation (CSC). The deal, worth approximately £200 million to CSC, will see the companies continue their partnership for a further six years.

CSC will assume responsibility for the provision of Zurich’s desktop services to its businesses in the UK, United States, Canada, Switzerland, Germany, Italy and Spain. CSC’s remit will cover remote and on-site IT support and software packaging and distribution to around 51,000 users.

Michael Paravicini, Chief Information Technology Officer at Zurich Financial Services Group, said: “CSC already provides support for the development and maintenance of our application software, and our expanded relationship will allow us to provide a more integrated holistic solution for our application support needs.”

CSC’s relationship with Zurich began in July 2004 when they signed a landmark seven-year global IT applications outsourcing contract.

Microsoft and HCL have announced a strategic alliance to co-create a new sourcing proposition, 'Structured Technology Transformation' (STT) that enables enterprises to adopt and deploy the latest technology innovation at no additional costs, while at the same time retaining greater control over their outsourcing relationships, say the two companies.

Computer Sciences Corporation (CSC) has announced that its newly established consulting practice dedicated to serving the UK wealth management market has released findings from its recent industry study.

As the market sits on the verge of a six-fold increase in growth over the next two years, according to analystis at Datamonitor, CSC’s study of banks, insurers and advisory firms found a significant shortfall in many organisations’ ability to manage the emerging demand for bundled propositions, tailored to specific customer segments. According to the study, 60 percent of those surveyed admitted their organisation structure is a hindrance.

“Many organisations providing wealth management products and services today are woefully lacking when it comes to responding to the future needs of customers,” said Joanna Hall, leader of the new practice and consulting partner for CSC’s Financial Services Sector in Europe, the Middle East and Africa. “To best serve customers, organisations will need to incorporate many more partner and affiliate arrangements into their overall wealth management offerings, and ensure their organisational structures, both culturally and technologically, are fit for purpose.”

The aim of the study was to establish how organisations felt they measured up to serve the the requirement for a wider range of products and services, and provide a more holistic approach for customers seeking to manage their financial investments. According to those surveyed, the findings revealed a lack of integration between the systems and processes needed to provide such services, with less than 10 percent of those surveyed believing their current technology performance will suffice.

“This is of particular concern since the study also predicts a significant rise in the role of the Internet as both a distribution channel and guidance or advisory component within the wealth management sector,” added Hall. “Wealth providers need to review their business growth strategies, carefully identify their client targets and tailor propositions. The strategy then needs to be translated into a robust and cost-effective technology environment.”

ArcelorMittal, the world’s largest steel company, has shaken up its outsourcing arrangements in a move towards a more global IT supply model.

After an in-depth assessment of its supply model, the company has formalised its framework agreements with Satyam and Mindtree which will be valid until 2011. The specifics of the agreements will be fleshed out after consultation with ArcelorMittal’s key stakeholders.

ArcelorMittal hopes the agreements will improve the cost-effectiveness and flexibility of the organisation whilst allowing “internal ArcelorMittal IT employees to focus on high value adding activities”. No jobs are being cut at the company to make way for the arrangements.

Subu D Subramanian, Director and Senior VP at Satyam Computer Services Ltd, said “This large deal provides Satyam a very significant opportunity to serve ArcelorMittal with integrated process and technology solutions leveraging our industry domain expertise and solution architecting capabilities”.

The British public would rather pay more and buy British, than get cheaper goods and services produced offshore, according to new research published by sourcingfocus.com today. Despite the credit crunch, only one in four consumers are happy for goods and services to be handled outside the UK, even if it makes them cheaper for consumers.

The online survey, conducted by ICM amongst consumers, aimed to establish changing consumer attitudes to outsourcing and offshoring at a time of economic downturn. Consumers responded on a scale of one to ten how happy they would be for various services to be offshored if it saved them money; the results were unanimously anti-offshoring. Consumers are most adamant that call centres should be kept in the UK – 59 percent of respondents were the most unhappy that they could be (a ten rating) at call centres being offshored, whilst a massive 79 percent were unhappy (rating 8-10) with call centres being handled outside of the UK. Only 6 percent were happy (3 percent very happy) to have call centres handled offshore.

Even functions that have routinely been completed outside of Britain for years – processes that are seemingly invisible to the UK public - are not safe from the backlash. Only 15 percent of respondents were very happy for electronic goods to be manufactured offshore, even if it made them cheaper, whilst just 13 percent were very happy for clothes to be made offshore.

Other interesting findings from the research are:

• Young people are most happy with services being offshored, with 52 percent of the 18-24 age range happy to accept offshoring services if it saves them money.

• Offshore call centres are exceptionally unpopular, with only 6 percent happy to see call centres offshored, even if it saved costs. The Scots are particularly adamant in this area, with only 1 percent happy to have call centres offshored, even if it saves them money.

• Women are more anti-offshoring than men. 64 percent of women would prefer to pay more for goods and services and keep them based in the UK as opposed to 55 percent of men. Only 22 percent of women would be happy for services to be handled outside of the UK, even if it lowers cost.

• Only 20 percent of those from the lowest social class are happy to pay for services to be handled outside the UK, even if it makes it cheaper for them. This is the lowest of any social class.

Chris Middleton, editor of sourcingfocus.com, commented: “It’s official: consumers – that’s men and women from across all walks of life, within all age groups, and in every part of the UK – hate offshoring. And the more information-based the offshore service is, particularly call centres, the more they dislike it. Businesses spend millions of pounds every year researching customer attitudes in an effort to prove that the offshore call centre experience somehow adds value to the brand; our research suggests this is questionable.”

Martyn Hart, Chairman of the National Outsourcing Association (NOA), the trade association for the outsourcing industry, commented: “This research makes unhappy reading for those within the outsourcing industry and particularly those with an interest in offshoring. The lack of consumer acceptance of offshoring – a process that is good for British business – is worrying and further education is obviously needed.

Offshoring is growing and diversifying. Many large companies will outsource a variety of processes to several offshore locations and consumers seem to tar all of these with one negative brush. Many of our members are suppliers delivering an excellent service to clients – it is about time these gained proper recognition.”

Computer Sciences Corporation (CSC) has announced that it has signed an IT desktop services outsourcing contract expanding the scope of services CSC provides to Zurich Financial Services Group (Zurich). The new agreement has a six-year base period at an estimated value of $399 million with a two-year extension option.

Under the contract, CSC will assume responsibility for the provision of Zurich's electronic Workplace (eWP) desktop services to its businesses in the United States, Canada, the UK, Switzerland, Germany, Italy and Spain. The scope includes global service desk, local on-site support, and software packaging and distribution to approximately 51,000 users. The eWP service will provide Zurich with the cost and performance benefits of a globally standardised desktop service environment while allowing organizations within Zurich to tailor services specifically to their business needs and locations.

'We are pleased to announce this expansion of our relationship with Zurich," said CSC Chairman, president and CEO Michael W. Laphen. "CSC's global expertise in desktop computing services will provide Zurich's businesses with access to innovative technology and services and bring new levels of efficiency in support of Zurich's global IT strategy."

Michael Paravicini, CIO at Zurich Financial Services Group, said, "CSC already provides support for the development and maintenance of our application software, and our expanded relationship will allow us to provide a more integrated holistic solution for both our eWP and application support needs."

CSC's relationship with Zurich began in July 2004 when they signed a landmark seven-year global IT applications outsourcing contract. Through the agreement, CSC provides all applications development and support services to Zurich's businesses in the US, the UK, Switzerland and Germany.

French outsourcer Atos Origin has announced Q1 revenues this morning of €1.42bn, up 5.3%. The company's contract wins were up 11% year on year.

Ovum analyst Phil Codling said: 'These numbers help to confirm Atos Origin's return to stable growth, as also evidenced by results in the second half of 2007. The company's “303” transformation programme continues to pay dividends in a number of ways, most noticeably in the sales performance.'

Order growth is particularly encouraging, added Codling. 'The company's investment in its sales capability (for example through the much-attended “Atos University”) is beginning to pay off. We feel Atos Origin's growing focus in the market is helping too. Not only is it targeting its efforts and investment in selected vertical markets, it's also carving out a good position in the growing mid-sized deal market (i.e. the bit that lies below the mega-deals).

'Indeed, when we recently analysed contract wins in EMEA over the last 18 months (using Datamonitor's contracts database), Atos had won more in the $50-350m bracket than anyone bar IBM. That's a positive sales performance, not least because this segment of the market is highly competitive, since it attracts not just the global mega-deal players but also plenty of “local heroes” and of course Indian challengers.'

That said, some of the results were patchy. Dutch revenues fell by one percent; France grew 6.8%, while the UK was up 5.5%.

As previously reported on sourcingfocus.com, investors Centaurus and Pardus are both still aiming to take a controlling stake in the French company.

Indian graduates from the infamous India Institute of Technology (IIT) are increasingly shunning western IT jobs, preferring to stay at home rather than head for traditional targets like the US and UK, according to growing KPO provider Evaluserve.

In a recent survey of 667 IITians (as they’ve been coined) there has been a significant change in the number of graduates heading west. Between 1964 and 2001 64 percent remained in India while of those that graduated since 2002, 84 percent have remained in India.

While wanting to stay near homes, family and culture was cited as the most common reason for staying in India, there was an increased perception that the US held less job opportunities for IITians; 28 percent thought that the US had limited possibilities for them. Interestingly 19 percent of graduates since 2001 thought that India had substantially increased job opportunities and living standards. Also, 72 percent of the students thought that India held the most promise for IT 10 years down the line.

Oracle Corporation has completed its long awaited acquisition of BEA Systems Inc after gaining approval from the European Commission. Oracle finally paid approximately $8.5 billion for BEA after a tumultuous courtship that began in October 07.

The corporation has enforced its position as the world’s largest software company overcoming the European Commission’s enquiry into potential competition issues.

The EU Commission ruled that “horizontal overlap between the parties' activities would not give rise to competition concerns, in particular since Oracle and BEA were not seen to compete head-to-head.” It also cited that BEA would “face several strong competitors in the overall middleware market and in each of the sub-segments, such as IBM, Sun, Microsoft and SAP”.

Oracle President Charles Phillips said, "The addition of BEA will accelerate innovation by bringing together two companies with a common vision of a modern service-oriented architecture (SOA) infrastructure,"