Outsourcing Times

Insurers Cut Costs By Outsourcing

By Priya Jestin, Staff Writer

While most of us may still deride the outsourcing phenomenon, fact is we cannot do without it any longer. The main reasons most firms have taken to outsourcing is that it allows them to focus on their core strengths. In an insurance firm, most of the services including human resources, billing and transactional processing, are important but not necessary in the proper functioning of the core competencies.

So what can a business do to ensure that it focuses on its core competencies without having to trouble itself over the peripheral activities? It can use a business process outsourcing (BPO) provider. This not only reduces costs but also allows a business to grow as the enterprise can now focus on its core business.

Since this is extremely sound business advice, it’s not surprising to note that insurers have taken to outsourcing like fish to water. Research shows that the use of IT outsourcing and BPO is slowly growing.

Now, Outsourced Lawyers

By Priya Jestin, Staff Writer

How would you fee if all the jobs at General Motors suddenly moved to China? Chances are you wouldn’t think twice about it. Why? Because for quite a few years now, it’s been the Chinese, Taiwanese and others who’ve been at the helm of the manufacturing industry. Moreover, the manufacturing industry isn’t as paying as say the software or banking industries.

But if major corporations began to work with lawyers in India, you’d definitely have a big problem. That would be a breach of security and well, how can we trust these guys with important information? Well, if you didn’t already know, the practice has been on for some time now. Corporations like Oracle, Cisco and General Electric are some of the big names that have begun trimming their legal costs.

According to a recent report by Crisil Research and Information Service, the legal offshoring industry is expected to grow to $4.7 billion by 2012 in India alone. Of course, it’s the cost advantage. Who’d want to pay an American lawyer $200 or more an hour when you can get an Indian lawyer for anything between $50 and $70 an hour? If you want to go even cheaper, you could get an Indian lawyer working as a temp. It would cost $20 an hour or less, which when compared to $70 an hour for a temp in America, works out to the Indian’s favor.

Until quite recently, lawyers were immune to the offshoring phenomenon and didn’t have to worry about losing their jobs. This was mainly because their work was steeped in arcane U.S. law. It also often dealt with sensitive information companies feared could fall into the wrong hands. But that reluctance is fading now.

Change Is The Name of the Game

By Priya Jestin, Staff Writer

In outsourcing, the easiest part is signing on the dotted line, or doing the deal. And then begins the really hard part. Everything in the agreement may seem absolutely watertight and both parties in the relationship may think they have a really strong relationship going. However, what they don’t realize is that the rules of the game change constantly depending on various factors. Hence instead of trying to play by the rules, if the companies learn to adapt to changing realities, they will find their relationship growing stronger.

Now, adapting doesn’t mean trying to foresee and predict changes well into the future. You just cannot tell what the global scenario is going to be like five or ten years down the line. So, instead of wasting resources, time and energy trying to prepare for the future, your company must try other methods of maintaining and building a strong relationship. One of the best ways of strengthening a relationship is to build on it by creating a platform for information sharing and dialogue with vendors. Adaptability to changing conditions is another prerequisite to success in the outsourcing game.

IBM, US lay off 400 employees

Are you aware of the recent lay-off of the employees of IBM? Do you know that their headquarters for procurement in going overseas to china from the current one at New York?

The shocking news about the lay-off of 400 employees from IBM came up at the wake of this month! The company has accounted the unavailability of suitable position within the company for a period of a month as the reason for this lay-off.

Informationweek reports that the employees suspect the lay-off to have taken place with the Bladecenter team while an IBM spokesperson has denied saying that this suspicion was untrue.

Read one of our previous post titled 'IBM Outsourcing More Jobs' to know the details of work being outsourced by IBM!

IBM records inexplicable profit in the third quarter!

By Priya Venkatesh, Staff Writer

Have you heard of the third quarter results from IBM, the software giant? With the outsourcing boom on the move, IBM has reported a 4% increase in net earnings when compared to the previous year.

As per the reports from informationweek, the hottest global service Business of IBM that amounts to 50% of its total revenue has reported 3% increase in sales.  As per the report from Information week, Net value of the innumerous deals with IBM has accounted to around $10.5 billion this year. IBM promulgates a 9% increase in hardware sales and another 9% in software sales.

Click here to know the details of the major outsourcing contract signed between Disney and IBM.

CSC – Global Crossing initiate the real time implementation of IPv6

By Priya Venkatesh, Staff Writer

Have you upgraded your network to be compatible with IPv6? You and I may be thinking on the necessity to do so! We may not be aware of the need to make this move!

But CSC & Global Crossing together started an initiative towards real-time implementation of IPv6 Network in 2001. They took advantage of the enormous experience of CSC In IT services and the inexplicable expertise of global crossing in IP based network.

Targeting the federal customers, the joint venture expects the successful implementation of IPv6 Network by June 2008!

Read more on 'CSC renews seven-year outsourcing contract with Schroders' to know the details of CSC's another venture with Schroders.

Millstone Medical Outsourcing expands customer base

In an older post titled "Medical outsourcing catches on", I mentioned the growth of medical outsourcing. Here is a somewhat related news story.

Millstone's continuum of start-up solutions, integrated services, and contract packaging services have made the company one of the top outsourcing partners for orthopedic companies. Its wide range of services has recently attracted five medical device companies, which include Doctors Research Group, Inc., DVO Extremity Solutions, and Aesculap Implant Systems, Inc.

Joyce Ludwig, a Quality and Regulatory Consultant for Aesculap, sums up the advantages of tying up with Millstone:

Finding an outsourcing partner who has top-of-the-line operating space and the necessary experience to handle a function as critical as sterile packaging is not an easy task. We were impressed by Millstone's clean room facility and packaging capabilities and are pleased to have found a partner we can trust.

Yahoo Finance has more on the story.

Alsbridge in line for twin National Outsourcing Association awards

If all goes well, representatives of Alsbridge—the independent advisors on outsourcing, shared services, and offshoring—could be walking away with the Advisor of the Year and Outsourcing Professional of the Year awards on October 12 at the NOA award ceremony in London.

The award for Outstanding Advisor could go to Alsbridge because of its four-volume Practitioners Guide to Shared Services and BPO, the highly acclaimed Tripartite Charter for successful deal negotiation, and the recognition by the OGC for the Catalist Framework Agreement for Outsourcing Advisory.

The other award for the Outsourcing Professional of the Year could go to Howard Spode, Principal with Alsbridge Europe. Spode has played a key role in new business delivery and client-side advice for outsourcing/offshoring strategies.

For more on the achievements of Alsbridge, click here.

Tech service provider SI International bags $138 million contract

In an outsourcing agreement that will be spread over ten years, the US Patent and Trademark Office has opted to grant its pre-grant publication classification services to Reston, Virginia-based SI International Inc. The deal has pushed the value of SI shares upwards to $28.31 in NASDAQ trade. Reuters reports on how SI plans to execute the deal:

The company said it will recruit and train about 150 staff for the contract, and its new facility will be located in Harrisonburg, Virginia.

It takes two to tango: Wipro and Motorola in joint telecom venture

When two leading and highly successful companies form a common front to offer a service, it makes you stop and ponder, However, you must keep in mind that every company has its business focus and strongpoints, and when the strongpoints of two companies are complementary to each other, there lies a potential team-up of resources and expertise.

Wipro has excelled in delivering managed services, while Motorola has its expertise in mobility. The new venture, called WMNetServ, is a strategic move to combine their forces and provide viable telecom services to public and private network customers. Hindustan Times reports:

The joint venture will host a global network operation centre platform in India to integrate seamlessly with Motorola's network operating centers in North America and Europe to provide 24/7 network monitoring capabilities to customers.

Centrica's HR outsourcing Deal with Hewitt Associates

British Gas Company Centrica has signed a seven-and-a-half year HR business process outsourcing contract that will cover its 30,000 strong staff in the UK. The deal has been signed with HR services firm Hewitt Associates. It includes workforce administration, payroll, reward management, performance management, succession planning, customer services and HR related information services. The value of the deal has not been disclosed yet. The HR transformation program at Centrica is well underway and the company's new partnership with Hewitt will accelerate and support the delivery of technology for Centrica's line managers.

BCW sells international outsourcing division, but continues to grow

UK's leading credit management group BCW is ready shed its 23-year old outsourcing division for £28 million. Founded by Paul Fraser, MD of BCW, the outsourcing arm had grown over the years through high value employment and investment. Now, it's the turn of its new owners, an MBO team backed by venture capital group Sovereign Capital, to reap the ultimate benefits.

However, the turnover at the remaining units of BCW is expected to touch £20 million this year. With some strategic alliances and acquisitions in the pipeline, BCW is well on its way to multiplying profits. Fraser spells out BCW's success formula:

We have invested hugely in technology - over seven figures per year - and it enables us to manage customer data far more efficiently than would otherwise be possible.

TCS to acquire outsourcing arm of UK's United Utilities PLC?

According to reports, India-based Tata Consultancy Services (TCS) might go ahead with an 800 million to 1 billion US dollar bid to buy Vertex, the outsourcing wing of United Utilities. If it works out, this deal will be an addition to the multi-year IT maintenance contract between the two parent companies. Forbes reports:

Vertex—which has interests in back office functions like customer services, human resources, procurement, finance and accounting—is perceived by the parent company as a non-core business, and hence the decision to sell.

Accenture lands one billion dollar contract with Unilever NV

Ending several months of speculation, Accenture has now confirmed that it has bagged a seven-year outsourcing deal from Unilever. This contract is in addition to the reaction already in place between the two parties through an outsourcing contract for application development, implementation, and maintenance services in Europe. 

As a result of the new HR contract, Unilever will benefit in its services such as recruitment, payroll administration, performance management, workforce reporting, and third-party provider management. The services will extend to 200,000 Unilever employees spread over its delivery centers in India, the Philippines, China, Romania, the Czech Republic, and Brazil. The deal will add to Unilever's aim of cutting costs to the tune of 700 million euros ($900 million) per annum.

Food and Business Review Online has more on the details.

Major Outsourcing Conference

The annual Pharmaceutical Outsourcing of Discovery Chemistry, Advanced Intermediates and API's conference will be held on July 17-18 at the Hyatt Regency Jersey City on the Hudson, New Jersey. At the 10th anniversary of the conference this year, greater focus will be given on pharma needs and fine chemicals in general. The emphasis is also being given in contract manufacturing as well as custom synthesis.

At the conference, the global pharmaceutical industry's suppliers for custom synthesis, fine chemicals, manufacturing and other related contract services will be covered. Top industry experts will participate in the conference and address the gathering. Areas such as globalization, outsourcing, emerging markets and virtual outsourcing will be prominently featured in the discussion.

More Information: Read Here

Exhibiting companies include InterChem, Cardinal Health, Enamine, Ricerca, Key Organics, Johnson Matthey, KNC Labs, Tyger Scientific, deCode Chemistry, PharmaCore, Helsinn, Carbogen, Amcis, PDMS, J-Star, and ChemDiv.

American Girl and API Outsourcing extend outsourcing deal

The outsourcing deal between American Girl Inc., a wholly owned subsidiary of Mattel, Inc., and leading Business Process Outsourcing provider API Outsourcing has received a new lease of life for an additional period of three years. API will provide services such as production of order confirmations, checks, letters, and company notices.

This agreement will lead the relationship between the outsourcing partners to a total time span of 6 years since the first deal was signed in 2003.

US Companies Benefit from Outsourcing

According to a recent study conducted by Capgemini, the US companies have greatly benefited from outsourcing. They are not only pleased with the benefits delivered by current outsourcing efforts, but also they plan do more outsourcing in future. The US companies believe that focusing attention on matters that are core to business will augur well for further growth. Improving process speeds and providing near-term cost savings are also part of outsourcing initiatives.

The US executives understand that the benefits of outsourcing go well beyond cost saving. Outsourcing is a shortcut to business success as companies use it to fuel growth and innovation. In today's competitive environment, executives are looking for ways to drive benefits and improve corporate performance. The US companies have realized that outsourcing is an efficient way to increase competitiveness, improve speed to market, and transform their businesses.

Meachers Group Holdings ties up with China Outsourcing

Meachers Group Holdings has entered into a partnership with China Outsourcing, a company dedicated to sourcing commodities and sub-contracted manufacturing in China. The purpose of this tie up is to enable UK companies to save upto 50 percent on product sourcing and manufacturing costs. This will involve companies having a single source of supply right from initial order placement to final delivery.

China Outsourcing will be the ideal partner to take advantage of this tie-up as it has a presence in both the UK and China. The offices are manned by a skilled work-force which can speak English and Chinese as per the demands of the situation. China Outsourcing conducts extensive tests to ensure that the quality standards are preserved as per the prescribed norms. The perfect blend of expertise and experience will ensure that the objectives of the partnership are met. Manufacturing Talk reports:

From the point of manufacture in China, Meachers Group Holdings utilises its freight forwarding division, Oast Agenices, to undertake shipment, customs clearance and entry into the UK. From arrival in the UK, Meachers offers a wide range of delivery options to suit specific requirements.

LogicaCMG strikes six-year outsourcing deal with ING

LogicaCMG has entered into an agreement with ING, the Dutch financial superhouse. The agreement will span over a period of six years and cover application development, maintenance, and system testing. The purpose of the outsourcing contract is to reorganize functions and save €190m annually by the year 2008. Ovum reports:

The deal relates mainly to ING's banking operations, and is worth an estimated €200m over six years. Some 350 Netherlands-based ING staff will transfer to LogicaCMG, and no employees are expected to lose their jobs as part of the deal.

Intelligroup strikes it rich with a seven-year outsourcing contract

Intelligroup has signed a $24 million outsourcing deal with Royal Greenland to manage its entire IT operations. Royal Greenland benefits from this contract as it receives a wide range of technical expertise and at the same time gains from the ability of Intelligroup to scale up operations as per the requirements of the company. EFYTimes reports:

Intelligroup will provide complete IT operations support, including infrastructure and server management and desktop support, for Royal Greenland's global locations. Intelligroup will use its 24x7 onsite and offshore delivery model to provide such services to Royal Greenland.

Alsbridge Turns One

Alsbridge, the consulting company formed with the merger of the Trowbridge Group (US) and ALS Consulting (UK), has done remarkably well in its first year of operation. The company advises its clients on outsourcing, shared services, and offshoring. 

In recent days, it has also launched its new web site, which has a whole lot of resources on outsourcing. You can access the site for a wide variety of white papers, case studies and articles discussing the impact of outsourcing, shared services and offshore ventures on IT, HR, Finance and Accounting, Procurement, CRM and other business processes.

yahoonews.com reports:

Our company has seen over 150% growth in revenue since the merger between the Trowbridge Group and ALS Consulting last year. Outsourcing is a highly volatile market, yet Alsbridge is quickly becoming a preferred consultancy firm due largely to our unbiased approach to the consulting process,” said Ben Trowbridge, Managing Partner, North America.

Pearl signs a 12-year outsourcing deal worth £486m

Pearl, the Life Assurance firm, has signed a 12 year contract with Diligenta, a subsidiary of Tata Consultancy Services to outsource back office operations. The objective is to have a single interface across functions to enable better cost control and improve business efficiency. VNUNet.com reports:

The main aim of the contract is to consolidate Pearl's current 11 finance and admin systems into a single platform to streamline the way it deals with the costs of its business.

Kraft Foods inks agreement with EDS

Kraft Foods Inc., a leading food and beverage company, has entered into a $1.7 billion deal with Electronic Data Systems Corp. This mega deal between the world's second-largest computer services company and the world's second largest food and beverage company would entail EDS providing a broad range of services to Kraft Foods with effect from June 1. newratings.com reports:

As part of the deal, the world's second-largest computer services company, Electronic Data Systems, would provide a broad range of services, including data centers, IT hosting, telecommunications and workplace support services to the Northfield-based company from June 1.

Northgate bags Boots outsourcing contract

Northgate HR, the UK’s largest supplier of HR applications has signed a seven year outsourcing contract with Boots Group PLC to enable the group to improve and streamline it's HR infrastructure. This deal will result in enhancing the reputation of the group as an efficient retailer. Paypershop.com reports:

The contract, worth in excess of £16 million, covers the outsourcing of payroll services and core HR systems for Boots 65,000 employees.

Brazilian outsourcing firm aims to make it big

Polics, a Brazilian startup outsourcing unit with an expected revenue of 20mn reais (US$9.29mn) in the first year of its operations is projecting the billing figure to touch 80mn reais by 2008. This six month old fledgling company has big plans to become a major player and is banking on several public sector projects to help its growth plans. TMCnet reports:

The company has expertise in finance, public and utilities markets, and aims to become a leading SAP implementation and outsourcing company in these sectors.

ARINSO announces acquisition of recruitment firm

ARINSO International, a leading provider of HR Technology Consulting & Outsourcing Services, has added recruitment to it's portfolio of services with the acquisition of Lansdowne, an end-to-end recruitment services firm. Lansdowne, founded in 1990 has a staff strength of over 100 and can boast of a revenue figure in excess of EUR 7 million in 2005. Paypershop.com reports:

The acquisition of Lansdowne is a highly value-added extension of ARINSO’s HR Outsourcing (HRO) offering, fundamentally strengthening its capacities in the field of outsourced recruitment.

ProSourcing Partners to provide services to Metropolitan Washington businesses

The newly formed ProSourcing Partners LLC will provide its accounting and business advisory services to businesses in the Washington Metropolitan area. The core team of Prosourcing Partners consists of experienced people in the business and this new entity is well placed to reap the benefits of their expertise.

ProSourcing Partners will operate from Beers & Cutler's Tysons Corner office until the firm moves to new offices in the next few months. ProSourcing Partners offers cost-effective interim and long-term support for back office finance and accounting aspects of businesses. The entity is headed by Mitchell Weintraub, who has 20 years of experience behind him. According to Yahoo news, Beers & Cutler PLLC decided to spin-off its outsourcing group to Mitchell Weintraub, a former Beers & Cutler Outsourcing LLC partner. The new company will
haver an entity of its own and begin with a strong client base and 20 professionals.

HP Sets a trend in Customer Bonding

Hewlett-Packard, based in Palo Alto, Calif., has set a precedent in providing its services to Procter and Gamble and at the same time emulating the company's physical location. The environment is in close similarity with the setup of P&G in the finance and accounting areas. Both these giants in their respective fields have set their own rules for success and at the same time share the common values of trust, integrity and competitiveness.

P&G seeks seamless integration of it's practices with the services of HP so as to bring about the same quality standards and these standards give the same amount of satisfaction to the suppliers. It goes without saying that this contract will influence the shape of the BPO industry. According to TransWorldNews, it is important for both companies to exhibit a sense of togetherness for the success of the deal. It is imperative for Procter & Gamble to make its accounts tranparent to the suppliers, and for Hewlett-Packard to implement the best practices with other customers.

XM Canada Signs Outsourcing Pact with Accenture

Canadian based satellite radio company, XM Canada has signed a deal with Accenture to combat it's growth phase in terms of increasing subscriber base. XM Canada's current infrastructure setup will perhaps be unable to meet the demands of all of 75,000 estimated subscriber base by August.

The contract is a three year multi million contract and it is expected to help XM Canada's delivery standards. Further, it will help this satellite radio company to concentrate in it's core activities and in growing its business. XM Canada, operated by Canadian Satellite Radio Holdings Inc. has seen it's subscriber base grow to 50,000 since it's launch in November last year. XM Canada is another example of the increasing dependence on outsourcing across sectors and the satellite radio company has opted for Accenture to help the company continue its growth path. ITBusiness.ca Canada reports:

The satellite radio provider expects to have one million subscribers in Canada by 2010. Its U.S. parent currently has six million subscribers. Both divisions currently use a third-party software application called Portal to manage their subscriber base, customer care and billing systems. Prior to XM Canada's launch Accenture helped it customize the software to ensure that customers would be able to sign up for their accounts once they purchased the device.

R.R. Donnelley acquires OfficeTiger for $250 million

R.R. Donnelly, the printing services company, is buying BPO unit, OfficeTiger in a $250 million
cash deal. The printing company is banking on OfficeTiger's established presence to drive business in the North American market. Reuters reports:

The deal would be "mildly dilutive" to earnings in 2006, it said, but it added that earnings per share on a non-GAAP basis are still expected to be in the range of its previous forecast.

Granules Inks outsourcing deal with SQL Star

Granules India Ltd, the pharma formulations manufacturer will let SQL Star International Ltd. integrate it's functions across all it's offices and plants cutting across geographical boundaries. This ERP implementation is scheduled to see the light of day from July 2006 and will help Granules India to bring about an integrated approach to its business functions. India Outsource Watch reports:

SQL Star will help Granules in deployment of Oracle ERP, RFID solution, process control, systems integration and implementation, IT facilities and operations management. Krishna Prasad, MD, Granules India, says, "Interactions with SQL Star were marked by credibility, ollaboration, a clear business understanding, and a 'non-sales' approach, putting them on a completely different platform than the others."

ACS gets 5 year $200 million outsourcing contract

Affiliated Computer Services, Inc., a leading outsourcing provider having a place in the Fortune 500 stable has entered into a deal with the packaging solution provider, MeadWestvaco Corporation. This deal is yet another proof of this outsourcing vendor's growing recognition in the BPO and IT solutions sector. Webbolt reports:

Under terms of the agreement, ACS will centralize and consolidate MeadWestvaco's IT infrastructure and provide a customized, highly effective, adaptable technology platform designed specifically for the company's global business requirements.

Perot Systems acquires eServ to lend new thrust to its portfolio

Perot Systems Corporation acquired eServ, LLC which is a product engineering outsourcing provider. The acquisition happened for a fixed component of $21 million in cash and a variable component upto $7 million depending on meeting specific targets. This acquisition will give Perot Systems a foothold into engineering services.

The synergy lies in the understanding of eServe's target market which will go a long way in broadening the horizons of the suite of offerings from the stable of Perot Systems. Perot Systems is headquartered in Plano, Texas and reported $2.0 billion in revenue for 2005. The company has more than 18,000 associates across North America, Europe and Asia. Webbolt reports:

"eServ is an excellent strategic fit for Perot Systems because of the company's depth of industry expertise, customer base, and the strong cultural fit," said Dave Sanders, Perot Systems vice president and Commercial Solutions group leader. "We will now be able to provide high quality, cost-effective outsourced engineering services in addition to our range of applications, consulting, infrastructure and business process solutions."

CSC renews seven-year outsourcing contract with Schroders

Computer Sciences Corp signed a contract valued at $235m and will run for seven years and ten months and it replaces the original contract signed way back in 2001. London based Schroders manages assets worth £122.5 billion for a wide range of corporate and retail clients. ComputerBusinessReviewOnline reports:

Under the terms of the new deal, CSC will provide infrastructure services for desktops
and networks, as well as support for certain core applications.

API Outsourcing, Inc. bags huge deal

API Outsourcing, Inc., a leading Business Process Outsourcing (BPO) provider has signed a multi-year contract with Network F.O.B., Inc for the delivery of freight payment services. The solution will provide an integrated online access to all relevant parties in the functional chain to information that will go a long way in giving Network F.O.B. a distinct advantage over competition.

API provides outsourcing services to bridge the gap between manual and automated processes and this is exactly what API's Freight Payment Solution will do for Network F.O.B.'s business operations. The solution will be implemented in three phases. In fact, Network F.O.B.'s selection of API's solution was largely influenced due to it's phased implementation which gives more room to manage it's business rules effectively. Black Enterprise reports:

"Network F.O.B. has a network of independent freight agents that ship freight for businesses throughout the United States, Mexico and Canada," stated Gary Halleen, President and CEO of API Outsourcing. "API's Freight Payment Solution will help the agents better manage their freight expenses."

Granules India first Indian SME to outsource IT services

Now even Indian SMEs have woken up to the benefits of outsourcing. SQL Star International Limited, an IT knowledge and enterprise services unit, has bagged the first strategic outsourcing contract in the Indian SME market segment.

Granules India Ltd, a fully integrated pharmaceutical formulations manufacturer with the world's largest 'granulation' capacity, has entered into an agreement to outsource its entire Information Technology (IT) management to SQL Star. Incidentally, Granules India is itself a provider of outsourced pharmaceutical formulation solution services to large global pharmaceutical firms. Now it is outsourcing its own requirements to another Indian firm. SQL Star's CEO Narendra Shukla told The Economic Times:

We believe that the best of global expertise can be cost effective and made available to the domestic enterprise in India. Mostly organisations do not deploy their better talent for the Indian domestic customers; but SQL Star seeks to change that situation 

Is this a new trend? We have to wait and see!

Accenture picks up Savista's BPO assets to focus on middle market

Accenture, the global management consulting, technology services and outsourcing company has agreed to acquire key assets of Savista, expanding the range of bundled, back office business process outsourcing (BPO) capabilities the company offers to include those designed specifically for the middle market - organizations with fewer than 12,000 employees. The market for these services is estimated by industry analysts to approach $17 billion and is expected to grow to more than $25 billion by 2009.
The acquisition will supplement Accenture's market-leading business process outsourcing capabilities in human resources, finance and accounting, learning, customer care and procurement. The acquisition is expected to close in the next month. Terms of the agreement were not disclosed.

Following the asset acquisition, approximately 400 Savista professionals will join Accenture, bringing the total number of Accenture professionals performing BPO work to more than 18,000.

This acquisition, perhaps, confirms the notion that as far as the BPO market is concerned, we have seen only the tip of the iceberg. A lot more action is in the offing. One can bet on that!

Read more: Accenture to Expand Business Process Outsourcing Offerings with the Acquisition of Savista's BPO Assets; Bundled Back Office Business Process Outsourcing Solutions Will Target the Middle Market

Vanco seals outsourcing deals with Euromaster and Total

The three-year outsourcing deal between tyre company Euromaster and Vanco, the largest single deal for Vanco worth £19.6 million, will result in the management of Euromaster's telecom services by Vanco. This deal comes soon after Vanco's agreement with oil and gas company Total to provide an internet VPN connecting sites across five continents. Silicon.com reports:

Allen Timpany, CEO and founder of Vanco, said the high-profile contract wins show that the VNO model - which involves effectively reselling network capacity at the lowest price by passing traffic around different carriers - is putting pressure on asset-heavy telcos such as BT.

NIIT launches remote infrastructure management service

Remote infrastructure management is where the action is. It is a rapidly expanding market and is a few steps up the value chain. The market is rapidly expanding and it is now estimated to be about $70-85 billion. NIIT, a leading player in the learning solutions market has now joined the fray in the offshore remote infrastructure management business.  It launched its Managed Services business on Thursday.indiainfoline.com reports:

"The first wave of offshoring was with Application Development and Maintenance and the next wave with Business Process Outsourcing. With the launch of Managed Services, our attempt is to ride the crest of the third wave around remote Infrastructure and Application Management,"

Euopean cos taking the BPO way

A new survey has found that outsourcing and offshoring among European businesses is set to increase as boardrooms continue to pressure their CIOs for more IT cost savings. The survey of 161 CIOs and IT executives in European organisations by Capgemini found that 58 per cent of the respondents are considering outsourcing and 39 per cent are considering offshoring in the next two years. The survey results show that although European companies have been slow on the uptake when it comes to outsourcing and offshoring, things are changing real fast. Cost factors will increasingly push them towards embracing a business model which has a big outsourcing component. That is inevitable! silicon.com reports:

The report said: "The cost chase is far from over and CIOs remain under heavy pressure, facing challenges from increasingly common, low-cost delivery options such as offshoring and distributed delivery."

New media site to connect BPO players

CMP-Cybermedia LLC has launched a new website dedicated to global technology and business services sourcing. The website www.globalservicesmedia.com is an initiative towards building powerful media solutions connecting the global buyers and sellers of technology and business services. dqchannels.com reports:

Targeted at professionals who want to master the worldwide sourcing of people, processes and technologies, the website offers information ranging from business process outsourcing, IT outsourcing, customer service and the effective management of global business operations.

Big 6 may lose BPO dominance

The ‘Big Six’ of outsourcing – Accenture, IBM, ACS, CSC, HP and EDS – could see their dominance challenged in the coming days, according to a study done by the Houston-based consultancy firm Technology Partners International Inc. With more and more customers splitting up their contracts between several vendors, the average size of deals are coming down and the deals are being spread over a number of players including smaller players. business-standard.com reports:

A spokesperson for TPI said: “Although historically, incumbent providers have tended to be retained almost as a matter of course, the increasing level and diversity of competition, coupled with a trend towards selective or single process outsourcing all mean that providers cannot rest on their laurels. Client retention will increasingly depend on an incumbent’s ability to offer a competitive proposition. This could mean significant changes in price and scope from the original contract.”

Is back-sourcing the new trend?

That more and more American and European companies will resort to outsourcing and offshoring is something that we have heard ad nauseum. A recent 'survey of surveys' - very much necessary to make sense of the huge variation between reports of the size of the outsourcing market from different organisations such as Gartner, IDC and ComputerWire -- has again come up with the same conclusion. Offshoring is now deeply rooted and the rush to climb the offshoring bandwagon will continue unabated. Yet, amidst the boredom of knowing the already known, there are interesting  aspects to take note of.

The first is the phenomenon of back-sourcing. Hey! What is that, you may ask? Its a fallout of the evolution of outsourcing. One trend that has firmly established itself in the last few years is that of multi-sourcing. No more are companies willing to strike offshoring deals with just one or two vendors awarding them mega deals. The trend now is to break up the offshoring pie into a number of service and application providers. Take the recent General Motors award. The more than $15billion contract was split up and awarded to several vendors - at least one of them from India. In the past the award would have gone to just one or two players. But not anymore. This is the trend with other such awards. ABN Amro, for example. signed 5 year deals with 5 vendors last September.

In fact, this has been going on for some time. In 2003, companies signed 29 deals worth more than $1billion, in 2004 the number of such deals came down to 25 and in 2005 the figure had dropped to a meagre 15. This year, one can expect even fewer mega deals and many more multi-sourcing deals.

With multi-sourcing comes the problems of managing vendors and investing more on governance and relationship management. Companies are typically spending anything between 8% and 20% of total contract value on governance of outsourced operations with higher spending being reported by those having complicated multi-sourcing  arrangements. Consequently, some organisations are looking at what functions they can do better than their vendors and retaining them. This is back-sourcing. JP Morgan Chase has done it with IBM, Banco Santander has said that it is back-sourcing some of Abbey's IT operations and UK retailer Sainsbury's has announced that it is bringing back in-house its multi-billion outsourcing with Accenture. So, surely this is a significant trend? Or, is it a counter-trend within a trend or just an exception which proves the rule?

Read more: Global Sourcing trends in 2006

Indian BPO cos get smarter

Indian BPO companies have quickly learnt how to avoid paying taxes. With the BPO business booming in India, the smarter ones among BPO companies in India are setting up theirt registered offices in well-known tax havens such as Bermuda, the Cayman Islands, Luxembourg or the Isle of Man. Some of them are even registered in the US although they deliver work out of India.

Although this is not an issue that they like to talk about, Indian companies are resorting to this move either not to pay any taxes at all or to defer payment of taxes in the United States. While most claim that they are doing so at the behest of their clients who feel tackling legal and other issues is easier in these locations than in India, the real reason is tax avoidance. By parking their profits in holding companies registered in these tax havens, companies avoid coming under the US tax net. Also by having a holding company not only do they pay no taxes to anyone, they are also not liable to pay tax when they decide to quit the business. Its like having the cake and eating it too! The Economic Times reports:

BPOs in India often set up postbox addresses in these countries to claim concessional tax treatment. They don’t pay tax, but the boards do meet in tax havens to fulfil legal requirements. Spectramind India had a holding company in Bermuda and Wipro acquired the holding company in Bermuda together with the Indian subsidiary. The merger process is pending before the High Court and approvals are expected soon.

 

Vendors watchout

There is good news for vendors of IT and BPO services. Two new opportunities have come  up in the last few days for  BPO service vendors to make a killing. The mobile telephone giant Vodafone of the UK is planning to outsource a significant piece of its technological operations. The deal could well run into billions of dollars. The other opportunity has been thrown up by the decision of Swindon Council to go for a $535 billion IT/BPO outsourcing project that would unfold over 15 years. Line 56 writes:

Swindon Council is receiving tenders until February 16, so interested vendors still have a little time to try to get in on the action.

Air NZ considering Union proposal to keep engineering work in NZ

Air NZ and the engineering unions are under way, mainly focused on the unions' proposal for wide-body engineering. The talks will go on until the end of January, and follow the announcement by Air NZ in December that it would pursue its step to send heavy engine work overseas, but is willing to consider a proposal from the unions to keep the work in New Zealand. The National Business Review reports:

That proposal, developed by the Engineering, Printing and Manufacturing Union and the Aviation and Marine Engineers' Association in conjunction with financial consultants Michael Stiassny and Brendon Gibson of Ferrier Hodgson, followed the airline's announcement on October 19 that it intended sending all heavy engineering work overseas, with the loss of 617 New Zealand jobs.

£7 billion outsourcing deal between Winterthur Life UK and Citigroup Global Transaction Services

In the £7 billion outsourcing deal between Winterthur Life UK and Citigroup Global Transaction Services, Shearman & Sterling and Lovells have carved out an important role for themselves.

Shearman has a financial services practice’s relationship with Citigroup, and this is particularly relevant in the outsourcing agreement, which stipulates that the fund administration, custody, and related services of Winterthur will be transferred to the Edinburgh funds platform of Citigroup. The transfer is likely to be completed in the latter half of 2006. Legal Week reports:

The transaction builds on Shearman’s financial services practice’s relationship with Citigroup. The bank is a regular client of the firm but the London financial services group first acted for it in 2004 on its purchase of ABN Amro’s custody business and the outsourcing of Citibank International’s Post Office Card Account benefits business to Citicorp Electronic Financial Services.

Coty Inc. and IBM in procurement services agreement

Coty Inc. is a market leader in global beauty products with a portfolio of 35 brands including Calvin Klein, Adidas, Rimmel, Davidoff, Lancaster, Jennifer Lopez, Jil Sander, Joop! Kenneth Cole. The group, comprising of Coty Beauty and Lancaster Group, has now finalized a 5-year contract with IBM for procurement services. Under the terms of the agreement, IBM will procure goods and services for Coty in the specific areas of business services, travel, facilities management, technology and telecommunications, marketing, and logistics.

Coty expects to take advantage of IBM's global economies of scale in providing an impetus to its business line. It will also result in significant cost savings, which will ease the pressure on capital. IBM will provide its key Procure-To-Pay procurement solution, which will serve as the foundation of the deal. This is because Coty will now have access to IBM commodity experts, a global contact center, and an accounts payable processing center supporting Coty suppliers and employees in six languages.

Employease retains top position in Business Insurance magazine’s employee benefit information system

Employease, Inc., a provider of innovative benefits solutions and outsourcing options, has been ranked--for the second consecutive time--as the top employee benefit information system by Business Insurance magazine. Employease helps employers cut down costs and simultaneously improve service.

Not surprisingly, the company has listed as the only vendor in the Visionary quadrant in Gartner's "2003 U.S. Midmarket HRMS Magic Quadrant Report." By using the solutions provided by Employease, companies can utilize the HR staff to provide process-outsourcing services on behalf of a customer. TMCnet reports:

The company's applications include full-featured HRIS, benefits administration, employee self-service, manager self-service, leave management, performance management, recruitment and connectivity to internal systems, benefit providers and other service providers. Employease outsourcing solutions include employee call center, carrier billing, invoice reconciliation, enrollment support, fulfillment services, COBRA, HIPAA and flexible spending account administration.

Equinox Corp. expands capacity in India

Equinox Corp., a mortgage loan processor company that was bought by Indian outsourcing firm i-Flex Solutions Ltd, has increased its facilities in India to 40,000 square feet, accommodating about 750 employees. The link with i-Flex has helped attract clients from the banking sector. With the lower operating costs working in its favor, Equinox is looking to expand into outsourcing in investment and retail banking business processes.

Black Enterprise reports that Orange County also hosts other leading mortgage companies such as Ameriquest Mortgage Co. and New Century Financial Corp. New Century Financial Corp. is headquartered in Irvine, California. It is a leading full-service mortgage company extending first and second mortgage products to buyers across the U.S. through the subsidiary companies subsidiaries New Century Mortgage Corporation and Home123 Corporation. Ameriquest Mortgage Co. is based in Orange and specializes in home purchase and mortgage refinance loans.

Back office business process outsourcing agreement between Lloyds TSB and Xansa

IT company Xansa will deliver back office business processes to Lloyds TSB in the domains of life and pension services, resulting in an initial position of 150 employees. The outsourcing deal was announced by Lloyds, and will affect Xansa's India operations. Business Line reports:

The size of the deal has not been disclosed. "While we cannot divulge the size of the contract, it will result in a starting position of 150 employees," a company [Lloyds TSB] official said. According to Xansa, the contract builds on the company's strategy of delivering back-office processes to the financial sector.

Seven Jeans, Coach, Outsourcing -- All on PBS

We don't normally mention TV shows here, but I thought this transcript from PBS was pretty interesting. It profiles a woman wearing Seven Jeans (OK, I admit it, I am a sucker for both Seven Jeans and Lucky Brand). The woman checks out a purse and says, "This is Coach?"

The point of the story being that Coach has completely reinvented its brand, and is now chic again. Impressively, it has done this while using outsourcing as a low-cost manufacturing solution. Is there anything you can't outsource in the new millenium?

Teva and Ind-Swift in pharma agreement

Teva Pharmaceutical Industries, a leading global drug company, and Ind-Swift Lab are engaged in talks to finalize an outsourcing agreement. Under the agreement which is likely to be concretized in a a week's time, Ind-Swift Lab will manufacture fexofenadine for Teva's successful anti-histamine generic formulations. Ind-Swift will supply 30 tonne of fexofenadine, and will dedicate its center at Derabassi, which became operational last year at a cost of Rs 22 crore. The plant will have to be 100 percent operational to meet the demand under the contract.

The expiry of Claritin which helped Schering-Plough net profit volumes up to $5 billion in 2001-02, manufactures such as Teva, Johnson & Johnson and Wyeth have stepped into the antihistamine segment. Teva, based in Israel and with a presence in north India, is one of the leading 20 companies worldwide that are engaged in the development, production, and marketing of proprietary branded pharmaceuticals and active pharmaceutical ingredients.

Northrop Grumman Corp signs 10 year contract to provide Virginia with IT services

The Los-Angeles-based defense contractor Northrop Grumman Corp will provide support for a major part of Virginia’s IT services. This was announced by Governor Mark R. Warner. The contract is for a period of ten years and worth $2 billion. The services will be located in southwest Virginia and will necessitate the setting up of more than 400 jobs in the region.

In all, the contract involves the creation of 631 jobs to be located in Chesterfield County and 433 in Russell County. Northrop Grumman Corp will set up a 130,000 square foot data center and help-desk facility in the Russell town of Lebanon at a cost of $22.8 million. Most of the employees will be drawn from the region itself. According to a spokesperson, the jobs will cater to the requirements of building and operating the state’s computer network. Times Dispatch reports:

The contract includes a role for the University of Virginia at Wise, which will have a satellite office and will provide technology education support through internships and student recruitment efforts. State employees who go to work for Northrop Grumman would receive 4 percent pay raises and signing bonuses, the announcement said.

EDS and First International Bank of Israel sign $108 million outsourcing deal

EDS Israel has entered into an agreement with the First International Bank of Israel. The agreement is valid for the next eight years, and is valued at $108 million. According to EDS sources, this is the largest and most significant outsourcing agreement in Israel. Consultant-News reports:

Under the terms of the contract, FIBI will outsource its IT operations to EDS Israel, including approximately 100 employees of FIBI's IT subsidiary, and the IT infrastructure. Through this contract, EDS will manage the bank's IT infrastructure; host the bank's central, departmental and personal computer activity and manage its communications network.

TCS acquires Comicrom, strengthens presence in Chile

Leading Indian software company Tata Consultancy Services Ltd (TCS) continues on its acquisitions spree. The most recent step in this direction is the acquiring of Comicrom, a company based in Chile, for US$23 million.

The two companies were already into an understanding to work jointly for providing software support in Chile, and the merger came about with TCS buying Comicrom's stake of 49 percent. With the merger, TCS expects its position to be further strengthened in the banking industry of the Latin American region. The step is also likely to add to the business-process outsourcing portfolio of TCS. IT News reports:

Privately held Comicrom, with 1257 employees, provides services mainly to banks, insurance companies, pension funds, and government organisations in Chile, TCS said. Comicrom counts 70 percent of Chile's banks as customers and has 57 percent of the country's cheque processing business. It made revenue of US$35.5 million in the financial year 2005.

Unisys to provide computer support to the Department of Health and Human Services in outsourcing contract

The Department of Health and Human Services (HSS) has awarded a three-year contract worth $65 million to Unisys. According to the agreement, Unisys will extend computer support to eight HSS agencies: Healthcare Research and Quality, Health Resources and Services Administration. Administration for Children and Families, Administration on Aging, Substance Abuse and Mental Health Services Administration, Office of the Inspector General, Office of the Secretary and the Program Support Center.

Unisys will manage desktop PC and server support, a service desk, server consolidation, continuity of operations/disaster recovery, training, application and server hosting, security operations, system and network monitoring, and database and application administration. FCW Media Group reports:

“Our vision for this program is one in which [information technology] services are provided so reliably, users can take them for granted and instead concentrate on their agencies’ strategic issues and missions,” said Greg Baroni, vice president of the company’s Global Public Sector. 

Rabobank and Unisys Outsourcing agreement extended to 2010

Rabobank, the Dutch financial services provider, has extended its existing outsourcing agreement with Unisys Payment Services and Solutions (UPSS) to the end of 2010. According to the agreement, UPSS controls 50 percent of the Netherlands market in the paper-based transactions sector, and Rabobank expects to take advantage of this experience for processing its own  paper-related payment transactions. Water News reports:

“Unisys has proven to have both the business knowledge and technology to help us improve our document services processing,” says T.I. Bommel-Scheffer, manager of giro payments at Rabobank. “The benefits of the shared utility give us the required scale for added efficiencies. UPSS also invests in new technology and process optimization, which gives us a cost-effective way to stay ahead in managing our payments.”

Santex Standard extends outsourcing services to Latin American countries

After having made the necessary investments for providing outsourcing services from its center in Argentina's Córdoba province, Santex Standard is now set to provide services to companies based in Latin America. Basically catering to outsourcing needs from the US, Santex has already started operations in Chile, which is emerging as an attractive destination for multinational companies. Santex views Chile as an investment base for providing services in other parts of Latin America.

Santex is progressing towards a level 3 CMMi certification. Regarding the scope of its business in Latin America, Santex has no preconceived notion, but will extend services according to market demand. Business News Americas reports:

Unlike standard IT outsourcing models, which offer certain services to be implemented within certain timeframes, Santex Standard's business model is a more flexible approach, according to Santex Standard's business development director for Latin America, José Luis Jiménez. Santex's business model is based on creating work teams that build projects according to client requirements and resources available.

DiskSites and Unisys Global Outsourcing & Infrastructure Services in three-year service contract

According to a three-year contract signed recently, DiskSites, an innovator in providing network infrastructure optimization solutions to distributed organizations, will offer its wide area file services VBranch product range to Unisys. In turn, Unisys will build a complete product and services solution and make it available for sale to Global 2000 customers. Dell and other global channel partners of Unisys will market the product.

Unisys Global Outsourcing & Infrastructure Services is already building a program around DiskSites, and the new contract is expected to continue the positive relationship between the two companies. Businesswire.com reports:

According to Amir Shaked, CEO of DiskSites, "The combination of Dell's platforms and market presence, DiskSites' enterprise-grade software and Unisys' international service capabilities introduces a best-of-breed solution for the fast growing WAFS market."

TCS to open its first administrative office in the UK for back-office operations

Tata Consultancy Services (TCS), India's biggest outsourcing service provider, has finalized an agreement with Britain's Pearl Assurance. Under the terms of the agreement, TCS will extend business-processing support to Pearl's closed funds portfolio.

This contract places TCS in the back-office service market in Britain and will boost the company's efforts to enhance its presence in the UK. TCS already has tied up relationships with several British financial services, but the agreement with Pearl will lead to the first administrative office of TCS in the UK. Times Online reports:

The company has expanded outside India to establish bases in other low-cost countries such as China and Brazil. It also has operations in so-called “near shore” locations, such as Hungary, so that it can be closer to its customer. The move into Peterborough, in Northamptonshire, will allow TCS to offer customers the opportunity to outsource different tasks to different locations.

Unilever considering Outsourcing jobs to Eastern Europe

Unilever, the leading consumer products company based in London and Rotterdam, has confirmed that the company is considering moving some of the finance, human resources and IT jobs outside Western Europe in order to cut costs. This statement was in response to a report by Financial Times (German edition) that Unilever was considering outsourcing of 2500 jobs to Eastern Europe.

Unilever is discussing the possibility of the outsourcing move with Accenture and IBM, who are the possible service providers. At this stage, the outsourcing move is only a possibility, and Unilever has not yet reached a final decision. Xinhuanet.com reports:

A Unilever spokesman said the figure quoted by the newspaper was “highly speculative" but he could not say how many jobs would be outsourced, said the ANP. But the company has confirmed it is looking at the possibility of outsourcing administration and IT functions and staff support services

North Carolina Municipal Power Agency Number One and ACES Power Marketing extend Outsourcing agreement

PR Newswire reports the extension of the outsourcing agreement between North Carolina Municipal Power Agency Number One (NCMPA1) and ACES Power Marketing (APM). With this extension of the agreement, APM will continue its services in providing NCMPA1 with hourly wholesale power transaction execution services "as agent".

Based in Raleigh, NCMPA1 is made up of 19 municipalities in the western part of North Carolina. APM will provide the services from its East Regional Trading Center ("ERTC") in Cary, North Carolina. Clay Norris, Division Director-Planning, ElectriCities, said in a statement that with the extension of the agreement, APM would be able to persevere with its cost-effective outsourcing of hourly operations. PRNewswire reports:

"NCMPA1 is an important customer of APM, and this agreement extension with NCMPA1 further demonstrates APM's ongoing commitment to providing services for the public power market," said Brian Beebe, Director of Business Development at APM. "APM's relationship with NCMPA1 is a collaborative effort that allows both firms to focus on respective core business activities."

CyberMedia India Ltd and CMP Media Declare joint venture

CyberMedia India Ltd and CMP Media have declared a joint venture that will cater to worldwide media services. Both the companies have successful records on their own: CMP is a leading player in the market arenas of technology, health, and entertainment, while CyberMedia is the largest specialty media house in South Asia.

The new venture will be called CMP-CyberMedia LLC, and will provide improved information to industry heads on evaluating and securing services for their business processes. the sales teams will now be able to build a brand portfolio encompassing the print, online, and event-based areas. The joint venture has been prompted by the growth potential of the industry over the next few years. DQChannels.com reports:

The JV, CMP-CyberMedia LLC, combines the strength of these media leaders to better inform industry executives how to evaluate and secure services for their businesses. It will also provide marketers with access to the right decision makers for their messages by developing a comprehensive brand portfolio that will include print, online and events.