Outsourcing Times

Survive The Outsourcing Trend With This Guide

It is natural to worry about losing your job – especially in present day America. If you are an IT professional, your worst nightmare may just come true today, or maybe tomorrow. So, are you prepared for surviving the outsourcing onslaught?

One of the first things you must realize is that the present situation is not as threatening as it is made out to be. Secondly, you don’t need to await the layoff notice. There are many things you can do to remain competitive in the job market. For instance, learn to hard sell the practical benefits you can deliver instead of talking technical jargon. Another thing you could do to improve your employability is learn more skills. For more information on how to survive the outsourcing trend, you can check the Outsourcing Survival Guide

Phenomenal Growth in Global Market for Hosting Services: Report

Research and Markets, a market research resource, recently announced that it would add Infrastructure Outsourcing and Managed Services to their offering. The firm says outsourcing enterprise infrastructure can refocus a business on its core competencies while reducing costs. Topshots.com reports:

With a forecast of $39.4 billion in 2006, the global market for hosting services represents the largest opportunity for IT services providers within the broader managed and outsourced infrastructure services market. For more information you can visit the website.

Read more: Global Market for Hosting Services Represents Large Opportunity

Near Shoring To Become Norm in ‘07

By Priya Jestin, Staff Writer

Luxoft, one of Russia’s leading providers of IT outsourcing development and services to companies like IBM, Dell, Deutsche Bank, T-Mobile and others, recently issued its predictions for the IT outsourcing industry in 2007. According to Luxoft, no one approach – in-house, on-site, ODCs or captive models – will be on top in 2007. Each company will access its available global resource and skill pool and choose a variety of outsourcing and in-house combinations to reach its desired business and technical goals. Outsourcing, say Luxoft officials, will become as commonplace as Six Sigma.

This bit of news should bring a lot of cheer. It is expected that in 2007, all forms of security will make it on to the shortlist for any successful outsourcing engagement – system, physical, staff and disaster recovery. Clients will increasingly demand excellence on this front. Also, companies will increasingly look to near shore development solutions to round out its outsourcing portfolio. In 2007 there will be increasing demand for outsourcing resources in Europe, Eastern Europe and Canada but this phenomenon will be seen with resources around the globe.

Homecoming

Imagine virtual contact centers that tap high-caliber workers with industry expertise, and connect them through a network of home-based agents across the US. This idea could revolutionize the way businesses interact with customers. Only thing is, it is no longer an idea; it’s a reality. Businessweek.com reports:

Several factors have contributed to the homeshoring trend and will continue to fuel growth in the coming years. Among them are technological advances that make it easy to set up and monitor home-based agents. Consider the increased availability of high-speed Internet connections, as well as innovations in Voice over Internet Protocol (VoIP) technology, which can add a host of features to calling plans, while reducing the price of telecommunications.

Read more: Bringing the Workforce Home

IT Boom In Russia

Exports of Russian programming products increased by 80 percent, from $1-billion worth last year to $1.8 billion in 2006. Analysts now predict that Russia will be one of the top three countries for IT outsourcing by 2010. Kommersant.com reports:

“Russia now controls 3 percent of the market for offshore programming,” said Viktor Vainshtein, head of the Aplana company. “By 2010, our country might confidently claim 10 percent and, if things go right, 15 percent. That will be possible in large part thanks to active state support.”

Read more: Russia's IT Boom

Kodak renews Nortel outsourcing deal

Eastman Kodak Co. recently agreed to a renewal of its existing agreement with Nortel Networks Corp. Nortel will now manage Kodak’s U.S. voice network for another three years. Marketwatch.com reports:

The Rochester, N.Y., film and camera company said the renewal calls for Nortel to continue managing Kodak's network of PBX's and telephone services through 2008. Kodak has outsourced its voice network to Nortel since 1995.

Read more: Kodak renews Nortel outsourcing deal for 3 more years

Indian IT firms queue for Japan's outsourcing pie

--By Priya Jestin, Staff Writer

Having got their fairs share of European and US markets, Indian IT firms are realizing that to maintain their present rate of growth, they need to expand exponentially. So now you have them exploring the Japanese market.

Japan is the world's second-biggest spender on technology after the United States. The total IT outsourcing market in the country grew to $15 billion in 2005 and the market is forecast to grow 5.8 per cent per year through 2010 to 2.34 trillion yen. And this time around, the Indians don’t want to make any mistakes – culturally that is. So now you have Indian software engineers learning the Japanese language, cultural nuances and etiquette.

TCS Bags $ 100 m Kimberly-Clark Contract

TCS seems to be on a deal-winning spree. The latest deal TCS bagged is from US healthcare company Kimberly-Clark, which owns brands like Huggies and Kleenex. The US$100 million deal follows on the heels of the $90 million deal TCS signed with Qantas Airways last week. The company is also said to be closing in on a major deal from Bank of China.

The Indian outsourcing industry is dependent on oversees clients for a major part of its revenues. The US is one of the largest markets for Indian software firms. If the Bank of China deal comes through, it will be one of the largest outsourcing deals in Asia. Sda-india.com reports:

Earlier, TCS announced that it was working on at least five deals and was hopeful of garnering over USD 100 million in this quarter. A 200 million euro contract from ABN Amro and a USD 200 million deal from CitiGroup were the other major deals bagged by the company.

Read more: TCS Wins USD 100 Mln Outsourcing Contract from Kimberly-Clark

Retail Giant Myer, IBM sign 5-yr Deal

On Demand Zone Retail giant Myer recently announced a five-year IT outsourcing deal with IBM Australia. IBM will now supply a host of IT services to Myer. This includes AS400 support, midrange services, data networking, desktop, applications maintenance and development as well as help desk services. Computerworld.com reports:

IBM Global Technology Services general manager Peter Campbell said the company aimed to help Myer reach its full market potential. In a statement, he said: "IBM is delighted to work with Myer on its transformational journey, and will draw on the breadth of its technology services and retail industry expertise to support Myer's overall business strategy."

Read more: Myer inks five-year outsourcing deal with IBM

Qantas Signs Deals With Indian Firms

Australia’s Qantas Airways recently announced a seven-year deal with Satyam, India's fourth largest software exporter. This deal is worth over $54 million. Satyam has to maintain information technology services and develop software for more than 150 applications for Qantas.

Another Indian firm Tata Consultancy Services (TCS) has also signed a $90 million technology outsourcing deal with Qantas. Under its contract with Qantas, TCS has to provide software services to upgrade airport operations and commercial systems over the next seven years.

This recent development clearly indicates that Indian outsourcing firms still have a huge lead over their counterparts in other countries thanks to the availability of skilled and relatively cheap manpower.

Now, Pharm Offshore

Executives across industries are now exploring ways of tapping their offshore workforce to generate additional revenue, improve core business processes, and offer more value to customers. While pharmaceutical companies came late to offshoring, they are making up for this delay by moving quickly to capture gains beyond labor cost savings in back-office operations. Mckinseyquarterly.com reports:

Most of the industry, however, has been more cautious. Some pharma companies are outsourcing selected functions (such as certain IT activities) only for cost savings rather than looking more broadly at the development of new processes that would improve business productivity or generate revenues.

Read more: Pharma leaps offshore

AT & T terminates customer service contracts for DSL installations

Here is a piece of breaking news from AT & T! Are you aware of the terminations of customer service contracts to other countries by AT & T? Read on to know the details.

AT & T has decided on terminating the customer service contracts for DSL installation that it had been outsourcing in the past. The company has come to a consensus with the CWA (Communication Workers of America Union) to use the personnel within the nation for the customer care service of DSL installations at home. In addition to this, the customer care executives would provide the technical details regarding email,internet and DSL related technical queries.

The employees who would be taken into will be into the rolls of AT & T by the wake of the year 2008

Click here to read more on "Threat of Outsourcing Causing Union Growth" in one of our previous posts.

IBM, EDS bag outsourced projects from Vodafone

IBM and EDS have bagged the subcontracted projects from Vodafone. The outsourced work involves back end application maturation and maintenance activities of IT network across the Globe Group.

Amidst a severe downfall of the Vodafone group in the European market very recently, the company has given emphasis to the cost curbing activities. As an initiative towards cost curbing by 30% within the next five years, Vodfone group has taken up this deal with EDS and IBM.

Read more on "Vendors watchout" to know the details on the IT and BPO projects that are outsourced by Vodafone group, UK.

Welsh Water to revamp IT systems in multi-outsourcing contract

CapGemini, LogicaCMG, and TCS will seek to transform the business processes and IT systems at UK utility Welsh Water in a £100 million outsourcing contract. The outsourcing partners will bring about comprehensive hardware replacements and implement the fully integrated SAP enterprise resource planning system.

The outsourcing move is expected to bring Welsh Water on par with state-of-the-art water technology, and the next three years will see the utility train 2,500 employees so that the new system is put to its optimum use. Vnunet quotes head of IT Fraser Nairn:

In the past, we have not invested a great deal in IT, and we want to update all our systems to give much better services to our customers and bring big efficiencies into the business.

IT heavyweights discuss the outsourcing flight path

As we have seen in an older post titled "Western European IT outsourcing bounds ahead through mega deals", it is least surprising that IT continues to be the one industry that is making rapid strides, attracting many offshore mega deals. India is very much a part of this world phenomenon. 

This was reflected at the IT conclave organized by the Industrial Interaction Committee of the MBA program at IIT Kanpur, where several of the top IT heavyweights traced the development of outsourcing in India from its days of infancy to its present mature state.

Mr. Ramakanth Desai, Senior Vice President, Business Strategy and Innovation at Wipro, reflected on the initial phase when cost arbitrage was the key attraction that Indian IT players had, and looked at the status today when big deals are being struck by service providers in India. The BPO industry obviously continues to play a major role in the paradigm shift, with a growth rate of about 50% per annum.

Other speakers focused on issues such as the global mindset of Indian managers for a vibrant outsourcing industry, project management as a key to the success of the IT industry, the utilization of IT as a strategic tool for increasing business competitiveness, and the rather sordid tale of corruption in the IT industry.

For more details on each of these subjects, click here.

Fiserv Inc. to provide core banking services to Denmark State Bank

In an older post, I mentioned the high dependence of investment banks on outsourcing. In fact, outsourcing in the banking sector has been on a steady growth path across the globe.

When the time came to have a relook at its outsourcing partner, Denmark State Bank in Wisconsin opted to go for Fiserv Inc., rather than renew the contract with its existing service provider.

It's really the requirement for change that has prompted Denmark State Bank to opt for Fiserv Inc in the place of its current service provider. The Bank officials assert that the Premier core capability of Fiserv is a better option that enables the bank to access all customer data from a single application without giving up functionality requirements.

The Fiserv clearing network will posit the bank pretty well to create substitute checks as and when required and extract more mileage from the deal. Finextra reports on Fiserv's Information Technology Inc. (ITI) business unit:

Available for both outsourced and in-house environments, ITI's openly integrated software suite offers products for virtually every function, including Internet banking, enterprise content management, executive intelligence, relationship management, branch automation and core accounting, all available on the industry's most popular hardware platforms.

Dell's Outsourcing Initiatives

Dell is planning to change its business strategy by outsourcing most of its services in order to expand its operation across the globe. Traditionally, Dell has been US-centric. However, now it wants to focus on other countries that have emerged as top IT and Software hubs. The company will reduce the number of services it currently provides in-house. Dell is expanding into growth markets by building new plants in countries like Brazil, China, India and Central Europe.

My previous post titled "Reducing Cost Adjustments in Outsourcing Contracts" gives useful information about cost adjustments in outsourcing.

Visanet and EDS: Outsourcing deal through decades

Over the next ten years, the Plano-based tech company EDS will continue to provide ITO and BPO services to Visanet, a credit card services provider based in Brazil. The new contract is worth $209 million, and is an extension over the existing agreement between the two parties.

What is interesting to note is that the two companies have been associated over the past ten years; this is certainly turning out to be a long-term association. Global Services reports:

In addition to existing services, EDS also will provide call center support to assist Visanet merchants with point-of-sale equipment-technical support. The call center handles more than 450,000 merchant calls per month.

Offshore IT Outsourcing

You must have heard about risk factors associated with outsourcing. Often companies overlook these risk factors and face problems with the processes in the end. Risk is natural in strategic business initiatives. It increases when it involves two organizations that are involved within different geographical and political boundaries.

Offshore IT outsourcing involves special emphasis on Information security and risks associated with loss of control over strategic business process. Frequent audits and analysis can help you in maintaining a continuous supervision over your vendor. To ensure better vendor management, you need to influence the communication methodology for offshore software development.

Get some tips on outsourcing by reading my previous post titled "Outsourcing Tips for Small Businesses".

Offshore Outsourcing Reduces U.K. Tech Workforce

It is said that somebody's is gain is other's loss. This is true in this case. You will be surprised to know that the success of offshore outsourcing is causing the number of UK-based technology staff to decline. The job reductions are witnessed in programming, low-level technical roles, call centers, helpdesks and back-office administration.

According to reports, there will be 130,000 offshore workers delivering software and IT services for UK organizations. The number of UK-based staff hired by offshore companies will continue to increase over the years. However, they may not be sufficient to offset the overall decline in the UK.

To know more about IT outsourcing, you can read my post titled "Choosing the Right Time for IT Outsourcing".

Indian and Philippine IT Firms Sign Outsourcing Deal

National Association of Software and Services Companies (NASSCOM) and its Philippines counterpart have signed an agreement to work together to promote outsourcing in the respective countries. The agreement will boost the outsourcing market in Philippines that is currently witnessing an upward trend. According to reports, Philippines could have a million people working in call centers by the end of 2010. Officials of NASSCOM and the Business Processing Associations of the Philippines (BPA-P) signed the agreement in Manila.

Read my previous post titled "UAE: Hot Destination for Outsourcing" to know how outsourcing is rising in the UAE.

Offshore success bites into UK tech workforce

Research analyst firm Ovum has thrown up some alarming facts for the UK job scenario in the technology sector. According to the report, the number of offshore workers delivering work to the UK organizations will double within a period of three years, touching a figure of 130,000 offshore workers. On the flip side of the coin, there is going to be a 6% drop in the number of onshore software and IT services staff.

While there is a steady number of UK-based workers being absorbed by offshore companies, this job channel is not enough to counter the fall in UK-based jobs in the IT and software sector.

Ovum senior analyst Phil Codling makes a frightening statement on Silicon.com:

We face the prospect of a skills time-bomb in IT. It is not clear where the next generation of highly-skilled, experienced programme and project managers will come from.

Software Development Outsourcing Revenue in India Goes up

Recently, I had written a post titled "India’s Outsourcing Revenue Is Growing" that informed you about the rising outsourcing revenue in India. Today, the focus is on software development outsourcing revenue. Software Development outsourcing revenue of India has gone up by almost 32 percent and reached US$ 6.6 in the second quarter of 2006. According to reports, more and more offshore outsourcing companies from the USA and the UK are eyeing India for the overseas development solution.

As India has the best quality and highly qualified IT professionals, it has become the most preferred destination for the Western companies. The financial data suggest that exports of information technology and software development services amounted total US$ 6.57 billion (295 billion Indian rupees) in the first fiscal quarter. A large number of western companies are shifting their back-office and other non-core development work to India to focus more on the core business activities.

Nasdaq to Increase IT Outsourcing to India

The Nasdaq has decided to increase the outsourcing of its IT requirements to Indian firms. Nasdaq has already done a bit of outsourcing through contractual relationship with organizations. It has many listed companies to supply these services.

Nasdaq does not feel the need to develop the IT system itself. Rather it has decided to contract those services to firms such as Infosys and Cognizant. Nasdaq will rely on its outsourcing partners to fuel the trades executed through a sophisticated computer and telecommunications network. The network will transmit timely, critical investment information to all users.

Read our previous post titled "Indian BPOs Are on The Prowl to Acquire Overseas Companies", which is relevant to this post.

IT Outsourcing Slowing Down

Recently, we had published a post titled "The security glitch plagues IT outsourcing". Now our fear comes true amidst the reports that IT outsourcing is slowing down. Experts believe that outsourcing firms will now have to tailor their contracts to each opportunity.

They must be able to show that their outsourcing deals are able to make improvements and cost savings on the service. The security glitches and quality issues have slowed down the pace of IT outsourcing, which is not a good sign. Most businesses have started bringing IT and business process outsourcing contracts back. If this trend continues, then IT outsourcing will be reduced to a considerable extent.

Choosing the Right Time for IT Outsourcing

Outsourcing has become a "buzzword" in the industry today. Many companies are outsourcing their entire IT operations in order to bring more efficiency and effectiveness. Cost saving is also one of the major factors that drive the outsourcing growth. In the past, outsourcing was used to farm out the undesirable jobs. However, situation is completely different today. IT outsourcing has become a common phenomenon in the software industry. It is important to make a perfect analysis before finding out the right time to outsource your business operation.

While considering the hiring of full-time staff, the HR departments pay close attention to whether or not the employees look skillful and efficient or not. If applicants meet the requirements, they are interviewed in person to judge whether they truly fit the positions or not. Companies that offer IT and programming services, advertise their employees' specialized skill. However, the hiring company rarely verifies this. Many strong management teams justify outsourcing as a mean to focus on their staffs' expertise. This is the correct use of outsourcing.

Outsourced operations have been successful, but not without the involvement of skilled management. Constant supervision and guidance can tremendously improve your business initiatives. Without a dedicated project environment, outsourced services may not work for the companies. If you are going for outsource your IT operations, make sure that you are passing your business into right hands.

Manage time, outsource email!

In this time and age, we are all familiar with the value of the adage, "Time is money." All ventures are resource-strapped, and the objective is to maximize output from the limited human resources.

Communication plays a big part in maximizing the output; the quicker you are able to communicate, the more is the yield. But what if an external agency is able to manage communication for you and free your in-house resources for core activities of the enterprise?

Many companies have taken that route by outsourcing their email requirements. Apart from cutting operating costs, outsourcing emails also leaves "both hands free" for your IT department to concentrate on day-to-day business requirements.

There are other potent advantages of email outsourcing. Outsourcing can tell you exactly how much it is going to cost to manage email, so you are better prepared when allocating budgetary needs. It also lets you get away with your technical limitations in email management; your service provider will be tech-savvy and have all the updated strappings necessary—POP3, IMAP4, WebMail—for effective email communication. Most important, you will be backed up by 24x7 tech support from your service provider, and this will ultimately boil down to better customer response.

So, what are you waiting for, go the email outsourcing way, and discover a new management tool; your customers—and your IT department—might just thank you for taking that step!

Click here to read more about email outsourcing.

54 million euros are ours, says Siemens

In a time-no-bar outsourcing deal with US-based Talecris Biotherapeutics, Siemens Business Services will provide the entire IT infrastructure requirements of Talecris for 54 million euros. Siemens will support all locations of Talecris for this lump sum figure. EURO2day reports:

SBS will run Talecris servers, operate the company''s network and provide desktop services and helpdesk support. SBS will also provide an application management service for Talecris.

HP Extends IT Outsourcing Deal with Canadian Bank

Hewlett-Packard Co. (HP) has extended the It outsourcing deal with Canadian Imperial Bank of Commerce (CIBC). That means HP will continue to manage IT outsourcing tasks for the bank. The deal was renegotiated recently. The deal will mark another step in HP's effort to compete with its rivals for enterprise information management contracts. The new deal renegotiates that contract to add $700 million and four additional years. It will bring the combined value to $2.2 billion over 11 years.

According to Computer Partner -

HP began managing infrastructure services for CIBC in 1998. Since then, bank users have demanded new technologies such as Internet banking, greater use of bank branches and cash machines instead of main offices and a greater need for security such as fraud detection, he said.

IT Outsourcing Firm Achievo to Merge with Software Developer BBX

IT outsourcing firm Achievo has decided to enter into an agreement to merge with China's software development firm Beijing Beifang Xinyu Information Technology Co Ltd (BBX). The merger will make BBX a wholly owned division of Achievo. With 450 employees, the merger will be Achievo's largest acquisition in terms of headcount. BBX provides software development and IT services to Japanese companies with offshore outsourcing services in China.

Westpac Bank made Security Blunder in Outsourcing Deal

When Westpac Bank made the IT outsourcing deal with IBM GSA in 2000, it was expected that the deal would help the bank in achieving higher quality and productivity. Now it seems that it did not get what it expected. Recently, Westpac Bank admitted that IT security has been breached several times in the IBM center and the bank had to suffer for it.

Although Westpac is not regretting its decision of outsourcing its operation to IBM, it admits that it has made a blunder by outsourcing security as part of the outsourcing contract. According to the bank sources, it has struggled to get security and staffing levels back on track.

$112 million BTO outsourcing contract in the kitty for IBM Japan

Japanese consumer finance company ACOM has outsourced its loan, credit card, and installment sales finance business to IBM under a 10-year BTO contract. While IBM extends its BTO portal and money resources with this contract, ACOM has signed the deal to computerize the data on 34 million pages, which was hitherto maintained in paper format.

After computerization, IBM will help ACOM store the documents and make them more accessible for the front-office network.

Global Services Media has more.

Gaming in outsourcing: No longer a child's play

Gaming in outsourcing is serious business. A few years back, the trend to outsource production in the gaming industry had caught up like a whirlwind, and I have drawn attention to the phenomenon in an earlier post. As in so many industries, India is emerging as a leading destination for outsourcing in gaming as well.

But what do outsourcers say on the success—or lack of success—of outsourcing gaming requirements? The recent Amritt Venture Report has specific answers. Out of 317 gaming professionals from the U.S who participated in the survey, 58% believe that outsourcing in the gaming industry is played on a rough turf; the process is not as smooth as they expected in the beginning.

Quite a few respondents say that they are disappointed with the quality and delivery schedule churned out by the vendors. Some respondents had to turn to new vendors, while others had to opt for a second vendor. These reactions notwithstanding, 94% of the respondents are committed to tread the outsourcing path; according to them, it is a rough, but must-traverse path.

Game Daily has more on the fiscal benefits achieved by gaming companies through the outsourcing model.

Zsoft Launches New Software Outsourcing Platform

Zhongguancun Software Association (Zsoft) announced the launch of a China-Japan software outsourcing platform in order to boost China's software outsourcing business for Japanese markets. Zsoft is a Beijing-based non-profit software industry association. The platform will offer eight categories of service including project, talent, communication, business travel and financing. The new platform will be a creative one. It will bring profits and latest technologies to software companies in Zhongguancun, which is the Sillicon Valley of China.

PR NewsWire reports that -

After the Second 2006 Zhongguancun Software Outsourcing Summit, Zsoft launched the China-US Software Outsourcing Platform to facilitate software-outsourcing business flowing from the US to China.

Importance of Customer Retention for the IT outsourcing in Europe

According to a recent survey made by Patni Computer Systems, top decision-makers in Europe have identified 'customer retention' to be one of the most important drivers for outsourcing companies. The survey revealed that outsourcing strategies adopted by the companies focus on this. In the recent years, Western Europe has emerged as a preferred outsourcing destination for companies in Europe.

European companies directly correlate outsourcing efficiencies to customer satisfaction. Companies believe that outsourcing would help them utilize internal resources to focus on their core functions. Financial Services organizations in Europe are now catching onto the outsourcing wave. Industry expertise, flexibility in partnership and resource skills are the key criteria for the European Organization to select an outsourcing partner.

According to domain-b.com -

Financial Insights is the specialist end-user research and consulting subsidiary of IDC that focuses on challenges facing financial organizations and how technology can provide solutions. It has a team of over 30 analysts based in the main global financial centers.

Going beyond the expected: Infosys net profit scales up to $173 million

Arguably one of the top three software companies in India along with TCS and WIPRO, Infosys is riding high on the wave of outsourcing to bring in the big bucks. Its outsourcing services have seen a 50% rise in demand over the last quarter alone, pushing sales to a new high that is well beyond the projected figure. This has led Infosys to push its targets even higher for the next quarter.

In terms of numbers, the company added 38 clients and 5,700 staff during the previous quarter. The trend has also led to an annual increase of 15% in salaries, and brought in the tough question of holding on to its employees. BBC news reports:

India's National Association of Software and Service Companies (NASSCOM) has estimated that contracts worth a combined $100bn will come up for grabs over the next two years.

Nasscom on Outsourcing

The National Association of Software Companies (Nasscom) has hired managed consultant Booz Allen Hamilton to make an analysis on the potential outsourcing business in Indian IT companies. The Nasscom intends to intensify its thrust on the engineering services domain. Nasscom President, Kiran Karnik announced this on the first executive committee of Nasscom in Pune. The gathering has witnessed a huge turnout. Karnik stressed that the study will act as a catalyst. It will display the potential of India as an attractive destination for outsourcing of engineering services by global IT players.

HCL Tech to Sign Outsourcing Deal with Old Mutual

HCL Technologies Ltd., India is all set to sign a $400 million outsourcing deal with a unit of South Africa's biggest insurer Old Mutual. It has been noticed that Indian software services companies have been trying to cash on the outsourcing boom. HCL's moves is seen a positive step on this regard. Old Mutual won control of Swedish savings firm Skandia earlier this year after a long battle for takeover. HCL has adopted and articulated multi-million dollar client engagement strategy to provide effective services to its clients. The proposed deal would boost HCL Technologies' profile.

According to Reuters -

Shares in HCL Technologies, India's fifth-ranked software services firm, rose as much as 6.9 percent to 540 rupees in a firm Mumbai market. They later retraced to 526 rupees by 11:40 a.m. (0610 GMT), up 4.2 percent.

Community Dept signs on Unisys West for developing software

Western Australia's Department of Community Development was not finding its existing information systems adequate because there was no integrated management system. To improve the situation, the department has embarked upon project Assist, which will implement a packaged CRM and content management software across its 84 office locations.

According to Global Services Media, the project will be executed by a client solution from Unisys West. Under the three-year outsourcing contract, which is likely to be extended for a further couple of years, Assist will use a mixture of Oracle's PeopleSoft Enterprise CRM and Objective's Enterprise Content Management suite.

The pace of outsourcing: A downward trend?

In spite of the fact that the outsourcing industry registered a growth and consolidation in the software sector, the top IT firms were responsible for only 21% of this revenue. According to a  study, for the first time since 2000, outsourcing services grew more slowly than project-based services. However, David Margulius reports that it is the IT sector that drives the outsourcing industry. Infoworld reports:

…the biggest push right now for IT services companies is to “productize” their offerings (that is, enable them via technology platforms and make them more repeatable and less labor-intensive). So it’s great for enterprise customers that thousands of companies, rather than just a handful, are creating these products and competing for the business.

CBA employs a multi-sourcing strategy

In an effort to improve its IT service delivery across the platform, the Commonwealth Bank (CBA) has extended its long-standing relationship with EDS. The two partners came together in 1997 through a AU$5 billion contract, and the fresh lease of life has ensured that they will continue to work together until June 2012.

Besides the arrangement with EDS, the Bank has also plunged into a contract with Optus for a managed mobile voice service. According to the bank's chief information officer Michael Harte, this is indicative of a multi-sourcing strategy, which is a significant policy shift.

ZDNet Australia has more.

Western European IT outsourcing bounds ahead through mega deals

A few months back, you might recall a survey that indicated a decline in the number of large outsourcing deals. More recently, we also read a report about the apparent slowing down of the outsourcing process.

However, a new study by IDC reveals that the top-100 pack of Western European outsourcing deals accounted for a total value of $40.5 billion in the last year alone. This quantum jump has been powered by large deals that got even bigger. However, another interesting facet to these mega deals is that they are for a shorter contractual term.

What makes such deals a win-win situation? Jennifer Thomson, research manager, IDC European Services, explains:

Without the long contract lengths, vendors must engineer cost savings in a much shorter time period, while at the same time developing collaborative go-to-market strategies to win in large-scale multi-sourcing.

Clearly, the preference is for shorter term periods and for avoiding a prolonged engagement between outsourcing partners. According to the IDC study, the trend toward short engagements involving big bucks is also accompanied by a stronger BPO sector in Western Europe.

IT Outsourcing

In today's highly competitive IT job market, there is no guarantee that an individual having knowledge and experience would get a good job. The IT job environment of the 1990s is no longer there and it is unlikely to return again. There was a time, when there was a shortage of technical workers to fill the available jobs. Now the number of aspirants has gone up as compared to the available jobs. The current environment does not promise a handful of job opportunities if there is a loss of job. IT outsourcing has gained momentum in the market, as it saves both money and time. At the same times, the pressure on third parties brings positive result and improves the quality and productivity.

IT outsourcing in Western Europe

A new study conducted by the IDC revealed that the top 100 Western Europe outsourcing deals totaled $40.5 billion in value last year. It is driven by nine mega deals signed for a total of $20.5 billion. Five out of nine deals have been awarded by two government agencies. Outsourcing deals are getting shorter in length because customers are less willing to stick to a contract for long periods. Vendors must explore cost-savings in a much shorter time period. The study also revealed that IBM is no longer the topnotch company in the Western European outsourcing industry. Although it signed 14 deals in 2005, the aggregate value was lower than that of BT Global Services and EDS.

According to OneStop Click -

In addition, the study highlighted positive growth rates in BPO (Business Process Outsourcing) across Western Europe, especially within the UK.

IBM Signs IT Outsourcing Contract

Peru's leading food maker Laive has signed a five-year outsourcing contract with IBM. Laive will outsource its entire IT operation and infrastructure to IBM. The deal will be worth US$ 2 million. Under the terms of the agreement, IBM will provide a solution that includes hosting of all Laive applications such as ERP, Lotus Notes, and business intelligence software and helpdesk support for Laive's major plants. In addition, IBM will provide all IT infrastructure-related services, including PCs, networking equipment and telephone switching.

According to TMCnet -

IBM will also implement an ERP system integrating all the company's operations, allowing Laive to prepare for major business growth and better control its IT and business processes. Founded in 1910, Laive produces food products such as cheese, butter, yogurt, milk, cold cuts and fruit juice.

IBM to Expand Outsourcing Center in Australia

Large companies are finding outsourcing as a useful tool to expand their business worldwide. Especially, IT companies are taking the lead in exploring new outsourcing avenues. Software giant, IBM has recently announced that it would expand its Business Transformation Outsourcing Center in Brisbane, Australia. IBM's move is aimed to meet the growing demand for multilingual business and technology services across the Asia Pacific region. IBM is opening the 200-seat delivery center in Australia to transform and operate business processes such as CRM, Human Resources and Finance for its clients.

IT Outsourcing in Industrial Growth

The outsourcing industry is completely dominated by IT outsourcing. Revenues from IT services reached $624.4 billion in 2005, which was a six percent increase from 2004. According to recent reports, IBM retained its position as the market leader in IT services with revenues of $47,357 million. Surprisingly, most of the major players in the industry saw their market share falling marginally in 2005. Even the IBM witnessed a sharp decline in its growth rate. However, project-based service and IT support grew at a faster rate than the overall market. iHotdesk has published an article on the Same Topic.

With total spending of $141.3 billion (£76.2 billion) in 2005, the financial services market remains the largest vertical for IT services revenue, although healthcare organizations saw the most significant growth in spending during the year.

IT Outsourcing in the Government sector: The flip side

After a survey of 300 international C-level executives across all sectors and interaction with leading global IT outsourcing players, PA Consulting Group has concluded that the value of outsourcing is undermined by factors such as misunderstanding, miscommunication, lack of planning, and misdirected investment. Government organizations and suppliers sometimes work at cross-purposes with the IT outsourcing objectives and fail to understand the requirements of clients:

Only 21% of suppliers and 38% of lawyers thought their clients articulated their objectives clearly to the supplier marketplace.

As Public Technology reports, this has a telling impact on returns. According to Fons Kuijpers, head of IT sourcing, PA Consulting Group:

There is no excuse for IT outsourcing deals to go wrong in a mature market. Yet, even now, many IT outsourcing deals are doomed before they start because of poor business cases where key items such as costs for the retained organisation have been omitted.

Click here for further details on the PA survey.

Bristol International Airport's IT outsourcing Deal

Bristol International Airport has outsourced its IT operations to cope with an increase in passengers. The airport has signed a five-year deal with Steria to accommodate passenger traffic that is expected to reach nine million by 2015. The deal was signed for an amount of £6 million. The outsourcing contract will allow Bristol Airport generate additional resources and labor within the organization. Cost saving would be another major benefit that would be achieved through this outsourcing deal. VNU Net has published an article on the Same Topic.

IT service provider Steria took over the management of the airport’s IT infrastructure and business applications earlier this week following a two-month due diligence process, which McAuliffe is crediting for the smooth handover.

Worksoft in China on way to emulating Infosys in India

SiliconBeat reports that Silicon Valley venture capital firm Sequoia Capital has pumped in $30 million to fund the China-based IT outsourcing firm Worksoft Creative Software Technology. With this additional overseas investment by Sequoia, coupled with the earlier investment made by DCM, Worksoft is definitely aligning itself to be China's best outsourcing company.

The major competition for Worksoft comes from China-based service providers who have their focus on clients from Japan. In contrast, Worksoft has a U.S. focus, and this will probably lead to the company moving up in the near future to number one in the Chinese outsourcing market.

Event: Russian Outsourcing & Software Summit 2006

If you happen to be in Moscow on May 31, you can be a part of the 6th Russian Outsourcing & Software Summit, the premier event in the arena of IT outsourcing and software development. The event will facilitate the easy flow of updated information about the software export market in Russia and the CIS countries. Click here for more information on the event and how to participate.

Dubai Municipality opts for outsourcing IT operations

IT outsourcing vendors have yet another potential client; this time it is the Dubai Municipality, which is seeking outsourcing partners to handle IT requirements. The government organization is hoping to reap the twin benefits of implanting a techno-savvy IT mechanism and cutting costs. A superior technology will lead to higher quality service and also enable the organization to focus on core business areas.

IT Weekly reports that Dubai Municipality is currently in the initial phase of assessing the business value of outsourcing. In a couple of months' time, the process will step into the next phase of selecting an outsourcing vendor and going ahead with a contract. Admittedly, outsourcing is yet to become the in-thing in this part of the world, but several government agencies are in the process of adopting an outsourcing strategy.

En Pointe Technologies in $2.5 million outsourcing contract

The breaking news from RealTimeTraders.com is that a department of a major city in Western United States has signed a contract with En Pointe Technologies, under which En Pointe will provide the city department with infrastructure, service professionals, and advanced server and networking technologies. These services will phase out the department's current information systems and lead to an upgradation of the department's central application database.

Top Global Outsourcing Companies

According to a recent report released by the International Association of Outsourcing Professionals, Indian software companies have a strong presence in the top 20 Global Outsourcing 100 list. IBM has topped the list followed by Sodexho Alliance, Accenture, Hewlett Packard and Capgemini. Wipro Technologies bagged seventh spot on the list. Some other Indian companies such as HCL Technologies, Mastek, Genpact and Patni Computer also found themselves in the list.

More Information: Read Here

The 100 firms on the list represent $68.9 billion in 2005 revenues and 1.03 million employees worldwide, providing services to companies such as GM, Ford, Citigroup, Bank of America, ExxonMobil, and Verizon.

An Cheim signs IT Outsourcing Deal with HP

An Cheim has signed a seven-year IT outsourcing deal with HP. The deal is worth €20m. An Cheim is a collaborative higher education information management system that consists of several institutes. HP will host the hardware and associated software for each institute from a single central location. It is said that each institute will benefit from significant savings. An Cheim was established to implement library, finance and human resources information systems in the Institutes of Higher Education.

The IT outsourcing will largely benefit software configuration, hardware, documentation and training. The systems implemented within the IT outsourcing programs will include a financial management system and integrated HR applications. There is a library system that provides a self-service facility to reserve items and enable users to access a range of specialist websites.

More Information: Read Here

According to Paul Malone, national project manager with An Cheim Computer Services, the deal will provide the institutes with a total cost of ownership saving of €20m over five years due to a combination of “significant” infrastructural and organisational cost savings.

Outsourcing deal gone sour: Sprint Nextel files lawsuit against IBM

Just a few days earlier, IBM was voted as the leading outsourcing company in the list of 100 top global companies. However, the IT giant is now facing the wrong side of outsourcing. According to a report published by the Kansas City Star, IBM's outsourcing partner Spring Nextel, a telecomm company, is seeking damages of more than $6 million over an outsourcing agreement that did not meet expectations.

According to Spring Nextel, IBM owes nearly 120,000 hours of work and has failed to increase productivity by 6.4 percent. This claim is being contested by IBM. While the two companies battle it out on this front, they continue to work together on other contracts.

London City Airport seeks IT support from Sita

Sometimes, outsourcing is the easy way out for organizations that do not want to enhance in-house capabilities. A service provider can step in neatly to provide assistance to a struggling in-house service. For instance, take the IT services at the London City Airport. With an increase in passenger traffic at a rate of 14 percent per annum, the airport authorities could not cope with the increasing IT requirements, and have now sought the services of aviation sector contractor Sita to increase efficiency in services.

According a seven-year contract, Sita will extend support in management and improve sector expe3rtise. Airport authorities believe that the initial investment will pay off in the long run. Richard Gooding, the airport’s managing director, advises other companies seeking outsourcing alternatives to set clear goals:

Too many people outsource solely to cut costs – I don’t support that. If you cannot get the service quality right, it does not matter if it’s a bit cheaper.

For more on the story and for further readings, click here.

Increased outsourcing, but no "fab-light" strategy for STMicroelectronics

European chipmaker STMicroelectronics has steadily increased its outsourcing percentile over the last year or so. Compared to 42 percent of advanced CMOS logic put out to foundry in the beginning of 2005, the company has now gone in for an increase to 53 percent. By the last quarter of the year, ST is inclined to take this up to 59 percent. This trend has generated a debate that the company is going the Philips Semiconductor and Freescale Semiconductor way in following a "fab-light" strategy. This opinion was, however, dismissed by company officials.

Click here to read more

China reaches new high in software outsourcing

China, the second largest outsourcing marketplace in the world, has scaled new heights in its software outsourcing services market. Analysis International reports that this sector reached 2.592 billion yuan (US$323 million) in the first quarter of 2006. China Daily reports:

China exported 228 million mobile phones in 2005, of which only 13.2 million phones, or 5.8 percent, were home brands, said Wang Jianzhang, director of the ministry's general planning department at an international forum on China's mobile phone industry earlier this week.

Predictions on Outsourcing Growth

According to predictions of Deloitte consultancy, advances in broadband, network security and IP communications infrastructure may lead to a boom in outsourcing. More people will be encouraged to work from home in future, which will encourage firms to make use of contract workers located anywhere in the world.

Firms have the option of either investing more in structured IT training or employing more technically literate staff. The outsourcing firms are less likely to encounter infrastructure problems, as home workers use their own software and tools. IT Week reports:

Deloitte also forecast that more firms are likely to use offshore services to get access to higher quality workers, rather than merely to reduce costs in areas such as IT and research and development.

Cadmus takes over local IT software unit

Cadmus, the Brazilian Outsourcing Company has taken over a local IT unit by the name of Sky Software. This is the culmination of a series of talks beginning in late 2006 and marks the beginning of acquisitions being a part of the growth strategy of Cadmus. dBusinessNews reports:

Cadmus that closed year 2005 with revenues around 32 million reais is searching for medium and small sized organizations as target of acquisition in the business of Software Outsourcing.

CGI Group inks outsourcing Deal with Cirque du soleil

CGI Group Inc. has bagged a 10 year contract valued at $130 million from Cirque du soleil under which it will provide operational support for its global technology and applications infrastructure. This partnership will go a long way in strengthening CGI's in the entertainment and sporting events sector. Canada East reports:

CGI said 84 information technology positions at the Cirque du soleil in Montreal, Las Vegas and Orlando will be transferred to CGI as part of this contract.

CGI Group inks outsourcing Deal with Cirque du soleil

CGI Group Inc. has bagged a 10 year contract valued at $130 million from Cirque du soleil under which it will provide operational support for its global technology and applications infrastructure. This partnership will go a long way in strengthening CGI's in the entertainment and sporting events sector. Canada East reports:

CGI said 84 information technology positions at the Cirque du soleil in Montreal, Las Vegas and Orlando will be transferred to CGI as part of this contract.

Wipro inks outsourcing deal with HDFC Bank

Wipro Infotech has signed a 10 year Rs 360 crore outsourcing deal with HDFC Bank. HDFC Bank has already made a mark in technological innovations and this contract with Wipro will further enhance its status in providing high quality service through technological improvements.

The outsourcing practices of HDFC Bank has helped the company to grab a stonghold in the Indian banking environment and this deal with Wipro will help in expanding its network and achieve cost optimization in providing service to it's clients. Wipro Infotech is the IT solutions and services division of Wipro Limited for India, Middle East and Asia Pacific. IT News Online reports:

"The key differentiator in the HDFC Bank win was our Program Governance framework, our customer friendly engagement model and technology depth. All three are critical elements in ensuring long term success of the relationship. We launched our Total Outsourcing business eighteen months ago and this is our fifth consecutive win," said Anand Sankaran, Vice President, Global - IT Outsourcing.

Accenture and Unilever iInk outsourcing deal

Accenture has entered into a seven year contract to provide IT services to Unilever spanning across 25 European countries. The deal will aim at integrating Unilever's European operations to propel it's growth objectives. Finanzen.net reports:

The contract is part of Unilever's "One Unilever" program, which is designed to deliver annual savings of EUR 700 million through the implementation of a unified and streamlined operating model for the company.

Indian tech firms witness strong growth backed by outsourcing

The outsourcing growth story overshadowed the rising rupee and increased wages to enable Indian technology companies to post strong Q4 results. It is expected that there will be further growth in outsourcing deals as more and more US and European companies recognize the need to reduce costs to gain competitive advantage. Reuters India reports:

Indian software services companies, thriving on an outsourcing boom, are set to report quarterly profits rose by at least a third even as a slightly stronger rupee and rising wages crimped profit margins.

Unilever Leverages With Accenture

It’s a typical see-saw situation; while on the one hand Unilever has entered a seven-year agreement with global consulting and technology services provider Accenture to provide support for IT  application development and implementation, on the other it has transferred only 300 of its 500 IT staff to the consultancy. Accenture is also looking to bag the human resources outsourcing contract from the multinational conglomerate. The terms of the contract stipulate that Accenture is responsible for the provision of IT services for Unilever’s operations in 25 European countries, under the umbrella of Unilever’s “One Unilever” program, which aims to save the company EUR 700 million annually by streamlining operations throughout its branches. While Unilever has said it will not effect compulsory redundancies, the fate of its workers still hangs in the balance.

Convergys is making it a habit

Fortune Magazine gives Convergys due recognition as one of "America's Most Admired Companies" as decided by a survey comprising of 10,000 industry experts. The call center outsourcing company has been recognized for the sixth consecutive year which gives ample proof of it's role as a committed player in the outsourcing arena. TMCnet reports:

Convergys (News - Alert) was rated second overall nationally for the Diversified Outsourcing industry.

Vishesh Infotecnics Initiates Knowledge Process Outsourcing Operations

Vishesh Infotecnics