Industry news

Indian outsourcing company HCL Technologies has been awarded a multi-million dollar contract to provide R&D over a ‘multi-year period’.

HCL will provide engineering, prototype designs and IT services to UK based avionics company Cobham.

Tom Garvey, vice president of operations at Cobham's Avionics and Surveillance Division, said: “We expect that this relationship with HCL Technologies will support our agility and further boost growth."

The deal by Anheuser-Busch Inbev (ABI) to buy Mexican based brewery company Grupo Modelo, has been faced with a competition suit from the US Justice Department.

Bill Baer, assistant US Attorney General said: “The department is taking this action to stop a merger between major beer brewers because it would result in less competition and higher beer prices for American consumers."

ABI already owns half of Grupo Modelo and have entered into a multi-million purchase to complete a full takeover however the suit now throws the deal into question.

H&M are planning rapid growth in China with the addition of 325 stores in 2013, the clothing giant are also planning store growth within the US.

As the second-biggest fashion retailer with 2,800 stores globally, the Swedish based company is looking to develop in new markets, with markets such as China having already shown high levels of potential for western businesses looking for expansion.

The plans come after a posted rise in annual profits despite a drop in profits in the fourth quarter during 2012 in a challenging market for high street retailers.

With a 20.6 percent rise in profits during the third-quarter, the release of Mahindra Satyam’s results, along with expansion and high profits from industry leaders such as Infosys show acceleration in outsourcing markets.

Satyam had been impacted by continued payments resulting to fraud claims stemming from its running by Ramalinga Raju. But with action concluded, the business is now able “to focus even more on the business-ready solutions for our customers," said Vineet Nayyar, chairman.

"We continue to strengthen our industry and alliance partnerships and explore multiple avenues for growth, including mergers and acquisitions”, said CP Gurnani, CEO.

The increase in reported profits by outsourcing leaders comes on the back of predictions of growth within the US and renewed demands for outsourced services, projects including Medicare have fuelled anticipation for future business.

A MPs’ transport committee pointed to the Department for Transport and the civil service for a catalogue of “major failures” and “irresponsible decisions”.

The failure has been estimated to have cost taxpayers around £50 million with no outcome. The West Coast procurement failure and findings of the committee are embarrassing to the government at a time when the public sector is trying to develop internal procurement capabilities and in turn publicly criticises the private sector for lesser failings.

Louise Ellman, chairwoman of the committee, said: “This episode revealed substantial problems of governance, assurance, policy and resources inside the Department for Transport”, adding “This was compounded by major failures by civil servants, some of whom misled ministers."

Shares have fallen by 4 percent at AstraZeneca after the drug giant posted a fall in sales.

Sales dropped in the last three months by 16 percent from a combination of expired drug patents, few new drug releases and rising operating costs.

"Our performance in 2012 reflects a period of significant patent expiry and tough market conditions globally", said CEO, Pascal Soriot said in a statement.

The company has predicted that 2013 will see reduced earnings as operating costs are predicted to continue to rise.

Businesses including BT, Capgemini, Cisco, HP, John Lewis, the Metropolitan Police, Microsoft, Morrisons, O2, Royal Mail and UBS have joined together under the title of the Tech Skills Partnership to bid for public skills funding.

The creation of the partnership, with the backing of the UK’s skills council, is seeking to gain funding from a pot of £340 million, from the Employer Ownership of Skills Pilot.

The funding is designed to promote industry skills and develop economic growth with industry support. Previous examples of industry support can be seen in the expertise that the ICT industry brought to the creation of the UK’s new ICT curriculum.

IBM is seeking to differentiate their offering from Amazon by providing a high-end premium service aimed at enterprise level rather than the self-service Amazon cloud.

IBM faces the obstacle of remote cloud uncertainty at enterprise level and reversing the appeal of hosting vital applications in-house, compared to the attractiveness of AWS to SMEs.

The new service will provide greater support, cloud management tools and sets itself apart from its competitors by offering software support. In a press release IBM said: “Many organisations eager for the economic advantages of cloud computing hesitate to run critical applications on the cloud.”

IBM has also moved to expand the clouds global availability, with the service now in countries including China, Australia and Brazil.

Every time we sit with clients and South Africa is mentioned, our eyes light up. Having worked there, we find it difficult to understand why the country so rarely makes it onto their short list of preferred sourcing destinations, especially as the advantages of established locations begin to wane.

South Africa has a welcoming, service-orientated culture, good infrastructure, decent European language skills and a strong pipeline of graduates, school leavers and other qualified staff. It’s in the same time zone as mainland Europe and, compared to established European locations, is cost competitive. So why is the country falling behind in the race to become a leading outsourcing destination?

The devil as always is in the detail. In this case, it lies in fear of the unknown and uncertainty, both of which cloud the lens through which businesses assess the country’s credentials.

Many studies point to crime as the major roadblock. It’s true that the crime rate is high but, equally, press coverage of this problem is sometimes exaggerated. However, add recent political uncertainty and strikes to the mix and the picture starts looking bleak to the uninitiated.

Getting access to the right range of skills also throws up another challenge. While the country enjoys a decent skill base at junior levels and attrition is relatively low, a lot more needs to be done to develop the middle-management skills so crucial to running a sustainable operation.

High unemployment means the government is understandably wary of opening up its labour market to foreign nationals but foreign investment that creates local jobs is another matter, surely? Sectors such as IT that require strong technical and managerial skills, and have the capability to generate high levels of employment for locals in the long run, need to be treated differently. Our view is that the government must design its policies around the needs of the sourcing sector, review its work permits processes and timelines, and relax norms to make it easier for companies to set up and operate out of the country.

So where does this leave your business?

The African story is certainly taking shape – and South Africa is a gateway to doing business in the African continent. The country’s economy is growing, attracting investment from both the East and the West, and has been showing the way to other African countries.

If Africa features in your business plans, then it is certainly time to consider South Africa as a potential sourcing destination. If you are a service provider keen to hedge your bets, then South Africa is certainly worth looking at. And if you are an end user and already have a presence in South Africa, the captive sourcing opportunity is worth exploring.

However, if the African continent doesn’t feature in your company strategy, then South Africa has some more work to do before it emerges as a true contender. It cannot compete effectively on junior-level skills and infrastructure alone.

Nobody can deny one thing though. It’s just about time for Africa. Oh – and did we mention the fantastic weather?

Much has been written in recent years on the subject of a shortfall in the availability of skilled IT professionals to meet increasing demands. While it may be the case, I would argue that the real problem is not a lack of available talent but a poor and ineffective use of IT skills across the majority of IT departments.

To reinforce that opinion, IPsoft recently conducted some research amongst UK IT decision makers which identified a worrying trend. It seems that in many cases IT professionals are spending almost a third of their time on low level IT tasks for which they are over-qualified, and which could be far more effectively managed. The research recognised clear neglect of critical, often expensively-gained, skills and expertise, with those surveyed admitting that on a regular basis their staff only use about half (47%) of their applicable qualifications. With overqualified staff delivering simple, often mundane tasks, valuable skills are quickly lost through underuse, motivation levels drop rapidly, and the potential for error creep up.

While IT managers expressed concern about this situation (74% of those surveyed revealed a major frustration with the level of time dedicated to low level IT tasks) they did not necessarily understand how to address the challenge. A significant and recurring outcome was the availability of staff to support innovation and change initiatives. For many IT departments, too much time spent on “run the business” activities hampers their ability to drive “change the business” initiatives, many of which are aimed as using IT as a business differentiator and are thus infinitely more valuable to a business than the engine room of keeping systems and services running.

Perhaps the most alarming fact to come out of our research was that 88% of respondents felt resigned to the fact that wastage of skills is a necessary inconvenience. They accepted that to make progress in an enterprise IT environment, IT operations staff will have to perform day-to-day tasks for which they are over-qualified. That’s worrying, because it simply needn’t be the case.

Today, for example, expert systems are capable of automating on average over 50% of IT support incidents. Not just discrete tasks, or steps in a process, but end to end activities from the detection of an event or the receipt of a request, through the evaluation and diagnosis of the requirement, the execution of a remediation, the validation of success, and the notification or escalation as appropriate. IT leaders who embrace the potential of automation will find that they have at their disposal a greater pool of skilled staff, better motivated, more engaged, and fundamentally better equipped to use their talents to drive innovation and change.