Industry news

A suppliers list for the public sector document management service contracts, awarded at the start of the month, has been released by the Cabinet Office.

The list includes preferred suppliers such as Capita, TNT, and RemployLPS, to deliver the document management framework that has been created to provide government departments with electronic storage of media, as well as the transportation and management of physical documentation.

The framework will cover public sectors including the NHS, local government, educational institutions, emergency services and housing.

The Information Services Group’s (ISG) expect that UK outsourcing will increase in the second half of 2012 after the strongest results in decade in 2011.

While the start of 2012 saw a reduction in outsourcing contacts from 2011 due to the unusually high figures of last year and from the delayed effects of the Eurozone crisis, outsourcing is expected to rise as uncertainty dissipates.

ISG, said “we expect outsourcing activity and total contract value to pick up in the second half of 2012 and project full-year results to be in line with historical norms.”

CSC is planning a further 640 UK redundancies which brings the total number of job losses to 1,100 this year, say Unite.

Unite have said they are disgusted with comments from the NOA who stated that, as a private company, CSC should be able to conduct their business as they see fit.

National Outsourcing Association Chairman Martyn Hart says: “If CSC were to offer voluntary redundancies, it would be the people it really wanted to keep who’d be first out of the door. The IT industry is experiencing major skill shortages, and genuine talent is in demand. The people volunteering for redundancies are most likely the ones who could quickly walk into a lucrative job elsewhere, the cobalt coders and suchlike.

“CSC simply cannot afford to lose all of its best talent as it goes through this transitional phase. Although so closely associated with the public sector, CSC is a private company which, in the face of adversity, should be able to choose how to reorganise its workforce as it sees fit.”

AstraZeneca is set to buy Ardea Biosciences Inc in a $1.26 billion acquisition of the drug treatment firm specialising in gout and cancer.

The move will see AstraZeneca, the U.K.’s second largest drugmaker bolstered by the purchase of Ardea . The move will bring new treatments to a company that has suffered recent setbacks in product development and from facing strong completion from rival firms.

Barry D. Quart, President and Chief Executive Officer of Ardea, said “From our earliest interactions, we were impressed with the quality of AstraZeneca's people and we are confident their commercial strength and global reach will help realise the full potential of our programmes.”

CSC’s success in winning the Ministry of Defence contract to provide back office services has been met with threats of industrial action from the Public and Commercial Services Union (PCS).

The decision by the MoD to select CSC as the preferred bidder based on the companies’ ability to meet the obligations of the contract as the lowest bidder has led to worries that the cost savings will be achieved through reducing staffing costs.

PCS has raised the possibility of industrial action at the expected job losses from the implementation of CSC’s cost saving strategy. The union has said that it plans to hold meeting over the coming weeks and have said that “industrial action cannot be ruled out at this stage.”

Small outsourcing contracts are rising while larger contracts are being issued in smaller numbers. Low price contracts have become prevalent within the public sector as it focuses on offering contracts for delivery of services to SMEs, while large outsourcing contracts have fallen significantly in 2012.

Whitehall have been pushing the use of small contracts in order to mitigate against project failures as well as their use as part of a cost cutting measure. The government have attempted to move away from using large corporations to deliver on big contracts to instead splitting multiple contracts between firms to deliver on one project while promoting value for cost.

Smaller contracts have risen at the expense of more costly larger contracts. Data released by the Information Services Group (ISG) showed that large contracts valued at over €20 million had dropped by 32 percent year-on- year in Europe, the middle-east and Africa.

The increase in these smaller outsourcing contracts and the slowdown in the employment of larger contracts, have resulted in part from the delayed impact of the Eurozone crisis. Constraints and guidelines from Whitehall from the fallout of the 2012 budget have also constrained the public sectors finances, with smaller contracts favoured for their value for money.

While small contracts have been favoured due to their flexibility, quick turn around and cost, all in the climate of financial pressures on government departments, ISG predict that contacts of €20 and over will increase in the second half of 2012. The government pressure to source smaller contracts from multiple firms has also been questioned with figures showing that 92 percent of contracts still remain with large corporations.

While smaller contracts have been acclaimed for reducing risks, costs and delivery times of projects, the coming months are expected to see a rapid rise of large figure contracts as markets stabilise from the aftereffects of the Eurozone crisis and large firms increase dominance of public sector contracts.

The telecom business is marked by volatility – there is continuous technology innovation, competitive clashes, price wars, and changing consumer behaviour – in this environment, forecasting even a few years ahead is impossible.

With the network increasingly regarded as the underlying “plumbing” for telco services, all are asking if they want to be a plumber or something else (you will have noticed, plumbers can actually earn good money, so it’s not that you shouldn’t be a plumber, but it’s a different trade, and you may need different skills and scale to compete in that game).

Being anything other than a plumber, you need ask whether it’s still important for you to own, invest and control the network in-house (which requires you to invest in and keep your tools maintained) or pass on the responsibility for investment and the risks associated with that investment to another supplier.

On the whole, we have seen operators large and small increasingly turning to outsourcing both network and field services operations. The industry now (and will increasingly) exists in a complex web of deep alliances. In many cases, people who were once arch-rivals are sitting down to collaborate. Old adversaries are forced to do so, given the significant financial, operational and strategic pressures they face, and the format that such collaboration is taking place, is in the form of an outsourcing alliance or some shared service solution.

In many senses, the telco sector was a leader and innovator of outsourcing, both as a buyer and a supplier.

There are today more than one hundred major network operators both mobile and fixed (oh and the in-between Wimax), that have outsourced at least part of their networks to one of the major telecommunications equipment suppliers. The outsourcing supplier scene is also rapidly changing, with new players on the block emerging from the East, as well as old telco competitors getting in on the act.

Outsourcing not only delivered those all important cost savings, but occasionally transformed the operator from being a product centric dinosaur to a customer focused eagle. For both existing telcos and new entrants to the sourcing and shared services market, the key word for successful outsourcing has been flexibility. Managing the change process with the supplier is more vital than the ability to negotiate a robust contract in the first place.

However, it may now be time for the sector to consider a second generation of outsourcing – most outsourced the underlying plumbing – great – no more worries around network upgrades, performance etc but in a fiercely competitive market where your competitors have done the same – the real differentiator can only be content, and not many telcos do content. Maybe a more strategic approach is required to the sourcing of content, maybe even some form of shared content centre?

Cash and both credit and debit cards are to be made redundant by 2020. According to a survey of 1,200 technology experts by Pew Internet Research, smartphones with PayTags will become the new method of payment.

65% of the survey respondents believed that near field communications (NFC) – the technology used in contactless payment – would be widespread by 2020. The findings come as no surprise following ComScore data that found more than 10% of smartphone users have already made payments using their phone.

Chris Silva, an analyst with Altimeter Group, said that "NFC is going to play a much more prominent role, a major role in m-commerce (mobile commerce)".

The news comes this week as Barclaycard announced the launch of a PayTag sticker. The sticker can be attached to the back of the mobile phone, and while there is no integration between the phone and the PayTag, it will still allow customers to make purchases of £15 and under.

Oracle and Infosys have announced a new Oracle Project Driven Supply Chain for High Technology Companies. The new application will enable enterprises to reduce project-related inventory.

The project hopes to extend Oracle's integrated stack of software and hardware applications for the technology industry.

The partnership between the two computing giants makes sense, as Infosys technology business and systems integration expertise with Oracle's integrated applications will enable the new application to increase supply chain performance on a single, unified platform.

"As high technology companies look to increase service revenues by directly providing installation and implementation services to their customers, they require integrated and comprehensive solutions that deliver world-class supply and project management capabilities," said Jonathan Oomrigar, solution specialist vice president, Oracle. "With Oracle Project Driven Supply Chain for High Technology Companies, Oracle is addressing this need by expanding its comprehensive range of hardware and software solutions designed for the high technology industry."

SMEs should outsource peripheral operations to allow them to focus on core functions, according to an IT services provider.

Colin Blumenthal, Managing Director of Complete IT, believes that many SMEs should not be distracted by area such as IT, HR and finance, and instead be outsourced. According to Blumenthal, external specialists are capable of offering a "flexible and responsive" service.

Blumenthal’s comments follow a survey by Western Union Business solutions last month which claimed that confidence amongst SMEs were at their highest level for six months and that two thirds were optimistic about Q1 trading conditions.

Blumenthal said: "As organisations see the slow signs of recovery and growth, re-investment will be needed and this offers a perfect opportunity to re-evaluate whether the functions are best managed in-house or outsourced."