Industry news

International Business Machines Corp. (IBM), the world’s biggest computer-services provider, is acquiring Worklight Inc., a closely held maker of software for smartphones and tablets to enhance its mobile-service offerings.

Worklight’s software accelerates the delivery of employee and consumer mobile applications to multiple devices and enables secure connections to a company’s information-technology systems, Armonk, New York-based IBM said today in a statement. Terms of the deal weren’t disclosed.

In the current financial climate, small businesses are big business. From crafters to professional services it seems that the growth in small and freelance business is a fast moving one. Whether it be due to redundancy, as a way to facilitate a career change or just as a way to get back into the workplace, the ‘kitchen table’ enterprise is a business model that is making a big contribution to the economy.

In the beginning it is the flexible working hours, the very short commute to the kitchen table and a sense of pride and achievement that make these small businesses successful. The passion and personal touch of the business owner is key to making potential clientele into repeat customers, but there does come a point when the business grows almost out of control. The personal touch is lost under a pile of paperwork and the passion is subdued after yet another website crash! This is the point that many consider taking on staff, but that in its self is likely to put more strain on the business and the already stressed business owner. The extra cost involved in employing a member of staff is often prohibitive and the extra paperwork obviously takes valuable time away from the front end of the business.

My advice has always been to outsource services as and when they are needed. To make use of all the other ‘kitchen table’ businesses out there. To tap into their myriad of skills and their enthusiasm for the things that is the stuff of nightmares for other small business owners. The social networks are full of small businesses peddling their wares and offering all manor of services. The beauty of platforms such as Twitter is being able to get a feel for the person before a entering a business relationship. The sort of things that they tweet indicates their level of knowledge and identifies a common interest, links to their websites and blogs will help sway a decision to make contact.

In preparation for this article I surveyed my Twitter followers, asking them about the services that they buy in to help their business run more smoothly. I was expecting accounting to come out top, but it was actually IT that was top of most peoples list. This actually makes sense given that most of my followers have online businesses and their websites are quite literally their shop fronts. But it is not just online businesses that need a shop front on the web, even those with a footing in the real world need to have an online presence. So it is little surprise that IT services took 66% of the vote. Coming in at 33% was accounting and there are no prizes for guessing that Tax Returns and end of year accounts where the most popular times of the financial year for using an accountant. Several of those surveyed do employ staff and they indicated that they make use of online payroll services. From my business point of view I was very disappointed to discover that outsourcing PR and marketing came within the remaining 1% along with admin support.

I asked what problems the small businesses had experienced in outsourcing, no major problems came back in the responses, but a general theme of vetting and getting references for potential service providers was expressed. I would concur, anyone who works for a business, whether that be as an employee, freelance or the business owner themselves will need to reflect the brand and respect the ethos of that business. The right person for the job is not the cheapest but the person who will help to grow the business and protect its reputation. I found that on average the small businesses that took part in my survey spent and average of 20% of their turnover on outsourcing services and this became less as the business grew as a direct result of using these services.

In conclusion I would emphasise that the best way to grow a business is to expand the talent pool and the quickest way to do this is to outsource the jobs that are either time consuming or beyond the skills of the business owner. There is absolutely no merit in spending hours trying to make the books balance if it means neglecting potential clients. With very few exceptions it is the business owner who must drive the marketing and PR of the business, whether they are using an outsourced PR company or not, having the time to be the face of the business is essential. In this golden age of online accessibility and a competitor being just a click of the mouse away, hiding behind a broken website, under a pile of invoices or not taking advantage of every opportunity to raise the business profile is not an option.

In recent years, we have seen UK businesses moving away from the tendency to outsource business functions overseas and once again seeking delivery of these services within their borders. However, have national pride and political sentiment now become the drivers of the onshoring vs offshoring debate? Or do cost-consideration and expertise still determine where a business locates its services? Adrian Guttridge, EMEA Head of BPO, HP Enterprise Services investigates the importance of these factors and the role of vendors in this decision process.

Since late 2007, most of Western Europe has been in the shadow of economic uncertainty. Large numbers of reputable business institutions have struggled to survive and for some, the impact of the debt crisis has been overwhelming. The UK banking sector witnessed the nationalisation of Northern Rock and saw both the Royal Bank of Scotland and Lloyds TSB receive an injection of public funds to shore them up. One might think that such developments would, if anything, strengthen the allure of offshore cost-savings. However, cost was no longer the only consideration.

Alongside a renewed cost-cutting imperative, the economic downturn also ushered in the politics of protectionism. Sending business abroad to create jobs, infrastructure, and skills overseas when these are needed so desperately at home has a negative impact on companies and political goodwill, another valuable asset, already in extremely limited supply.

The past 12 months have also been characterised by social and political unrest, particularly in many developing markets. This has demonstrated the geopolitical risk of locating business services abroad and alerted corporate decision-makers to the fact that while offshoring delivered benefits to the balance sheet, it also brought with it the very real possibility of denial of service and the business challenges that come with this. Such cost-savings, it suddenly seemed, could have a significant cost in themselves.

These factors have indisputably shifted the context of a CFO's thinking when grappling with the offshoring vs onshoring debate. In HP’s experience, what will ultimately remain the most pressing consideration, and the easiest sell internally, is cost. While the events of 2011 have demonstrated that the analysis cannot stop here, the essential savings to be made from offshoring through, for example, labour arbitrage, have not lost their allure.

As such, businesses have had to find the middle ground. At HP, we are finding that organisations are increasingly seeking to get the best of both worlds by adopting a hybrid model with the core business at home and selected services strategically outsourced overseas. HP’s Best Shore delivery strategy caters to this dual requirement by giving the customer the advantage of a global infrastructure and balanced global footprint. This enables the business to react quickly to any uncertainly, but capitalising on the cost benefits of offshoring.

Individual customers may have specific reasons for wishing to keep certain services onshore – such as data-protection and security – but it is more than likely that for other services, location choices will depend largely on the vendor’s judgment that conditions are suitable. Moreover, what will ultimately determine a market’s viability as a centre for, for example, the provision of BPO services is the expertise, the people, the processes, the tools and the infrastructure available. This is what a vendor will look for when deciding where to establish itself.

HP’s approach is to develop centres of excellence for specific services in broad based key global hubs supported by regional language centres. What delivers value to customers is our investment in people, technology and modern facilities; it means they get more time to spend on managing their core business and don’t need to worry about their location strategy.

As ever, advancing technology will continuously shift the goalposts of this debate. Connectivity has created a global village in which individuals and communities everywhere can contribute in the outsourcing market. As this trend moves towards its logical conclusion, the particular resources or characteristics of a specific market will lose their significance and a location-based outsourcing proposal will become less relevant.

For now, the pendulum on the “onshore vs offshore” debate will continue to swing back and forth, impelled by transitory political, social and economic exigencies. Cost is still what the CFO will have front of mind when tackling this dilemma, but the growing sophistication of technology may make it a headache of the past.

Over the last twelve months consumer devices have become the real game changer when it comes to implementing new technologies in the workplace. So it comes as no surprise that 2012 will be the year for consumer IT to flood the workplace. Recent research shows that iPads and Android tablets increase productivity and motivation amongst employees, and those turning to tablets now have more flexibility in the methods they use to complete tasks, as well as where they can carry them out. Train, coffee shop, at home - the list of ‘mobile’ working is endless.

However, with the introduction of consumer devices in the office, comes the need for better security and protection of corporate data and intellectual property – a real headache for IT managers! Decision makers in IT departments will have to consider the ways in which they can prevent this, as well as tackling potentially harmful viruses and file infections from creeping up to the corporate network. Another obstacle for in-house IT departments to get their heads around are the issues with software compatibility and less effective applications (for the time being).

Over time, as mobile working increases, organisations will slowly move application and data residence in to the cloud starting with lower priority applications first, then adding more important services thereafter. With businesses turning to such virtualised services and cloud based models, it is in their interest to understand how to best access data from these devices.

It would be foolish of businesses to see the integration of devices in the workplace as a pest or hazard. After all, there are inexpensive ways to tackle the potential hazards that may be obstructing businesses in their quest to move forward with the consumerisation of IT at work. This year we will see many organisations turning to experienced consultants for assistance and support in integrating devices into the workplace.

Skilled IT solution providers will be able to explain the real benefits of bringing your own device to businesses, and how to integrate them effectively to increase productivity and morale amongst workers. They will also provide expansion strategies to integrate or migrate solutions quickly and effortlessly, all whilst ensuring that the concern around data security is abolished and that application functionality is at its maximum.

To adapt to the storm of consumer IT that is sweeping across offices in the UK and US, businesses must get behind the next generation of IT and accept that technology is always evolving. They must adopt a new attitude as this will boost productivity and is a means to achieving goals, which until now, have been out of reach for many organisations.

News that Accenture Life Insurance Services has won an eight-year business process outsourcing (BPO) agreement with BNP Paribas Cardif may be a sign that the European life insurance and pensions market is set for increased outsourcing activity.

BNP Paribas Cardif, the life, property and casualty insurance subsidiary of BNP Paribas, has a strong international focus, generating nearly half of its premiums outside of France, with a particular focus on emerging markets including Taiwan, Russia, Ukraine, Turkey, Brazil, Chile and India. Insurance is sold principally through intermediaries and bancassurance channels.

Accenture will manage an important portfolio of BNP Paribas Cardif's group life insurance policies business in France, including the administrative management of the insurer's call centres and ancillary accounting operations.

According to Daniele Presutti, managing director of Accenture Life Insurance Services, the life insurance industry is undergoing fundamental change, driven by increased regulation and risk management pressure and more volatile markets. This provides an opportunity for some insurers to gain market share. Outsourcing can help them strengthen capabilities to reach their objectives.

Services to be provided by Accenture include policy administration, call centre services, ancillary accounting and enhancement of the current life processing platform.

Accenture has made no mention of any staff transferring under the Acquired Rights Directive. This legislation aims to protect employees when businesses are restructured, including in cases of outsourcing, but which often adds complexity, cost and risk to the execution of an outsourcing transaction, especially for services crossing country borders.

One interesting detail is that the scope of the Accenture/Cardif deal includes new insurance business. In the UK, traditionally, third party administration deals have focused on the outsourcing of processes in support of closed books, coupled with aggressive cost saving models, following the aggregation model pioneered by Clive Cowdery's Resolution and subsequently taken up by Phoenix Life and others.

This announcement comes at a time when commentators have been suggesting that the UK market has reached relative levels of saturation and maturity, with large insurers such as Phoenix, Resolution, Prudential and Co-operative Financial Services having previously outsourced the administration of their books of business to the likes of Diligenta and Capita. Capita has a strong record of contract wins in the sector and says it has approximately 22% of the total UK market for insurance clients such as Zurich Financial Services.

It could be argued that Capita is currently suffering from indigestion as it grapples with the complexities of managing these large books of business, such as the need to transform the underlying technology on which the individual policies are administered. This has given the other main UK player, Diligenta (a wholly owned subsidiary of Tata Consultancy Services) the opportunity to increase its own share of the market.

Diligenta has impressed recently with its successful consolidation of multiple legacy systems onto a single integrated cloud-based system based on the TCS BaNCS Insurance platform. Diligenta built its business around a large contract with Phoenix in 2005, and subsequently its 2010 acquisition of UISL, the former L&P business of Unisys, which enabled it to pick up work for Old Mutual in the process. The end of 2011 saw Diligenta sign a 15-year, £1.37 billion deal with Friends Life under which some 1,900 employees are expected to transfer to Diligenta under TUPE (the UK’s version of the Acquired Rights Directive).

Other players include:

 International Financial Data Services (the State Street/ DST Systems joint venture) which entered the sector in 2010 with its acquisition of Percana Group headquartered in Dublin and is also reported to be working with Phoenix

 Swiss Re, which in 2007 took on the responsibility for 12 million life & pension policies under an outsourcing arrangement with Aviva, which included 3 million active premium paying policies

 The Indian outsourcer HCL Technologies, which in 2008 acquired Liberata Financial Services and subsequently inked a long-term deal with Equitable Life worth an estimated £125 million.

Although announced in 2009, the contract did not start until March 2011. Equitable Life expects to make cost savings of approximately £8 million in the first full year of the contract and will reduce its provision for future costs by over £100 million through committed savings and cost predictability under the contract.

The recent Friends Life deal with Diligenta and the BNP Paribas Cardif deal with Accenture suggest there’s still life in this sector with large savings to be gained. Friends Life, for example, reported expected savings of £60m per annum from 2015 with one-off costs of £230m, although a robust approach to contracting supported by ongoing service management and governance is needed to ensure that the promised savings actually materialise.

Atos, an international IT services company, has announced that it has been awarded a five year contract worth £74 million by the Department of Health. Under the contract, Atos will deliver an integrated IT desktop service plus a range of supporting services within the Department of Health (DH) and for some of its Arms Length Bodies.

A spokesperson for the DH said: “The procurement was conducted against the ASCC framework using an in-house team and has delivered a flexible contract that will result in savings of around 40% on the current cost of service across the life of the contract.”

The contract draws together the desktop solution for the Department and some of its Arms Length Bodies, such as, the Care Quality Commission, into a common, high-quality, integrated, shared service. It supports the aims of the Government Strategy for ICT, both in reducing costs and ensuring the necessary ICT is in place to deliver DH reforms and modernisation in 2012 and beyond.

MTN, a leading telecommunications company with a presence in 21 countries in Africa and the Middle East, has announced the extension of its managed services agreement with Ericsson.

This announcement marks the extension of the first managed services contract between Ericsson and MTN, originally signed in 2009 in connection to the rollout of MTN's 3G network in Ghana. Under the extension, Ericsson is responsible for network operations, field maintenance and optimization.

Jon Hoffmann, Chief Technical officer, MTN Ghana said, "Our first two years together achieved the results we were hoping for: we could focus on subscriber growth, and Ericsson delivered network reliability and efficiencies."

HCL Technologies Ltd., a leading global IT services provider, has underlined its position as a socially responsible business by announcing a series of initiatives around building Glocal Centres of Excellence (GCoE) with the aim of creating 10,000 jobs in US and Europe in the next five years.

"As our unique Employees First culture has continued to grow and evolve, we've seen more and more HCL employees expressing the desire to see a truly socially responsible business model," said Vineet Nayar, Vice Chairman & CEO, HCL Technologies. "Clearly, the need of the hour is growth and employment and we believe that this initiative will create unique business value for HCL while generating sustainable employment in local economies for years to come. It will need significant collaboration of all stakeholders; however, we do believe that it can be done and we are committed to backing this program with all our resources and best intent," he added.

The public administration select committee has commended the government on making progress to tackle the well known problems associated with public sector IT, but warns it has not done enough to address concerns around skills, legacy equipment and allegations of "cartel-like" behaviour among suppliers.

The committee published a report in July 2011 entitled, A recipe for rip-offs: time for a new approach, that listed its concerns about the public sector's overdependance on the same large IT providers, lack of ability to make any large-scale change to how it uses IT, and issues around skills and legacy equipment.

The committee has now published a progress report examining how far the issues raised by the original report have been addressed.

Salesforce.com, the enterprise cloud computing company, has unveiled Desk.com, revolutionizing customer service for a social and mobile world.

Desk.com enables businesses to deliver personal customer service by offering a help desk that is social, mobile and simple to use and deploy. Desk.com allows any business to instantly work with customers over any major social network. Desk.com Mobile allows companies to carry a help desk in their pocket and answer customers on the go.

"We built Desk.com so that every company can deliver personal customer service in a social and mobile world. Desk.com is social at its core; its mobile app instantly lets any employee, anywhere, deliver awesome customer service; and it can be deployed quickly and easily," said Alex Bard, vice president and general manager, Desk.com.