Industry news

John Cotterell, Chief Executive at Endava, explains that UK organisations can benefit from choosing Romania as their nearshore location for IT projects

The current economic climate is forcing world-leading organisations to re-evaluate both their local and overseas IT outsourcing options to improve efficiency and costs. These organisations are now looking to balance their location risk by moving some IT spend away from offshore regions, such as India, and utilise other talent pools in new, nearshore locations. This nearshore option is becoming more attractive for IT projects, due to time zone, proximity, cultural empathy and quality of work.

The nearshore option

When considering any offshore location criteria, decisions should be based not only on price, but on the quality of the labour pool and level of cultural empathy with the UK. Thankfully, new, ‘nearshore’ locations of central and Eastern Europe have emerged that are closer and more accessible to the UK than ‘traditional’ offshore locations.

These nearshore regions are becoming an increasingly attractive alternative for UK firms to outsource business process outsourcing, IT services and engineering projects. A particularly popular nearshore location is Romania - famous for the world’s 2nd largest building and of course Dracula.

Romania has made a huge leap in the IT outsourcing arena following EU entrance at the beginning of 2007 and is now a highly attractive destination. The country is a new offshore star in Europe according to the A.T. Kearney’s 2009 Global Services Location Index - ranking 19th and having the highest climb compared to all the other countries in the analysis (14 places – see Appendix 1 from A.T. Kearney report), while the other countries in the region have seen a decline in the rankings.

Romania’s well-established IT centres have been shortlisted by KPMG in the top 31 emerging locations worldwide for IT-BPO outsourcing, with Cluj-Napoca being the most interesting location in Romania after global companies like Nokia, Emerson, Office Depot, Genpact or Evalueserve opened subsidiaries here in 2008.( Appendix 2 – excerpt from KPMG report)

Apart from the common advantages of nearshore destinations, including similar time zone, cultural affinity, lower overhead related to project set-up (i.e. travel costs), which in the long term, reduce the overall risk of a project, Romania is seen as a unique location. It is easy to reach with a 2-3 hour flight from London, is a member of the EU and has 5 major IT clusters to choose from: Bucharest, Cluj, Timisoara, Iasi and Brasov.

IT talent

However, Romania's key strength remains the availability of skilled IT services labour pools at competitive costs. (Gartner Research 2007 – appendinx 3)

The IT professionals in Romania are recognised for their technical excellence, as well as, for their strong engineering background - which comes from a long-established tradition in technical higher education. Each technology cluster has a top-tier technical university and about 8,000 graduates are added to the IT labour pool each year, while there is a pool of about 134,000 people for various technology-oriented jobs (Gartner Research 2007 – appendinx 3).

Also, the fact that many IT companies already have established a strong foothold here - including giants like Microsoft, Oracle, Siemens, Infineon, Alcatel, Freescale, EA Games etc. This contributes to building specialist skills in niche areas, high levels of technical proficiency in leading-edge technologies, as well as software skills.

Good communications with nearshore teams is also a major factor to consider. Romania is known for having a multilingual labour market and this has led to Oracle opening a call center in Bucharest that is operating in 13 languages. Technical staff possess excellent language skills – Gartner reports that 60% of the IT workforce speak English, but from our experience figures are actually higher and all our employees are fluent in English.

Competitive infrastructure

Due to increased demand for high-quality infrastructure, the telecom infrastructure is currently being modernised and office space is available at highest standards. All these combined with only a two-hour time difference makes daily communication and reporting very easy throughout the project lifecycle.

Moreover, the leu, which is Romania’s national currency, has recently depreciated and is contributing to the strengthening of Romanian IT outsourcing vendors’ competitiveness. In this way Romania has kept its lower cost profile compared to other member states in the region (Poland, Hungary, Czech Republic).

Romania’s nearshore capability is most powerful and valuable to outsourcing clients in the UK when applied to highly-transactional, complex IT projects with evolving business requirements and new technologies, where the quality of the engineering and development teams and trouble-free communications ensure project success.

Outsourcing trends / looking ahead

In the current economic environment, across the industry verticals, it is expected that the Financial Services sector will be most active in outsourcing projects due to dramatic budgets reductions and the consequential drive to find lower cost methods of delivery. This situation will bring new opportunities to outsourcing vendors in Romania holding deep industry expertise.

As Romania is an EU member state, banks and financial services organisations will find software engineering and development expertise within the EU in a legally- and politically-stable environment, enabling them to match their compliance requirements with cost-effective and rapid project delivery.

As the world adapts to new risks and constraints, the opportunities are larger than ever in Romania for companies that want to outsource IT services and BPO projects. The rewards will go to those companies first to identify them.

A shared legal service between Cheltenham and Tewkesbury Borough Councils has recently been launched. The new team will be called ONE LEGAL

A combined service will deliver cost savings to both Councils which will save money for taxpayers. An additional key benefit is the greater knowledge and skills base of the new team which will better equip it to support the varied and often complex legal work arising from the challenging business agendas of the two Councils.

ONE LEGAL is based at Tewkesbury Borough Council and retains a presence at the Municipal Offices in Cheltenham.

Leader of Tewkesbury Borough Council Cllr Robert Vines said: "I am delighted to see the launch of this new shared service, which really highlights the benefits of working together with Cheltenham Borough Council. We are committed to providing excellent, value for money services that really meet the needs of our customers - and this is clearly reflected in the shared legal service."

Proposals that could see private parking wardens operating in Bournemouth are set to go before the council.

The borough council is still working on a business case to outsource parking enforcement to private contractor Mouchel.

Mouchel already runs the council’s revenues, benefits, ICT and facilities management departments after signing a £150m deal in December.

HCL Technologies Ltd. has warned that a historic U.S. rating downgrade over the weekend may lead to a temporary slowdown in business in the industry's biggest outsourcing market as fears of a double-dip recession sparked a sell-off in India's technology stocks.

The downgrade may lead to a slowdown in business in the immediate term, Shami Khorana, president of HCL Americas, said in an interview late Sunday. Clients in the U.S. might feel cost pressures immediately and go slow in their spending decisions, Mr. Khorana added.

SSE, Britain’s second largest energy supplier, has awarded Logica, a leading business and technology service company, a contract for the provision of communication, data and pre-payment services for residential smart meter system trials in Great Britain.

The companies will work together to deliver the benefits of smart metering systems to SSE’s customers ahead of the mandated mass market roll-out of smart metering to domestic customers in Great Britain. This is currently expected to start in 2014, when the new Data Communications Company is available for use by the energy industry.

SSE will procure, install and maintain the smart metering systems on behalf of its customers, and Logica will deliver the communications, data and pre-payment support on behalf of SSE.

Logica supports, through its Smart Data Services and award winning Instant Energy product, over 85 percent of smart meters installed in people’s homes across Britain. We have supported the installation of over 25,000 new smart meters per month. This agreement with SSE will further increase this figure, strengthening Logica’s position in the British smart metering market.

Craig Boundy, UK CEO, Logica, explains; “Smart Meters don’t just empower consumers to change their relationship with energy, they are integral to the creation of smart grids, creating a vital infrastructure that will enable Britain to satisfy our energy needs more sustainably, whilst helping to keep energy affordable. This contract will enhance SSE’s ability to effectively engage with its customers about their energy consumption by using the two-way communication capabilities provided by smart meters. This contract award also helps Logica to consolidate our position at the heart of Britain’s smart energy market.”

Capita’s registrars business announces that it has been chosen to run BAE Systems’ share plan administration and Legal & General’s register and share plan administration. The appointments by these FTSE 100 companies further demonstrate Capita’s ability to manage both complex and large volume registers and share plans.

The contract with BAE Systems will see Capita providing the company’s 37,000 employee participants with share incentive plan administration (SIP) services. This includes a new branded share portal and other enhanced employee communications methods such as the issue of credit card sized information cards containing important investor related details.

Capita’s appointment by Legal & General saw the transfer of multiple share plans including legacy data, and a complex register, all of which was implemented in a strict timeframe. In addition, Capita worked with the company to enhance aspects of its share portal functionality to encourage shareholders and participants to administer their holding online, while also streamlining shareholder payment processes.

Charles Cryer, chief executive officer of Capita’s registrars business, comments: “Being awarded these contracts from such esteemed brands is testament to our robust project management and expert client engagement. Organisations are increasingly looking for partners who can bring a flexible and personal approach to running register and share plans smoothly and efficiently, delivering optimal transparency and enhanced communications for shareholders and employees. We have repeatedly demonstrated that this is where our strengths lie.”

Fusion-io, Inc. a provider of a next-generation shared data decentralization platform, today announced that it has entered into a definitive agreement to acquire IO Turbine, Inc., a provider of caching solutions for virtual environments. Under terms of the agreement, Fusion-io will pay up to approximately $95 million, subject to purchase price adjustments, for all outstanding securities of IO Turbine. The consideration is payable in cash and stock, provided that the cash portion may not exceed $35 million. The transaction is expected to close by the end of August 2011, subject to final closing conditions.

The acquisition is a key part of Fusion’s strategy to enable enterprise customers to increase the utilization, performance and efficiency of their datacenter resources and extract greater value from their information assets. Having partnered closely for a number of months, Fusion-io and IO Turbine have a shared philosophy for solving datacenter inefficiencies. The integration of IO Turbine’s software into Fusion’s platform will enable traditional storage infrastructures to keep up with the increasing demands of virtualized servers and expands Fusion’s market opportunities to both new and existing customers.

“IO Turbine’s software is uniquely architected to take advantage of flash memory in the server to solve the I/O bottlenecks, the inhibitor to the adoption of enterprise virtualization,” said David Flynn, Chairman and Chief Executive Officer of Fusion-io.

“We believe integrating ioMemory and IO Turbine adds a critical and previously missing performance component to virtualized IT environments that will accelerate the adoption of Fusion-io technology. This acquisition also underscores our focus on providing customers with an enterprise solution that features software and hardware components designed to accelerate their business’ full suite of applications.”

Cabinet Office minister Francis Maude launched two separate consultations on open data in government and the planned Public Data Corporation (PDC).

UK taxpayers are being asked to comment on the handling of public data by central and local government.

The Cabinet Office is seeking views from British citizens on the following:

•how we might enhance a "right to data", establishing stronger rights for individuals, businesses and other actors to obtain data from public service providers;

•how to set transparency standards that enforce this right to data;

•how public service providers might be held to account for delivering open data;

•how we might ensure collection and publication of the most useful data;

•how we might make the internal workings of government and the public sector more open; and

•how far there would be a role for government to stimulate enterprise and market-making in the use of open data.

Maude said that such a plan would be a "brave step" by government.

Amazon Web Services LLC (AWS), an Amazon.com company, has announced new capabilities for customers designed to support the security, network management, dedicated connectivity, and identity management requirements of enterprises when deploying mission-critical applications in the cloud.

AWS has extended Amazon Virtual Private Cloud (Amazon VPC) to all AWS Regions, allowing enterprises to launch their Amazon VPC environments in the US East and West Coasts, Europe, Singapore, and Tokyo, and in multiple AWS Availability Zones within each Region. Amazon VPC enables businesses to provision a private section of AWS, where they can then launch AWS resources in a virtual network that they define and control, including selection of IP address range, creation of subnets, and configuration of route tables and network gateways.

This gives enterprises a simple and seamless way to leverage AWS while using the same security and management controls already familiar to their business. Enterprises can connect to their Amazon VPC via a Virtual Private Network (VPN) or through an Internet connection. Starting today, enterprises can now also connect multiple networks, such as branch offices, to each other as well as to their central corporate Amazon VPC environment

BT has announced a 10-year multi-million pound contract with Sunderland City Council for a network that will enable the council to offer higher levels of service to its customers, while generating savings across all City Council services.

BT will deliver a corporate network connecting 188 sites, including council buildings, which will help make council services more efficient and effective.

The deal comes as Sunderland steps up the roll-out of its ambitious programme of social, economic and physical regeneration. A key part of this is embracing the benefits of new technologies and applications. The City Council and Sunderland Partnership recognise that a city-wide infrastructure is essential as an enabler for both business and community sectors.

Councillor Paul Watson, Leader of Sunderland City Council, said: “We have an established record for delivering excellent services to the people of Sunderland. The strategic partnership with BT will help us build on the good work we've done and deliver even better value for money for Sunderland’s Council Tax payers. The partnership will put Sunderland’s residents, businesses and the council at the forefront of developments in government IT services.”

Neil Rogers, President Government & Health, BT Global Services, said: “We look forward to delivering excellent service to the people of Sunderland over the next decade. BT is an established, long-term partner of the council and is committed to assisting Sunderland realise the vision outlined in the Sunderland Strategy 2008 – 2025.”