Industry news

The government has said it is to invest £81m in fire and rescue authorities in England to "improve the resilience, efficiency and technology in their control services" following a damning report into FiReControl by the National Audit office.

In a written ministerial statement published on 5 July, fire minister Robert Neill announced plans to provide up to £1.8m for each fire authority. Services will be asked to submit their plans by 4 November and these plans will be assessed on value for money and resilience improvements, Neill said.

Banking giant Santander has announced that it will create 500 UK call centre jobs after staff complained of service at the India Call Centres.

The jobs will be created in Glasgow, Leicester and Liverpool.

Martyn Hart, chairman of the National Outsourcing Association says a trend could be emerging:

"Santander has listened to its customers' demands and brought its call centre operations back to the UK. This is not just a matter of rising costs in India, but falling quality.

"Simple processes can be dealt with by interactive voice recognition - but more complex problems require the operative to have a solid understanding of the caller's culture. This is what helps good operatives open calls sympathetically, drill down to the heart of the problem, then find solutions. India's staff attrition rates are at an all-time high - people move on very quickly, for just a few rupees more elsewhere. This means there is no time for adequate cultural awareness training, so quality has dropped. NOA has been saying for years that cultural affinity is a must for successful offshoring. Santander's return to the UK proves how important this is to customer satisfaction. Taking the cheapest option will never be a route to success, if the quality is not up to the mark.

"As the costs of doing business in India fall into line with more developed nations, NOA suggests that companies considering outsourcing call centres to India ensure that their suppliers invest (and continue to invest) in intensive programmes of cultural awareness training. That way, they can retain business by competing on quality, not just on cost."

Compuware Corporation, the technology performance company, has announced that it has acquired privately held dynaTrace software. The $256 million cash acquisition closed on July 1, 2011.

"Organizations today depend on the rapid development and delivery of high-performing applications to drive revenues, customer satisfaction and brand," said Compuware Chief Executive Officer Bob Paul. "To meet these demands effectively, IT organizations must have visibility into the performance of every transaction, from development, through test and in production. Together, Compuware and dynaTrace APM solutions allow IT to meet business demands for performance and agility through unbeatable insight into the user experience — whether in cloud, complex or traditional environments."

Headquartered in suburban Boston, dynaTrace employs 180 people around the world. Substantially all of these employees, including the leadership team, are expected to remain with Compuware. dynaTrace has a 92-percent win rate and a five-year CAGR of 125 percent because its unique PurePath technology solves the multi-billion dollar problem of optimizing application performance in a different and better way.

Logicalis Group has agreed to acquire Netarx for about $34 million in a deal involving two VAR 500 companies.

The acquisition expands Logicalis' overall operations in the Midwest, its managed services practice and adds a Tier 1 service desk to the Farmington Hills, Mich.-based solution provider.

"We've known Netarx for a long time. They are Michigan-based biz as is Logicalis. For many years, had we've had mutual respect for the leadership of Netarx. We felt that the culture of the organization mapped almost perfectly to ours," said Greg Baker, Logicalis' CFO for the U.S. business.

Two district councils in the east of England have set up a shared service for front and back office functions which they are offering to other public authorities.

East Lindsey and South Holland have created a limited company named Compass Point to handle HR, finance, payroll, IT support, revenues and benefits and customer services, operating from two centres in Manby and Spalding.

The joint venture is owned by the two councils, with shareholdings reflecting the size of their services and investment at 63% for East Lindsey and 37% for South Holland, although they have equal voting rights with three members each on the governing board.

Nigel Howell, chief executive of East Lindsey, told GGC: "We're offering two sets of services. There's the traditional outsourced services where we might tender for work, or other authorities might invest and become new partners in the company.

"We are relatively young but we've had interest from a number of organisations already, mostly in potentially becoming partners. This is the most novel aspect of what we've done."

BT, a UK based communications offerings and services provider, has opened its New Delhi Technology showcase facility as part of its ongoing investment plan in Asia Pacific.

The new facility is aimed at delivering enhanced service delivery capabilities to help multinational companies succeed in their business opportunities in India and the rest of the region, and help Indian corporations operate in other parts of the world.

BT Global Services Asia Pacific President Kevin Taylor said: "Many of our customers are expanding into India and we are investing to extend our communications infrastructure and services to support their growth. We have a long history of investment, a strong customer base and an excellent product and solution offering in this country, the latest example of which may be seen in the New Delhi showcase, bringing to life the opportunities offered by a networked, converged world."

~ There is one area where financial services organisations should be able to focus their resources to create a stable, secure and efficient IT environment. Ganesh Pai, senior vice president and head of insurance at MphasiS, outlines how agile delivery outsourcing is allowing the financial services sector to thrive and move forward post recession ~

The financial services sector is one that is traditionally very robust. Recent events in the global economy have tested that resolve to the extent that these businesses have been forced to re-assess many of the practices that they have lived by for many years.

The long-term effects remain to be seen, but for the immediate future change is essential. Not only do changes need to be made to cost structures to make organisations more efficient, but diversification in the way that services are delivered will help create competitive advantage in an industry where there’s plenty of noise. Agile delivery outsourcing is the way that many of these goals can be achieved.

Why financial services should look at outsourcing more

The immediate benefits to the bottom line – as a result of lower monthly operational costs and significantly reduced total cost of ownership (TCO) – are why financial services institutions are making a play to shift many functions to a service delivery partner. However, there has always been a reluctance to do so in this industry because of the sensitive data that they handle.

Historically, to take advantage of anything beyond very basic outsourcing you had to buy everything just to get what you need – this is the equivalent of buying a whole PC just because you need a new mouse. Now outsourcers are integrated enough to offer financial services providers the whole range of services, but agile enough in their delivery to let them use only services they need. The areas that are especially appealing are many of the back office processes. Not only are these parts of the business where high-cost, low-revenue generating spend occurs, it is also an area where there is largely no sensitive customer data being processed.

Outsourcing some of these functions to a skilled outsourcer can ensure that the quality of job completion remains high, security is maintained, but the overall cost of having those operations in-house is significantly reduced – freeing up operational budget to focus on revenue-generating or more business-critical areas.

Taking advantage of the changing environment with an agile approach

The traditional benefits of outsourcing are reason enough for many financial services organisations to link up with an experienced service provider. However, one of the challenges that these businesses face in today’s market is a rapid rate of change.

Increased competitiveness, a more closely-scrutinised marketplace and a new customer profile becoming more prevalent all point to the need for a change. Banks and financial services providers – traditionally very rigid, conservative institutions – need to increase the agility of their service delivery if they are to move along with some of these changes.

This is where financial service institutions are starting to see the added value to outsourcing.

The frequency and impactful nature of industry regulation shifts the goalposts for financial institutions on a regular basis; risk assessment for any major money decision has increased exponentially as a result of the downturn; and the flood of mergers and acquisitions has significantly altered the landscape for many organisations. The importance of these three factors for outsourcing services and maintenance agreements is that nobody knows when the next significant change is going to happen – but it will and they need to be ready to adapt to it.

Finding the right partner for this is very important. Contractual flexibility is something that not all partners can provide – but something that is increasingly essential in a turbulent market.

Delivering new services requires new skills and expertise to develop the technologies and processes needed to drive them. For instance, one of the quickly growing trends in the financial sector is for mobile apps to gain visibility of the latest market information and also to execute trades with precision timing.

This is a dramatic shift from previous approaches and requires a specific skillset to deliver. This is where an outsourcer with the skills and agility to turn around these projects in short timeframes can significantly boost the competitiveness of any financial organisation.

The future of outsourcing in finance

But if every outsourcing story was a tale of untold joy, everyone would be doing it. There are outsourcing projects that fail to meet these expectations; but, in most cases, there is a common explanation: inflexibility.

Agile delivery of outsourced services significantly enhances the chances that a project will be successful. Agile delivery is even more important for businesses that face fast rates of change or high levels of competition – something that describes almost every financial services institution in today’s volatile market.

Outsourcing to a specialist service provider, adding professional services into the mix, can help to make the whole operation more agile by focusing on the processes that are most valuable to the organisation.

Capgemini, one of the foremost providers of consulting, technology and outsourcing services, has announced the acquisition of 100% of AIVE Group, one of the leading Italian IT service providers, from 3 primary private equity funds (Emerald, Fidia and Athena Private Equity) and AIVE’s management.

This strategic move will enable Capgemini to strengthen its application portfolio as well as its SaaS (Software as a Service) positioning and its market share in IT services in Italy. The operation will be done based on an enterprise value of EUR 42.9 million and will be financed by the Capgemini Group’s net cash. The contract was signed under conditional approval by the Italian relevant anti-trust authorities.

This transaction following the acquisitions of Prosodie, Avantias and Artesys in France, BI Consulting Group in North America and CS Consulting in Germany, highlights the Group commitment to continue expanding in its traditional markets. Capgemini Italia reported 2010 revenues around EUR 150 million and employs 1,800 experts. Despite the recent harsh economic times for the IT Italian market, Capgemini Italia registered high single digit average annual growth over the last 4 years.

Olivier Sevillia, CEO Application Services (Continental Europe) and member of Capgemini Executive Committee, declares “This acquisition will strengthen our market position centered on project-based, customised solutions with a set of pre-configured solutions; as an example, together with AIVE, we will become the leaders in Italy on Microsoft Dynamics and one of the leaders in implementations of SAP applications, with more than 450 dedicated professionals. This will enable our clients to benefit from a full range of alternatives to fit their needs. The integration of AIVE will consolidate our market position enabling further expansion in Italy, which is part of our present strategy.”

Spread across an area of 35000 sq. ft, the new BPO facility in Gurgaon will increase Capgemini’s BPO’s total capacity in India to over 4500 seats. The existing BPO staff in Gurgaon will deliver Global Order Management services to Nokia Siemens Networks, a leading global enabler of communications services, to support the company’s global Supply Chain Management.

The services delivered cover Quote-to-Cash end-to-end processes including all aspects of order management, spanning preparation for delivery, customer order management, distribution, and customer invoicing. The Gurgaon operations will contribute in leveraging Capgemini’s expertise in BPO, its BPOpen™ technology platform* and its Rightshore® network to harmonise and standardise the supply chain processes across Nokia Siemens Networks’ operations across the world.

In India, Capgemini’s BPO unit has close to five thousand employees delivering Finance & Accounting, Management Assurance, Engineering services, Content Management, Research & Advisory, Supply Chain Management, Procurement Services and Human Resources outsourcing services to more than 25 international clients across centres in Mumbai, Bangalore (largest set-up), Chennai, Kolkata, Gurgaon and Salem.

“Capgemini India’s capabilities in BPO significantly contribute to competitive advantage we offer to our global clients. Such capabilities are based on our unique combination of a leading supply chain consulting service with a strong outsourcing delivery capability. Our expansion in India validates the Group’s belief in the region in the long term, best in class delivery location for its global clients”, said Hubert Giraud, Head of Capgemini BPO Strategic Business Unit.

The Dismissals and Appeals Committee of Suffolk County Council has concluded its investigation into the ‘whistleblowing’ allegations made against Chief Executive, Andrea Hill.

The statement from the Committee states: “Bullying and harassment allegations were robustly investigated by an independent firm of solicitors. Although it remains a concern that such a perception existed, the Committee is satisfied that there was no evidence to support those claims or that she was responsible for the death of David White (former Head of Legal Services). The Committee wants to reassure staff that all allegations are treated extremely seriously.

“The Committee also received a report into Mrs Hill’s expense claims during her tenure as Chief Executive. It has concluded that whilst there were undoubtedly claims which, in the current climate, might not represent best use of public money, the Committee accepted that there was no dishonesty in the claims made.

“Following a lengthy discussion last Friday, and negotiations between representatives of both parties over the weekend, the county council can now confirm that Mrs Hill will be leaving her post with immediate effect.

“There has been significant media attention attached to Mrs Hill which has become a distraction and both parties accept that with new political leadership of Suffolk County Council in place, it is better to allow the organisation to move forward with new managerial leadership.

“The county council would like to thank Mrs Hill for all she has done over the past three years and wish her well for her future.

“The total value of compensation to be paid to Mrs Hill is £218,592. This figure includes her contractual notice period.”