Industry news

PricewaterhouseCoopers affiliates agreed to pay $25.5 million (15.3 million pounds) to former Satyam Computer Services Ltd investors to settle U.S. litigation over the audit of the Indian outsourcing company.

The settlement came four weeks after PwC agreed to pay a record $7.5 million U.S. penalty over its auditing work for Satyam.

In papers filed late Friday in the U.S. District Court in Manhattan, lawyers for the investors wrote that the accord followed mediation and was an "excellent result" for their clients.

Satyam's founder and former chairman Ramalinga Raju had in January 2009 revealed that what was once India's fourth-largest outsourcing company had fraudulently inflated revenue, income and cash balances by more than $1 billion over five years.

The fraud is sometimes known as "India's Enron," referring to the U.S. energy company that collapsed in 2001.

Tech Mahindra sets up BPO operations in Philippines

Tech Mahindra, India’s fifth largest software exporter and part of the US$ 11.1 Billion Mahindra Group, announced its plans to set up BPO operations in Philippines. The company recently signed a multi-million dollar deal, as one of the preferred BPO partners for strategic outsourcing with a leading full-service telecommunications company in the Philippines. The deal is spread over a period of 3 years.

Tech Mahindra will provide the client with contact center support for sales and back office, customer care and technical support for their wireless postpaid, landline and broadband customers. The end-customer mix will include both retail as well as high-end business customers of the client. Tech Mahindra has set up the contact centre at Manila to enable and deliver these services to the client and has already recruited over 600 associates locally.

The past year also saw Tech Mahindra foray into the African geography and the company has opened centers in seven African countries to serve clients in the region. The operations have already been commenced in Nigeria, Zambia, Malawi, Ghana and Gabon, while Congo DRC and Congo B are expected to start operations within the next few months.

Mr. Sujit Baksi, President - Corporate Affairs & BPO, Tech Mahindra, said, “Philippines is not only a key market for us, but also a strategic location from where we plan to service our global clients. We look forward to strengthening our presence in Philippines through our engagement with one of the leading players in the Philippines telecom industry and will actively support our client’s innovative plans to address the mobile telephony and broadband services market. Similarly, Africa is also one of our key growth markets and we have opened centers in seven countries to serve our clients in the region. We are excited to bring our best practices in customer service, which would accelerate growth for our clients in this region. Backed with global telecom experience and streamlined processes, Tech Mahindra will help clients enhance end-customer experience.”

ExlService Holdings, Inc. a leading provider of transformation and outsourcing services, has announced that it has signed a definitive agreement to acquire Outsource Partners International, a leading global provider of finance & accounting outsourcing services. With this acquisition, EXL establishes itself as one of the leading third-party service providers in global F&A outsourcing.

Rohit Kapoor, President and CEO of EXL, stated, “I am extremely excited about EXL’s acquisition of OPI. OPI is one of the largest pure-play providers of complex F&A outsourcing in the market today. OPI has over 3,700 professionals globally, approximately 80 clients, and an extremely talented management team. By combining EXL’s F&A outsourcing and transformation capabilities with OPI’s end-to-end F&A outsourcing capabilities and proprietary platforms, we will assemble a comprehensive set of F&A solutions. These solutions will be of tremendous relevance to the CFO’s organization.

"The acquisition furthers EXL’s strategic objective of leveraging technology and proprietary intellectual property in our solution offerings. We will also firmly establish our onshore outsourcing presence in the U.S. while enhancing our European and Asian delivery footprint. OPI’s and EXL’s cultures are aligned and customer centric. Our respective high-touch relationship management models are highly complementary and by combining forces we will be able to provide our clients with a broader range of transformation and outsourcing solutions. I am extremely pleased to welcome the entire OPI team to the EXL family, and we look forward to an exciting and successful future.”

As the recession begins to fade, companies have a renewed interest in developing innovative strategies to increase revenue, enhance working capital and retain their most valuable assets - clients. The days of aggressive labor arbitrage and transaction cost reduction are a thing of the past, replaced with intelligent cost management practices, optimized business process management and the utilization of advanced analytic tools to drive the business forward. The new lever being pulled today is achieving breakthrough business value and performance by aligning people, process and technology in unique ways.

Most viable organizations realize they have highly efficient processes that streamline efforts and significantly reduce costs. Though most have cracked the efficiency code, they are unaware that there is an effectiveness goal that can drive even greater business value.

While each function or department in an organization optimizes their part for efficiency, there are key inflection points where potential leakage can occur and hamper the overall effectiveness of the processes and ultimately business performance. In addition, most companies don’t have a sense of how good or bad their processes are and how much value is being leaked.

Knowing greater business value can be attained through both efficient and effective business process management is the first step toward optimized business results. Understanding the complete process end-to-end, and all of the critical connection points, creates levers for increased effectiveness. This, coupled with the availability of critical data and benchmarking against similar processes cross industry, crystallizes the road to true business effectiveness.

A solid and detailed plan, that leverages efficiency and drives effectiveness, one that is tailored to the client and implemented in a modular fashion delivers significant business results. In 2009, Genpact launched a structured and scientific methodology for managing end-to-end business processes called Smart Enterprise Processes [SEPSM] which delivers two to five times the impact on improved cash flow, increased margins, revenue growth and other targeted financial and operating metrics. We support our clients in their quest toward true effectiveness using process as an underutilized lever.

If the census was an example of how the amount of data stored doesn’t equate to the value gained , then it is the best and worst one you could find.

The government without doubt knows more about us than it ever did.

The e-government portal knows more about me than my wife does; car tax renewal and even if my car has valid insurance, all my tax information, child benefits, child tax credits - you name it, it knows about me - my family, my car, my home, my children, my electronic passport, and more than I probably wish to know they know.

We know this is true because of the amount of money the government spent on IT projects in the last 10 years – billions of pounds of investment to collect trillions of bits of information.

And 10 years since they started they still ask me to fill out a form, or type it online, asking me about the all the stuff they already know. So they have used up thousands of hard disks, and then they fill up another few thousand with my census data, doubling the data providing no more real knowledge it seems to me.

Now, the argument goes ‘but census data is a moment in time – a one off, because of population changes, migrations, emigrations, changes in religion, changes in family structures, you name it, it has changed, therefore the old data isn’t accurate or real-time enough to make future decisions’.

Well, and don’t take this personally central government, a lame excuse for not using the data you have well enough.

If government was a ‘supply chain’ and instead of delivering services to citizens it was delivering products on shelves to consumers, you’d have to think that they couldn’t figure out how many tins of beans the country might want to eat in a year.

Perhaps the real problem is that the government’s eagerness to ‘collect’ data on us, to fine us for not paying our car tax or filling in our tax return late or forgetting our MOT by a week has destroyed its ability to use the data they have in a smarter more efficient way.

They have lots of data collection and it seems to me very little data analysis.

If Tesco can send me vouchers to tempt me into buying things they already know I might buy then surely the government can do the same. What retailers have done for years is leverage tools to analyse the data they have to sell more to their customers.

And one rule of retailing is – if it doesn’t sell another tin of beans then don’t spend any money it. So, retailers don’t have any more data than they need, what they do is analyse it analyse it and analyse it again.

Perhaps if the government treated us like consumers of government services instead of citizens then they might realise that the data they have is a pot of gold, and would start a programme of storing less and knowing more. Perhaps our new time of fiscal constraint will force a less profligate attitude to storing ever more data on us all, and perhaps 2011 will be the year I fill in my last census form. Somehow I doubt it – and I hope not - after all, it’s the only time I get to be a fully signed up Jedi Knight!

Many companies still believe that they are ‘too small’ to consider outsourcing their IT infrastructure – so let’s get that myth out of the way first of all. Infrastructure outsourcing is not just for large companies. In fact, the provision and management of IT infrastructure can help small-to-medium sized enterprises (SMEs) reduce costs, gain greater control and increase the flexibility of their IT operations.

All of these factors lead us straight to myth number one: the cost benefits of outsourcing are only attainable for large companies. It’s easy to see where this particular myth comes from: details about the latest multi-million pound IT contracts are often covered by the media, where as smaller deals typically are not.

However, if you’re an established SME company with between one and a few hundred employees, outsourcing actually makes a lot of sense – either with the provision of the infrastructure itself and/or the management of it. Cloud computing, in particular, is changing the landscape of infrastructure provision. Instead of having to purchase, set-up and maintain hardware and software in house, the cloud model will allow you to access your IT infrastructure (and/or software) as a service. As a result, upfront costs can be reduced significantly, and you’ll also benefit from the provider’s continual investment in improving/upgrading the infrastructure.

Likewise, you don’t need to have a large IT department in order to reap the benefits of outsourcing the management side of your infrastructure either. We’ve worked with a high-growth SME in the property management and investment sector, which – after outsourcing the management of its infrastructure – reduced its IT head count by 60%. Not only that, but the fixed-price managed service was 57% cheaper than what the company had been spending on staff.

Myth number two amongst SMEs is that outsourcing will lead to a loss of control, since many of the services that used to be performed in-house will now be externalised. Any concern here is really unwarranted: when working with an outsourcer, the ownership is still yours. The main difference is that you can now focus on managing the supplier relationship and performance, instead of being burdened by the day-to-day minutiae involved with running all of these operations yourself.

A greater sense of control can also be gained through a regular review and reporting process (as well as a clear issue escalation process) to make sure that the key business objectives and service performance levels are being met. It’s advised to set a monthly performance/operational review, for example, as well as a bi-annual contractual review and an annual strategic review to ensure that your suppliers are aware of any changes in strategy, and also to cement the relationship between both companies.

Also, it’s worth remembering that outsourcing is not an ‘all or nothing’ arrangement, and we actually recommend that you retain a small number IT staff in house, such as those responsible for end user support. These support staff can give immediate response to issues at the user level, offering the direct interaction which is important to managing internal satisfaction.

Myth number three claims that outsourcing equates to inflexibility, since many SMEs still believe that outsourcing will tie them to a fixed contract with a fixed level of services, thereby leading to less flexibility if (and when) the company’s requirements change.

The fact is the outsourcers’ business is designed to scale up and down and provide a wide range of services to multiple clients. After all, what is your back-office operation is their front office and competitive edge. Experienced outsourcing providers will not only have the economy of scale to offer you cost-effective solutions but also can increase or reduce the service level depend on your business requirement. This is not usually achievable immediately or easily when you have an IT function with fixed headcount. Moreover, the outsourcers will have an extended talent pool or partner network for some specific or niche services you may require.

Simply consider the amount of investment that you’d need to put in up front – and the time it would take to achieve a return on your investment – if you set up and manage your own IT infrastructure in house. It could often be years. And during this period of time, there are still on-going maintenance and support costs and efforts involved. In comparison, by outsourcing the IT infrastructure, you can weigh out these costs over time, and therefore make necessary changes much more easily.

Infrastructure outsourcing is not just for large companies. Our experiences have shown that it has successfully helped many SMEs to reduce costs, gain greater control and increase the flexibility of their IT operation. Through working with a trusted technology partner, you can achieve your core business objectives through an effective and efficient IT function.

The outsourcing of the recruitment process to an external partner gives organisations immediate access to best practice in the market and the skills and experience of dedicated professionals. Which, of course, should mean that the quality of hires made through such an arrangement should be better than those made in any other way. But how do you actually know if the right recruitment decisions are being made? And given the wide range of factors that can affect the performance of an employee once they enter a business, from corporate culture to line manager ability, is it really possible to assess measure quality of hire in any meaningful way?

At the last meeting of the Ochre House Network, an extended think tank made up of over 650 major employers such as GE, Lilly and Microsoft, delegates came to the conclusion that, while measurement can be a daunting challenge it’s by no means and impossible. And these were the concrete suggestions that they came up with:

1) The ratio of candidates selected for interview by line management to the number submitted by the sourcing team

2) The number or percentage of exits per annum on a year by year basis

3) The allocation of bonuses at the end of a recruit’s first year

4) Comparison of capabilities at interview, on hiring, after three months and after one year

5) Asking line managers whether they would re-hire a recruit after three months and after a year

6) Sustained high performance over a three year period – it’s unrealistic to expect high performance within the first six to nine months

7) Monitor whether a recruit is tagged ‘high potential’ within an agreed time period

However, let me voice a few words of caution. Measuring quality of hire is obviously essential to make sure that organisations are building the right talent resources and getting best return on investment. However it’s important that the recruitment process doesn’t get bogged down in too much administration, stopping those at the coal face of talent acquisition doing their jobs properly. And it’s also vital that organisations don’t become obsessed with making the ‘perfect’ hire. What counts is that they get the best possible person available at the right time and in the right place. Aiming for the best is obviously always a good thing, but tempering expectations with realism is what gets the job done at the end of the day.

Sir Philip Green’s recent report into Government efficiency raised some serious questions about public sector policies on data management. To many, the issues raised were nothing new; poor quality data, duplicate contracts, procurement problems – we’ve heard them all before, so why do these problems continue to stifle service efficiency?

The answer lies not only in the current lack of technological capabilities in the public sector, but a deep-rooted shortfall in the understanding of just how vital information is to all organisations. All too often the benefits of analysing and making critical decisions on information are overlooked, which in turn triggers many of the problems listed above. This culture has to change if the Government is serious about transforming our public services to cut costs and improve efficiencies for the long-term.

Influencing every decision, everyday

Let us be under no illusion – data is the lifeblood of all organisations and it must be harnessed and utilised to ensure efficiencies are made. Instilling this culture across a business or department can take time, but it must be progressed to ensure all employees are taking decisions based on the whole picture rather than a best guess.

Green described the government’s procurement data as “shocking”, noting that it is both inconsistent and hard to get at. This example alone captures the main problems of the ‘dodgy data’ culture in a nutshell. Why are there so many inconsistencies in this area? Why are separate departments paying different prices for the same services? Why has nobody every spotted these anomalies? Even if they did, is there anything they could do about them?

It is simply not the case that Civil Servants deliberately overlook these discrepancies, instead it is because they rarely have the tools available to draw comparisons in the first place.

All seeing means all knowing

The report correctly notes that currently, departments are operating in a disjointed structure and that savings could be made much more quickly with a central mandate. What’s worse is that each department relies on a manually produced return to record transactions, in some cases even asking suppliers for information about cross-government contracts.

This kind of information should be stored centrally within the organisation to allow decision-makers to draw comparisons and collect information to drive down costs and negotiate better deals. Without a system in place to present this data, managers are unable to gain the necessary visibility into spending and are thus forced to guess the best prices without any real evidence available to consider.

Gaping holes in the public purse

The statistics in the report highlight numerous financial oversights, all of which are completely unnecessary and costly. There are a total of 71,000 central Government buyers who have an approximate monthly spending limit of up to £1,000, which is not monitored. There are no real spending reviews against Key Performance Indicators (KPIs) and departments have no incentives to spend less than the cash budgeted to them.

But without proper performance management assessments, how can departments even begin to iron-out these inefficiencies? Clearly, the need for a drastic cultural change to information management needs to be implemented with immediate affect to deliver the level of public savings in the Comprehensive Spending Review.

Small changes mean big savings

Even the smallest changes to data efficiency can reap savings of millions of pounds of public money. If a nurse or ward manager has identified a quicker way of working in a hospital, which reduces administration and speeds up patient care, shouldn’t all managers in the health service be able to see it, review it and, if suitable, roll it out elsewhere? If a Police force has pioneered a new patrol initiative, shouldn’t that be shared with other officers and departments? Currently, without the central data available, these savings initiatives will fall under the radar.

Undoubtedly Philip Green’s experience in the retail sector – one of the most aggressive industries where stock replenishment and effective data analysis can make or break a business – have given him an expert insight into spotting these shortfalls. But now that these problems have been highlighted, it’s time for the Government take to action to centralise data and ensure managers have a clear insight into all the facts before they make long-term decisions. Once this new culture of responsible data management is fully implemented across all departments then delivering greater savings to hard-pressed taxpayers’ will be a much easier challenge to tackle.

Wipro has announced its sales and profit figures for its final financial quarter of 2011 showing steady growth.

India's third largest IT services firm also announced its results for the full year 2011.

The final quarter of 2011 saw IT services sales reach $1.4bn which was a 4.2% increase on the previous quarter and just over 20% higher than the same period the year before. Profit for the three-month period was 9% higher than the fourth quarter last year at $312m.

For the full year Wipro made $5.2bn in sales, 18.9% higher than the previous year. Profit rose 15% compared to 2010 to £1.18bn.

Wipro had a surge of customer wins with 68 of its 155 new customers for the whole year signed in the final quarter.

IT services accounted for 76% of Wipro's total sales and 93% of its total profit in the year.

Source: http://www.computerweekly.com/Articles/2011/04/27/246537/Wipro-latest-Indian-IT-supplier-to-reveal-spending-trends.htm

IT service provider VanceInfo Technologies Inc. has announced that it has acquired 100% equity interest in the main operating subsidiaries of LW International Holdings Limited ("Lifewood"), a China-based company providing business process outsourcing ("BPO") services. Under the terms of the acquisition agreement, VanceInfo will pay an initial consideration of $5.6 million in cash and stock, with contingent consideration to be paid based on Lifewood's financial performance over the next three years.

Established in 2004, Lifewood provides primarily data processing services to clients in the United States, Europe and Asia Pacific. Its key industry verticals include publishing, healthcare and financial services. The acquisition marks VanceInfo's strategic expansion into the BPO business, an early stage growth sector with increasing synergies to the IT outsourcing sector.

"Lifewood is a highly process oriented BPO service provider with a well-developed system platform and customer centric service culture," commented Chris Chen, Chairman and Chief Executive Officer of VanceInfo. "It invested heavily over the past few years and has built a solid foundation for us to move aggressively into this high-growth business that is complementary to VanceInfo's service offerings. We believe this strategic alliance will create synergies for both and allow VanceInfo to serve a broader range of international customers with combined offerings."

"We are very excited to join the VanceInfo family," said Ronald Cheung, Chief Executive Officer of Lifewood. "Leveraging VanceInfo's platform and Lifewood's BPO capabilities, we hope to quickly bring this young business to the next level and become a market leader in China-based BPO services in the future."

Lifewood generated approximately $4.5 million in net revenues in 2010. The transaction is expected to be slightly accretive to VanceInfo's 2011 earnings.