Industry news

Serco Group Plc, a provider of outsourcing services, said it’s not in talks over any “major transaction” after a newspaper reported the company had offered $2 billion to buy SRA International Inc.

Serco Group, based in Hook, England, “is not in any discussions regarding any major transaction at this time,” it said an e-mailed statement today.

The Sunday Telegraph said earlier, without citing anyone, that Serco had bid for SRA International in a deal that would make it the biggest foreign provider of services to the U.S. government. The newspaper said Serco, advised by UBS AG, was improving the offer after the initial approach was rejected.

Source: http://www.bloomberg.com/news/2011-01-23/serco-says-it-s-not-discussing-any-major-transaction-correct-.html

Wipro Ltd., India’s third-largest software exporter, replaced the co-heads of the company’s main computer-services business after posting sales that missed analysts’ estimates.

T.K. Kurien will take over as the chief executive officer of the information technology business, Wipro’s largest, from next month after Girish Paranjpe, 52, and Suresh Vaswani, 51, resigned as joint CEOs, the company said in a statement today. Billionaire Azim Premji remains chairman and managing director.

Premji promoted Paranjpe and Vaswani less than three years ago to lead Wipro through the global financial crisis. Their resignation may hurt client relationships and “disturb” Wipro’s growth momentum, said Rahul Jain, an analyst with Dolat Capital Market Ltd. in Mumbai.

“Both the CEOs quitting is a bit of a negative surprise for Wipro,” said Sandeep Muthangi, an analyst at India Infoline Ltd. in Mumbai. “Senior-management attrition has been fairly high at Wipro, and this could be a precursor for another round of high-level attrition. It also seems very abrupt to me.”

Third-quarter revenue increased 12 percent to 78.3 billion rupees ($1.7 billion), the Bangalore-based company reported today, missing the 80.5 billion rupee average of 47 analyst estimates compiled by Bloomberg. Profit rose 10 percent to 13.2 billion rupees, in line with estimates.

Shares Fall

Wipro slumped as much as 4.4 percent, the biggest intraday drop since Nov. 19, to 456.55 rupees as the company joined Infosys Technologies Ltd. in indicating that a weaker global economic recovery may undermine growth in India’s software- services market.

The stock changed hands at 460.50 rupees, or down 3.6 percent, at 10:53 a.m. in Mumbai.

Vaswani worked at Wipro for more than 25 years, serving at different times as chief executive officer of Wipro’s joint venture with Acer Inc. and president of Wipro Infotech.

Paranjpe joined Wipro more than 20 years ago. He and Vaswani were promoted to joint CEOs of Wipro’s IT business in 2008. The two are also resigning from their positions on the company’s board of directors.

“It hurts the company,” said Jain, an analyst with Dolat in Mumbai. “What’s important is who replaces them. The immediate momentum has been disturbed.”

Wipro engaged two CEOs for the IT business to get “diversity in thinking” during the “uncertain environment” in 2008, Chief Financial Officer Suresh Senapaty told reporters in Bangalore.

‘New Environment’

“Now if you go into the new environment there’s a unanimous view that there is growth, there is an uptick in IT spend and outsourcing,” he said. “From that point of view, all you need to do is drive growth, and therefore it was thought appropriate by the company that we need to have one CEO.”

The operating profit margin for the main IT division was “flat” in the quarter, Senapaty said. Wipro’s 10 percent growth in third-quarter profit was slower Infosys’s 14 percent increase and market leader Tata Consultancy’s 30 percent.

“Wipro is lacking in terms of growth,” said Jigar Shah, a Mumbai-based analyst at Kim Eng Securities India Pvt. “The company is doing well, but not as well as its peers.”

Source: http://www.bloomberg.com/news/2011-01-21/wipro-third-quarter-profit-increases-10-sales-miss-analysts-estimates.html

Carlsberg has signed a five-year contract with Accenture for application services for its European brewery operations.

Accenture will support a range of application services in a co-sourcing agreement managed by Carlsberg. The services will support the brewer's business standardisation programme.

Application services will be delivered in areas such as incident management and problem management. Accenture will support service validation, test management and request fulfillment.

The supplier was chosen based on its experience in delivering similar services in the consumer products industry, said Kenneth Egelund Schmidt, vice-president and CIO at Carlsberg.

In April 2009, Carlsberg signed a contract with Accenture for SAP and Microsoft software implementations in Europe, and the delivery of a common enterprise resource planning platform.

HP Enterprise Services today announced FCC, a Spain-based multinational public services company, has signed a seven-year technology services agreement with Hewlett-Packard Servicios España, S.L.

The agreement is intended to transform FCC’s technology infrastructure to advance the company’s ability to compete internationally; it is valued in excess of $300 million in revenue for HP.

With this agreement, HP will provide data center services and end-user workplace management for the entire FCC organization, which has a presence in 54 countries. FCC’s core businesses are environmental services and water management, construction of large infrastructure, cement production and renewable energy production.

“FCC has grown twofold over the last four years, and we want to increase our competitiveness on an international scale by improving our efficiency and practices,” said Antonio Gómez Ciria, general manager, Administration and IT, FCC. “HP’s innovative, industry-leading infrastructure services will ensure our IT systems meet our critical business requirements as we expand into additional global markets.”

The agreement is part of a broader initiative by FCC to reengineer its management systems to better allocate resources to strategic tasks. Citizen Services Group, FCC’s parent company, intends to apply these same efficiency improvements to all of its international businesses.

HP will provide centralized data center services and consolidate FCC’s distributed data centers into two locations in Madrid, Spain, operated by HP. Through consolidation and standardization, FCC can increase agility, improve visibility over its international operations and lower its operating costs.

HP also will provide workplace services, including delivering service desk services in nine languages to support FCC’s 20,000 worldwide employees. Onsite support and managed print services will keep systems running and users productive. HP’s workplace solutions are based on industry best practices that create consistent, well-integrated and scalable processes and tools to deliver a more agile end-user computing environment.

“To capitalize on its many growth opportunities, FCC needs a technology infrastructure that is available, enables collaboration and adapts easily to change,” said Mike Nefkens, senior vice president and general manager, HP Enterprise Services, EMEA. “Drawing on our extensive expertise in managing technology environments for large global companies, the HP team will help FCC on its journey to become an Instant-On Enterprise.”

CSC have announced that the U.S. Air Force awarded the company a task order to provide analytical and technical support to its 24th Air Force Cyber Command, located in San Antonio, Texas. Awarded during CSC’s fiscal 2011 second quarter, the task order has a one-year base period and four one-year options. The order was issued under the Information Technology Enterprise Solutions-2 Services contract, which CSC won in 2006.

Under the terms of the order, CSC will provide technical and analytical support in areas relating to command and control, planning, implementing, and executing the Air Force cyberspace mission. CSC will support the development and implementation of tools and procedures for network defense and warfare operations, as well as related integration of network support and exploitation capabilities and functions. Work on this task order will be performed at Lackland Air Force Base in San Antonio, Texas, under the direction of Wiley Hill, CSC’s local lead executive.

“As a trusted leader in providing global cybersecurity solutions, CSC is honored to support the evolution of the Network Warfare Operations mission to a cyberspace capability for the 24th Air Force,” said Harold C. Smith, vice president and general manager of the Intelligence Group for CSC’s North American Public Sector. “Our mission is to ensure the Air Force’s cyber command is confident in the integrated processes, procedures, data, and systems to support its air, space and electromagnetic spectrum operations.”

In the first of four articles, Tim Palmer, expert in HR Transformation and the Co-Chair of the European HR Outsourcing Association at PA Consulting Group, outlines how HR Directors should consider their options for sourcing HR services, and not blindly succumb to commonly-held beliefs about HR outsourcing.

HR cannot be immune to the pressures that today apply to every other part of an organisation, and there is a need to find the right way to deliver the required services for the best value for money. The reality is that if HR doesn’t assess its own options, in this climate, someone else will probably do it for them. Rather than having a sourcing strategy forced upon the HR department from elsewhere, it is better for HR directors to proactively assess alternative strategies, from the creation of internal shared services to outsourcing. HR can get ahead of the game and present its own strong opinion on the best way forward.

Key to success is to have clear goals

This might sound as if outsourcing is being advocated for use in all situations; in fact the opposite is true. Outsourcing is not something that should be done lightly. Do it well, and it is a great way to achieve strategic goals that might not be otherwise available. Do it badly, and it has the potential to cost you more money and more grief than you ever thought possible.

Being realistic, outsourcing will not solve all the issues facing an HR organisation; and it is rarely possible to achieve every requirement in one outsourcing solution. Outsourcing cannot deliver lower costs and better service and new systems and lower risk; but, done well, it can deliver one or two of these goals and provide quantifiable value to the organisation. Good outsourcing involves trade-offs, and HR directors need to be honest about their true objectives, so that they can understand what they have to play with.

So how to move forward? The outsourcing market is awash with ‘bumper sticker’ advice about the pros and cons of various approaches. From impossibly over-optimistic return on investment figures to dire warnings about loss of control, these simplistic and ill-founded myths are adding unnecessary confusion.

In fact, despite the perceived complexity, HR outsourcing is a relatively simple thing. The HR director has to determine the strategic goals; and the organisation must decide whether or not it is prepared to have a third party working to support the delivery of those goals. Taking the outsourcing route is not a software selection exercise or something to be worn as a badge of honour. Deciding whether or not to outsource HR should be a sound, sensible decision taken with all of the necessary facts at your disposal.

Next week, Tim Palmer examines the first two specific myths about HR outsourcing, and why they are not to be believed.

For more information visit www.paconsulting.com/sourcing

How can you measure the value of outsourcing key elements of talent management such as recruitment if you don’t clearly understand what you are trying to achieve through it?

Traditionally businesses have seen outsourcing and, in particular, recruitment outsourcing in relatively simple terms, often bound up with a focus on reducing costs and boosting procedural efficiency. However, over the past few years we’ve seen more and more HR directors understanding the case for using outsourcing in a more strategic way and accepting its value throughout the whole of the talent management chain. Effective implementation of this approach calls for the strategic planning of workforce management to ensure that the management of talent aligns directly with a company’s business goals. But how can this be executed in practice?

The key seems to be a challenging, but nevertheless essential, combination of the ‘big picture’ with a detailed road-map. And realising the big picture means looking at the context the organisation operates in now, and perhaps more importantly, will operate in over the coming years.

Markets change more rapidly today than perhaps at any other time in human history. And that means most businesses need to be re-evaluating their offerings on a continuous basis with obvious consequences for the composition of the workforce. Look for example at Telefónica O2 diversifying into such areas as healthcare and financial services, parts of GE developing consultancy expertise or, at a more extreme level, Nandan Nilekani of Infosys claiming that his company’s role now is not to produce technology but to ‘redefine the boundaries of the possible’. And all this means that the skills-sets which made companies successful in the past may be redundant in the bright new future.

Of course predicting the future is not an easy matter. Anyone who watched the BBC programme ‘Tomorrows World’ in the 1960s or 70s may still be wondering what happened to the robots, routine space travel and three hour working days. But the need to at least make an educated guess at future business direction and what capabilities your workforce will need to make it happen is not something that any serious enterprise can afford to ignore.

Defining the nature of the likely ‘next’ workforce will allow organisations and their outsourcing partners to work out the best ways to reach out to the individuals who will make it up. This will almost certainly mean more imaginative methodologies than traditional advertising or use of recruitment agencies. Instead it will mean careful development of the employer brand and the building of communities through social media to build pipelines of talent that can be drawn upon as specific roles become available.

The challenge for HR professionals and outsourcers alike will be to create plans and structures that are both detailed yet flexible enough to adapt to constantly changing needs. A daunting challenge perhaps, but one that simply must be met.

Paul Daley, director at recruitment outsourcing and talent management specialist, Ochre House. www.ochrehouse.com

Towards the end of last year, FusionExperience ran a series of interactive webinars providing insight and guidance into important issues relevant to operations and outsourcing.

In the first webinar we set out the importance of having a good operations strategy and gave detailed guidance on the level of resources to be devoted to developing and updating one. When considering operating model strategy, two questions are clearly prominent on the participants’ minds, namely why to have one in the first place, and why or when should it be reviewed. Answering these will identify the key elements that a good operations model must contain. Examining what happens if you don’t have an operating strategy can start to answer this, namely sub-optimisation, urgency winning over importance and inefficient allocation of resources.

The second webinar looked at the importance of managing the outsource suppliers that are an increasingly large part of most asset management operations. Outsourced service provision is central to the operation of almost all asset management firms. The basic rationale for outsourcing across all industries is that the benefits of scale outweigh the additional management costs of acquiring services from suppliers.

The third webinar looked at important techniques for Managing Major Change, focusing on techniques for achieving momentum and coherence at the fuzzy front end of projects. Change in asset management is constant and pervasive; new products must be launched to respond to changes in customer preference, service features must be added in line with demand for more tailored service and service levels need to be continually upgraded to keep pace with customer expectations, at ever lower costs.

However the change process can fail if some basic tenets are not followed; requirements must be properly understood, scope must be fully defined and accurate estimates of the resources required must be produced. Moreover stakeholders must be fully engaged and the acceptance criteria defined.

Our final webinar entitled ‘Managing Operations’ covered measures companies can take to improve operations. It is through operations that companies deliver services and brand. Good operations will deliver to expectation, are flexible and allow for the rapid launch of new products and new services. By contrast, poor operations will undermine a brand, will consume management resources dealing with failure, and will divert financial resources away from other areas of the business.

Operations consist of a company’s people, its technology, and its process. If operations are important it therefore follows that they should be managed. In the webinar we looked at a framework for process management described by the Capability Maturity Model Integration for Services (CMMI). This is a model used globally by many large organisations to drive cost reduction and improvement in services delivery. The CMMI model is a progressive model, with each level describing in detail the process goals to be achieved, and the practices required to improve them.

Whilst the webinar targeted the asset management sector, the issues raised were sector agnostic. The reason we held these webinars was to impart some of the knowledge at FusionExperience have garnered over many years and hear from other back office professionals who shared their opinions and asked some often challenging questions. We have written up the findings of the webinars, which can be accessed at Sourcingfocus.com, our media partner’s website. These can be viewed at http://www.sourcingfocus.com/index.php/search/results/8c749bd8a1c7bae36e39218ebd80920d/

Gordon Easden, Financial Services practice head.

Hampshire County Council aims to shave £900,000 off its annual IT bill by reorganising its IT services unit and reducing contract costs.

The cuts come as part of the council’s efforts to deal with a £55m hole in its 2011/12 budget. The council also plans to axe 1,200 jobs as part of its cost cutting.

"There can be no debate over whether or not we make cuts, the withdrawal of government funding to meet the national debt leaves us without that choice,” said Ken Thornber, leader of Hampshire County Council.

As part of the IT savings, the council will merge its Culture, Communities and Rural Affairs department with its Property, Business, Regulatory Services and IT department.

It also hopes to improve its productivity through better use of IT. It expects to be able to make a saving of £1m through improving its support and administration functions and enabling more employee self-service.

Recently, Hampshire teamed up with Dorset County Council to develop a joint ICT strategy.

That collaboration was expected to save Hampshire somewhere between £2m and £5m in IT costs over the next three years.

As part of the shared services arrangement, the councils share computer centres, business continuity, technical expertise and technical services. A joint management board was established to explore possible savings on major IT systems, shared contracts and procurement and a joint support and service desk.

"In order to meet the current and future financial challenges we have undertaken a comprehensive review of how the council operates and of all its services and we are now embarking on a change programme that is of an unprecedented scale,” added Thornber.

Source: http://www.computing.co.uk/ctg/news/1938184/hampshire-council-aims-gbp900-savings

Accenture and Carlsberg have agreed to a five-year contract for the provision of application services to the European operations of Carlsberg Breweries A/S.

Under the terms of the agreement, Accenture will support a range of application services in a co-sourcing agreement managed by Carlsberg. The services will support Carlsberg’s “Business Standardisation Programme” which aims to enable future growth through the introduction of common business processes, and an enhanced ability to share best practices across its European operations.

Application services will be delivered in areas such as incident management and problem management, and a 7-step improvement process for incident/problem management. In addition, Accenture will support service validation, test management and request fulfillment.

The contract complements an agreement announced in April 2009 by Accenture and Carlsberg Breweries A/S, under which Accenture supports Carlsberg's SAP and Microsoft software implementations in Europe, and the delivery of a common enterprise resource planning platform.

“The choice of Accenture to help us support BSP reflects their proven experience in delivering similar application services in the consumer products industry and the flexibility it offers in helping us to achieve the aims of our BSP,” said Kenneth Egelund Schmidt, Vice President CIO at Carlsberg A/S.

“This contract underlines Carlsberg’s drive for optimization and continuous improvement,” said Henrik Rasmussen, senior executive in Accenture’s Consumer Goods and Services practice. “The services to be implemented under this contract will help Carlsberg to benefit from a standardized delivery of application services, which is crucial to achieving high performance.”

The two companies will work together to deliver the services through Accenture’s Global Delivery Network, using one of Accenture’s centers in Hyderabad, India, and local service management at Carlsberg in Copenhagen, Denmark.

The application services that will be delivered will be based on the Information Technology Infrastructure Library (ITIL) version 3, which represents a first for the consumer products industry. ITIL is a series of documents, originally created by the Office of Government Commerce, a governmental department in United Kingdom, to help implement an efficient framework for IT Service Management.