Industry news

  • 22 Dec 2010 12:00 AM | Anonymous

    Accenture will collaborate with Magneti Marelli in the design and development of the company’s in-vehicle infotainment (IVI), telematics and embedded software initiatives, under a five-year contract.

    Magneti Marelli designs and manufactures high-tech systems and components for the automotive sector. Accenture will help develop and manage the company’s digital entertainment and communication solutions and services designed to improve the onboard driving experience of a wide range of vehicles, including cars, light commercial vehicles and trucks.

    Marcello Tamietti, a senior executive for Accenture Automotive, said, “Accenture has developed a strong and productive relationship with Magneti Marelli. This agreement will allow us to help the company offer drivers and passengers a huge range of new and innovative services in their vehicles, from infomobility and entertainment services, safety and security solutions, to car maintenance and e-commerce services.”

    “Magneti Marelli is pleased to team with Accenture in this effort,” said Giuseppe Rosso, chief technology officer of Magneti Marelli. “Accenture’s proven track record in the area of embedded software and deep automotive industry knowledge will greatlysupport our ability to serve the in-vehicle infotainment and telematics global market, in a phase of big growth of our business. This agreement also allows a useful integration between our technological know-how and Accenture’s expertise in the field of service software platforms.”

    Accenture will utilize its global network of Automotive Solution Centers to provide an unparalleled body of automotive industry knowledge and experience. Based in four locations: Hyderabad, India; Turin, Italy; Shanghai, China; and Detroit, in the United States, the centers are connected virtually, allowing clients to be served regardless of their location.

  • 20 Dec 2010 12:00 AM | Anonymous

    While President Barack Obama met Wednesday with the CEOs of some of America's largest companies to discuss ideas for expanding the economy and creating jobs, a Chinese outsourcing firm was raising cash to help it expand in the U.S. market.

    Beijing-based iSoftStone Holdings held its Initial Public Offering (IPO) on Wednesday. It sold 10.8 million shares at $13 a share, raising about $140.8 million. The company is now listed on the New York Stock Exchange.

    iSoftStone has about 10,000 employees, mostly in China, but is seeking U.S. clients. To help accomplish that, in October, iSoftStone acquired Ascend, an IT consulting firm with Fortune 1000 clients in Waltham, Mass.

    It believes Ascend will help it reach new markets, "as many global banking and financial institutions are increasingly seeking to work with China-based providers for IT and BPO services," Tianwen (TW) Liu, the company's founder, chairman and CEO, said at the time of the acquisition.

    President Obama met for more than four hours, in private, with the CEOs from firms including Google, Intel, Cisco, GE, and others, to talk about innovation, education, global trade and exports.

    These things are what China is seeking as well, and iSoftStone's route shows how China-based companies may improve their ability to compete in the U.S. for outsourcing work and high-skilled jobs.

    And iSoftStone isn't the only outsourcing company from China to issue an IPO this year. hiSoft Technology International, of Dalian, in the country's northeast, was listed on the NASDAQ in June. It claimed to be the first Chinese IT and BPO outsourcing company to complete an IPO.

    Camelot Information Systems, of Beijing, went public in July. The company says it is the largest domestic provider of SAP-based ERP (Enterprise Resource Planning) services in China.

    A sign of China's new approach to the U.S. market is the number of IPOs it is responsible for this year. There were 68 venture-back IPOs this year, which was a rebound from 2008 and 2009, which posted a two year total of just 18 IPOs, according to the National Venture Capital Association (NVCA). In 2007, there were 86 venture-backed IPOs.

    But of the 68 IPOs this year, 23 were from China-based companies, said Mark Heesen, president of the NVCA. Subtract the Chinese firms from this year's IPO total, and Heesen called it an "anemic" year for venture-backed U.S. firms.

    Heesen said China's IPO showing this year is a new phenomenon. "You are starting to see indigenous entrepreneurship in that country, and you are seeing Chinese who have been educated in the U.S. going back to China," he said.

    Indeed, many of the top managers in iSoftStone have degrees from U.S. universities. Scott Gehsmann, a capital markets partner in PricewaterhouseCoopers Transaction Services practice, said getting listed on Wall Street will also help the Chinese companies in the U.S.

    "[There is a] quality seal of approval and accomplishment that comes with going public," Gehsmann said.

    Going public will also help the Chinese firms hire U.S. workers, because they can now offer compensation programs that include stock, he said. "It provides a competitive advantage."

    PricewaterhouseCoopers issued its own report on IPOs that includes others companies, not just those venture-backed. It said 154 IPOs were completed this year, compared with 69 in 2009, and said the market has recovered from the "doldrums" of the last two years.

    Gehsmann, whose firms works with companies that are preparing IPOs, said he was optimistic about the pace of IPO activity next year, based on what he sees in the pipeline.

    Source: http://www.computerworld.com/s/article/9201311/Chinese_IT_outsourcers_turn_to_Wall_Street?taxonomyId=72&pageNumber=2

  • 20 Dec 2010 12:00 AM | Anonymous

    Stare out of the office windows at Park Towers and - if you are lucky - you may spot a zebra or a giraffe.

    The sleek, glass building on the edge of Nairobi National park belongs to Horizon Contact Centers, one of a handful of emerging Kenyan firms that hope to grab a large slice of the global outsourcing market and establish the country as a leading provider of the call centres and back offices of the world.

    Inside, there is little time for safaris. The sleek offices are packed with rows and rows of blue cubicles staffed by young graduates, all calmly talking into headsets and typing into identical PCs.

    The rhythmical conversations are polite and familiar to anyone who has called a customer support line or has picked up a cold call from an insurance firm.

    "Kenya is very well known for its runners and wildlife, but when people talk about IT services there is a question mark," says Sanjay Sikka, chief executive of the year-and-a-half-old firm.

    Now that is all set to change, he says.

    Net effect

    Four years ago, the Kenyan government unveiled its Vision 2030 plan to develop the country.

    Central to its goals were the use of technology and a desire to emulate the success of countries such as India, South Africa and the Philippines.

    "It is not about taking India's business away from them," explains Paul Kukubo of the government's ICT board, in charge of promoting Kenya as an outsourcing destination for foreign firms.

    "The market is so big globally that the issue isn't about competition. The source markets - the US and the UK - are still looking for high quality, low cost destinations to do business."

    Until recently, Kenya was not in a position to go after the business. Its digital infrastructure - and particularly its satellite communications links with other countries - was prohibitively expensive for firms that rely on instant communication.

    That changed in 2009, when the first of three undersea internet cables arrived in the country.

    "I travel around the world trying to make the case for international investment in outsourcing," says Mr Kukubo.

    "Before the cables came it wasn't even a discussion. Now we have seen a huge interest with companies saying 'you have the basic ingredients'."

    Mr Sikka, who's firm initially used a grant from the World Bank to help pay for the expensive satellite links, agrees.

    "It's had a huge impact on cost," he says. "It's made Kenya competitive with the rest of the world."

    Perception problem

    Down the road from Horizon's sleek headquarters is Kencall, Kenya's first outsourcing firm, started in 2005.

    Before the cables arrived it had to use voice compression technology to ensure that customers did not pick up on the lags in conversations as the calls were beamed thousands of miles up via the satellite

    "When you calculate that distance to go up to that satellite and back down again at the speed of light, it would mean that for a word to be heard in England it would take about 6-700 milliseconds," says its founder Nik Nesbitt.

    "That delay makes calls horrible."

    Now, there is no need for the technology. This has brought other benefits, says Mr Nesbitt.

    "Our bandwidth costs have dropped about 90%. However, the part that is most exciting to us is that we are able to go out and get higher value more attractive work because we have the fibre optic capability, which pays us more."

    He says the cables "offer a perception of reliability" to potential customers.

    "Previously, the satellites offered that reliability, but not the perception," he says.

    But reliable cheap bandwidth is not the only selling points for Kenya, says Mr Sikka.

    He highlights the country's "abundant talent pool" and its "neutral accent".

    "India invests a lot in so-called accent neutralisation, where the agents are taken through a course," says Mr Sikka, himself a veteran of the Indian outsourcing scene.

    Kenya, he says, does not have that problem. It's a mantra repeated by everyone pushing Kenya as an outsourcing destination.

    Mr Sikka also emphasises the population's "cultural affinity" with countries such as the US and the UK.

    "Cultural affinity to the UK is very important," he says. "It is very important to show an empathy and understanding of the culture. It can't be someone calling up from an alien world with no understanding about what it means to live there."

    He says young Kenyans consume the same TV shows and music as their counterparts in the US and the UK, and they follow the same sports teams.

    The legacy of the British schooling system in Kenya is also an advantage, he says.

    "The main thing when you are talking on the phone is getting into the customer's shoes."

    Price point

    Kenya is not just targeting call centre work. Horizon offers data processing.

    Nearby, in a conspicuous four-storey red building, Ken-Tech data offers other services such as image tagging.

    The staff at Horizon must pass through several layers of security to stop data breaches For example, the firm does processing work for an unnamed smartphone application that allows users to take a picture of a product to find the best prices online.

    The pictures are sent to a team of people in their offices, who analyse the images and tag them with descriptive words that can be used to find the best prices on the web.

    "The results are sent back to the phone within 30 seconds," says Lakshmanan Manickam, general manager of the firm, and another person who has moved from India to kick-start the industry.

    This work requires a "highly-skilled workforce", he says, who are able to describe objects accurately.

    The firm also creates content for websites and audits transcriptions and translations for US companies.

    He says it is much easier - and cheaper - to set up these projects in Kenya; factors that will make it "the next outsourcing destination".

    But not everyone is so optimistic about Kenya's chances.

    "I'm more conservative about what it can do," says Erik Hersman, an entrepreneur and a major figure in the local technology start-up community.

    "If you are just trying to bid against your Indian counterparts, I think it is a hard thing to do, particularly when they have so much experience."

    He believes that rather than offering similar services to other countries, Kenya needs to find its own niche if it is to be successful.

    "I think it is a little bit more of a difficult space than people make it out to be."

    In addition, he says, the country should not try to compete with other countries on price.

    'Lone voice'

    It is a view echoed by Mark Hillary, author of Who Moved my Job.

    "If your basic offering is, 'it is cheaper to work here than India', than that is a pretty poor sales pitch," he says.

    Outsourcing could soon rival Kenya's tourism industry, the government hopes Instead, he says, firms and government should look at the kinds of graduates that are coming out of the country's universities and offer services based on their skills.

    This has worked for countries such as Bangladesh, he says, which has developed a concentration of animation firms.

    He says Kenya's historical ties with the UK, which means it has similar accountancy and legal systems, offers opportunities for outsourcing firms.

    However, Mr Hillary says his studies conducted with the United Nations suggest the country may face other challenges.

    "We found the biggest inhibitor was people's sense of corruption," he says. "But, it's more about the perception of doing business than the reality."

    A spate of violence following the disputed 2007 presidential elections also damaged the country's reputation.

    But the government's Mr Kukubo remains optimistic.

    "One has to be candid about these things," he says.

    "[The 2007 violence] was one of those things that was incidental and rare in Kenya's history.

    "Out of that crisis was born a new Kenya, really. Bad as it may have been, I think we learnt out lessons."

    In the next year, he says, there will be an "explosion of interest" from firms wanting to set up in Kenya.

    It has already invested in a new business park on the Mombasa Road, a stone's throw from Kencall, Horizon and Ken-Tech data.

    The 500,000sq ft (46,450sq m) of empty office space, primed for an influx of local and India firms, is an indication of its conviction.

    And it is a validation for Kencall's Mr Nesbitt.

    "When we started Kencall, we were really a voice in the wilderness talking about outsourcing. I think everyone sat there with one raised eyebrow waiting to see what could happen.

    "But people have now begun to see that this can actually work in Kenya."

    Source: http://www.bbc.co.uk/news/technology-12004815

  • 20 Dec 2010 12:00 AM | Anonymous

    The coalition government has claimed that ICT and consultancy cuts have helped contribute to £1bn of efficiency savings made so far with a forecast £2bn to come in its first year in power.

    Of the £1bn, £500m has come from a moratorium in five key areas of discretionary spend: consulting, ICT, recruitment, marketing and property.

    The cuts are part of the government’s plan to reduce the nation’s budget deficit and include the renegotiating of contracts with major suppliers.

    Some 50 per cent less was spent on consulting compared to the same period last year, saving £300m, while £402m in savings came from stopping major projects, such as abolishing ID cards.

    “This government is leaving no stone unturned in cutting unnecessary and excessive expenditure to protect jobs and the frontline services on which people depend,” said Cabinet Office minister Francis Maude.

    “This reform programme has required a culture change in government, as the system is not set up to operate efficiently.”

    The Cabinet Office also published details of ICT projects over £1m across government as well as the Operational Efficiency Programme Benchmarking Report for April 2009 to May 2010.

    Maude argued that the report shows how bad the quality of basic management information collected by the previous government was.

    “There is no excuse for government not to produce the same standards of management information achieved by the best in the private sector,” he added.

    “Robust data is the foundation of government acting in a more business-like manner and operating as efficiently as possible.”

    Source: http://www.v3.co.uk/v3/news/2273999/cabinet-office-ict-cuts#ixzz18ef11dhx

  • 16 Dec 2010 12:00 AM | Anonymous

    Outsourcing business operations is no longer contained to big businesses. A new research reveals that more than 80 per cent of new and small businesses are warming to outsourcing in a bid to cut costs and gain skills.

    The research carried out by OutsourceMyProject.com, an intermediary website between businesses and service providers, has identified this trend among new and small businesses. The companies surveyed believe that outsourcing will save money and give access to experienced people they need to survive.

    Among the organisations that have outsourced, 65 per cent went abroad and the minority stayed in the UK. A quarter of these were most likely to outsource websites and e-commerce.

    Loren Holland of OutsourceMy Project.com said, “Outsourcing has mainly been the preserve of larger companies, with few opportunities for start-ups or SMEs to outsource their work or projects. This latest research shows that these businesses need help if they are to succeed in and benefit from outsourcing.”

    He adds, “Outsourcing and offshoring allows businesses to access specialist skills, as and when they need them. It also allows businesses to work with suppliers from lower cost economies such as India and Eastern Europe. It is essential that new and small businesses explore these opportunities in order for them to prosper, especially in the current climate.”

    Source: http://www.sourcingmag.com/offsite.asp?A=Fr&Url=http://www.b2bm.biz/News/RESEARCH-NEWS-Outsourcing-hot-among-small-businesses/

  • 16 Dec 2010 12:00 AM | Anonymous

    Capgemini will continue to serve as the automaker’s application integration management (AIM) supplier for each of these respective process areas. The combined value of the five-year agreements is more than $100 million (approximately €75 million) and is an extension of Capgemini’s ongoing work in support of GM’s Next-Generation Systems Factory Operating Model, which provides standardized processes for application management as well as developing common, integrated standardsbased solutions that scale with business needs. These contracts are in addition to the renewal of two other General Motors contracts in support of their application outsourcing efforts announced earlier this year.

    Under the terms of these three contracts, Capgemini will collaborate with GM’s Information Technology organization in providing services in the areas of: strategic planning, data management, systems engineering and architecture (SE&A), software engineering, program management, and verification and validation (V&V). Solid execution, innovation, and continued evolution of these services will assist GM IT’s on-going efforts to be more flexible, efficient, and effective in delivering new business capabilities.

    “The AIM teams involved are a key support element in GM IT’s drive to provide the innovation and delivery excellence required by our business,” said Terry Kline, vice president, Information Technology, and chief information officer, General Motors. “Capgemini’s services are integral in helping us support GM as it designs, builds and sells the world’s best vehicles.”

    “This win is testament to our collaborative relationship with GM, our success over the past four years in support of their IT initiatives, and the trust they’ve placed in Capgemini as a strategic partner,” said Marc Martinez, General Motors global account executive, Capgemini.

  • 16 Dec 2010 12:00 AM | Anonymous

    HP has announced that it will be adding 105 highly skilled jobs to its Enterprise Business unit in Galway, to boost the company’s software engineering base.

    With the support of investment promotion agency IDA Ireland, HP is looking for IT workers with a range of skills, including enterprise data architecture, application development, and software engineering and testing.

    The positions range from entry level to architect IT, and engineering positions from graduate to PhD level.

    The workers will be located in HP’s Ballybrit campus, and will work on two multi-year projects that are currently underway at the site. New recruits will work on HP’s latest technologies including its cloud infrastructure, as well as for its services business.

    Martin Murphy, managing director of HP Ireland, said: “HP’s strategic intent is to continue the shift towards research and development, including working with institutions such as LERO, the Irish Software Engineering Research Centre at Limerick University.”

    Separately, last week IDA Ireland supported Citi’s recruitment drive announced for the creation of 250 new jobs in Dublin and Waterford, some of which will be in operations and technology roles. Other positions will be available in its funds, client services and product development divisions.

    These are in addition to the 440 new IT jobs that the US financial services company announced it would be creating in Belfast last month.

    Meanwhile, Yahoo is planning to reduce its workforce by up to 700 people, according to Reuters.

    The losses would be equal to between four and five percent of the Internet company’s total workforce, and are expected to be mainly in Yahoo’s US products group.

    Its Q3 2010 results showed that the Yahoo had 14,100 employees at the end of September, and this latest round would be the company’s fourth large-scale cuts in the past three years. Reports claim that employees could be notified of the cuts as early as today.

    Source: http://www.cio.co.uk/news/3253588/hp-creates-105-jobs-yahoo-to-slash-hundreds/?olo=rss

  • 16 Dec 2010 12:00 AM | Anonymous

    Business functions such as IT and finance at European and US companies will continue to be offshored to low-cost locations as the practice matures.

    According to business advisory the Hackett Group, 1.1 million jobs, including those in IT and finance departments, have been offshored since 2008 and another 1.3 million will go the same way by 2014.

    The company said IT has dominated offshoring since 2000 but it is now levelling off, while finance job offshoring is accelerating.

    "With the modest resumption of economic growth this year, policy makers throughout the industrialised world have been struggling to create jobs. But our research shows that across key business functions, their efforts are simply being overwhelmed by offshoring and other factors," said Michel Janssen, chief research officer at The Hackett Group.

    "This is what's driving the jobless recovery we're seeing in key white-collar job categories, and it's likely to continue for the foreseeable future."

    The Hackett Group said that in 2009 nearly 700,000 jobs in finance, IT, and other areas were lost to a combination of offshoring, productivity improvements, and lack of economic growth.

    "We see the number levelling out at around 250,000 jobs lost each year through 2014, and possibly beyond," said Janssen.

    The group said that businesses are becoming more mature consumers of offshore services.

    Honorio Padron, global business services practice leader for The Hackett Group said many companies have become much more mature in their use of offshore resources.

    "They began with shared service centres nearly a decade ago, taking basic transactional areas offshore on a one-off basis. But today we're seeing the rapid ascendance of comprehensive cross-functional global business services operations that are moving far beyond transactional work, to handle the lion's share of the support function for many companies. The result is a globalisation trend from which there's simply no turning back."

    Source: http://www.computerweekly.com/Articles/2010/12/15/244517/Offshoring-growth-will-create-a-jobless-recovery.htm

  • 16 Dec 2010 12:00 AM | Anonymous

    As part of its activities in helping business organisations create solid and profitable relationships, the NOA has been working with other industry associations in collaboration with the British Standards Institute (BSI) to publish the first-ever standard on Collaborative Business Relationships – BS 11000 Part 1.

    The formal launch of this new Standard at the House of Lords on Tuesday, 7th December, began with a welcome from the leader of the House of Lords and Chancellor of the Duchy of Lancaster Lord Thomas Strathclyde.

    Senior industry executives, from a wide range of commercial and public sector organisations were present at the Launch to gain a deeper understanding on how this break-through standard can help them stay ahead of the curve by generating and implementing practical, innovative solutions through effective business relationships.

    “We are delighted to host this event,” says BSI’s CEO Howard Kerr. “Building strong relationships both within and outside a company is fundamental to organizational growth and innovation”.

    As part of the NOA’s commitment to establishing best practices in outsourcing, and in collaboration between organisations, the NOA has taken a leading role in working alongside a range of other industry associations to create this new industry standard aimed at ensuring successful collaborative business relationships.

    NOA Board Member, Adrian Quayle, took on the responsibility of representing the outsourcing industry on the BSI Committee responsible for preparing the Standard. Adrian co-ordinated and contributed the NOA’s input throughout the development of the Draft Standard to its final version for publication.

    Adrian commented: “In order to ensure we had the widest representation from the best thinkers in the outsourcing industry, I have been working with, and have received great contributions for BS11000, from a sixty plus strong Special Interest Group (SIG) drawn from NOA members and other thought leaders. The SIG members are drawn from a cross-section of service recipient customers, service providers, and third party advisers.

    “It is expected that the British Standard 11000 will become a requirement for companies across a wide range of public sector contracts which will obviously include many outsourcing deals. Work continues on Part 2 of BS11000 - The Guidance and it is expected this will be published early 2011.”

    The NOA SIG was represented at the House of Lords Launch by Paul Hart – IBM, Steve Barker – Siemens, Jess Long and Sue Tompkins – EQPartnering, Jim Brannan and Louise Brannan – Bcerta, Lauren Tennant – The National Trust, Belinda Doshi – FFW LLP, Andrew Humphries and Linda McComie from SCCI as well as Adrian Quayle, from the NOA Board.

  • 16 Dec 2010 12:00 AM | Anonymous

    Simon Tennant, finance transformation specialist at PA Consulting Group

    In this second article Simon Tennant, finance transformation specialist at PA Consulting Group, outlines how immediate benefits can be gained from small adjustments and reviews of current sourcing strategies.

    In addition to reducing false demand, revisiting and reassessing the strategic changes that have gone before and understanding where the current sourcing arrangements can be expanded in scope, there are four further areas where a sourcing health-check can immediately deliver valuable, ongoing benefits.

    • Extend reach – organisations need to ensure that services are taken up across all their operations. Standardising operating models across all territories and divisions provides a much greater return on a shared service investment.

    • Simplify and standardise – organisations need to simplify sourcing arrangements. For example, many financial services organisations have historically allowed sourcing to be managed at an individual business level, resulting in multiple arrangements with multiple providers. By rationalising the provider base, organisations can remove service overlaps between different providers and deliver further economies of scale. Equally, reducing the number of providers that have to be managed may provide a further cost saving as interactions with those providers are simplified and standardised.

    • Review your governance processes – organisations need to check their governance arrangements are delivering the expected value and benefits. They need to explore whether controls can be tightened to prevent value leaking from the arrangements and whether further savings can be made, especially if the service is stable and mature. A recent PA sourcing survey found that only 16% of companies assessed themselves as having a mature governance model.

    • Ask for a discount – organisations need to explore the option of reducing the costs with their suppliers. Many of PA’s larger clients are actively reviewing their contracts, applying focused programmes to improve their return on existing sourcing relationships. This is often accompanied by a request to the provider for a discount or a change in the phasing of payments. Such a request is rarely welcomed but, if approached in the right way (by understanding the balance of risk on both sides), it can be successful. Organisations do need to remember that their service provider is operating in the same climate of austerity, so there will be limits to what they can feasibly offer. That makes it important to consider whether there is anything that can be offered in exchange, such as references, assets or additional scope. There may also be opportunities to get the provider to pay for changes which help both them and their client. There is a clearly a mutual benefit from helping both parties cut costs while maintaining service delivery. So it is vital to challenge providers to act as partners and for all sides to support each other through the difficult times.

    Underpinning all this work is the need to keep sight of the long term intention of any sourcing arrangement and, at each stage, check that the organisation’s approach is not undermining this. That means understanding that there is a prime opportunity to put in place changes which will better support the organisation as it moves into a period of higher growth and that change presents an opportunity.

    These articles are extracts from PA Consulting Group’s book, ‘Surviving and thriving in the economic crisis: The sourcing opportunity’, and is available free of charge. To request a copy of the book, please visit http://www.paconsulting.com/sourcingopportunity

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