Industry news

“IT’S the biggest deal of your life,” a Bournemouth councillor stressed to his colleagues at last night’s climatic meeting.

And his colleagues voted 34-12 for that deal – a controversial £150m agreement to transfer four departments to a private contractor, Mouchel.

The vote came after a two years of study and three council meetings this week alone. Monday’s went on from 6pm to 11.30pm. Mouchel will take over the revenues, benefits, ICT and facilities management departments for the next 10 years.

Unison fought the deal and branch secretary Dave Higgins said last night 88 jobs from just over 300 being transferred will be lost. He said the union will now work with Mouchel, but some of the debate must have hurt him and the dozen or so watching staff.

Cllr Beverly Dunlop questioned why council staff had not made sufficient improvements themselves over the past 5-10 years. “Any manager that needs to be asked to reduce costs and increase output is clearly not demonstrating the basic tool kit you would expect,” she said.

Tory leader Cllr Peter Charon said he’d got a stronger public reaction to the plans to close Hengistbury Head recreation centre.

Conservative members argued the deal is essential. It is supposed to save 40 per cent on the revenue budget on the next 10 years and create 650 private sector jobs. The Government grant to Bournemouth is dropping by 11 per cent next year alone so making savings protects services and saves jobs in the long run, they said.

The problem is, not everyone agrees – one of the council’s own section 151 officers, responsible for making sure money is spent properly, broke ranks to argue it could cost more than the current arrangement.

Cllr Ben Grower, Labour leader and the deal’s most vocal critic, told the Tory group Mouchel needed the council more than the council need Mouchel. “You talk about the council taxpayers as shareholders,” he said. “But why should council tax payers subsidise the shareholders of Mouchel?

“They won’t be getting a dividend this year, but presumably they will be getting one next now this deal is done.” He said afterwards we could expect them to throw resources at the deal for 4-5 years then the service would drop off to protect profits.

The contract is secret but a few details emerged. The council can stop Mouchel being paid for work it does not do, but it cannot impose penalties.

Steve Moriss, a managing director of Mouchel, said afterwards: “There’s a heavy responsibility on us to deliver and we are committed to doing that.

“The whole aim of the contract is to improve services, given the difficult budgetary constraints, and that’s what we’ve been able to do in our other partnerships.”

Source:

http://www.bournemouthecho.co.uk/news/8629542.__150m_outsourcing_deal_approved_by_Bournemouth_Council/

Eighteen months ago Richard Sykes forecast that the real outsourcing commerce of ‘the Cloud’ would develop in the form of Platforms. He now confirmes that judgement.

A platform? Consider the iApps platform: a technical construct in ‘the Cloud’ that enables innovative ventures to create and deliver new applications for the iPhone. The platform provides an integrated set of infrastructural (data processing, storage and network) and support services to the technical standards that ensure full compatibility with the iPhone – and these services scale rapidly if sales of the new iApp prove to be a runaway success!

PayPal is now positioning itself as a mobile banking platform ‘in the Cloud’, offering an increasing diversity of services for the management of personal accounts and payments through the increasingly intelligent mobile phone. Security is ‘in the platform in the Cloud’. There is a developers’ area of the platform (the first, PayPal claims, to be offered by a Financial Services company) with access to secure APIs. The old-fashioned signed cheque can be deposited by taking a photo of each side of the cheque and despatching the paired images.

Facebook is also now positioning itself as a platform, developing an increasing diversity of services for its over-500m active users on its core technology platform (that also claims to be the largest gaming platform in the world). It is eyeing its future as a potential replacement for the intranet in the large enterprise – it has recently launched a ‘Groups’ capability and argues that it is more in tune with the working culture of the Millennial generation that is now moving into, onto and up the corporate ladder. In this vision, the Facebook platform could be exploited to allow a more seamless interaction between the contemporary Enterprise and its customers.

In the meantime, salesforce’s well established force.com is gaining ground as a leading platform for the development of, and delivery of, business applications, particularly in the web services arena. It provides access to pre-built software components: 80% simple assembly plus 20% new code = more rapid creation of new applications.

So here is a new dimension to the Enterprise (out)sourcing strategy. The Enterprise will already have the essential elements of an internal platform on its infrastructure. Yet key to most businesses is effective & real time access to customers, suppliers and the supply chains that support external realities of the business model. The developing commerce of these ‘platforms in the Cloud’ may offer a new and innovative means for the sourcing of an exostructure able to support delivery of the outward facing aspects of the Enterprise business model.

Source: http://www.outsourcemagazine.co.uk/articles/item/3607-platforms-make-sense-in-the-cloud

Multimedia services for mobile networks in the region

Orange plans to open a new Technocentre in Abidjan, Cote d'Ivoire (Ivory Coast) in West Africa to support its growth plans in emerging countries, and in particular in sub-Saharan Africa.

The new facility is expected to develop and launch new products and services specifically designed to meet regional needs.

The new Technocentre will specialise in multimedia services for mobile networks including SMS, USSD (basic data services via a GSM network), WAP or Web-based services.

In addition, it will also work on offerings designed to facilitate access to the Internet for Africans everywhere by improving network accessibility and developing inclusive content-based services.

The new facility will also provide support for countries in the region as the roll-out of Orange Money accelerates over the coming months.

The company said Orange Money is the group's mobile payment service and is a key part of the strategy to improve customer fidelity in Africa.

Orange Africa Middle East and Asia executive vice president in charge of operations Marc Rennard said by providing a regional platform, the new Technocentre would reinforce the Group's capacity to develop new products and services specifically designed to meet the needs of sub-Saharan Africa.

"By drawing on local knowledge and expertise, the new Technocentre will enable us to develop innovative new offers in these areas that will create value both for our customers and the economy as a whole," Rennard said.

The Technocentre, which will open in Abidjan by the end of 2010, will join the group's network of 15 Orange Labs worldwide and will reinforce the existing research and development facilities in Africa and the Middle East.

Source: http://telecoms.cbronline.com/news/orange-to-open-new-technocentre-in-west-africa_101110

Accenture has completed its acquisition of Beijing Genesis Interactive Technology Co., Ltd., a Beijing-based embedded software services company that provides mobile software outsourcing services and solution licensing for companies in China.

The acquisition will build on the expertise, design, development, testing and outsourcing capabilities of Accenture Embedded Software Services, which helps clients innovate through the use of embedded software to deliver any product, service or solution faster and more cost-effectively across a range of industries. Those industries include mobile devices, automotive, medical equipment, and aerospace and defense.

“Embedded software has become a main differentiator for mobile devices and solutions driven by customer demand for ever smarter devices,” said Jean Laurent Poitou, managing director of Accenture Embedded Software. “As a result, our clients are looking for ways to increase the predictability and lower the development cost of new and emerging software technologies.”

Mogenesis developers offer a range of skills across multiple embedded software platforms, including Android, Symbian, Windows Mobile and LiMo. Mogenesis has been providing mobile software services since 2004.

“The Mogenesis team brings years of accomplished software engineering experience across market-leading mobile platforms and time-critical product development and solution licensing,” said Poitou. “The acquisition will enhance Accenture’s existing developer base in terms of both numbers and geographic reach, meeting rapidly increasing client demands for embedded software skills, particularly across Asia.”

Gong Li, Chairman of Accenture Greater China, said, “This acquisition will significantly strengthen Accenture’s mobile software and application development offerings to device manufacturers in China, and add to our capabilities to provide end-to-end value-added services on mobile devices for operators.”

Accenture’s record in embedded software includes helping original equipment manufacturers ship more than 300 different mobile phones worldwide. It has also helped chipset vendors create robust adaptation software, and in-vehicle infotainment (IVI) manufacturers run systems and operator testing.

“We see great synergy in combining our offerings in the embedded software market with Accenture’s consulting and technology outsourcing expertise, industry focus, and global reach,“ said Dennis Kung, chief executive officer, Mogenesis. “This will give clients all the benefits of working with a global leader like Accenture and the local skills and market knowledge of our people.”

Source: http://newsroom.accenture.com/article_display.cfm?article_id=5091

The unemployment rate remains near double digits and many Americans have simply stopped looking for work. Yet somehow an NBC sitcom about U.S. jobs going overseas is becoming a hit.

The show, called Outsourced, revolves around an American manager running a call center in India. It's great to see a prime-time show take place somewhere other than the United States. After all, if you get all of your information about the world from network television, you might not even be able to locate Canada on a map (oh, yeah, that place just to the right of Northern Exposure).

The premise of Outsourced is that Todd, the American manager, is saddled with a B team of call center employees – quirky but loveable underdogs who are just struggling to get by. In other words, an American television audience is being asked to sympathize with a group of Indian workers who have jobs that Americans have recently lost. That any Americans want to watch – its average of 6.3 million viewers a week makes the show one of the top new network offerings so far this season – is remarkable.

The truth is that we're divided. There's a gulf between cosmopolitans who benefit from globalization and blue-collar workers whose wages have gone steadily downhill because of foreign competition. Some people appreciate the 24-hour customer service line, regardless of the accent of the person on the other end. Others are strictly "Buy American."

Sometimes, it's the same person who lost her job last week to a run-away factory and this week shops at Walmart to save money by getting cheap shirts produced in Sri Lanka and cheap Halloween decorations made in China.

According to the consumer watchdog Public Citizen, the nation has lost about 4.9 million jobs and 43,000 factories because of free trade deals like the North American Free Trade Agreement and normalization of trade relations with China.

President Barack Obama has said that he wants to eliminate tax breaks for companies that send jobs overseas. The president supported a bill that would have done just that – but Republicans killed the bill in the Senate.

However, Obama is leaning toward supporting trade agreements with South Korea, Panama, and Colombia that the Bush administration negotiated. And he pushed through bailouts for U.S. companies without conditions that would have restricted their outsourcing of jobs.

Don't expect Outsourced to delve into those issues. It is a sitcom, after all.

But you can count on this TV show to humanize the people so often demonized for taking American jobs. Even the Buy America crowd can take some measure of solace when watching the show.

Except for a few framing shots, the show is filmed in Los Angeles with mostly American actors.

But director Ken Kwapis says that if the show is successful, he'll do more work on location. In a clear sign of the times, Outsourced itself may wind up getting outsourced.

Read more: News Democrat Leader - Outsourcing Television

Leaked document reveals negotiations over EU accepting 50,000 new Indian IT workers, lobby group claims, with 20,000 allocated to UK

A deal between the European Union and India could allow 50,000 new IT workers from the subcontinent to take up employment in Europe each year, it has been claimed.

Lobby group MigrationWatch says it has obtained documents leaked by the European Commission which suggest up to 20,000 of this figure are intended for the UK.

This compares to just 7,000 and 3,000 work permits allocated to France and Germany respectively, MigrationWatch claims, the UK IT industry's larger size.

"This looks suspiciously like a side-door to Britain for 15,000 to 20,000 Indian IT workers every year," said MigrationWatch chairman Sir Andrew Green, in a statement. "It is even more astonishing coming at a time when British IT workers are finding it increasingly difficult to find employment and there is a 17% unemployment rate among computer science graduates."

The group claims that an agreement may be finalised as early as next week.

In recent months, the Indian IT industry has expressed concerns that a proposed cap on immigration to the UK from outside the EU could impair its global competitiveness.

During a speech at Confederation of British Industry's annual conference earlier in late October prime minister David Cameron suggested that any limit would not prevent businesses sourcing talent from overseas. "Let me give you this assurance," he said. "As we control our borders and bring immigration to a manageable level, we will not impede you from attracting the best talent from around the world."

Last week, the prime minister also indicated that intra-company transfers, whereby multinational organisations move employees across borders, would be excluded from any immigration cap. "Intra-company transfers shouldn't be included in what we are looking at," he said during prime minister's questions.

In response to MigrationWatch's claim, John Clancy, a spokesperson for the European Trade Commission, commented: "It is true that the EU and India are currently in discussions about the temporary movement of professionals delivering a service. Such provisions, known as Mode 4, are an integral part of every Free Trade Agreement the EU negotiates and they are not just important for our trading partners but just as much for European businesses: Any commitment the EU makes, tends to be largely reciprocal and would hence benefit EU investors and service suppliers operating in India, simply because it would enable them to transfer key personnel into their establishments abroad."

Source: http://www.information-age.com/channels/it-services/news/1297063/eu-to-offer-indian-it-industry-50000-work-permits.thtml

President Obama, who last year said U.S. companies should create jobs in Buffalo not Bangalore, appears to have had a change of heart on outsourcing's effects on the economy.

Speaking Monday at a press conference in New Delhi, Obama said the view that outsourcing costs U.S. jobs while enriching India is nothing more than a "stereotype."

The president, at the podium with Indian prime minister Manmohan Singh, said the notion India is stealing IT and other jobs from the U.S. is outdated. "I think both countries are operating on some stereotypes that have outlived their usefulness," Obama said.

"In every discussion I've had with Indian businesses, what I've seen is that our countries are matched up in a way that allows for enormous win-win potential," said the president.

Outsourcing, where U.S. companies send programming and other tech work to low-cost countries like India, has drawn considerable flak from worker groups. Obama looked to cash in on that sentiment in his presidential campaign, when he promised to make it more difficult—through adjustments to the tax code and other measures—for U.S. companies to send work abroad.

Last year, as president, Obama slammed tax laws that, in his view, made it easier for businesses to "create a job in Bangalore, India than if you create one in Buffalo, New York."

Obama seems to have altered his view. "We're very proud of our high-tech industries and we think we make some of the best products in the world, and we want to sell them to a growing Indian market," Obama said during Monday's press conference. "But it turns out some of those same technologies are ones that will allow Indian entrepreneurs to grow and thrive and create jobs right here in India," Obama said.

While the president's reversal on outsourcing may anger some worker groups that supported him during his run to the White House, many businesses may welcome the fact Obama has flip-flopped on the issue. A significant number of U.S. companies, from General Electric to Boeing and IBM, rely on ongoing access to Indian IT and engineering talent as they look to build products that are globally competitive.

Indian prime minister Singh also defended offshoring during the press conference. "Our outsourcing industry I believe has helped improve the productive capacity and productivity of American industry," said Singh.

Obama is in the midst of a ten-day tour of Asia that will also see him make stops in Indonesia, Japan, and South Korea.

Source: http://www.informationweek.in/IT_ITES/10-11-09/Obama_flip_flops_on_outsourcing.aspx

According to Nemertes’ 2010/11 “Communications and Computing Benchmark,” nearly 97% of organisations are currently using or planning to use some form of outsourcing, documenting a solid increase from 2009 when the figure was 85%. Currently, 73% of research participants use managed services (the largest component of outsourcing), up from 65% in 2008. In fact, managed services have seen a tremendous run since 2006, when only 27% of organisations used managed services.

Outsourcing consists of a range of options on a continuum from managed services to hosted services to Software as a Service (SaaS). Managed services typically include outsourcing management of a specific application, technology or function, often including maintenance. Usually, managed services consist of managing onsite equipment at the customer premise, though with a service such as business continuity/disaster recovery (BC/DR), onsite equipment is at a provider facility. Hosted services deliver applications via either the Internet or dedicated network using MPLS, Carrier Ethernet, or leased line. SaaS is similar to hosted services with the same delivery model. However, SaaS is intrinsically multi-tenant, on-demand, with pay-as-you-go pricing. In comparison, hosted services are often not multi-tenant, on-demand, and typically have multi-year pricing.

Several factors drive the adoption of managed services. The top reason IT staffs outsource is to save money, a driver 69.5% of organizations cited. The greatest savings results from reducing the staff and perhaps 24 x 7 facilities to house them. Providers take advantage of economies of scale to offer management and maintenance services at rates lower than it costs organizations to provide the services internally. A lack of staffing skills is the next-greatest driver: About 30% of organizations indicate a lack of internal skills as a primary managed-services driver, and about 25% of organizations identify lack of staff as a primary driver. IT leaders often decide against employing staff to manage systems they view as commodities and use those headcounts for more strategic functions.

These drivers directly reflect plans to adopt managed and even hosted services in 2011. The top managed services are for functions seen largely as commodities in IT: Network/router management and IP Telephony. IT leaders who continue to grasp internal control of network/router and IPT management should closely evaluate the cost of outsourcing versus internal management.

Source: http://www.networkworld.com/community/blog/outsourcing-remains-strong

New figures released by the tax-collection agency through freedom of information show its spending was dominated by two outsourced deals — Aspire for IT and Mapeley Steps, a PFI contract for the management of HMRC's property, which cost £333m in 2009-10. Overall, HM Revenue and Customs (HMRC) spent £1.75bn on suppliers in the last financial year.

The Aspire contract, which started in 2003 and will run until 2017, dominates the agency's spending with IT suppliers. The next largest is Specialist Computer Holdings, which received £20m in the last financial year, followed by BT, which received £15.2m.

Other IT vendors listed include Detica, which received £9.2m; Fujitsu (£7.2m); Airwave (£2.9m); Cable & Wireless (£2m); and Vodafone (£1.9m). Capgemini is listed as receiving £2m in its own right, outside the deal with Aspire.

"The figures do show again the reliance on key prime contractors by central government organisations," commented Chris Pennell, principal analyst at Kable. However, he added that it has been shrinking in terms of spending for some time. "This trend is unlikely to change given that there are some outside HMRC that view the deal as being ripe for breaking up. Other suppliers who already have a foothold into HMRC will be watching the changing landscape with interest."

Source: http://www.zdnet.co.uk/news/it-at-work/2010/11/09/hmrc-spends-765m-on-it-outsourcing-deal-40090795/

Questor says Buy

In the short-term they will be pressed to deliver savings, and those savings will – not matter how much they protest – eat into profits.

However, in the long-term they are likely to be some of the biggest winners as the Government turns to the cutthroat corporate world to solve the lackadaisical attitude of many public sector workers.

At present just 11 of Britain's 110-odd prisons are contracted to private-sector operators, four of which are run by G4S, four by Serco and three by Kalyx. The Government is currently tendering for offers on a further four, and it seems likely that more will switch to private management.

An increasing number of hospitals, schools, custody suites probation services and police stations are also likely to fall under the day-to-day management of outsourcers.

G4S, which secures Heathrow Airport and GCHQ, claims it can achieve 20pc efficiency savings almost as soon as its handed the keys. For a Government which is trying to save £81bn by 2015, outsourcing has got be a big part of the solution.

Analysts at Panmure Gordon agree: "We believe the volume of opportunities should increase over the medium term on the back of [G4S signing the memorandum of understanding with the Government over making cost savings], with the company stating there is no reason to suggest margins should be under significant pressure from here."

G4S is a cheap way to play the growing outsourcing trend, not just here but around the world. The company, which began life in Copenhagen in 1901, now operates in 120 countries. G4S's latest scalp was a move into Brazil this summer, which has got the company's management very excited. It wasn't the beaches that piqued their interest but the prospect of helping lock up all the sports fans heading there for the 2014 World Cup and 2016 Olympics.

The shares are trading on a price to earnings ratio of about 12.4, falling to 11.5 next year, and currently yield 3pc and a dividend of 7.67p.

G4S is a defensive stock likely to look good in the better times as well as the bad times. Buy.