Industry news

Earlier this week Dell trumped Hewlett-Packard’s (HP) $24 a share offer, but that was yesterday’s news. The bidding war between HP and Dell is getting more interesting as HP raised its offer from $27 a share (announced mid-week) to $30 a share.

Dell’s offer of $ 24.30 per share was made on 23 August and would see it pay $1.6bn (over £1bn) for all common 3Par stock.

But if Dell thought this would be enough to dissuade HP from the game, they were wrong.

On 26 August HP made its offer which was $3 higher than its original offer; 11% premium over Dell’s latest bid, which values the company at $2bn.

Since Dell made its original bid at $18 per share on 16 August the price offer per share has increased dramatically.

The stakes are rising quite quickly and it will be interesting to see who ends up making the acquisition.

While Dell may have made the first move, at $53bn its annual revenues are half of those of HP ($115bn). For Dell it maybe one of those games from which it is safer to walk away.

Sunoco has awarded IBM a deal that will see the manufacturer and marketer of petroleum and petrochemical products outsource its managed business process services and application support services.

Under the agreement IBM will help Sunoco drive improvements to a number of its back office processes by leveraging IBM's experience in the oil and gas industry, and deep business and applications process expertise, existing tools, and operational knowledge, thus enabling Sunoco to focus more of its resources on critical growth initiatives.

Similarly, as part of the agreement, IBM will provide services to Sunoco from its global operations centers, enabling Sunoco to better manage its Application Enhancement, Application Maintenance, Finance and Accounting, and Indirect Procurement processes.

It is not clear how large the contract is but last year Sunoco spent close to $90m, signing a $34m contract extension with India-based Wipro’s Infocrossing unit.

Sunoco also has contracts with AT&T Services and CompuCom. The company hired consulting firm EquaTerra earlier this year to identify other areas that might be ripe for outsourcing.

The Royal College of Nursing (RCN) has implemented NewVoiceMedia’s cloud-based telephony solution ContactWorld, to ensure that its members can always speak with an expert consultant regardless of any problems that the call centre encounters.

The RCN contact centre in Cardiff is a vital resource to nurses, providing advice and support on issues such as pay, working conditions, law, employment and retirement concerns, as well as specialist counselling services.

In addition to the disaster recovery function, RCN will use ContactWorld to manage incoming calls from nurses, students and healthcare professionals to its library service. All RCN members have access to the organisation’s library, currently one of the biggest specialist nursing resources in the world.

The NewVoiceMedia solution is entirely cloud-based, and can work with any phone - PBX extensions, home landlines and mobile phones - and does not require expensive hardware to operate.

Similarly, integration with other existing telephony systems is easy, allowing RCN to simply switch between its standard solution and ContactWorld within minutes via the web should an incident arise.

UK support services and construction service provider Carillion has recorded a healthy set of interim results, with profit before tax up 17% at £58.8m for the six months ending 30 June 2010; close to £9m higher that during the same period last year.

However, revenue shrank 11% to £2.51bn (H1 2009: £2.83bn), owed to the disposal of non-core businesses, the sale of equity investments in public-private partnership (PPP) projects, among other things.

Earlier in August, the firm was awarded a five-year extension to its existing infrastructure contracts with EDF Energy Networks, worth £40m a year.

Under the extension, which is set to kick in January 2011, Carillion will deliver infrastructure services for sub-stations and cabling to support the electricity network in the East of England.

The coalition government’s spending review, due in October. With projects such as the Building Schools for the Future (BSF) being axed, many in the construction and outsourcing community are waiting to get a better grasp of the extent to which cuts to public spending will affect them.

Public Sector Bank UCO Bank has awarded IT and business transformation service provider Wipro Infotech signed a 7 year total outsourcing contract with five Regional Rural Banks (RRBs).

The contract is for implementing a Core Banking Solution (CBS) across 803 branches of RRBs under UCO Bank’s sponsorship.

With this initiative, all five RRBs would come under the ambit of core banking, thereby ensuring uniformity in technology platform and related business processes for improved business efficiency and customer care.

The scope of services includes building, hosting and managing the underlying infrastructure at the Data Centers, in addition to implementing the Finacle CBS across the five RRBs in question.

Wipro would also provide network management and user training across all 803 branch locations as a part of the Total Outsourcing relationship.

The CBS would be executed on an Application Service Provider (ASP) model where Wipro would get paid on a monthly pay-per-use basis. Roll out of all branches is expected to be completed by September 2011.

Global IT and BPO services provider has been awarded a seven-year contract with Serco Learning for the development and delivery of ‘Progresso’; Serco’s new information management platform for schools.

The Progresso platform is being designed by Serco and developed by Patni and will be available at the end of 2011.

The platform is a centrally hosted management information platform that provides relevant data, tools and services directly to schools, parents and local authorities.

It will reinforce the Serco Learning position as a provider of high quality and innovative solutions in education and over time will replace ‘Facility’, the existing platform

Serco will continue to provide direct user support and market direction for both, Facility and Progresso. Patni and Serco will deliver the new Progresso platform and then optionally host it as a managed service to schools, academies and local authorities.

Patni has also won a three-year contract from Codan Group part of the insurance giant RSA Group.

The seven-figure agreement will see Patni provide managed services around some of Scandinavia’s core insurance platforms.

The Codan Group, which operates in Denmark, Sweden, and Norway, invited five leading outsourcing companies including Patni to bid for the application management contract in September 2009.

It short-listed three vendors in March 2010 and made its final decision to appoint Patni in June.

Gordon Easden, financial services practice leader at FusionExperience, explores some of the concerns in the minds of fund managers when it comes to outsourcing.

Traditionally there has been reluctance within the fund management industry to widen the scope of the business processes fund managers outsource. Although many are happy to outsource back office functions such as fund accounting many are still slow to recognise the value of broadening the scope of operations they are willing to entrust to a third party. However, the outsourcing landscape has changed, creating the opportunity for fund managers to transform service quality and cost by outsourcing much more and much more cost effectively.

The present day outsourcing by fund managers is part of a continuum that started 15 years ago. At its inception, fund managers were happy to outsource basic back office functions but would not have been comfortable allowing access to more complicated or ‘core processes’ such as customer service for example. The evolution in those 15 years is illustrated in the development of outsourced customer service solutions. This has almost become a matter of course for fund managers. Many are also considering outsourcing to a centre of excellence that provides a more holistic service as it would be supported by much wider range of technologies at a cheaper price.

This evolution has presented the fund manager with a wide array of options when deciding what to outsource, a question that can sometimes feel a little daunting. It is important for a fund manager to consider its options holistically and develop an in-depth understanding of what its operations are there to do. Fund managers must have a handle on core structure and costs and an understanding of what is going wrong. This will help isolate what functions are advisable to outsource and which may not be necessary.

A concern for many in the industry when looking to outsource are the perceived risks involved. It is fair to say that in some cases, when not managed adequately, outsourcing can create risk. Fund managers run the risk of losing the capability and knowledge to run processes and also the possibility that too many processes are embedded with the provider. This can make it difficult for fund managers to migrate away or renegotiate contracts favourably. There is also the risk of choosing a provider that is not a specialist in the areas that they have been earmarked to outsource.

The industry undeniably has specificities that present challenges in outsourcing, but also illustrate the importance of it. Fund managers’ operations are rapidly evolving, particularly in the technology and regulatory landscape, from customer care to the evolution of the STP market place with regards to targeting and positioning. This necessitates a high level of reporting and presentation technology to cater for regulations that are in constant evolution. The average size of a fund management firm remains small so there is a demand for centralised and cheaper service.

Finally, as the UK emerges from the recession, the specifics of the fund management industry and the evolution in regulation have led to a much greater emphasis on transparency of reporting and compliance. Outsourcing providers with evolving platforms and new technologies can help fund managers move from more traditional monthly reporting to a daily reporting cycle that many clients have come to expect.

Exam results keep rising but pupils taking relevant subjects continue dropping

Hot on the heels of the recently announced A-level results, this week’s release of GCSE results indicated a rise in the pass rate – for the 23rd year in a row.

But if students are getting smarter, why is it that options/subjects such as languages and ICT have seen a drop in the number of pupils taking them?

In today’s multicultural/multilingual world, technology filters into all aspects of life; so does it make sense to opt of the subjects which could very well determine (or at least significantly influence) future job prospects?

“The IT industry may well value qualifications in areas other than IT, such as. Science, Mathematics etc, above pure IT subjects in the future,” observed Roger Newman, senior vice president at IT solutions provider Mahindra Satyam. “The next generation of knowledge workers, which are now entering higher education, have grown up with, and already have a good understanding of, the fundamentals of IT and so can develop into the type of person who can drive more business benefits from IT regardless of having a formal IT qualification.”

As the economy slowly recovers, demand for skilled labour will also increase. In this instance, the markets and industry knows what they need and know what they want. It needs skilled labour and it is ready to import or export it depending on the situation.

“The recent A-level and GCSE results suggest that there has been a general decline in the number of students taking IT subjects,” noted Newman “I believe it may be symptomatic of a shift in the types of skills that will be required in tomorrow’s IT workers. IT is now highly embedded in most business processes and businesses are increasingly using off the shelf applications and Open Source Solutions. It therefore follows that businesses rely on a higher degree of skill in understanding business processes and the application of technology to operations than the past.”

Newman stressed: “Somebody has to build the off-the-shelf applications and Open Source Solutions and, to do this; formal training in IT is required. In summary the decline in the number of people studying IT subjects will probably not affect outsourcing trends in the short or even medium term but will have a profound effect on the IT industry in the long term, unless a sensible balance is maintained.

In its August 2010 Labour Market Outlook survey, the Chartered Institute of Personnel and Development found that the demand for migrant workers has increased in line with improvements in the UK labour market during the past year.

The study surveyed 600 organisations of which 45% indicated that they had vacancies that were proving difficult to fill from the domestic labour market and were now looking overseas in a bid to fill the positions.

According to their figures about one in six (17%) employers intend to recruit migrant workers in the third quarter of 2010, which is above the previous peak of 15% recorded three months ago. Employers in the education and healthcare sectors are most likely to hire migrant labour (27% in each sector).

In a technology-based world, the budget cuts will continue affect the quality of education – among other public and social programmes – the outlook for Britain just keeps getting rosier…

Oslo-based aluminium firm Norsk Hydro has awarded Accenture a three-year application outsourcing (AO), which covers support and maintenance of two of Hydro's SAP systems globally.

The agreement is designed to improve the efficiency and cost-effectiveness of Hydro’s SAP-based business processes through an industrialized approach that offers higher quality and innovation.

The services will be provided to Hydro users in multiple countries by Accenture’s Global Delivery Network, using centres in Germany and India. The delivery of the outsourced services is scheduled to begin in October 2010.

Norsk Hydro and Accenture have worked together in the areas of consulting and technology services since the late 1980s.

The Lloyds Banking Group (LBG) has awarded Factbook, a specialist provider of fund reporting, marketing and data management solutions to the investment community a extension of their managed factsheet service.

LBG has chosen to migrate their Bancassurance factsheet production for both Halifax and Bank of Scotland to Factbook’s fully managed production environment, building upon the success of the earlier Clerical Medical factsheet project.

This latest roll-out sees peak monthly document delivery from the LBG production platform almost double to in excess of 250 retail fund factsheets.

The relationship between LBG and Factbook is already a couple of years old and it is expected to further develop over the coming months.