Industry news

For those who have not visited India recently the pace of change is amazing. Europe has a lot to learn from India's aviation industry. The planes are clean and cheap, a bus (not a five mile walk) takes you to the plane, and new terminals are replacing the crumbling buildings of only five years ago. But I am not trying to romanticise India because squalor and opulence lives side by side with this rapidly growing economy.

My reason for being in India on this occasion is to attend NASSCOM 2010 (National Association of Software and Services Companies) – an event that I have seen grow from an offshoring trade show to one of the largest global conferences, sponsored by the likes of CSC and Accenture, now with as many as 1600 delegates, 120 speakers, 130 suppliers and 22 trade delegations promoting their country as an offshore destination.

Over the course of the three days of the conference, starting today, I will be interviewing various notable personalities in the outsourcing space, including some of the event speakers, and each day presenting a summary of their thoughts and the apparent industry trends.

To start with, compared to last year the atmosphere is upbeat. Last year the recession was politely ignored but still the elephant in the corner, Mumbai was still reeling from the terrorist bomb attack and the Satyam debacle was in danger of wrecking the Indian Outsourcing industry. This year these issues have been forgotten but there is still a sense of realism that the days of 30-40 per cent growth are ancient history.

Norman Pitman and Michale Bieler, respectively the VP EMEA Business Development and the Director of Sourcing Advisor Relations of CSC (a global IT and Business Process Outsourcing consultancy, and event sponsor), agreed today that there is an air of optimism. Indeed, Pitman intimated that the pipeline for the forthcoming financial year will be one of their strongest yet, particularly on account of UK public sector opportunities.

Meanwhile, KK Natarajan, CEO of Mindtree (a global IT solutions company) explains that this increased optimism and market change has largely been driven by customer needs as much as market forces. Customers are, he claims, becoming far more selective in terms of their outsourcing partners, and far more demanding in how fast the return on investment arrives, which has in return prompted a market for specialist service providers. Indeed, this message was echoed in the day’s presentations as sourcing is appearing to be more about providing business value than cutting wage bills.

Also throughout today’s discussions, both with individuals and in the speaker slots, it has become apparent that cloud computing is going to dramatically change the industry. But Pitman was keen to emphasise that cloud computing should not be seen as a fresh new technology, but instead as a concept that has been available for some time and is now enjoying a refreshed market.

Nonetheless, Pitman and Bieler added that on-demand computer power has been a major part of many sourcing contracts recently, even a requirement by many customers, and the supposed advent of cloud computing has been a perfect way to fulfil this.

Tomorrow, I will be interviewing more delegates and trying to answer the question of how 2010 will compare to 2009, what will the major trend changes be, and how sourcing contracts have been, are and will be changing.

Companies in China and India stand to capture a global competitive advantage because of the strength of their country’s student IT literacy, according to new research from Accenture.

The research, based on a survey of more than 5,000 students and young workers in 13 countries around the world, found that the technology practices of new hires and students, between the ages of 14 and 27, have leapfrogged their counterparts elsewhere in the world.

The research showed that in much of Western Europe the same sample felt that technology consumes too much time.

The Americas (Brazil, Canada, and the United States) and Asia-Pacific (Japan and Australia), meanwhile, have positive perceptions of technology, but not at the same level as young people in China and India.

Gary Curtis, Accenture’s chief technology strategist commented: “The implications are profound. Companies are at risk of failing to attract and retain new hires, while also seeing their competitive edge erode from lack of innovation in information technology.”

The NHS has extended a networking deal with Novell, covering security and workload management for cloud applications, it was has been widely reported.

The agreement is worth around £6m and will run for up to five years. The supplier’s Secure Login software will aim to improve access controls for different types of hospital records.

Mark Ferrar, strategy director at the NHS, told Computer World UK that using an open source-based system “not only reduces costs, but will also underpin two key strategic initiatives for the NHS – reducing our environmental impact and moving towards a cloud computing environment”.

Food giant Kraft has been accused of going back on its word to keep open a Cadbury factory, after union officials said its closure was going ahead, the BBC reports.

Kraft plans to follow Cadbury’s plans, made before the takeover and off shore its chocolate production to Poland.

The closure, which is expected, before 2011 will result in up to 400 employees jobless.

“The ink is barely dry on the takeover and a promise made to the Cadbury workers has been broken. If the rumours now circulating are to be believed, Somerdale looks set to be the first casualty of Kraft’s ownership," said national officer Jennie Formby.

Tata Consultancy Services (TCS) has opened its third delivery centre in Queretaro, Mexico.

The new centre will serve global clients in IT services, consulting and testing, BPO and call centre services.

Speaking at the launch, Ankur Prakash, director of TCS for Latin America, commented "We remain committed to Mexico and we continue to invest in developing the skills of the IT professionals here."

The company plans to hire 500 new agents in 2010 to staff the centre.

Nokia plans to axe up to 285 jobs at its plant in Salo, Computer Business Review has reported.

The move comes as the Finnish giant plans to revamp the plant, develop an operational mode, introduce new specialised manufacturing methods, focusing attention on the high-end smartphone market in Europe.

Juha Putkiranta, senior vice president of markets at Nokia, said, "Salo is a crucial part of Nokia's global manufacturing network. Plans involving changes to employees are always painful, and they are set in motion only after thorough consideration."

Essex council leader, Lord Hanningfield has resigned after expense charges were brought against him, Computer World has reported.

The council signed the eight-year agreement with IBM to transform its operations and services, and cut costs. However with costs expected to be between £2.3 billion and £5.4 billion, dependent upon the services procured, Essex council has been criticised for the scale of the project after other outsourcing deals had previously gone wrong.

Hanningfield, who initiated the multi-billion-pound outsourcing contract between IBM and Essex County Council in 2009, now faces criminal charges along with four other politicians over his expenses claims.

Civilian contractors are being sent to Afghanistan to operate military pilotless aircraft, the Times has reported.

QinetiQ has operators working with the Royal Netherlands Army in Uruzgan province in central Afghanistan providing a system of unmanned aerial vehicles (UAVs) that can be called on at any time by the Dutch forces. UAVs are being used increasingly by the Nato-led operation in Afghanistan, although American and British forces generally operate them themselves.

Outsourcing is expected to grow as pressure on defence spending rises, but it is controversial in conflict zones because it requires qualities such as flexibility, trust and mutual understanding that are difficult to write into a standard contract.

UK airline, bmi, has signed a contract with IBM to manage a new-look passenger check-in operation.

As part of the ITO contract IBM has re-engineered bmi’s kiosk, web and mobile self service check-in systems.

The new system will service bmi’s main UK and Ireland airports including Heathrow, Manchester, Edinburgh, Glasgow, Dublin and Belfast.

The installation of the new system aims to increase customer uptake of the self service system, allowing bmi to “achieve continued cost savings, keep airfares competitive and improve customer service levels”, said the tech giant.

Peter Federico, bmi Group IT director, said: “We are pleased to be partnering with a company which has demonstrated its capability in this field over a number of years. It gives us a unified check-in platform for self service kiosks, web and mobile devices.”

Research consultancy and advisory firm Op2i has relaunched a survey looking at the impact of the recession and its recovery on the outsourcing sector – with the results to be made available on sourcingfocus.com

The study, which builds on last year’s survey from the company, is titled “Outsourcing Expectations and Reality – where next?” and will also look at the outsourcing plans of various organisations.

Respondents are provided with an instantaneous analysis of their responses with answers compared with views from industry gurus.

To complete the 15 minute survey log on to http://www.proxi.co.uk/op2i