Industry news

As cloud computing, the process of delivering and sharing applications online from a web browser, continues to grow in popularity, many service providers have been left wondering how it will impact on the traditional outsourcing model.

The concept of cloud computing has all the attributes to support a global outsourcing environment, eliminating hardware to lower infrastructure and energy costs, as well as offering the scalability to meet demand in an unpredictable global market.

We are experiencing a global delivery continuum, where many organisations are evolving from crude business process outsourcing (BPO) environments (a lot of lift and shift), to SaaS delivery, in order to optimise that environment, and deploy a cloud computing "plug-in" model.

Seeing through the clouds…

While outsourcing providers should be embracing the benefits of the cloud process, it’s worth noting that it is by no means a silver bullet to alleviate the challenges of all organisations. However, it does represent a tool that can be quickly added to the arsenal of IT solutions for many companies. Large organisations may have sufficient resources internally to accommodate routine business requirements, but should a need arise to quickly ramp up a business unit or product line, the cloud delivery model becomes a valuable tool, enabling agility. For companies of all sizes, that have a seasonal business or product line, accommodating peak demand periods without having in-house servers sitting idle at other times is crucial. Financial indications suggest that we'll start emerging from this economic slump in the coming months ahead, and companies need to be ready to scale-up their support infrastructures in a smart fashion to respond.

Cloudy competition…

Increasingly, buyers will reap the benefits of cloud delivery as more major providers enter the market. Many established providers with robust infrastructure, skilled staff and a legacy of delivering high quality services are finding their traditional markets saturated with competition. Cloud computing provides a logical emerging market that offers opportunities to grow their business. The scramble to offer more benefits at a lower price could well rival the marketing wars we see today in the automotive industry. This can only result in brighter prospects for organisations seeking cloud cover in an economic storm. Outsourcing for the sake of cheap labour will always generate some savings in the short-term, but these costs will soon return if you don't follow through with the improved processes and technology that allow for a global operating model. Simply shipping out your ‘mess’ for less is never going to make much of a difference to your bottom-line, and will often end up costing you more in the long haul. The bottom-line is that when an organisation moves into a global outsourcing model, it must transform the way its business deploys technology platforms and business processes if it is to generate real cost-efficiencies. Embracing the new developments in the cloud is a sure way to make an outsourcing experience work on a continual basis.

In summary, as the outsourcing industry goes through another transformation, driven by cloud computing, businesses will continue to depend upon the services of a skilled and trusted systems integrator partner. Experience really is invaluable when it comes to configuring the right computing environment that addresses unique business needs.

What a week Google has had. Putting its foot down on China’s demand to censor the search results on its Chinese service could see them pulling out of the country altogether. A multi-billion dollar business with ethics - who would have thought it?

Google were not the only company in the news this week who are being eulogised for their social awareness. It was revealed on Thursday that IBM has topped the Stonewall list of gay-friendly employers for the second time in four years.

Stonewall is a UK lesbian, gay and bisexual charity, and published its Top 100 Employers 2010 during the week. IBM has topped the list, being named the best place to work in the UK for lesbian, gay and bisexual people. It seems even outsourcers have a social conscience.

However, employees at Bosch may not be feeling as warmly about the outsourcing industry as the employees at IBM. On Friday, the German manufacturing company announced its plans to close a car plant in Wales and move the remaining production to an existing plant in Hungary, leading to significant job cuts.

The subsequent loss of 900 jobs in the UK is a result of an almost 50 per cent fall in demand for luxury vehicles. Looks like the sector can’t please all of the people, all of the time.

Also this week, in a total role reversal, Barclays has brought outsourced applications back in-house. The bank has decided it will not renew its £400m outsourcing deal with Accenture.

The move will see 230 out of the 900 technology staff who moved to Accenture when the deal was signed in 2004, return to Barclays. With the general consensus that outsourcing is on the up, this seems to be an interesting move by Barclays. Sourcingfocus.com will ensure you are kept updated on the progress.

Never a dull moment in the sourcing industry as this week of ups and downs demonstrates. But then, when does the course of business ever run smooth?

German manufacturing company Bosch is set to close a car plant factory in Wales, moving its remaining production to a sister plant in Hungary in 2011, it has been widely reported.

The move, which is expected to lead to a loss of 900 jobs, had been triggered by a 45 per cent fall in demand for alternators for luxury vehicles, according to FT.com.

A spokesperson from Bosch said the decision to close the plant in Miskin, near Cardiff, was due to wider difficulties in the industry.

Indian media company UTV Software Communications has signed a five-year deal with IBM to streamline its key provisions.

The technology giant will take over the company's finance and accounts, rights management, procurement, projects, material management and other key functions in a bid to provide a customer-centric operating environment. Included in the contract is India's first cloud-enabled email system, according to the company.

Rajeev Wagle, chief financial officer, UTV Software Communications Ltd. commented: "The market here is growing at a rapid pace and customers are increasingly becoming demanding, making it imperative for us to offer fresh delivery platforms and content diversity enabled by technology."

The Ministry of Defence (MoD) is said to be mulling over outsourcing the management of the Merchant Navy, which would potentially save the government tens of millions of pounds.

Groups including James Fisher, Maersk, Serco and the VT Group are all understood to be interested in managing the contract.

The British Library has paired with Capgemini UK in a bid to transform its IT systems.

The technology provider will design and implement a new request management and delivery system to “significantly improve” access to library resources by making searching, ordering and delivery processes “simpler, easier, faster and more efficient”.

Caroline Brazier, associate director of the British Library, said: “We were impressed by Capgemini’s genuine commitment to client collaboration, and by the quality of their people, proposals and track record.

“We are looking forward to working closely with them on this key project and to achieving our planned transformation in the service we deliver to our customers.”

The project forms a key part of the British Library’s aims to expand its user base among researchers from the UK higher education sector, the commercial world and individuals.

IBM has been named the best place to work for lesbian, gay and bisexual people for the second time in four years.

The news was revealed following a survey from Stonewall, the lesbian, gay and bisexual charity, which has published its Top 100 Employers 2010, showcasing Britain's best employers for gay staff.

In second place is Hampshire Constabulary and Ernst & Young comes third in the survey, based on a range of key indicators, with over 7,000 participants.

Gay staff working at the top 25 workplaces reported a satisfaction level almost ten per cent higher than workplaces outside the Top 100. Staff were also more likely to disclose their sexual orientation in monitoring exercises at the highest ranking organizations.

Brendon Riley, chief executive officer IBM UK & Ireland, commented: “IBM is extremely proud to accept this important accolade. At IBM, we pride ourselves on delivering a working environment which reflects equality of opportunity and experience for all. Diversity constitutes our character, our identity and ultimately our success – it is in our DNA.”

For the full results visit the website.

UK-based holiday centre Park Resorts has appointed Sitel to provide the company’s sales and service operations, following its 40 per cent sales increase over the last two summers as holiday-makers opt for money-saving staycations.

The decision was a difficult one however, according to the holiday company’s sales and marketing chief.

“It was not an easy decision to outsource our reservation centre but the positives will speak for themselves,” said Andy Edge, sales and marketing director at Park Resorts.

“I am very proud of the Park Resorts team,” he added.

Although previously delivered in-house, sales and service operations were given to Sitel in 2008 whilst they provided overflow support to company. After the success of the move, there was a transition to a full outsourced solution from its Stratford upon Avon centre in January 2009.

Schools could begin outsourcing their ICT following public sector budget cuts after the 2010 general election, a survey has indicated.

The study by Redshift Research on behalf of ICT provider The Stone Group found that budgetary restraint was the top concern for 84 per cent of schools this year.

Stone Group technical services manager Richard Stockdale told computing.co.uk that schools could be forced to look at outsourcing because they are increasingly run like businesses.

“There has historically been a reluctance to outsource IT in schools, but then they have never faced a situation like this one, where the funds available will be reduced,” he added.

The survey polled 200 ICT decision-makers in the UK education sector.

Barclays Bank has decided it will not renew its £400m outsourcing deal with Accenture following its expiration in June, it has been widely reported.

The news comes a month after the financial services giant announced it would bring the management of it s desktop systems back in house.

The move will see 230 out of the 900 technology staff who moved to Accenture when the deal was signed in 2004, return to Barclays, according to Computer Weekly.com.

A spokeswoman at Barclays said: "We will not be renewing this as we are bringing the resource in-house."

The change followed a strategic review to ensure it had "the most efficient model that supports our business".

The partnership included application development and management of the bank’s UK-based commercial and retail banking systems in a bid to cut costs.