Industry news

An Essex-based Conservative council has paired up with IBM in a deal worth over £5bn in a bid to better manage and provide public services.

The eight year deal marks a new wave of privatization supported by David Cameron, it was reported in The Times.

The partnership will aim to transform the way public services are provided across the county and will attempt to achieve cost savings of around 20 per cent for the council.

The first task for IBM will be to review the £800m of services that have already been contracted out to investigate whether contracts need to be reviewed or if further savings can be made.

Simon Humberstone, of IBM said: “We can set up a hoist and send one worker instead of two. This is both cheaper and allows more one-to-one time between staff and patient.”

Japanese car manufacturer Nissan is on the hunt for a business process outsourcing partner to provide application development and maintenance services in a bid to cut operational costs.

The organization has invited outsourcing companies such as TCS, Wipro, IBM and Mahindra to bid for the deal which is reported to be worth around $250m.

A significant local presence or partnership with another Japanese IT firm is among the key parameters the bidders have to follow, according to a senior executive at one of the tech firms exploring this opportunity, it was reported in the Offshoring Times.

Japanese firms outsource IT contracts worth over $8bn to countries, such as China, India, Korea and Vietnam every year.

A Dundee domestic utilities advisory call centre has announced it will create an extra 40 jobs in the first three months of 2010.

Call Centre Dynamics is set to expand thanks to a £250,000 grant from the Scottish Government’s Regional Selective Assistance in an attempt to boost the company’s workforce by 116, it was reported in the Evening Telegraph.

The funds have also helped establish a second Dundee call centre for the firm.

Human resources manager Bette Smith said: “We need people skills and I think people in Dundee have these. It’s one of the accents that’s accepted across the country - we’re trusted and people like to speak to us.”

“We get a lot of applications for the jobs but we have restricted ourselves to this number to ensure they get proper training and there’s enough time spent with them to sharpen up whatever skills they need. We are delighted with the people we have so far, everyone mixes in so well.”

UK outsourcer, Capita Group Plc has signed a £75 million acquisition deal with ICT service group Synetrix Ltd.

Synetrix currently provides ICT application and communications solutions to both public and private sector organisations, including the London Grid for Learning.

The merger is believed to both “enhance and expand Capita's current IT capabilities, whilst gaining a number of key new customers through greater expertise in a range of areas that support Capita’s existing capabilities." Capita Chief Executive, Paul Pindar said.

Australian financial services giant Westpac is on the hunt for outsourcing suppliers to take on contracts worth up to $500m.

Indian technology companies Infosys, HCL and other firms are bidding against multinational rivals IBM and HP-EDS, it has been widely reported.

A consulting firm is now advising Westpac on how to flesh out its IT transformation programme, which is aimed at saving over $400m by 2011.

“HCL, Infosys and Wipro, apart from IBM, are already in discussions with Westpac for these contracts — offshoring being considered as a critical portion of these engagements,” said an anonymous senior executive at one of the top tech firms looking into this opportunity.

Ramesh Shah, chairman of WNS Holdings has revealed he is retiring from his current position and moving into a vice chairman role, it has been widely reported.

Shah’s decision is said to have been based on reducing his workload.

Eric Herr will now become chairman after spending numerous years on the board.

It is with great sadness that sourcingfocus.com writes the final round up of outsourcing news in 2009. It has been a fantastic year in the quest to discuss all things sourcing related. There has been turbulence at times, but the industry has soldiered on and we find ourselves now at the dawning of a New Year. The end of the year is a time for reflection, and with that in mind, let us look back over the year that was.

In the summer the blockbuster film Slumdog Millionaire won eight Oscars and put India in the media spotlight. But Hollywood films are not the only things that have been putting India on the map. In the (equally glamorous) world of outsourcing, India continued to soar above the rest with 89 per cent of respondents in an EquaTerra report outsourcing their ICT services there.

The summer also saw the launch of 2009’s Outsourcing Black Book which, surely to the ire of many, brings offshore risk back to the fore. Sourcingfocus.com asked the experts what they thought in the news analysis ‘For whom the bell tolls’.

As we neared the end of summer, India’s glitz and shine waned rather dramatically. Reuters released a report which revealed that three executives at Satyam had been arrested for alleged involvement in the company’s accounting fraud. India’s main investigative agency said in a statement that it had arrested the vice president, senior manager and assistant manager in the company’s finance department on Sunday. Only time exposed how deep the fraud went.

Another strain on the outsourcing industry came in the guise of Barack Obama’s controversial offshore tax avoidance crackdown. The US president, who campaigned relentlessly on the issue of closing offshore loopholes, said the steps he announced would raise $210bn (£140bn) over ten years and "make it easier" for companies to create jobs in Buffalo, New York, rather than in Bangalore, India. Just when we thought it couldn’t get any worse!

Looking back, the sourcing industry has had a lot to contend with over the past year. Despite this, the industry has been going from strength to strength. As I mentioned last week, it seems we have all taken a leaf out of Santa’s business model. Sourcingfocus.com hopes all readers enjoy their Christmas break and looks forward to when we meet again in the New Year.

Europe overtook North America as the biggest outsourcing spender in the world for the first three quarters of this year, according to a TPI report.

Europe’s G2000 companies outspent their US counterparts by $1.2bn, and are on course to end the year as the highest-spending for the first time.

Overall, North America and Europe dominated the rankings with United States and Canada at No. 1 and 3, respectively, and six European countries making the top 10 - the United Kingdom (2), Germany (4), the Netherlands (6), France (7), Switzerland (9) and Denmark (10).

While other markets are growing slowly but steadily, the report found that India, at No. 13 and China, No. 21, have experienced a rapid rise in spending among their G2000 companies. Brazil, in increasingly prominent sourcing players, emerged at No. 24 as the highest-ranked country in Latin America. The report also found that Latin America has the fourth-highest market opportunity among the regions with $3 billion in additional ACV potential.

"Understanding the global outsourcing market requires up-to-date information on local and regional dynamics in every part of the world," said Melany Williams, partner and managing director, TPI Momentum. "This report offers on-the-ground detail and analysis by TPI experts and advisors to help service providers and others identify and pursue the most promising opportunities - wherever they might lie."

Readers can find out more about the report here.

The cost of outsourcing for end-users within the UK looks set to increase as country begins to come out of recession, research has suggested.

The operating costs associated with areas such as real estate and staff are set to increase over the next 12 months, according to the report from technology consultants Ovum.

This will lead to more staff employed on a permanent in-house contract and could force outsourcers who want to retain the best staff to up pay, in a move which will pass increases on to clients.

Ovum lead analyst Peter Ryan said: “Onshoring centres in North America, Europe and Australia/New Zealand, are already seeing vacancy rates that are substantially higher than usual.”

Significant onshore opportunities for outsources will still exist however, according to the report, particularly in areas that have been hit by the recession.

Healthcare company GlaxoSmithKline (GSK) has signed a five-year outsourcing agreement with HCL Technology division HCL Axon.

Under the agreement, Indian based outsourcer, HCL will provide GSK with systems integration, SAP implementation and IT consulting services for the international company.

The appointment comes a year after Indian-based HCL Technologies’ acquisition of UK based Axon.

"This is an important win for us, it keeps our objective of becoming the largest global SAP-based business transformation provider on track and confirms the rationale behind the merger with HCL technology.” said Mr Steve Cardell, President, HCL Axon