Industry news

Innovation Auto Risk, an Indian leader in claims management to insurers and fleet management companies, has signed an ITO agreement with IBM. The new contract is designed to support the company’s growth and expansion plans.

Under the terms of the agreement, IBM will deploy server, storage, networking and security IT infrastructure to be hosted at a data center in Delhi. IBM will provide 24x7 onsite infrastructure monitoring services from an onsite command center. In addition, it will provide managed services and ongoing project management for infrastructure procurement, commissioning and configuration, as well as hardware refreshes after five years.

"We are delighted with our agreement with IBM and believe its technology expertise and focus on delivering cost-efficient solutions will help us achieve our growth strategy and higher levels of customer satisfaction," said Manu Mehta, Director, Innovation Auto Risk. "We maintain a stable organization built on a foundation of experience and are committed to give our customers the benefits of the highest levels of service without losing focus on our core businesses. Since we offer cost-effective solutions to insurers helping them to reduce claims cost, we ourselves have to keep our costs at check while introducing latest technologies in India to our customers, in which case IBM helped us to achieve that," he added.

The agreement was signed in the second quarter of 2009, but financial terms were not disclosed.

British American Tobacco has signed a five-year application co-sourcing contract with Accenture to help it improve the design, development and implementation of its information technology systems for its business operations.

Under the agreement, Accenture and British American Tobacco will jointly design a wide range of applications for British American Tobacco’s functions, including finance, supply chain, sales and marketing, with Accenture developing these applications for global, regional and local use. The program will help British American Tobacco transform its solution delivery function into a global, simplified and standardised operation.

Accenture will deliver the co-sourced services through a joint application development centre with British American Tobacco in Spain and through the Accenture Global Delivery Network, including the use of delivery centres in the Philippines and India.

“We believe that this co-sourced program will make us considerably more effective across our global enterprise,” said Craig Wallace, head of solution delivery at British American Tobacco. “Collaborating with Accenture on this program will greatly enhance our knowledge, skills and capabilities and enable us to more quickly reshape and transform solution delivery within our business. Accenture is arguably the leader in this field and brings world-class people, tools and assets, combined with a deep understanding of and close relationships with SAP and Siebel.”

Financial terms of the deal were not disclosed.

The US Department of Defence (DoD) has signed an agreement with CSC to help enhance cyber security and combat threats. The agreement is a further step in safeguarding vital defence information that is important to US defence and national security.

Under the terms of the agreement, the DoD and CSC will collaborate concerning third party attempts to attack network systems. DoD and the Defence Industrial Base (DIB) Program members will use lessons learned to improve risk management of critical network infrastructures. This is consistent with the President's Comprehensive National Cybersecurity Initiative. In addition, technical practices developed within the DIB Program will improve the protection and security of information. As the agreement is implemented, the DoD and CSC will build a framework to characterise cyber threats to the defence industrial base, aiding in the development of measures to combat and mitigate these threats.

The London 2012 Organising Committee (LOCOG), the body behind putting together the London Olympic Games, has changed its infrastructure partner from Nortel to Cisco. According to LOCOG, the contract with Nortel has ended on good terms, following its decision in June to sell certain parts of its business.

The reason for the breakup was that that some parts of the business that were sold were integral to delivering on Nortel’s 2012 commitments.

In a statement LOCOG said, “Technology for the Games is a huge undertaking with a fixed deadline, relying on finalising the design and building of systems now. In order to deliver 'the most connected Games possible', LOCOG felt it was vital to work with a single business to cover the entire network infrastructure. As a result, LOCOG and Nortel amicably decided to bring the current agreement to an end.”

LOCOG invited Cisco to bid for the infrastructure contract which it won. The company will now immediately start working on the project.

London 2012 CEO Paul Deighton commented, “We continue on a path to deliver the most connected Games possible. We part with Nortel on good terms.

“Nortel acknowledges our fixed deadlines and our desire to have a single supplier for our entire network infrastructure have been impacted by Nortel’s decision to move towards standalone businesses. This is in no way a reflection of their capabilities – this is all about meeting our fixed deadlines.”

Sprint, provider of wireless and wireline communications services, has signed a unique wireless and wireline network services agreement with global leader Ericsson.

The new seven-year agreement will see Ericsson deliver operational efficiencies for Sprint while expanding Ericsson's own network services business in North America. The contract is valued at between $4.5 billion and $5 billion (USD) over the seven-year term of the contract.

Sprint's Steve Elfman, President of Network Operations and Wholesale, believes the deal, named "Network Advantage," catapults the company to elite status in wireless and wireline network effectiveness.

"No other U.S.-based carrier has followed through on the business-enhancing vision inherent in Network Advantage. Our best-ever network performance will become even better by leveraging Ericsson's world-class leadership in network services, their proprietary tools, and the knowledge of more than 30,000 dedicated and highly-speciali s ed service professionals to power Sprint's Now Network," said Elfman.

Key elements of the agreement include Sprint retaining full ownership and control of its network assets; customers working directly with Sprint employees as their primary contact; and Sprint retaining technology and vendor selections. Ericsson will assume responsibility for the day-to-day services and the transferred employees will become part of Ericsson Services Inc.

Nobel Biocare, a Swiss dental implant manufacturer, has signed a seven-year ITO contract with CSC.

Under the terms of the contract, CSC will assume responsibility for desktop and help desk services, as well as data centre operations supporting 38 Nobel Biocare locations in 33 countries representing five continents. Outsourcing these functions will enable the company to achieve cost savings starting in the first year and support Nobel Biocare's strategy to increase profitability and ensure long-term growth.

"Signing this agreement demonstrates the confidence industry leaders like Nobel Biocare have in our ability to provide flexible, cost-effective solutions that meet evolving business needs," said Gerhard Fercho, president of CSC's Central European Region.

BearingPoint's Brazilian operation, which specialises in consulting and systems integration services, is being purchased by CSC. CSC's new presence in Brazil, the world's ninth-largest economy, will add key horizontal capabilities and vertical industry expertise. The transaction is subject to the satisfaction of customary closing conditions and the approval of the court overseeing BearingPoint's corporate reorganisation.

BearingPoint's Brazilian operation currently has 550 employees and offices in Sao Paulo, Rio de Janeiro and Brasilia. Approximately two-thirds of the staff are qualified to implement and support SAP solutions. Through the acquisition CSC will add further horizontal capabilities includ ing project management, strategy consulting and applications management along with language capabilities including English and Spanish, in addition to Portuguese.

Clients of the Brazilian business include some of the world's largest producers of oil, gas and iron ore. The acquisition will expand CSC's industry vertical expertise and clientele in its Chemical, Energy and Natural Resources and Technology and Consumer sectors.

The acquisition will add to CSC's existing Latin American presence which includes operations in Argentina, Chile, Colombia, Costa Rica, Guatemala, Peru and Mexico.

GlaxoSmithKline (GSK) has signed a new five year IT support contract with Mahindra Satyam, recently rebranded from Satyam Computer Services. GSK has been a customer of Satyam since 2002. The new contract is to provide SAP and other critical systems support to GSK's businesses across the world.

"GSK is delighted to be able to extend our contract for another five years. We look forward to continuing to receive the high level of professionalism and commitment from Satyam and its associates that we have experienced over the past seven years" said Bill Louv, Chief Information Officer, GSK.

Last week I thought Lloyds TSB had their work cut out for them when turning bad press into good. However, it seems the outsourcing industry can’t get any worst coverage then it received this week. Placing ‘outsourced’ and ‘torture’ in the same sentence can never be good. Do not fear the Round-Up is not going to dredge the dark depths of civil liberties and human rights. This is not the type of outsourcing we are privy to and certainly do not condone it!

This week a thrilling ITO contract was won by CSC. Nobel Biocare, a Swiss dental implant manufacturer, has signed a seven-year ITO contract with them. Not the type of company that one sees often in outsourcing news. Dental implants, I still can’t work it out. Either way the toothy Swiss company hopes that CSC will help their implants grow and grow. The Round-Up wishes them the best of luck.

On to the more common, the U.S. postal service has renewed its customer service contract with Convergys. Since 2003 Convergys has provided the postal service with customer service support at three U.S. contact centres. This extension is the second two-year renewal of the contract.

And finally there is some exciting news for all the academics out there. Okay, you’re right, for some reason I do not have a following that consists largely of academics. However, the news that Gartner and Oxford University are launching a CIO academy in the Gulf Region is still exciting stuff.

The University of Oxford’s Saïd Business School and Gartner Executive Programs, a unit of Gartner, Inc., will deliver their renowned CIO Academy in the Gulf Region. The programme has become established over several years at Oxford, helping many IT leaders to maximise the contribution of technology to their organisations.

Although this week’s news round up began with a distinctly somber tone, I do hope you are left feeling uplifted and revived with all the new outsourcing contracts that are floating about. The Round-Up is a little worried about what headlines will be in the press next week. I hope when we meet next the news will not be so grave in nature.

Until then, happy sourcing.

It is common knowledge that the IT outsourcing market is split into so-called tiers, with tier one comprised of the “Big Four” (IBM, HP, Accenture, CSC) and tier two being mainly specialists in certain technologies or regional in scope such as Logica or Unisys, often aspiring to join tier one.

But this unintentional layering of the supplier market inherently creates a challenge. Companies with tens of thousands of employees, outsourcing IT functions through a contract of five years or more and with a value of upwards of £15 million per year, will be perfectly suited to a tier one provider. But the companies of a scale just below this with needs of equal complexity but an ability to sign a contract valued at only £3 - 10 million per year , simply will not be given the same levels of care and service by the tier one providers.

However, a tier two supplier typically lacks the sophistication and scale to accommodate the complex requirements these organisations have as they typically target the smaller end of the market. Therefore, companies of this size – approximately 2,000 employees for example – have shortlists of potential sourcing providers, but no one who can serve them fully, representing a gaping hole in the market – tier one wouldn’t serve them adequately, tier two can’t.

But there is a solution.

The first step is to readdress your expectations and understand you are unfortunately in a market black hole. If your budget is less than what would satisfy a top tier supplier, then the further down the hierarchy of suppliers you are looking, and the more care you must take when selecting the eventual supplier. And as you are unlikely to find a single supplier who can fulfil all your needs to the level you require, be open to a multi-sourcing approach whereby you take advantage of the specialisms of various suppliers. Provided the overall relationship and co-operation is adequately managed from all quarters, multi-sourcing can prove more than beneficial. Indeed multi-sourcing is arguably best suited to organisations of this scale.

Finally, with so many rumours abound within the sourcing industry, and any other industry for that matter, on possible mergers, consolidations, departures from the UK market etc., companies must be certain of whether the supplier is on an upward or downward trajectory. Will you be the most or least important client to the agency in three years’ time?

In short, with top tier suppliers likely to focus on more profitable and larger contracts, and smaller suppliers unlikely to be able to meet your requirements, heightened degrees of diligence and flexibility will be essential – your first choice supplier may not be suitable, but there is no reason why the problem cannot be solved by an alternative strategy.