Industry news

Capgemini, one of the largest ITO companies in the world, has moved to purchase Empire, a privately-held, Czech-based IT services and consulting company and its subsidiary Sophia Solutions, a local expert in Business Intelligence and Data Warehouse.

Through this acquisition and in line with its strategy, Capgemini will further develop its presence in mature Eastern European countries. The acquisition will add 165 new employees to Capgemini.

Under the terms of the share purchase agreement, Capgemini will acquire 100% shares of Empire and 70% of Sophia Solutions paid in cash. Capgemini will be able to acquire the remaining 30% of the shares in Sophia via call options over the coming years.

“This acquisition represents a significant step forward for Capgemini in our strategy to accelerate growth in our core Eastern European countries,” said Peter Laggner, CEO Capgemini Eastern Europe. “These companies enhance our Technology Services capabilities in our consulting oriented practice in the Czech Republic. We are looking forward to delivering on the promise of this acquisition and with strongly motivated management teams we aspire for a smooth and successful integration of the company into our country unit, region and Group.”

The transaction is subject to customary closing conditions and it is expected that it will close by the end of December 2008.

This week has seen public sector sourcing back in the spotlight. Prime Minister Gordon Brown's speech to the CBI on Monday put global thinking about the world economy at the centre of a new financial order that will emerge as the financial crisis dissipates.

Nationalism and protectionism were things of the past, he said, and global sourcing would be part of a more rigourously managed system.

You know something has changed when that most isolationist US president, George W Bush, has also spoken out against protectionism as he prepares to leave the world stage.

But the problems of home-grown government outsourcing have again been in the spotlight at home as the Information Commissioner wins stronger powers that will force organisations – such as government departments and their outsourcing partners – to tighten up data protection policies.

Information Commissioner Richard Thomas has won the support of justice secretary Jack Straw for tougher powers to investigate breaches of the Data Protection Act, fine organisations for data losses – and inspect government departments without prior consent.

Assistant Information Commissioner Jonathan Bamford hit the nail on the head when he told the Financial Times this week that recent public sector data losses were the concomitant of treating data security as an afterthought rather than as a central pillar of system design. “It was obviously a bit of an accident waiting to happen,” he said.

However, Mr Bamford then shot himself in the foot when he added that organisations should invest more in “privacy enhancing technologies”. No: technology evangelism is the root of the problem, not the solution.

Of course, systems must be secure and protected, but it is their management that is lacking, along with a duty of care to educate every tier of the organisation in data protection issues.

No amount of technology will prevent someone losing a storage device the size of a pack of chewing gum, or having a laptop stolen by an opportunistic thief. The blind faith in technology's ability to secure government while also opening it up to the populace is misplaced.

Put people first, with all their human flaws and inconsistencies, then design management policies around that. Finally add technology.

The outsourcing industry should be well placed to educate government clients, but as we leaned last week at the NOA summit, all too often contracts are run by people who are passing through their departments and lack the expertise to run major projects.

This article is from 2008. For a more up-to-date version, see Understanding Indian Culture for Successful Business in 2015/16.

With a population of over one billion, 3.29 million square kilometres of landmass to cover and a multitude of languages and customs, the Indian market can be a daunting place for businessmen. Business success can depend to a large extent on an understanding of the culture, the people, the land and the business environment that a foreign company and investor would be expected to operate within.

However, India promises great business opportunities and many organisations have already turned to this vast country, seeing potential in a substantial developing workforce and a cost effective geographical base for offices and factories. Yet, how is it possible to overcome the challenges of doing business in India due to a lack of relevant information, political uncertainly, the geographical scale that the country presents, the regional variations that exist and above all the cultural complexity that needs to be contended with?

The answer lies in gaining a general understanding of the culture. India is diverse with varied and distinct geographical regions each having its own language, customs and festivals. The country is comprised of a rapidly developing population. At present, 70% still live in villages and work in agriculture, 13% work in the industry sector and 17% in services. Literacy is highest in the South at almost 90%. This is contrasted with Northern regions where the literacy rate is only about 45%.

It is critical to also note the importance religion plays amongst all communities. The four principle religions are Hinduism (80%), Islam (14%), Christianity, and Sikhism with a small fraction of the population also practicing Buddhism, Zoroastrianism, and Judaism. Festivals are celebrated with much fanfare, so it is important to respect the major festivals of Holi, which is celebrated in the spring and Diwali, which is celebrated in October/November. During these holidays work comes to a halt.

As with most countries India has its own unique and subtle manner in which business is conducted. People in India tend to categorise most foreigners into three main groups, namely, Americans, English and German. With this classification comes a certain amount of preconception - fuelled by Hollywood - of how a foreigner is likely to behave. Likewise, many foreign business westerners enter India with pre-conceived notions of what the country has to offer based on media reports and fleeting first time impressions. It is important to give oneself time to adjust to the new cultural surroundings and not be taken in by initial reactions.

There are several idiosyncrasies attaching to the country which also vary from state to state. Consider the following:

• As a sign of respect it is customary to address persons by their family name as opposed to first names. Very often younger people will persist in using family names together with an appropriate title, such as Mr./Ms, as a sign of deference and respect. If a foreign business person wishes to be addressed by his Christian name he may have to request this several times over.

• Indian society remains patriarchal and thus it is important to understand the importance of hierarchy. When dealing with Indian businesses it is important to ascertain who is the authority figure and who has the final say. Many businesses are still family run and thus power vests at the top.

• Hierarchy also runs within middle and junior management. An understanding of this culture of dependence expected by a boss from his subordinate is important when running a team of local staff. There is often a tendency to seek support and advice in situations that may not warrant this level of dependency by junior staff on his superiors.

• Indian time keeping is better known for its lack of punctuality. Indian Standard Time (IST) or better known as Indian S t r e t c h a b l e Time means that deadlines are not always strictly adhered to in the work environment. Hence strict guidelines and enforcement may be necessary to adhere to western style fixed deadlines.

• It is important for a foreign visitor to understand gestures, body language and non verbal communication. The well known Indian rolling of heads is often a sign of acknowledgement and affirmation and not a negative. It is also not meant as a sign of any disrespect and should thus be acknowledged appropriately.

• Use of mobile phones, even during meetings, is customary and not intended to be a sign of disrespect.

• Giving and receiving business cards is also common and expected even at social gatherings!

• Religious sentiment runs high and many Indian businessmen may defer business decisions based on what may considered “good and auspicious” days. Superstitions may also have to be accounted for in various business dealings.

• Allow enough lead-time for projects and budget for unexpected costs – everything takes longer in India and therefore can be more expensive. Similarly, it is advisable to handle red tape with caution – exchange controls do exist and regulatory procedures can be highly bureaucratic. Exit strategies must also be considered up front.

With any foray into India it is imperative to ensure one creates and maintains a paper trail. Unlike the UK, India has a written contract act, namely the Indian Contact Act of 1872. This legislation applies to all agreements in India including letters of intent and memorandum of understandings. The position in relation to enforceability of letters of intent/memorandum of understandings can be ambiguous. It is advisable that any intention of making a preliminary understanding enforceable is clearly reflected in the documentation. An ‘agreement to agree’ is, in principle, not enforceable under Indian law.

It is also important to ensure that one contracts with the correct legal entity. These days many Indian companies have bases abroad. However, this is also an area which requires caution. Companies have been caught out in the past where they have signed agreements with foreign branches of Indian organisations (a UK branch of an Indian company for example) which in effect can be shell companies. Thus, in case enforcement for damages is necessary the foreign party would find it difficult to get redress against an entity that has no assets and where the parent company has not been made a party to the agreement.

Indian tax implications also require attention. Often foreign companies inadvertently create a permanent establishment [“PE”] in India without realizing the regulatory and tax consequences of doing so. India continues to have exchange controls and any movement of foreign exchange into or out of the country is regulated by the Reserve Bank of India.

Protecting intellectual property rights (IPR) is another critical facet of doing business in India. A well thought out IPR strategy can save much time and cost in future. It is advised that IPR is protected in the early stages of negotiation and that the IPR is registered with the relevant registry. Although there is no legal requirement to register trademarks or copyright material doing so facilitates the enforcement of one’s rights in case of infringement.

As with most countries, India has its own unique and subtle manner in which business is conducted. Success can depend on an appreciation and understanding of the cultural aspects in addition to patience and a high level of long-term commitment and personal attention and involvement. Establishing and maintaining strong relationships with Indian business associates is fundamental to successful business in India.

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If you are interested in attending the Offshore Communication Skills workshop and improving your foreign business skills, email admin@noa.co.uk or call 0207 292 8686. [2015]

Rabo Vastgoed Group, an international real estate organisation, has signed a five year outsourcing deal with Atos Origin. The contract will see Atos manage the company’s IT infrastructure in the Netherlands.

Rabo hopes that the outsourcing deal will deliver high-quality management, cost savings and enable the company to better anticipate new market developments.

"Thanks to this outsourcing we are able to ensure the quality of our IT service at a cost level that is in line with the market. What’s more, this makes Rabo Vastgoed Group very well equipped to respond early to changing customer needs,” says Jos van Lange, Chief Financial and Risk Officer of Rabo Vastgoed Group. "Rabo Vastgoed Group wants to strengthen its leading position in the real estate market and optimal use of IT plays a crucial part in this."

The agreement between Rabo Vastgoed Group and Atos Origin forms part of a wider outsourcing of the IT infrastructure to a total of three parties. Atos Origin is responsible for the IT service desk, office IT and computer centre services of Rabo Vastgoed Group. Rabobank Group IT, Rabobank’s own IT group, will be responsible for housing the central IT infrastructure and a third supplier will take care of services in the area of telephony and networks. In addition, the IT services provider will have operational control of these other services to be outsourced.

Satyam Computer Services, one of the largest Indian IT outsourcers has been tipped as the favourite to win a significant IT outsourcing contract from Indian Railways according to the Economic Times of India.

Having put in the most competitive bid, company officials are confident that they can come away with the contract. If Satyam does win, the company will be tasked with providing an asset management solution based on SAP business software for four locomotive sheds.

Financial terms of the contract were not disclosed but TCS and Wipro are also reported to be tendering for the deal.

The value of the top 100 outsourcing deals decreased by 39.2% from US$96.2 billion in 2006 to US$58.6 billion in 2007. The number of megadeals – those deals valued at $1 billion or more — also declined substantially in 2007 to 14 from 29 in the previous year, according to a new IDC study.

"2007 revealed a substantial softening of the megadeal market, as the percentage of the top 100 total contract value constituted from megadeals declined from 65.1% in 2006 to 34.4% in 2007," said Terrance Strom, research analyst, IT Outsourcing and Utility Services at IDC. "While not declaring the demise of the megadeal, we may in fact be witnessing a cyclical saturation of the market. Service providers will need to continue to invest in lower cost and more flexible delivery models, wisely expand their global footprint, and focus on emerging markets as the source of material growth in the years to come."

Additional findings from IDC's analysis include the following:

• The total value of megadeals included in the 2007 top 100 was $20 billion, a decrease of 68.1% from the $62.7 billion in megadeals signed in 2006. The number of vendors signing megadeals was 11; AT&T, BT, and the Capita Group led the way with two megadeals each.

• In 2007, IBM Global Services (IBM GS) captured $8.3 billion and 14.3% of the top 100 contract spend, followed by BT Group with $6.9 billion and 11.7%, and EDS with $6.2 billion and 10.6%. IBM GS maintained its top position in terms of the total number of top 100 deals signed with 16, followed by EDS with 10 and BT with nine.

• The average contract value in 2007 decreased across every geography with Asia/Pacific and Europe, the Middle East, and Africa (EMEA) suffering the largest declines at 71.4% and 45%, respectively. Americas-based deals also declined substantially at 41.6%, while globally scoped deals showed the smallest decrease of 12.5%.

• For the fourth year in a row, government contracts represented the largest share of total deal value with 27.9% of the top 100 contracts. However, contracts signed in the professional services industry represented the largest average deal size, followed by utilities and insurance. The transportation vertical accounted for the largest year-over-year growth, followed by professional services and utilities.

The IDC study, IDC's Top 100 Worldwide Outsourcing Contracts of 2007 (IDC #214715), now in its 12th year, provides detailed information and IDC's analysis of the top 100 worldwide outsourcing deals for 2007. It also provides an overview of the top 100 worldwide outsourcing contracts of 2007, ranked by total contract value. Using IDC's Worldwide Services Contracts database, this study examines the trends and characteristics of outsourcing contracts signed in 2007. Additionally, the study provides a brief analysis of those trends affecting the outsourcing market as well as guidance on how players can compete most effectively.

Steria and Land Registry have announced a five year partnership, worth £50 million, which will see the European end-to-end IT services company provide a managed ICT service for the organisation's Distributed IT Infrastructure (DITI) and Extranet services. The account was awarded to Steria following an eighteen-month intensive procurement process.

The partnership will see Steria provide and support a robust, resilient and secure DITI and Extranet to meet Land Registry's current and future business requirements. The contract will provide the underlying infrastructure which will enable Land Registry to deliver existing and new services in the future. The current DITI service serves over 8000 staff across the Head Office in London, key locations such as Plymouth and 24 other local offices across England and Wales.

The new service which will commence in July 2009 will greatly enhance operational cost effectiveness and offer financial transparency and predictability to Land Registry. It has been designed specifically to provide flexibility and will evolve to support the organisation's business transformation aspirations.

"Land Registry strives to provide the world's best service for safeguarding ownership of land and facilitating property transactions", commented Land Registry CEO, Peter Collis. "As well as a comprehensive depth and breadth of capability in both ICT and corporate services, Steria's approach demonstrated a culture of partnership and flexibility, both of which will be vital as we continue to leverage technology in the transformation of our business."

Organisations are experiencing project savings of 25 to 40 percent by deploying CRM applications in a software as a service (SaaS) model, according to Gartner Inc. Gartner said that its clients were making these savings from reduced application expense and lower implementation costs.

Much of the savings that organisations are making is a result of a lesser dependence on large external service providers (ESPs), which typically help businesses improve customer processes as part of the CRM engagement but which play less of a role when SaaS is involved. Among the top 100 SaaS deployments in 2007 and 2008, fewer than 10 percent involved a large system integrator or an external enterprise business consulting team. This would indicate that the role of ESPs in designing, measuring and driving CRM process improvements will diminish at enterprises deploying SaaS solutions for CRM through 2012.

"Due to the increasing use of SaaS for CRM, ESPs — which include business consulting and system integration services — will have less influence on CRM processes as SaaS accelerates," said Michael Maoz, vice president and distinguished analyst at Gartner. "This could result in an erosion of customer satisfaction among large enterprises that invest in SaaS solutions unless they invest their own resources to measure and manage long-term CRM process improvements."

Gartner expects a similar drop in customer experience scores from midsize businesses. They're a stronger target for SaaS offerings, and they rarely use ESPs for business consulting skills.

Mr. Maoz said that many projects that involve complex customer service contact centers are reported to be "on hold" until better references are available from the large enterprise application vendors that are in the process of releasing a new generation of their products. However, he said that SaaS is the deployment model of choice for an increasing number of projects. Gartner predicts that all forms of SaaS-delivered customer service applications in the call center will grow by more than 20 percent per year through 2012, and this will deliver significant savings. By 2012, 30 percent of new customer service and support application investments will be through the SaaS model.

Because SaaS applications lack sophistication in BPM and process design, and due to the absence of ESPs offering business process advice, the growing spread of SaaS CRM applications threatens CRM efforts. "There will be significant savings in infrastructure and resource costs in migrating to SaaS, but to put that money to work in customer process improvements, careful performance measurement of 'before' and 'after' project spending will need to be performed," Mr. Maoz said. "If this does not happen, then the savings will be shortsighted, as they will not improve the relationship with the end customer."

In a difficult economic climate, it stands to reason that many businesses will make similar choices and choose not to measure the benefits of the SaaS model. Gartner's advice to organisations deploying SaaS for CRM is to ask the software solution provider for its CRM process credentials and those of its ESP partners.

Additional information is available in the Gartner report "SaaS CRM Reduces Costs and Use of Consultants." The report is available on Gartner's Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=778215&subref=simplesearch.

The National Outsourcing Association has launched the UK’s first accredited professional outsourcing qualifications and training programmes. Available immediately and delivered through its newly formed professional development arm, NOA Pathway, the qualifications are accredited by Middlesex University. There are different qualifications and entry points available, to ensure that every outsourcing professional is catered for. The programmes range from the entry-level NOA Gateway, which offers learners a solid foundation in outsourcing, through to the masters level NOA Diploma. A range of training programmes covering all aspects of the outsourcing lifecycle are also being launched.

Introduced in response to demand from its members and following three years of development, the NOA becomes the only UK entity to raise standards by establishing an industry-wide benchmark for quality in outsourcing. The qualifications and training programmes will help both organisations and individuals achieve best practice in both the supply and use of outsourcing, giving them a competitive edge.

Martyn Hart, chairman of the NOA commented: “Globalisation has accelerated the rise of outsourcing. While this brings opportunities, it also brings some challenges. Until now, there has been no common best practice standard or benchmark for outsourcing and there is no way of recognising whether staff involved know their subject or not. NOA Pathways helps organisations evaluate suppliers/vendors and enables them to trust the supplier’s outsourcing knowledge, commitment and ability.”

The qualifications and training programmes have been designed and optimised to complement any organisation’s or professional’s work in outsourcing. Through a programme of work-based learning and workshops, individuals can achieve the following qualifications: NOAC – the NOA Professional Certificate, NOAAPC - the NOA Advanced Professional Certificate and NOAD - the NOA Diploma in strategic global outsourcing.

“By offering accredited professional development in outsourcing, NOA Pathway is establishing a recognisable kite mark for quality in the outsourcing industry. In line with the NOA’s commitment to best practice, NOA Pathway was created to increase outsourcing professionals’ expertise, confidence and knowledge of the outsourcing industry and to help organisations’ outsourcing teams stay ahead of developments in the outsourcing world.

“This innovative step to ensuring outsourcing organisations and individuals are fully trained in outsourcing best practice will improve the procurement and selection process, as well as enhance the strategic partnership between end users and suppliers,” concluded Hart.

Gmünder ErsatzKasse (GEK), a leading German health insurance company, has signeda five year ITO contract with Atos Worldline, an Atos Origin Company to implement and operate the issuing and management of the new German electronic health card (eHC).

In 2009, GEK plans to issue 30,000 cards per day in order to provide its 1.7 million members in Germany with the new card. One of the German public authorities’ most important IT projects, the eHealth card is an important step in the modernisation of European health systems. It is designed to guarantee the simple and secure exchange of data between insured parties, doctors, pharmacists and health insurance companies.

The introduction of the new electronic health card helps to connect together people, pharmacists, doctors, hospitals as well as the private and statutory health insurance companies, and aims at simplifying and accelerating exchanges, thereby doing away with any paperwork.

Atos Worldline has been selected by GEK to implement and operate the issuing and management of eHealth cards. Services include the implementation of the health insurance data, the running of the card application and management system. The solution is based on the Atos Worldline proven card application management system for the electronic health card ‘Worldline eGK KAMS’. Atos Worldline’s integrated solution for the Public Key Infrastructure ensures that patient data is securely stored.

The keys for the electronic health card provided by Atos Origin are approved as trusted services by Gematik (Gesellschaft für Telematikanwendungen der Gesundheitskarte mbH). The solution is modular and covers all safety requirements for the card application management service. The security requirements for key management, card personalisation, online card updates and health insurance agency requests (VSDD) along with card application directory services are supported in accordance with Gematik’s requirements and comply with the instructions from the German Ministry for Health.

“In order to ensure the required security and high availability of the electronic health card system internally, we therefore decided to outsource the service and awarded the contract to Atos Worldline. Their experience in the health administration and proven competence in processing large volume electronic exchanges together with their ‘integration’ and ‘business process outsourcing’ models were key factors in our selection process.” explains Norbert Schurr, Project Leader eHC at GEK.