Industry news

Alcatel-Lucent has selected T-Systems to provide onsite desktop support for its European and Middle Eastern operations. The agreement calls for T-Systems to maintain and deploy over 40,000 desktop and notebook PCs in 23 countries.

Alcatel-Lucent has been relying on T-Systems services for its workstation systems in western European core countries such as Germany, Spain, Portugal, the Netherlands and Belgium since 2004. The Telekom subsidiary now supports Alcatel-Lucent’s international IT strategy from Norway to the Mediterranean and from Ireland to the United Arab Emirates. The services cover onsite support for desktop and notebook PCs, UNIX workstations, printers, IP telephones, videoconferencing systems and first-level support for the network infrastructure linking them.

Through the deal Alcatel-Lucent plans to standardise its workstation systems to provide its employees with more efficient and cost-effective desktop capability. It plans to eventually deploy the same devices and services in every country.

Joseph W. McGrath has announced he will step down as President and CEO of Unisys Corporation, effective by year-end 2008. Mr McGrath has served as chief executive officer since 2005.

The company said the board of directors and Mr. McGrath agreed that a change in leadership would best enable Unisys to move forward on accelerating execution of the company’s strategy. McGrath will continue to lead the day-to-day operations of the company until a successor has been identified.

“It has been an honor and a privilege for me to lead Unisys and I am proud of what we have achieved in many areas,” said Mr. McGrath. “I’d like to personally thank all of the people at Unisys for their hard work and dedication over the past few years.”

The board of directors has formed a search committee that will identify and evaluate chief executive candidates. Mr. McGrath will work with the board of directors to ensure a smooth leadership transition for the customers and employees of Unisys.

HCL Technologies has challenged Infosys’s August bid for UK SAP consultancy, Axon Group. Under the terms of the Offer, Axon shareholders will receive 650 pence in cash for each Axon share valuing the entire issued and to be issued share capital of Axon at approximately £441.1 million. The latest bid tops Infosys’s previous £407.1m valuation of the consultancy.

Commenting on the strategic fit between HCL and Axon, Ram Krishna, Corporate Vice President - Enterprise Application Services, said “The merger of Axon’s strong implementation capabilities with HCL’s application and infrastructure management capabilities will help us deliver unique value on an end-to-end basis for the customers of HCL and Axon. The positive interactions between the HCL and Axon management teams since July 08, reinforces my belief that we will come together and create significant incremental value for both our customers and employees.”

British Airways has signed a multi million pound ITO deal with NIIT Technologies Limited. The three-year deal will see NIIT provide support and testing services for BA’s business critical applications across various areas of the airline.

The contract is one of the largest ever deals to be signed by NIIT Technologies and represents the extension of an existing twelve year relationship between BA and NIIT.

Mike Doyle, British Airways IT Application Support Manager, commented: “We are extremely pleased to continue our long term partnership with NIIT Technologies. They have proven to be a flexible, reliable partner evolving with our business and the technology trends within the airline industry.”

The deal comes as the airline industry has come under increasing pressures from rising costs of fuel, the credit crunch and falling consumer confidence. British Airways has also undertaken a cost mitigation exercise with their global partners to reduce costs and maintain competitiveness.

Ericsson, the a leading supplier of telecommunication services and infrastructure, has awarded TCS a five-year contract for the development and maintenance of its global internal IT operations.

TCS has been selected as one of the two strategic partners that will deliver application maintenance services to Ericsson and a preferred supplier for application development services. The value of the contracts was not disclosed.

Nils Molin, Managing Director Sweden at the analyst firm IDC commended on the deal, “This contract signifies the trend of increased acceptance of Indian headquartered IT companies delivering complex projects in the Nordic region. TCS has been spearheading this trend by investing heavily in localizing its Nordic operations, expanding its services portfolio and aggressively adding new clients. We expect Nordic companies to continue to add deliveries from off and nearshore centers to their sourcing strategies for IT Services.”

The board of directors at HP has authorized the buy-back of US$8 billion for share repurchases. According to HP, the move forms part of its ongoing program to manage the dilution created by shares issued under employee stock plans.

HP repurchased approximately US$1.6 billion worth of its shares in the third quarter and, as of July 31, 2008, had approximately US$3.0 billion of repurchase authorization remaining under the $8.0 billion repurchase authorization approved by the board in November 2007. The company plans to secure the remaining shares as and when they can be purchased from the holders.

HP has approximately 2.5 billion shares of common stock outstanding.

Over 11, 000 foreign workers are being brought into Britain by Indian IT companies each year, invoking questions of the country’s work permit scheme by the Unite trade union.

The Sunday Telegraph has released Home Office figures obtained after a two-year battle under the Freedom of Information Act, showing that six of the largest Indian IT outsourcers recruited 11,644 immigrants to work for them in the UK in 2006.

The companies that featured are Tata Consultancy Services, Wipro, Mahindra-BT, Mastek, Infosys Technologies and Satyam Computer Services.

Over a seven-year period these companies were granted work permits to bring 47,000 foreign nationals into the UK. The Home Office could not say how many have settled in the UK and how many have returned to their homeland.

In response to the new data, British trade union Unite has raised questions, saying that while it is possible that only foreign workers have the skills required for the specific jobs in question, the granting of work permits "should not be at the cost of resident workers". The union thinks that Indian companies may be "undercutting" British pay rates in the UK by securing work permits to foreign workers and paying them much less than what their British counterparts would earn in the same rank.

However, while Unite wanted to know if these positions could have been filled by UK residents, no mention was made as to the actual availability of sufficient UK IT talent. The new figures appear to confirm the ongoing industry worries about IT skills gaps and the dearth of new IT graduates being produced by UK universities.

The Securities and Exchange Commission (SEC), the US financial regulatory body, has awarded Lockheed Martin an Infrastructure Support Services contract. Awarded under the another all-encompassing government procurement deal, the contract has a base value of US$33 million, rising to US$122 million if all program options are exercised over six years. Lockheed Martin hopes for significant performance improvements from the integration and streamlining of the SEC’s IT.

The company will provide transition, program management, managed network, end user computing, service desk and pre-production and other infrastructure services.

Lockheed Martin will deliver on the deal from the SEC Washington, D.C. headquarters and SEC Operations Center in Alexandria, Va., with an additional 11 remote sites being supported from these two locations.

There is a CIO at a major UK retailer who, I suspect, is not untypical of many. He tells the tale of how, once upon a time, he used Oracle as his database provider, JD Edwards for his back-office enterprise resource planning (ERP), PeopleSoft for his human resources and talent management, Hyperion for his business intelligence and analytics and Siebel for his customer relationship management (CRM). Now he just uses Oracle!

That's not because he's taken a decision to standardise on the Oracle software stack. In fact in some cases – such as his CRM selection – he deliberately chose not use Oracle. But Oracle had other ideas. After more than two decades of growing his company through a combination of ruthlessly aggressive selling and in-house development of new technology, Oracle CEO Larry Ellison decided five years ago that the way to win market share in the 21st century was to go out and buy yourself some extra slices.

So over the past five years, Oracle has spent a cool $34 billion on 50 software company acquisitions, including PeopleSoft (and with it JD Edwards), Hyperion and Siebel, as well as number of more tactical acquisitions to flesh out its portfolio and enable it to address some vertical markets, such as the insurance sector or the telco market – in which Oracle now has arguably the most complete 'industry-specific' offering among the enterprise software giants.

Of course it's just tough luck if you didn't want to be an Oracle customer, but Oracle argues that what it's been doing actually mirrors the sourcing decisions being taken by client companies anyway. “Many large customers have been in the process of consolidating suppliers,” suggests Sergio Giacoletto, the man in charge of Oracle in Europe, Middle East and Africa. “So we have been consolidating the industry at the same time as European multinationals have been trying to consolidate their suppliers. That means the expansion of our own offerings is sitting very well with our customers.”

He has a point – up to a point. Certainly the 43,000 Oracle customers who descended on San Francisco this week for the Oracle OpenWorld conference showed no sign of obvious discontent. Rival vendors gleefully predicted following every significant acquisition by Oracle that there would be mass defections by the customers, fearful of falling into Ellison's clutches, but in reality they never came.

Now it might be argued that the enormity of ripping out an enterprise software implementation and starting again was simply too daunting for most customers, but the harsh reality for the rest of the market is that in most cases being under the Oracle umbrella has probably secured the long term existence of their chosen products rather than threatened it. Siebel, PeopleSoft and JD Edwards have all had upgrades and continued support – and a commitment to carry on supporting them forever.

Of course, forever is a long way off – and it's inevitable that as Oracle rolls out a next generation of software the pressure will mount for customers to migrate onwards and upwards – but the truth is Oracle is getting pretty good at managing acquisitions and keeping customers happy.

There was much love and group hugs all round for the latest members of the Oracle family this week, the BEA Systems customers who were the latest major acquisition by Oracle. BEA is a great example of the new world order in the software game. For years the firm was undermined and haunted by takeover rumours and predictions of its imminent demise; now it has clear long term future as a central component of a wider IT architecture.

Indeed, there wasn't a murmur of discontent to be heard from the BEA camp this week as the customers tucked into their conference party beers and danced to Elvis Costello (corporate dollars, anyone?) and UB40 (ditto!).

Later in the week Hewlett Packard CEO Mark Hurd is due to address the OpenWorld conference where he'll be talking about the new HP now that the EDS takeover has been formalised. The previous HP regime managed to be make a complete pig's ear out of the takeover of Compaq.

While Hurd might seem more obviously in control than his predecessor, he could do himself no harm by grabbing a few minutes with Ellison and his sidekicks – the smooth-as-silk Charles Phillips and the inestimable behind-the-scenes operator Safra Catz – and pick their brains on how to complete a successful transition without scaring your customers.

Those of us in the sourcing ‘business’ know that outsourcing is all about companies making decisions about where to source, or procure, services. When we talk about the subject, we tend to think of it in isolation. It’s a business strategy and there are well-established guidelines for deciding when to outsource, when to offshore, when to call in consultants – and when not to. But, in my new book I’ve strayed off the typical path worn down by outsourcing commentators and into a world inhabited by sheepdogs and terriers.

Just take a step back from the typical outsourcing debate for a moment and consider how companies are functioning today. Companies can source services, and even entire departments or functions, from the best of breed operators anywhere in the world. The Internet has created a robust pipeline that allows almost free data and voice transmission without boundaries. Yet, there is an opposite phenomena too – increased migration.

People are increasingly willing and able to travel for work. The EU already allows a free movement of labour, but most developed countries are on the prowl for new talent to plug skills gaps and are using points-based methods of securing that talent, wherever it may come from.

So, people are more capable of moving to the work and work is more capable of moving to the people. It’s a more fluid work of work out there and companies are increasingly structured in a way that reflects this. There is less of an ‘HQ’ culture and more of a loose global collective or federation, all interconnected and moving in the same direction, but not necessarily with all those actors being employees of the same company – or being employed by anyone at all!

Academics have written about this extensively. Business guru Charles Handy predicted all this in the 1980s and sociologist Manuel Castells wrote three volumes on what he called the ‘Network Society’ – so what’s new?

Well, the difference now is the sheer presence of this phenomenon in all our lives. It is now a reality for all of us. None of us in any walk of life can avoid globalisation any longer. The recent troubles in banks all over the world demonstrates how closely linked they have become and how a butterfly flapping its wings in one country can destroy a bank in another.

So how could I write something new on the subject that would add to the debate? Well, I decided that there was plenty of theoretical material already out there. I wanted to write something short, punchy, and different – so it would in fact serve to spark off more debate about how jobs, education, taxes, migration, and outsourcing are all interlinked.

So I came up with ‘Who Moved My Job?’ It was just published this month. The book is about three English sheepdogs: Winston, Charlie, and Blair, who find their idyllic life on Manor farm disrupted by the arrival of lower-cost foreign herding dogs. They embark on an adventure that changes their lives forever. Mozi, Pandit, and Lech (from China, India, and Poland) are trained in local herding methods by the English dogs and soon establish their dominance on the farm – even working longer hours without complaint. The three Border Collies embark on an adventure where they are forced to discover a new career, enduring life in Battersea Dogs Home, living rough in a London cemetery, and the nagging doubt that perhaps they can’t adjust to the fast-moving world outside the jobs they know and love.

The book has been fun to produce, but is clearly an experiment for me because it is so different to most of the books commenting on outsourcing. A new detailed academic study of the issues might get more recognition within ivy-clad university walls, but what is going to stimulate more debate and understanding in the media and with the general public – the people really affected by these changes?

Bring on the dogs!

Mark Kobayashi-Hillary is the author of ‘Who Moved My Job?’ and is Offshoring Director of the National Outsourcing Association.

www.whomovedmyjob.com