Industry news

HP has signed a five-year technology infrastructure agreement with Syngenta, a world-leading agribusiness.

Under the terms of the agreement, HP will use its ‘Adaptive Infrastructure’ as a service solution to transform Syngenta’s current infrastructure-based services into subscription-delivered services.

Martin Walker, global chief information officer, Syngenta, commented, “We chose HP ‘Adaptive Infrastructure’ as a Service so we can achieve faster infrastructure and application modernization with reduced risk and cost.”

Financial details have not yet been released.

The UK’s leading energy solutions provider, IMServ, has won an £11m contract with outsourcing company Logica, for operation of the British Electricity Balancing and Settlement Systems for ELEXON.

As the central IT services provider to Elexon, Logica’s key role is to consolidate the operation and hosting of the Balancing and Settlement Code; making the services more cost effective and efficient to manage.

The five year contract places IMServ as Logica’s key partner in the operation of Central Services for wholesale electricity settlement for England, Scotland and Wales.

Steve Brown, Managing Director at IMServ, commented: “We are delighted to be forming a partnership with Logica once again to perform this crucial role for the electricity industry. Through our expertise in the collection and aggregation of electricity data and our core infrastructure we look forward to working with Logica to provide a high performing service.”

Chancellor of the Exchequer Alisatair Darling used his speech at the Labour Party Conference in Manchester this afternoon to give centre stage to the challenges of globalisation: the risks from high oil prices and the credit crunch on the one hand, and the advantages of increased employment and wealth for the UK on the other.

In a solid speech, he said the secret of navigating the “unprecedented global challenges” of this downturn was “effective regulation”, rather than either "light or heavy-handed regulation", coupled with international cooperation. One government alone cannot deal with the challenges, he said.

The Chancellor – never a darling of the unions – brushed aside criticism that he is pandering to the unions on tighter financial regulations, saying that it is clear to all but the Tories that the City needs more effective control.

This will be addressed in a new banking bill in a fortnight, he said – a bill that will be analysed to see how strict those recommendations actually are.

The Prime Minister himself has contributed to an unfettered banking culture, and the Government is unlikely to over-regulate the shrinking, less competitive banking sector that remains the engine of the service economy.

Despite a few verbless sentences that recall the Blair age, the Chancellor's speech received what can best be described as a polite standing ovation, rather than an ecstatic one: one could imagine the tottering edifice of government balanced on delegates' shoulders.

That said, it's becoming clear that the extraordinary events of the past week – US nationalisations, plus record stockmarket falls and bounces – have given the Brown government an opportunity to throw new light on its earlier, much-criticised decisions, such as the nationalisation of Northern Rock. Put in the context of recent US events, that decision now seems prescient and stabilising, rather than muddled and mishandled as it was seen at the time.

It is also an opportunity to put some clear water between Labour and the Tories: the public would support signs of the Government intervening strongly in the City – something that David Cameron would be reluctant to advocate.

BT has signed a $660 million contract amendment with HP to extend the transformation of its technology.

The contract extends the companies current agreement for the next 7.5 years, whereby HP will continue to provide IT services.

David Butcher, managing director, service introduction, BT Operate, commented, “This contract renewal offers BT competitively priced services across a number of key areas of our IT infrastructure. HP is a key partner for BT and this deal will create the platform for accelerated innovation and delivery of services for our customers.”

Francesco Serafini, senior vice president and managing director, EMEA at HP added, “HP will support the management and transformation of the BT technology environment into an increasingly agile, cost-effective infrastructure designed to deliver what their business requires.”

Singapore Airlines Cargo has chosen Tata Consultancy Services (TCS) to service its cargo revenue accounting back office processes in a five-year multi million dollar contract.

Mr. Girija Pande, regional director for TCS Asia Pacific commented, “Singapore Airlines and TCS have always enjoyed a long lasting relationship which can be termed more as a partnership in progress rather than a customer service provider relationship.”

Trans Adriatic Pipeline AG (TAP) has commissioned T-Systems to develop and operate its entire information and communication technology. The contract will run for three years and will be operated from datacentres in Switzerland.

The IT services market in the United Arab Emirates (UAE) has been growing substantially faster than expected, as demand shifts from infrastructural investment to more strategic projects, according to a recent IDC study.

IT services spending in UAE increased 41 percent year on year in 2007 to nearly US $791 million. In coming years, IDC expects spending to continue to expand rapidly, fueled by a strong economy, a maturing IT market, skilled-labour shortages, increased foreign investment, and the increasing complexity of IT and its impact on operational management across all economic sectors. This is supported by the fact that IT services providers in the region have been investing heavily to expand both their services teams and offerings.

"Organisations in the UAE are facing a myriad of challenges that are heavily impacting their investments in IT services," said Margaret Adam, research manager, IT Services, IDC MEA. "The desire to accelerate revenue growth and rapidly take advantage of the opportunities in the region, as well as compliance and regulatory pressures and a drive for cost effectiveness, all fuel growth in the UAE IT services industry."

While 2006 saw infrastructure-related services, such as hardware and software installation and support, making up the largest portion of the IT services market, the situation changed in 2007 when systems integration services took the lead, constituting 19 percent of the market. It was followed by hardware support and installation (15.7 percent) and software support and installation (12.8 percent). The combined outsourcing category comprised 18.1 percent of the IT services market in UAE last year.

"The more sophisticated service areas such as systems integration, application customisation, and outsourcing were the fastest growing in 2007," said Adam. "Year-on-year growth of around 50 percent in these categories testifies to a maturing IT services market and a shift towards more strategic IT decision making."

The top 3 players in the UAE IT services market in 2006 — MDS, Emirates Computers, and Injazat Data Systems — were also the leaders in 2007. Combined, they accounted for more than a quarter of total revenues.

On the demand side, the combined government sector, with 26.7 percent of total services spending, was the largest customer for IT services, followed by the financial sector with 16.7 percent. The third-largest sector, with an 8.6 percent market share, was the combined agriculture, construction, and mining vertical.

IDC predicts that spending on IT services in UAE will continue to grow by an annual average of 23.9 percent over the next five years to reach $2.3 billion in 2012.

IT end-user spending in India is expected to reach US $110 billion by 2012 representing a CAGR of 14.8 percent from 2007 to 2012, according to Gartner. So far in 2008, IT end user spending is on pace to reach US $64.7 billion, a 17.2 percent increase from 2007.

This prediction, supplemented by a robust gross domestic product (GDP) averaging 8.08 per cent growth from 2007 through 2012, means the Indian market continues to represent a significant growth opportunity for IT vendors.

India is poised for double-digit growth across many vertical markets, with financial services and communications organizations spending the most on IT, closely followed by services, manufacturing and government.

“Indian businesses continue to invest in IT in order to drive operational excellence and innovation,” said Naveen Mishra, senior research analyst at Gartner. “Small and midsize businesses (SMBs) will drive the growth of various IT-related industries, with the critical involvement of value added resellers, distributors and retailers. Additionally, the Indian government's pro-business policies and their own increasing use of IT will continue to build confidence among local companies seeking to invest in and use IT.”

More predictions from the report can be seen here: http://www.gartner.com/it/page.jsp?id=756314

The Western European IT services market will grow 4.8% in the next five years, to reach $249 billion by 2012, according to a recent study published by IDC.

Despite the economic downturn, higher demand for outsourcing combined with the increasing externalization of custom application developments will drive IT services spending upwards by 5% in 2008.

In a statement, the analyst firm commented on the report: “Companies looking for greater predictability of IT costs are driving demand for outsourcing services. Today, as in the early '90s, to get IT off the balance sheet and as an operating cost is a major driver for outsourcing. In addition, increasing access to cheap resources and customers' need to modernize applications has revitalized the custom application development market, leading customers to increasingly externalize the whole project instead of hiring contractors to work on internal projects. Indian pure-play service providers are winning most of this growth, and even though they still account for a small proportion of the market, their aggressive growth is pushing the custom application development market up.”

The firm was also bullish in its assessment of IT services’ performance thus far in 2008 but issued a warning in the run up to Christmas: “During the first half of 2008, we hardly noticed the effects of the downturn on the IT services market. IDC believes the impact on IT services will be more visible from early 4Q08 and for the following 18 to 24 months, until the market rebounds again around the second half of 2010. Countries such as the U.K., Ireland, and Spain are the most likely to feel the impact of the downturn, due to the deterioration of the housing market and GDP growth in those economies that created a more gloomy business sentiment across all industries, including IT.

“From a market segment perspective, we expect consulting and project engagements to be the most affected by the crisis, whereas we anticipate higher growth in outsourcing as enterprises try to reduce costs. The project-oriented segment represents around 38% of the services market, so the final impact on the overall IT services market will remain rather limited.

“IDC is taking a more conservative view of the IT services market's growth, which was lowered to 4.5% for 2009. We anticipate that many businesses will see fewer new IT initiatives started in 2009, as clients refrain from starting new projects, and large projects already launched are split into smaller parts, with go-ahead needed for each new phase. Also, small and midsize businesses across Europe will be less keen to invest in IT in the coming years, bringing bad news for IT vendors looking to unlock the SMB space.

“Even though we expect the downturn to continue until the first half of 2010, we believe the effects in the IT services market will remain relatively limited, as the market is already business-case driven and not led by over investment like in the dot-com crisis.”

This week Damien Hirst made enough money from flogging a dead shark to buy a merchant bank, while stockbrokers probably harboured thoughts of pickling their chief executives in similar style.

And even as the stockmarkets tumbled – and America contemplated nationalising AIG, then insured the economy by bailing it out – HP announced plans to shed 24,600 jobs worldwide. Yes folks, welcome to the new world of down-scything.

But wait. Unlike the jobs culled from, say, Lehman Brothers, these sweeping cuts were designed to give Wall Street a spring in its step rather than push it from the window ledge (onto the horns of the famous bull donated by Merrill Lynch, perhaps).

The cuts will streamline the newly merged HP and EDS and focus it long term on the enterprise, said a decidedly non-pickled Mark Hurd. "The enterprise is big," he said to financial analysts. "It's attractive for us, and it's heading our way."

The only thing that's been heading towards big business this week has been the Grim Reaper, so any more deliberate scything of the chaff has to be a good thing. The aim, said HP, is to have twice as many sales staff as propellerheads, while increasing the number-crunching power of the business.

HP has digested thirty companies in four years, continued Hurd – sounding more and more like IBM did at the turn of the century: big and blue and on the prowl for more.

Indeed: it's strange how the passing of just a few weeks has made this merger seem like the last hurrah of a bygone age.

At present, though, tech stocks are one of the things propping up the US economy, so let's hope Hurd grabbed people's attention as he set out to do.

Dell stocks were on the slide this evening, though, on rumours of a fall-off in PC demand. Services are where it's at, it seems.

Meanwhile, global speculator George Soros said he believed the world economy is still heading into the storm, not out of it.

What's certain is that the economy is being torn asunder by a mix of short-termism (fears this week over falling oil prices, while a fortnight ago were fretting about their rise) and the need to establish a more stable long-term version of the 'free market'.

The one thing needed at such times is strong leadership, unity, and a story people can believe in, so it beggars belief that the British Government has chosen this week to stab itself in the back. Maybe it thought no-one was looking.

But perhaps it is taking a leaf from Hurd's book and planning to be a leaner, meaner machine next year – under similarly strong leadership.