THE HOME OF THE GLOBAL SOURCING STANDARD
If nothing else, the timing of the two announcements has been badly handled, and undermines both the purpose and impact of the strategic move to the wider market.
Under McKenna's leadership, the company says that the new division will take end-to-end responsibility for outsourcing services, providing outsourcing sales and design specialists to all Logica’s customers via local organisations, incorporating the 9,000 or so Logica employees currently working in the company's onshore centres, nearshore locations such as the Czech Republic, and offshore centres such as India, Morocco and the Philippines.
CEO Andy Green said: “Our customers are clear. They want Logica to relate to them locally, while also delivering the best competencies from around the world in the most cost effective and efficient way. Our new Outsourcing Services division will have the scale, tools and methods to offer sales and delivery support to our local organisations so that they can help our customers to succeed.”
But what of the departing McKenna, who is managing the new entity for barely a few months? A Logica stalwart and COO since 2005 – in most companies a role synonymous with the efficiency of a company's day-to-day business, and often its rationalisation – he was also interim CEO before Andy Green clinched the role on January 1st this year.
David Tyler, Chairman, said: “Jim has been at the heart of building Logica over the last 14 years and has had an excellent track record at the company. On behalf of the Board, I would like to thank him for his outstanding contribution, particularly in the last few months as interim CEO when he showed great commitment and leadership. Jim will leave with our very best wishes for his future.”
New CEO Andy Green seemed rather more single-minded: “I am delighted that Jim has agreed to stay on for an interim period to help me lay the foundations for the next stage of the group’s development. Jim has been instrumental in building the global delivery capability and his experience will be invaluable to me and the rest of the team as we establish the new Outsourcing Services division, which will focus on meeting the growing demand from our customers for globally competitive outsourcing services.”
One lesson for the outsourcing industry as a whole, particularly in uncertain economic times, is that the PR implications of allowing forward-looking strategic announcements to become mixed up with boardroom news is that both need careful handling, and ideally, separation in the public mind.
Infosys Technologies Limited, a world leader in consulting and information technology services, and Provenir, a leading provider of enterprise customer lifecycle management software to the financial services industry, today announced they have entered into a global relationship in which Infosys will deliver professional services to Provenir. In a separate agreement the companies have agreed to jointly offer information technology services and solutions.
"We are delighted to have Provenir as both a client and a teaming partner," said Ashok Vemuri, senior vice president and head of Infosys' Banking and Capital Markets. "This relationship is an important part of our strategy which will enrich our offerings and deliver clear competitive advantage to our clients."
This relationship between Provenir and Infosys will enable clients to take advantage of Infosys' best practices, consulting capabilities and technology expertise to quickly implement solutions that enable clients to fully leverage the broad capabilities of the Provenir Platform.
As a teaming partner, Provenir will have access to product expertise and strong application development and integration capabilities to help validate its product offerings. The partnership with Provenir will further enhance Infosys' superior industry expertise while working with one of the leading solution providers in the financial services industry.
"As our business continues to grow, particularly outside of North America, it is important for Provenir to be able to find ways to help our customers maximize the value and competitive advantage they can get from the Provenir Platform," said Jeffrey Oulton, chief operating officer, Provenir. "Our partnership with Infosys demonstrates our commitment to this objective. We look forward to leveraging Infosys' understanding of the financial services industry, deep client relationships, and global resources to deliver even greater value to our clients."
HCL Technologies (HCL), the global IT and engineering services provider, today announced that it has been selected as the provider of a mobile and remote working solution to Wiltshire Police. Valued at £2 million, the partnership will last for five and a half years, including an initial six month implementation period.
Policing in the UK faces huge challenges, as it tries to balance ever expanding demand with a period of tightening financial constraints. Liberating officers from their desks is a key strand in Wiltshire Police’s plans and HCL’s mobile and remote working solution is seen as central to this. It’s about enabling officers to do their work better and smarter, by cutting down unproductive time and giving them the information they need to combat crime and provide assistance to the public.
The first of HCL’s engagements with the UK public sector, this partnership is a milestone in HCL’s growing presence in the UK market. Rajeev Sawhney, President Europe, HCL Technologies, commented on the partnership, “This is a significant award for HCL and one that we are particularly proud of. It demonstrates our commitment to local markets and the UK public sector.”
Matt Bennion-Pedley, Wiltshire Police’s Director of Finance, said: “It was HCL’s business focus and collaborative approach that gave them the edge. We were looking for an innovative approach but also one that has to deliver results quickly, be easily scalable and adapt to continual changes in policing legislation and practice. It is still early days in the solution’s development but we believe we have found a real winner. This augurs well not just for us but also for UK policing in general.”
The solution will involve the creation of a Service Oriented Architecture (SOA) that is costeffective both to maintain and develop, and can be easily replicated in other Forces or associated agencies. The solution is network and device independent and hence is not limited by the operational policing solutions within any Force.
Luxoft, one of Russia’s leading providers of IT outsourcing services, has been named in one the most comprehensive and respected rankings of the EMEA region’s fastest-growing technology companies. Luxoft is the highest placed Russian software company in the Deloitte’s ‘EMEA Technology Fast 500’ list.
With 474 percent growth over the last five years, Luxoft is one of the top Russian companies in the top 500. The ranking is compiled by Deloitte, who has surveyed thousands of companies across 25 countries. This is the seventh annual survey that Deloitte has carried out. The average five-year revenue growth for all companies in the 2007 survey was 1,443 percent – the highest in the history of the rankings – demonstrating the fierce competition faced by companies trying to claim a place in the rankings.
Luxoft’s recognition comes in the wake of being named the sole recipient of the 2007 Frost & Sullivan Global Outsourcing Growth, Excellence & Customer Value Leadership Award and the world’s number one IT outsourcing product engineering vendor in the annual Black Book of Outsourcing as well as in the top three for emerging European vendors of the Global Services 100. Luxoft has also been awarded the National Outsourcing Association’s “Financial Outsourcing Project of the Year” and earned the “Best Employer of Russia” award from the Russian Chamber of Commerce and Industry.
Dmitry Loschinin, CEO of Luxoft, said, “’Technology Fast 500’ has long been considered a key indicator of trends and major developments in the IT industry. The rating includes fast-growing companies that are customer focused as well as quality and process oriented. The fact that Russian companies, including Luxoft, have fared so well is an indicator that the Russian IT industry has reached maturity and taken its place in the world’s economy.”
The take-up of ID cards in the UK has suffered a fresh blow with the news that both Accenture and BAE systems have decided to pull out of the procurement process.
ID cards in the UK have suffered a fresh blow with the news that both Accenture and BAE systems have decided to pull out of the procurement process.
Accenture, one of the government's central IT suppliers, told the FT it was pulling out for a mixture of "political and commercial reasons".
Yesterday it emerged from leaked documents that British citizens are unlikely to be issued with ID cards until 2012, falling behind the original planned date of 2010.
However, the Home Office claims six companies are still keen on bidding for the contracts, with the final list of suppliers being released in the Spring.
The leaked documents also revealed that teenagers will be targeted by the Home Office to take up the cards early. In order to open a bank account or purchase products like alcohol or cigarettes, teenagers will have to have the ID card.
Nevertheless, there is hope of riding out the downturn for some companies that play in the outsourcing market.
Although still relatively few companies have reported Q4 or Q1 earnings, many are due, and technology stocks are doing well enough overall to offer some comfort to investors. That said, at the higher end of the more consumer-oriented technology market, companies like Apple have reported strong quarters while predicting trouble ahead for their luxury buys. Healthcare, a key market for outsourcing providers, is expected to be the only other sector to experience double-digit year-on-year growth.
Gains at services and outsourcing mainstay IBM and chip giant Intel are a major impetus behind the technology sector overall, and AMD stocks were buoyed by the reported prospect of acquisition by IBM. However, there was bad news from Motorola, which announced a first quarter operating loss.
David Henshall, CFO of Citrix, had some more good news for the technology market: "We have closed out 2007 with a great fourth quarter completing another record year for Citrix demonstrating a strong demand and momentum throughout the business and continued execution against our strategy," he said. In total, we reported quarterly revenue of $400 million up 24% over Q4 ’06 and a total of $1.4 billion for the full year."
Analysts at Gartner and IDC released preliminary Q4 results that suggest Hewlett Packard led the worldwide PC market in 2007, with an 18.2% share, four points above Dell, which is good news for the overall health of this major services player. Indeed, it was not just the PC business that did well: HP showed an overall growth of 14% with net revenue of $104.3 billion in fiscal 2007. In 2008, it expects revenue to be approximately $111.5 billion.
Many of the major outsourcing and services giants are due to report in the next few days.
To add to the positive news, Wipro has reported positive demand across all segments of its business, including the addition of 25 US clients, and has other large deals in the pipeline. The chilly US economic climate, especially in the disastrously performing finance sector, has not significantly impacted on its business to date, and a majority of clients are expected to maintain their IT budgets at or slightly above 2007 levels, says the company.
Chairman Premji has outlined key strategic priorities for the company that emphasise account penetration; non-linear growth; large deals; talent access and employee-mix; game-changing partnerships with major players,such as Cisco, Microsoft, SAP and EMC; consulting expertise; investment in high-growth regions; and further acquisitions to bridge gaps in its service portfolio.
Wipro recently announced a strategic alliance with Cisco to jointly deliver network-based IT solution, and this anticipates cumulative revenue of $1 billion over three years.
Wipro confirmed last week that it is not in takeover discussions with Capgemini.
In the last US Presidential Election, the issue of outsourcing – most specifically offshoring – became a major voter concern, with working class voters being inherently suspicious of US jobs going overseas, and rich areas such as the West Coast watching the high-tech brain drain towards offshore locations such as India. With neither the recent strategic tax cuts nor this week's dramatic intervention of the Federal Reserve on interest rates stabilising the economy, it's a safe bet the issue of job security will focus voters' minds.
To date the issue has not arisen in the primaries, with subjects such as the war in Iraq clearly taking precedence. Nevertheless, the economy is in decline, perhaps already bottoming out into recession, and attention is focusing on matters closer to home, according to US analyst firm Brown-Wilson Group. "Until this week, offshore outsourcing hasn't been the emotional vote-motivator like it was in 2004,” said Doug Brown, managing partner of Brown-Wilson Group and co-author of The Black Book of Outsourcing. "Outsourcing is a reality for US companies to reach their business and financial goals and critical in today's fiscal climate. It's been four years since the heavy negative rhetoric of the presidential election used outsourcing and offshoring interchangeably, and made 'outsourcing' a dirty word.”
In a report,Outsourcing and the 2008 Presidential Primary Vote, the group notes: “Foreign outsourcing – or offshoring – remains the 2008 target of choice for protectionists.Critics claim offshoring is sending jobs to foreigners at the expense of American workers. The fact that the rest of the world also outsources their services to the US – i.e. 'insourcing' – is a consequence of the global economy too often overlooked by critics. For instance, American companies sell three times more IT services to the rest of the world – more than $10 billion worth – than they buy. If politicians declare war on outsourcing, US producers and workers will suffer the most.”
The return of offshoring to the political agenda will have differing levels of impact on the various candidates. A survey of over 5,000 registered voters in all fifty states from January 2-14 indicates that Mitt Romney and John McCain are the top Republican supporters of offshore outsourcing by record. McCain noted: “Every time US went protectionist, we paid a heavy price”, while Romney agreed: “It’s tempting to want to protect our markets and stay closed, but at some point it all comes crashing down and you’re hopelessly left behind”.
Among Democrats Clinton, Barack Obama and John Edwards, only Edwards and Obama have made strong public statements, or have voting records that indicate cautious opposition to offshore outsourcing. Edwards has stated that outsourcing is "an economic reality" and "America must act to ensure that it stays strong and adapts... to ensure that the American people are better prepared to meet the challenges of the new world”, while Obama admitted: "We know that we can't put the forces of globalisation back in the bottle. We cannot bring back every job that's been lost."
On the other hand, there is growing suspicion in some quarters of the electorate about Clinton's financial and diplomatic relationships with offshore outsourcers. This concern is most tangible in states that have seen high unemployment and foreclosures. Crucially, a number of these are also states with Super Tuesday primaries. In June, the Obama campaign released a memo accusing Clinton of pandering to the Indian-American community and noting the “tens of thousands” Clinton has received from companies that outsource jobs to India. For her part, Clinton has said: "There is no way to legislate against reality. Outsourcing will continue ... We are not against all outsourcing; we are not in favour of putting up fences."
Of the 3,000 Democrats polled, more than half (55 percent) of voters see offshore outsourcing as unpatriotic, a significant decrease from October 2004 when 93.9 percent of voting Democrats felt offshoring was anti-American. In the Super Tuesday states, 84 percent of Democrats believe offshore outsourcing is unpatriotic. Less than 7.9 percent of Republicans viewed offshoring as unpatriotic in 2004 and 6.5 percent in 2008.
It's difficult to know what Clinton or any other candidate can hope to achieve by engaging with the outsourcing issue as there is widespread ignorance among the electorate about (a) what it actually means and (b) what any President could or could not do about it. This ignorance is strongest among voters in Alabama, Michigan, Georgia, Tennessee, Missouri, Ohio, Texas, North Carolina, Wisconsin, Kentucky and Nevada.
Beyond that, America has been the engine of the world economy for the past couple of decades, and there is little that increased isolationism and protectionism will do to help it combat those giant economies in waiting, China and India, both major offshoring locations of choice. So far, the further east you travel, the less likely you are to catch the economic cold that is beginning to take hold in Europe.
In 47 out of 50 states, more than half of all registered voters in each state incorrectly assumed that the US President could unilaterally ban offshore outsourcing. Among Democrat voters in Super Tuesday states, the percentage dramatically increases to over 85 percent, who also said that this misconception would guide their candidate selection.
Brown-Wilson Group argues: “The argument is often made that it doesn’t matter if we vote for a president who is for or against anything issue-wise, because Congress ultimately represents the people and balances out the President's opinion or powers regarding imposing or approving anything. It does matter what the future President thinks or does in regards to economic issues like outsourcing. The President directs the foreign policy of this country and indeed both appoints individuals and works with individuals who make decisions regarding this and related federal issues.
“One of the President's responsibilities is Foreign Policy. However, it is a mistake to think that outsourcing is a federal issue. The US Constitution does not mention outsourcing at all. Other than Congress enacting legislation that indirectly affects outsourcing (via tariffs or some other means), there isn't anything that they can do that is permitted by the US Constitution, least of all the President.
"Though many of the candidates claim to be in favour of free trade, their rhetoric and voting records vary. Issues of fair trade, enforcement of labour standards, and trade policy towards African and Latin American economies will likely remain in the forefront of legislative debate as the presidential campaigns pick up steam.”
Anti-outsourcing sentiments are really expressions of fear about the lack of job security. When any economy slows down, trust becomes central to all working people's lives – witness recent protests in the capital by the British police, which at least made good the government's promise to put more constables on the street – 22,000 of them – but perhaps not in the way Whitehall intended. That protest was not about money, but about the claimed breach of trust over a mediated wage settlement. The disastrous PR implications for the government are being keenly felt, and the issue is unlikely to go away.
This is a good time to remember that such issues are as much a problem for our industry as for any other, even as we become a critical focal point for national and international debate about job security at home. Outsourcing creates local jobs, while offshoring shifts jobs overseas; but it is the latter that grabs the headlines. As the sub-prime economic cold spreads, virus-like, in both the news and the stock markets, then both outsourcing deals and outsourcing providers are being watched more closely than ever before.
First, take Capita, famously the scapegoat for all the outsourcing world's ills in the eyes of Private Eye. On Monday this week, the union Unite (formerly Amicus) accused the company of breaking promises to staff on the Capita site in Belfast. Capita’s announcement of a further 41 job cuts was criticised by Unite as a further sign that promises to secure more contracts and maintain the Belfast site as a centre of excellence are not being kept.
In a union statement, Graham Goddard, Unite deputy general secretary, said: "Unite members are concerned that Capita have failed in their promise to secure the long-term future of their life and pensions operation. The announcement of 41 job losses today represents another blow for Capita staff in Belfast, who face growing uncertainty as the company have failed to deliver on Chief Executive Paul Pindar's original commitment to the workforce of ‘opportunity and business expansion’. It would appear that Belfast was simply a stepping stone into a new market for Capita.”
The statement continued: "Unite will strongly oppose any compulsory redundancies and urge Capita to come back to the negotiating table. We are calling on Capita to honour their assurances to their workforce."
The 116 staff in the life and pensions department in Belfast must now reapply for the remaining 75 roles.
Things are equally uncomfortable on the other side of the fence, as Shell has recently discovered. The announcement that it was outsourcing more than 3,000 IT jobs was firmly rebuffed, again by Unite, but also – rather unexpectedly, perhaps – by NOA chairman Martyn Hart, who lambasted the oil giant for devaluing IT workers within the company by offering redundancy packages that were a distant poor relation of those offered to oil workers.
Hart said of the announcement (as we previously reported) : “What is of interest here is how Shell seems to treat its IT workers, in comparison to their oil rig workers. Shaving 75 per cent off their redundancy package looks like a fiscal kick in the teeth. And it’s not just a monetary issue. This action could undermine the importance of IT’s role within the company. IT is fundamental to the functioning of all organisations and Shell – and other companies – would do well to remember that,” he said.
Shell is one of several companies that has attracted its own coterie of bloggers and industry watchers, not all of whom have the company's best interests at heart, as readers of website http://royaldutchshellplc.com know only too well. This site is not connected to Shell, but reports on its every move, and takes feeds from hundreds of news sources concerning big oil's political, environmental, and economic manoeuvres in every part of the world.
As an industry we must learn one lesson well, and learn it fast. If recession strikes, this will be the first economic downturn to be reported at Internet speed. Every time a UK, US, or European job heads east, it will be commented on worldwide in a matter of seconds. We must understand that we no longer exist solely in the world of business, but also in the Blogsphere. Not only will people be watching the outsourcing world for symptoms of the wider economic health of the country, but they will be talking about us, and it will be the negative stories that stick; not the mega-deals and the contract wins.
This is the first opportunity for professionals in the outsourcing industry to discuss the issues that are truly pertinent to them on a day-to-day basis. sourcingfocus aims to be the first resource that all outsourcing professionals turn to when considering their outsourcing arrangements. The dialogue that this site will create between end users and suppliers will make an invaluable contribution to the outsourcing industry.
The site highlights the very best of the outsourcing industry. sourcingfocus includes: all of the breaking industry news; industry insight in the form of an editor’s blog, industry research, regular features from leading industry commentators, weekly outsourcing round-ups and one-off features from both suppliers and end users; new technologies such as podcasts and videos to deliver the message to a new generation of outsourcing practitioners; an outsourcing forum for professionals to discuss industry issues share best practice solutions and profile building opportunities for vendors.