Industry news

CAT Group, the worldwide provider of transport and logistics services, has awarded EDS a seven-year ITO contract to develop, integrate, deploy and support all of the company’s software applications.

This contract builds upon an existing IT infrastructure agreement CAT Group awarded to EDS in 2005. Under that agreement, which includes network management and governance and continues through 2015, EDS continues to manage CAT Group’s entire IT infrastructure, which includes 2,000 work stations at 131 sites in 19 countries.

Alejandro Forbes, CEO of the CAT Group, said: “With this new agreement, we are expecting a high level of IT cost optimization, valued at about $44 million over the next five years”.

Sparkassen Informatik’s subsidiary IZB and FinanzIT, both IT service providers for the German group of savings banks, have expanded their contract with T-Systems for telecommunications IT services until 2013. The deal is reported to be worth around three million euros.

As part of the agreement, Sparkassen Informatik and FinanzIT are entering into a technology partnership with T-Systems, the aim of which is to develop a new IP network for voice and data. It is designed to replace the previous data network provided by T-Systems.

The network will link together Sparkassen Informatik, FinanzIT and approximately 480 institutes of the Sparkassen organization in Germany. A total of 16,000 branches will access all the data and applications made available by the two IT service providers via the network for the Sparkassen organization.

The National Centre for Antarctic & Ocean Research (NCAOR), a research body dedicated to the survey and exploration of the seas, has enlisted TCS to undertake a comprehensive marine geophysical data acquisition program for the Antarctic region. The deal forms part of a national project to help understand the marine ecosystem and provide data to scientific communities to help them better understand global changes in weather and the environment.

The contract, awarded on the behalf of the Ministry of Earth Sciences, will see TCS work to make the outputs of scientific models available through web interfaces. These interfaces will then be used by scientific organisations who can retrieve data for interpretation and develop appropriate modules for their own their fields of expertise.

Rasik Ravindra, Director of NCAOR, commented: “This data is acquired through strenuous efforts by various scientific communities all over India. It is crucial to treasure this and to create an interface for researchers. I am sure TCS with its huge expertise and specially coming back from an experience of Tsunami Early Warning System for Ministry of Earth Sciences is the right partner for doing this work”.

New York City's Human Resources Administration (HRA), the US body charged with encouraging the social welfare of New Yorkers, has renewed a three-year document management contract with Affiliated Computer Services, the largest provider of BPO services in the US government sector.

Under the agreement, valued at USD $17 million, ACS will collect HRA case documents from multiple points in New York City that are taken to a central location to be inventoried, scanned and indexed. After a rigorous quality control process, the documents are added to HRA's internal imaging system for use by its staff.

"Since 2003, ACS has provided the HRA with outstanding service," said Michael Lavin, HRA's director of imaging systems and support services. "We value the commitment to quality that ACS has brought to the partnership in providing accurate and timely imaging work."

As I mentioned in a recent blog, Africa has been taking a number of small steps (if not yet giant leaps) towards being a centre for offshore BPO services. Ghana, Morocco, Egypt and Senegal are all on analysts' 'ones to watch tables', to which we can add Nigeria, Kenya and South Africa. European language skills and near-European timezones are much in the continent's favour.

South Africa has been particularly vocal about its strategy: in recent years the country has stated its intention to create 100,000 BPO seats by 2009.

However, analysts at Frost & Sullivan anticipate that the total number of outsourced seats will reach just 60,000 over the next five to seven years: a long way short of the government's target, and over an extended timescale. It's estimated there are 25,000 BPO seats today, at most.

"The planned growth in the industry is unlikely to be realised under current circumstances," says Frost & Sullivan research analyst Spiwe Chireka.

"This is due to a number of factors, particularly that South Africa's value propositions are not all relevant. The country is relying increasingly on factors such as good language capabilities, favourable timezones, its advanced financial services sector and strong government support which investors are not necessarily looking for anymore." Foreign investment, of course, is crucial to the success of the programme.

Frost & Sullivan says that the number of South African call centres has risen from 450-odd in 2004 to over 1,300 in 2007. That said, the maths are simple: with a maximum of 25,000 BPO seats in total, that's a lot of small operations.

So what are investors looking for? Essentially, IT and contact centre skills, which are thinner on the ground in South Africa, and throughout much of the continent, than they should be.

"Language and timezones have become irrelevant as most offshore destinations are operating 24 hour centres and have large English speaking populations," says Frost & Sullivan's Chireka.

"Also, the largest outsourced services in the US and UK, which are South Africa's target markets, are information technology and contact centres. However, South Africa's IT and contact centre skills are limited, which is a major hindrance to its success as an alternative destination."

Into the mix we should also throw the perceived political instability of small parts of the huge African continent – particularly relevant to a US market whose grasp of overseas affairs is limited in scope and parochial in impact – and the patchy, and therefore expensive, telecoms infrastructure.

That said, India notoriously had one of the worst telecoms networks in the world until very recently, but that has been no brake on its ambitions.

Energias de Portugal (EDP), a leading gas and electricity utility in Spain and Portugal, has selected Oracle to assess and update its ageing SAP infrastructure.

The move comes in light of recent energy deregulation in the Iberian peninsula and in anticipation of the creation of the Internal Electricity Market in Europe. The ongoing process of integrating Spanish and Portuguese electricity markets has required EDP to make its existing SAP-based customer information system (CIS) more efficient in order to enhance relationships with its business customers.

Swiss bank Zuger Kantonalbank has announced that it has extended its existing ITO contract with CSC. The new seven-year contract, valued at $33 million, marks the renewal of a previous eight-year contract signed in 2002.

Under the agreement, CSC will continue to provide SAP-based applications services, including development, maintenance and support. Specifically, CSC will continue its 24x7 operation and management of Zuger’s SAP banking platform and add new functionality that enhances system efficiency and increases ease of use.

“With CSC’s support, we can continue to lower operating costs while increasing customer service,” said Beat Mathys, a Zuger Kantonalbank senior management executive. “This will enable us to further increase efficiency and improve our cost-income-ratio in the highly competitive retail banking market.”

BT has signed a contract with FIAT Group Automobiles Germany AG to provide their new German headquarters in Frankfurt with state-of-the-art telecommunications and networking technology.

The fitting out of FIAT’s new flagship HQ on Frankfurt’s Hanauer Landstrasse, the so-called “Auto Mile”, will involve equipping the new building with comprehensive, highly advanced telecommunication infrastructure.

Under the terms of the agreement BT will install and operate an advanced Local Area Network (LAN) and wireless network access (WiFi) throughout the whole building. The project also includes the connection of the location to the MPLS Wide Area Network (WAN) that BT already operates for FIAT Group Automobiles Germany AG, the Internet access including firewall, and a high-speed link to the BT data center in Frankfurt. The mobile workers of FIAT Group Automobiles Germany AG will also be equipped with BT MobileXpress so that they can easily and securely connect to the corporate network even while they are away from the office.

Luxoft, a global provider of high-end IT outsourcing, has acquired ITC Networks (ITCN), a leading Romanian software outsourcing provider specializing in the telecommunications industry.

The deal, announced today, will create a combined entity of more then 3000 employees worldwide and an annual revenue of over £75 million.

Luxoft hopes the move will increase the company's global footprint and delivery capability within the European Union while helping to strengthen Luxoft's expertise in the telecom industry.

"This acquisition is another step in Luxoft's growth and strengthening of the company's global presence," said Dmitry Loschinin, President and CEO, Luxoft. "The tremendous telecoms aptitude of the combined team, prominent European Union location and shared commitment to engineering excellence will serve Luxoft, its clients and ITC Networks' clients well for years to come."

Through the deal Luxoft will inherit ITCN existing client portfolio such as Nortel Networks, Avaya and Trapeze Networks.

The acquisition follows a recent announcement by Luxoft that it is also developing a delivery capability in Vietnam.

The fiscal value of the deal has not been disclosed.

To an interesting lunch meeting about sustainability with business intelligence and predictive analytics company SAS. The subject was whether many companies' environmental agendas are just the proverbial 'greenwash', or driven by a genuine commitment.

I've heard the word 'greenwash' several times this week – notably last night in the polemical, Dan Brown-esque TV thriller Burn Up. On that occasion it was uttered by implausible oil man Rupert Penry Jones – shortly before (quite literally) leaping into bed with the green movement in a bid to save the world via transatlantic coitus. But I digress.

The point still stands, however (no pun intended): to what extent is the green agenda driven by shareholders and the bottom line (being seen to be green is good for business) or by a genuine will to be less profligate with carbon? We may be made of the stuff, but many believe it will unmake us before you can say “corporate social responsibility”. (SAS is a private company, so its own bottom line is hard to fathom.)

This was the moral dilemma embodied on TV by Mr Penry Jones, who in such dramas is rarely troubled by clothes, rather like the Emperor of lore.

For SAS, the Emperor's new clothes are real enough: it seems genuine about its internal quest to be green, even going so far as to work with Reading University to design a water turbine to power the company's offices near the Thames.

(This is a great idea – the Thames being a vein of motive power running through one of the world's great cities – but, alas, planning permission apparently stands in the way.)

Richard Kellett, SAS head of solutions and technology marketing talked at length and with passion about the company's environmental credentials.

These seem deeply embedded within the company, despite CEO Dr. Jim Goodnight's tendency to take private jets (SAS owns several) to and from conferences, while his staff travel on commercial airliners. Perhaps Goodnight is living the Bond fantasy suggested by his name, and does not go gently into green issues.

In some ways, SAS' passionate and committed Kellett embodies the dilemma of many large companies dipping a toe into the waters of sustainability: his is a marketing role, as many green spokespeople's are within the IT industry, and this makes some wonder whether sustainability should be part of a sales pitch.

On the other hand, it inevitably is, and with many CIOs and board-level executives looking to third-party IT providers for guidance, it's the marketing strategists who carry thought leadership messages far and wide.

Over a lunch so extensive as to be barely sustainable, Kellett said he believed that people have been taking what he called an “outside view” of sustainability for too long – a view borne of pressure groups and campaigners – and that the real answer was an “inside out” approach to stand any chance of achieving change.

Personally, I doubt whether we would have been having the conversation without several decades' worth of environmental activism, but he is right that it is now up to companies to put it on the board's agenda as soon as possible.

This is particularly true in a week that has seen the Government's own green credentials turn a distinct shade of Brown as it seeks to water down EU directives concerning sustainable energy and the national grid.

But the elephant in the room of sustainability is an Indian one, with China not far behind it. In the West we can hardly tell Asia not to become the economic hotspot of the 21st century, but the environmental impact can at least be planned for.

As I mentioned in my blog last week, 300 million rural Chinese will shift to urban environments over the next decade or two, partly to satisfy the burgeoning economy's need for IT and business skills, plus outsourcing expertise.

Perhaps it may indeed fall on large corporations to push the sustainability message and the green agenda, as it is clear governments cannot be trusted to do it themselves.

With the IT industry producing some two percent of all global carbon emissions – a figure Kellett suggested will soon double – it is certainly true that the IT industry is best placed to clear up its own mess.