Industry news

Capgemini UK plc has won a five-year contract to provide IT services to C.Hoare & Co, the UK’s leading independent bank. The contact, starting in June 2008, will see Capgemini provide 24/7 datacentre services from a UK delivery centre.

The bank says that its contract with Capgemini will improve the cost-effectiveness of its IT support, provide access to the expertise of a global leader in technology and outsourcing and enable valuable space occupied by computer facilities at its Fleet Street headquarters to be made available for other business activities.

Alexander Hoare, chief rxecutive of C.Hoare & Co, said: "Our strength as a bank lies in our provision of first-class personal service to our clients backed by high levels of efficiency and excellent data, and we are confident that working with Capgemini will maintain and enhance the IT service which provides vital underpinning for our work."

• See News Analysis for more on Capgemini, including its latest results, announced this week.

Thomson Reuters has signed off on a contract that will see BT manage its wide area network (WAN) infrastucture for the next eight years.

BT will work to transform Thomson’s existing technology into a high-speed, IP based global infrastructure that will encompass 323 locations across 100 countries including six applications hosting data centres.

The new contract follows a 10-year deal BT signed in 2005 to transform and manage Thomson Reuters global financial services information network.

Peter Moss, MD of content, technology and operations, Thomson Reuters, said: “Thomson Reuters is absolutely committed to gathering and providing high quality information to meet the needs of our demanding markets. To do this effectively we needed to support our people with a world class, efficient and well managed internal network. Having worked with BT for a number of years now we are confident they can execute against our requirements wherever in the world they may be.”

CODA Group, the finance systems specialist, and software as a service (SaaS) tyro, salesforce.com today announced the availability of CODA 2go, the first on-demand financial system built entirely on salesforce.com’s Force.com 'platform-as a service'.

The first release delivers Opportunity to Cash functionality, enabling users to go from the 'opportunities' in Salesforce to create an invoice at the click of a button and post the transaction to their sales ledger. It is fully integrated with salesforce.com’s CRM application and aims to help companies manage business processes. The system was launched today at Dreamforce Europe, salesforce.com’s European User and Developer Conference at the Barbican Centre in London.

• Salesforce.com passed 7,000 customers and nearly 140,000 subscribers in EMEA in the first quarter of the current financial year.

Finjan Inc has announced its discovery of a server controlled by hackers (Crimeserver) containing more than 1.4 Gigabyte of business and personal data stolen from infected PCs. The data consisted of 5,388 unique log files. Both email communications and web-related data were among them.

The compromised data came from all around the world and contained information from individuals, businesses, as well as renowned organizations, including healthcare providers, said the company.

The rise of India and Asia is underlined this week by the publication of the 2008 Global Outsourcing 100 rankings, by the International Association of Outsourcing Professionals (IAOP).

The chart features 20 Indian firms, five of them being in the top ten: Infosys (ranked 3), TCS (6), Wipro (7), Genpact (9) and Tech Mahindra (10). Accenture is on the top slot and IBM comes in second.

Other Indian companies placed in the 2008 list are HCL Technology (11) Mastek (16), WNS Global Services (19), Hexaware (22), ExlService (26), 24/7 Customer (28), Cambridge (36), ITC Infotech (40), KPIT Cummins (42), Patni (46), Zensar (53), MindTree (54), Mphasis (56), Aditya Birla Minacs (62), FirstSource Solutions (73) and VCustomer (84). Good management figures strongly in Indian companies' selections.

In last year's list, there were five Indian firms in the top 10: Wipro, Infosys, Genpact, Tech Mahindra and Cambridge.

China's hiSoft Technology International broke into the top 20 this year (at 20), after steadily climbing the rankings in previous years.

The full chart rundown is as follows, complete with the reason for each selection and ranking: 1/ Accenture Customer testimonials 2/ IBM Size and growth 3/ Infosys Technologies Executive leadership 4/ Sodexo Global presence 5/ Capgemini Achievement recognition 6/ Tata Consultancy Services Employee management 7/ Wipro Technologies Employee management 8/ Hewlett-Packard Outsourcing experience 9/ Genpact Executive leadership 10/ Tech Mahindra Outsourcing experience 11/ HCL Technologies Outsourcing experience 12/ EDS Outsourcing experience 13/ ACS Balanced performance 14/ CGI Group Customer testimonials 15/ HOV Services Outsourcing experience 16/ Mastek Customer testimonials 17/ SPi Customer testimonials 18/ Colliers International Global presence 19/ WNS Global Services Achievement recognition 20/ hiSoft Technology International Employee management 21/ SITEL Balanced performance 22/ Hexaware Technologies Competency certification 23/ CSC Outsourcing experience 24/ Unisys Competency certification 25/ ARAMARK Size and growth 26/ ExlService Holdings Achievement recognition 27/ Cognizant Technology Solutions Competency certification 28/ 24/7 CUSTOMER Employee management 29/ CB Richard Ellis Global presence 30/ EMCOR Group No. of locations/centres 31/ ISS Facility Services Balanced performance 32/ Syntel Employee management 33/ Headstrong Balanced performance 34/ Sutherland Global Services Employee management 35/ Neusoft Group Achievement recognition 36/ Cambridge Solutions Size and growth 37/ EPAM Systems Outsourcing experience 38/ Inspur Balanced performance 39/ Ocwen Financial Customer testimonials 40/ ITC Infotech Competency certification 41/ Océ Business Services Customer testimonials 42/ KPIT Cummins Infosystems Competency certification 43/ Amdocs Balanced performance 44/ Vertex Balanced performance 45/ Donlen Employee management 46/ Patni Computer Systems Balanced performance 47/ Diebold Global presence 48/ NCS Competency certification 49/ Pitney Bowes Balanced performance 50/ ADP Balanced performance 51/ Outsource Partners International Achievement recognition 52/ Advanced Technology Services Achievement recognition 53/ Zensar Technologies Balanced performance 54/ MindTree Consulting Achievement recognition 55/ Johnson Controls Global presence 56/ MphasiS Competency certification 57/ Convergys Achievement recognition 58/ Cushman & Wakefield Global presence 59/ Luxoft Achievement recognition 60/ Ceridian Achievement recognition 61/ Xerox Employee management 62/ Aditya Birla Minacs Size and growth 63/ ICG Commerce Executive leadership 64/ Stream Balanced performance 65/ Comprehensive Health Services Employee management 66/ Eclipsys Executive leadership 67/ IBA Group Employee management 68/ LogicaCMG plc Outsourcing experience 69/ ExcellerateHRO Achievement recognition 70/ SNC-Lavalin Profac No. of locations/centres 71/ Cartus Employee management 72/ KPN/Getronics Outsourcing experience 73/ Firstsource Solutions Balanced performance 74/ IPT Balanced performance 75 (equal)/ Hewitt Associates Achievement recognition NCR Balanced performance 76/ Summit HR Worldwide Achievement recognition 77/ Bleum Competency certification 78/ Cross-Tab Marketing Services Customer testimonials 79/ Cybage Software pvt Outsourcing experience 80/ Beyondsoft Customer testimonials 81/ LawScribe Balanced performance 82/ MERA Networks Executive leadership 83/ Intetics Employee management 84/ vCustomer Competency certification 85/ Smart Sourcing Customer Testimonials 86/ Datrose Employee management 87/ Ci&T Software Competency certification 88/ Achievo Executive leadership 89/ IST Management Services No. of locations/centres 90/ Auriga Balanced performance 91/ QuEST Achievement recognition 92/ CompuPacific International Customer testimonials 93/ DataArt Achievement recognition 94/ Emerio GlobeSoft Pte Global presence 95/ Symphony House Berhad Achievement recognition 96/ Objectiva Software Solutions Balanced performance 97/ Freeborders Achievement recognition 98/ Hundsun Global No. of locations/centres 99/ Mindcrest Balanced performance 100/ Innodata Isogen Achievement recognition

IT and BPO services company Cognizant Technology Solutions Corporation has joined a host of outsourcing companies enjoying positive results. The company has announced record Q1 revenues, for the quarter ending March 31, 2008.

Revenues for the first quarter increased to $643.1 million, up 7.2% from $600.0 million in the fourth quarter of 2007, and up 40% from $460.3 million in the first quarter of 2007. GAAP net income was $101.9 million, or $0.34 per diluted share, compared to $75.4 million, or $0.25 per diluted share, in the first quarter of 2007. GAAP operating margin for the quarter was 17.4%.

"We are pleased with this quarter, during which we have surpassed our growth targets. The quarter's results, achieved despite the increased economic uncertainty and challenges in the financial services industry, testify to the resilience of our business model which is diversified across business segments, service offerings and geographic regions,” said Francisco D’Souza, Cognizant president and CEO. “Our healthcare, retail/manufacturing/logistics and other segments all demonstrated sequential growth of approximately 10% or greater, and Europe continued to grow well in excess of company average, growing 12% sequentially during the quarter.”

“We have adopted a more cautious view for the remainder of the year to reflect the heightened economic challenges over the past two months," he continued. "However, we believe that the current environment also presents us with opportunities to help clients in industries such as financial services, healthcare and media adapt to the structural changes that are transforming their industries. "In addition, our clients are also seeking cost rationalization solutions in order to compensate for the pressures on their businesses. The investments we’ve made in broadening our service offerings, building deep domain expertise and advanced consulting and analytics capabilities position us well to capitalize on these needs.”

Based on current visibility, the Company is now providing the following guidance: Second quarter 2008 revenue anticipated to be at least $680 million; Q2 2008 diluted EPS expected to be $0.34 to $0.35 on a GAAP basis, and $0.38 to $0.39 on a non-GAAP basis, which excludes $0.04 of estimated stock-based compensation and stock-based Indian fringe benefit tax expense. Fiscal 2008 revenue is anticipated to be approximately $2.95 billion, up approximately 38% compared to 2007.

"We continue to invest across our industries, service-areas and geographies in order to address client needs, enhance our market position, continue to grow and deliver value for shareholders," said CFO Gordon Coburn.

“While keeping these goals in mind, we plan to increase resource utilisation throughout 2008 in order to optimize efficiency and quality and help us remain flexible within the current environment. As we look ahead, we remain confident that despite near-term challenges in the economy, our strategy and execution excellence will ensure that Cognizant’s growth continues to outpace the industry.”

"Our performance is a result of the diversification of our business across multiple industries and geographies," continued D'Souza. "We continue to see demand for our services across a range of industries, geographic markets and solution offerings. We experienced strong performance in the health care sector, which grew 45% year-over-year and 10% sequentially.

"Manufacturing, retail and logistics which grew 40% year-over-year and over 12% sequentially and our other segment which includes communication, information, media and entertainment and technology business areas which grew 11% sequentially and 41% year-over-year.

"And despite turmoil in the financial markets during the quarter, our financial services sector showed growth of three percent sequentially and 37% year-over-year.

"Geographically, Europe continued the strong trend we've seen for several quarters growing 87% year-over-year and 12% sequentially and comprised 19% of our revenues, compared to 14% of our revenues in the first quarter of 2007. It is worth noting there are significant growth in Europe, five full percentage points of total company revenues over a one year period is the result of our focused efforts to increase our presence in this geography."

The rising number of European companies offering human resources outsourcing (HRO) services with attractive service bundles and competitive price points are stealing market share away from HRO suppliers in the United States and elsewhere, according to an Everest Research Institute study of the European HRO market.

Since 2005, European HR outsourcing suppliers have gained 10 percent of the global market, currently hold 30 percent of it, and these numbers will likely continue to increase to meet rising demand in a market that hasn’t been significantly penetrated, according to Institute analysts. The Institute will hold a Webinar, European HRO Market: A Laggard or an Emerging Frontier?, on May 14 at 9 a.m. CDT to present study findings and insights.

While the global market continues to grow at a decelerated rate (15 percent CAGR from 2006-2007 compared to 22 percent from 2003-2005) and the overall number of transactions declined from 2006 to 2007, most of the global transactions occurred in Europe, a strong indicator of buyer maturity, according to Everest’s Pan-European HRO Market report. Annual revenues for HRO transactions originating in Europe reached almost US $750 million in 2007.

”Market penetration across all sectors is low; therefore, we expect to see continued HRO growth in Europe as buyers increasingly realize they must consider outsourcing to remain competitive in a global world,” said Monica Barron, VP research, Everest Research Institute. “Buyers are looking beyond cost savings and are very focused on effectively managing cross-country talent. With the entry of new ‘payroll-led’ and ‘offshore-led’ multi-process HRO suppliers, buyers have more choices and are no longer restricting themselves to ‘brand shopping’ the big-name global suppliers.”

Other highlights of the report include: • The United Kingdom continues to claim a large share of the HRO European market in terms of deal origination and employees covered, holding 56 percent of all European transactions and 82 percent of total contract value.

• West Europe is an emerging market within Europe with different sub-regions having different HRO potential.

• Central and Eastern European locations have become an integral part of supplier strategies to deliver HRO services in Europe, serving as HRO hubs to support European operations.

• Manufacturing, government, and telecom dominate European HRO buyer industries.

• The most transaction activity is with companies employing 15,000 or more employees, and 55 percent of these engagements are global or regional.

• In terms of transaction activity, Accenture, ADP and Northgate ARINSO signed 54 percent of them.

• Accenture and ExcellerateHRO are the current market leaders based upon the Institute’s data; however, buyers have more choices as existing suppliers, including Europe-centric Logica, Capita and Steria, solidify their HRO offerings and offshore-led suppliers, including Caliber Point, TCS, and Wipro, enter the HRO market.

French outsourcing group Capgemini has reported flat Q1 results, impacted by the weak dollar, according to the company. Year-on-year Q1 revenues saw a slight dip from the first quarter 2007 at €2.19bn (£1.7bn) compared with €2.21bn a year ago.

With the US and UK accounting for 41% of the company's total revenues, the decline of the dollar, and of the pound against the euro, have combined to hit the company.

UK revenues fell 4.5 percent, partly linked to the curtailment of Capgemini’s contract with HMRC.

Capgemini confirmed its targets for full-year revenue growth of between 2-5 percent at constant exchange rates.

Although the company is comparatively well positioned among the roster of European outsourcing talent, it is more exposed to the weak dollar and to the pound's weakness against the euro than its Asian rivals, who will be circling for a European buy. That said Asian sales recorded a slight increase.

Sequential growth from Q4 2007 was negative across the board by single digits.

The company said that outsourcing revenue growth stood at a comparatively healthy 3.7% year on year. Manufacturing, retail and distribution remains the largest segment of the company's overall business, growing slightly year on year to 28% of the business from just under 27%. Public sector deals fell to 25.5% of the company's overall business from 27.9% last year. • Capgemini has signed a five-year IT infrastructure management outsourcing deal with bank C Hoare & Co.

NCR delivered year-on-year Q1 revenue growth of 19% and a 45% increase in non-GAAP income from operations, led by what the company described as “robust revenue increases in our Europe, Middle East and Africa and Americas regions”.

As well as making financial processing hardware, NCR provides data processing services to numerous financial services customers, including credit unions and banks.

Revenues in the Americas grew 15% to $487 million; EMEA revenues increased 30% to $493 million, and revenue from Asia Pacific, Japan was $203 million, up seven percent from Q1 2007.

The company demonstrated global growth in its traditional industries, banking and retail, both of which grew faster than 20% year on year. “Despite the very challenging macroeconomic environment, we see opportunities to grow our business,” said president and CEO Bill Nuti.

“Our vision for the new NCR is to lead how the world connects, interacts and transacts with business and in Q1 we experienced increased and balanced demand for our products and services across our major geographies.

“We remain focused on our key management priorities of generating profitable revenue growth, building a sustainable leading cost structure and improving our working capital position. And while we have significant work ahead of us on each of these priorities, the progress we demonstrated in Q1 indicates that NCR continues on the right path,” he said.

CFO Tony Massetti added: “We continue to be somewhat cautious for the balance of the year due to the broader macroeconomic issues. “Given our strong start to 2008, we are increasing our full year guidance as follows. We now expect to report full year revenue growth of 5-7%, up from the previous guidance range of 3-5% growth. We are increasing our non-GAAP earnings guidance to a range of $1.52-$1.57 per diluted share, up from the previous guidance range of $1.48-$1.55 per diluted share.”

The time has come to think strategically about systems management, and how it can be used in a co-ordinated and effective manner to deliver real business benefit. This is one of the key conclusions drawn in a report by Butler Group. According to the report, IT Systems Management (Technology Comparison), as organisations demand the IT infrastructure delivers increased levels of availability and quality of service, the focus for IT managers is shifting towards a business service perspective. "Organisational IT structures are often characterised by many different siloed teams of technical specialists," says Roy Illsley, senior research analyst with Butler Group and co-author of the report. "These silos often drive the technology selection process in organisations, which to a large extent is governed by the existing skills within the IT department. This approach has created tensions between the requirements of the business users, and the capabilities to manage the technology of the IT department.

"The result of this siloed approach is that IT resources are locked into technologies, and organisations face expensive retraining or new hiring cost if technologies new to the organisation are selected."

The market in systems ,anagement has evolved over recent years. The leading vendors have all integrated the ability to monitor and manage a variety of infrastructure components, from virtual servers to network switches, into their solutions. Systems management tools are changing IT from being mainly reactive in its response, to being more proactive and business focused.

The new, more holistic approach to systems management is that of simplification, so that the IT department can manage the technology stack at a higher level, and therefore enable it to manage a wider range of technologies more efficiently.

As IT becomes ever more ingrained in the organisation the need to be responsive to business demand in a controlled approach has increased in significance. In fact Butler Group believes that the approach to this problem will differentiate the good IT departments from the average.

In the current economic climate many organisations are facing a tightening of financial controls and spending, IT is not immune from this recession; a recent Butler Group survey found that 73% of respondents expect their IT budgets to be reduced or remain flat in 2008, as compared to 2007. With this more prudent approach the allocation of IT resources becomes a major factor in how IT departments are perceived.

A different approach is required when it comes to managing infrastructure, says the report.

In order for IT to perform this role a number of fundamental changes are required to its operation and its remit, and these must be endorsed by the executive management team.

First, the IT department must have envoys in the business units/departments who act as the eyes and ears of the IT department, while also representing the department/business unit when it comes to delivery of IT change. This dual role creates a tension that IT must exploit so that it can on the one hand collect the real significance and value of any change requested by the business unit/department, and on the other hand ensure that the requirements are in line with IT strategy. Obtaining this level of intelligence will allow IT to establish the impact on existing services, and cost the change accordingly.

Second, the IT department must act as the arbitrator, and not decision maker, in the prioritisation of business demand; to do this it must be the IT department's role to chair a cross-departmental strategy meeting. This meeting should act as the control body where the decisions are made on which new changes are developed, and which services are of a greater importance than another.

Finally, the IT department must develop a strategy that is intrinsically linked to the business strategy; this is a critical shift for most organisations, as IT is not usually invited to the business strategy table. Butler Group contends that having a CTO with the responsibility for IT strategy, and making some IT staff have dual reporting into the CIO and the CTO, provides not only the independence but also the separation required so that IT can play a significant role in the development and execution of business strategy.

Illsley concludes, "Taking a holistic perspective to managing the organisation?s infrastructure requires a different approach and one which many IT organisations are not equipped to adopt. The concept of business-driven demand is not new. In fact IT has evolved based on this premise. However, currently the IT department responds to the department/business unit that either shouts the loudest, or has the capital to invest in new projects. It is our contention that the landscape is moving, and CEOs are increasingly looking toward the CIO as the guardian of business process prioritisation; in other words the IT department is being asked to police the business units based on corporate prioritisation."