Industry news

Wiltshire County Council has signed a seven-year, £12m contract to improve its frontline support services.The project, led by IT services supplier Logica, will cover upgrades to finance, payroll and human resources (HR) systems and aims to save £11m a year.

Logica will set up a shared services centre to support the enlarged unitary authority and will host a centralised system for the new council, containing all financial and HR information.

Financial services group Prudential has signed a two-year agreement with supplier Harvey Nash for the outsourcing of its call centre operations.

Using voice over IP technology, the outsourcer will handle the sales of consumer finance products through a 250-strong workforce based in Ho Chi Minh City and Hanoi in Vietnam.

The contract will also include generation of leads, as well as pre-screening potential customers and providing them with information about Prudential’s products and services.

IBM has announced new services to help organizations use collaboration and social networking to maximize employee talent and performance.

The Enterprise Adaptability services include a unique methodology to determine the return on investment of social networking, use of large scale communications programs to jumpstart adoption, automatic identification of key talent, and social network analysis.

According to IBM's 2008 Global Human Capital Study, which surveyed 400 executives in 40 countries, developing an organization that is adaptable to change is essential. However, the study found only 14 percent of those organizations believed they were highly adaptable, meaning they have the ability to predict future skills, effectively locate experts and effectively collaborate within and outside the enterprise.

With Enterprise Adaptability companies can learn how to embed Web 2.0 technologies into the fabric of business operations, says IBM, allowing employees, partners and customers to communicate, establish new business relationships and make real-time decisions within the context of their everyday work.

The service encompasses three phases:

• Planning: determines the business case for implementing social networking and collaboration capabilities by analysing current interaction patterns among employees, partners and customers. Assesses an organization's current capabilities and barriers to adoption, prioritises focus areas and creates an implementation plan.

Adoption: helps introduce collaborative and social networking technologies to an organization through online collaborative events such as company-wide collaborative events (based on IBM's Innovation Jams) or smaller departmental events. Provides social networking analysis, identifying patterns of interaction and the key topic experts and enablers within the organization.

•Implementation: speeds the adoption of social networking and collaboration technology by embedding capabilities into existing applications and measures the business results and benefits.

“Creating competitive advantage in a global economy requires the ability to recognise, refine and promote good ideas in an organization and turn them into products and services quickly. It means developing the right skills in the right place, applying new tools and technologies that provide access to global expertise and knowledge, while innovating and collaborating across national and organizational borders,” said Tim Ringo, VP and global leader, Human Capital Management, IBM Global Business Services.

• IBM has also announced it is re-entering the PC market in eastern Europe, in partnership with Linux distie Red Hat.

The British Islamic Insurance Holdings (BIIH) has signed-off on an £87m ITO deal with Capita. BIIH provides insurance services that are compatible with the Muslim faith.

The eight-year deal will see Capita provide full front and back office services including selling and administering new policies, managing the claims process and managing customer relations.

BIIH CEO, Bradley Brandon-Cross commented on the deal: "The Muslim faith states that, because of various product features, conventional UK insurance options are in conflict with Islam and this creates a dilemma for British Muslims. We are planning to create a British insurer that operates in a way that removes this dilemma and creates an exciting new sector in the British insurance market."

Capita will handle the contract from its existing office in Cheadle from which it will deliver customer sales, servicing and claims management.

Nearly half of leading US technology companies outsource some type of manufacturing or service, according to a new survey by accounting and consulting group BDO Seidman. Forty-nine percent of all respondents said they outsourced key services to offshore destinations; this increased to 64% among Silicon Valley companies.

The findings are from the 2008 Technology Outlook Survey, which examined the opinions of 100 chief financial officers (CFOs) at technology companies located throughout the US. Revenues of the surveyed companies ranged from $100 million to $15 billion.

Of those outsourcing, the most common functions being off shored are: manufacturing (74%), IT services and programming (51%), research and development (49%), distribution (45%) and call centers (35%).

The most common locations for outsourcing are India (60%), Southeast Asia (50%), China (46%), Western Europe (21%) and Latin America (19%). When asked what one location they might consider for outsourcing in the future, the CFOs cited India (30%), China (23%), and Southeast Asia (22%).

“Despite some of the CFOs’ concerns regarding international expansion, nearly 50% of technology companies in the US and 64% in Silicon Valley are feeling the need to source services or production overseas. This shows that the very nature of the technology industry has become international,” said Lee Duran, Partner in BDO Seidman’s Technology Practice.

“These companies are also continuing to outsource their manufacturing, IT and distribution services to India, Southeast Asia and China; despite near-sourcing alternatives in Latin America and Canada."

Other findings in the survey were that CFOs at technology businesses cite currency risk (26%) and uncertain political/business climates (25%) as their main concerns regarding continued international growth in 2008.

Training of international employees (17%), risk to intellectual property (14%) and international business tax regulations (12%) were less of a concern to the CFOs.

Approximately four-fifths (79%) of the CFOs indicated their business has operations outside of the United States.

The survey reinforces the view that 21st century business, especially in areas that focus on innovation and speed, is increasingly about managing an ecosystem of suppliers rather than being an integrated 'soup to nuts' organisation.

It also flies in the face of much US election talk which has identified offshoring as a threat to the US economy; indeed, it appears to be supporting the most dynamic elements of the US business world.

Vietnam's emerging status as an offshoring destination of choice got a boost this week as the Prime Minister of Vietnam and UK Trade and Investment Chief Executive, Andrew Cahn, championed the benefits of doing business in Vietnam to over 250 senior UK business leaders. The forum, hosted by global recruitment consultancy Harvey Nash, highlighted the region’s challenge to India and China for outsourced services.

Vietnam has a young, skilled IT workforce and now produces thousands of English-speaking graduates every year. Staff churn is low, at less than five percent. In recent months Bill Gates and the Bush administration have joined the chorus of voices backing the country's ambitions to be a global player.

In his address, Harvey Nash outsourcing MD Paul Smith predicted that Vietnam will be the most desirable destination for outsourced services by 2012. Smith said: “The duopoly India and China have long enjoyed within IT outsourcing is fast coming to an end – and rightly so. With deregulation, accession to the World Trade Organisation and UN Security Council as well as significant overseas IT investment, Vietnam is becoming the outsourcing destination of choice for international business, not simply the poor relation.

"Vietnam has always offered a highly skilled labourforce and low costs, but this coupled with economic expansion, political stability and diplomatic acceptance means the decision to choose it as an offshore destination has become a no-brainer.” UKTI CEO Andrew Cahn added that Vietnam "offers competitive, high-quality services and is now getting its due recognition as an attractive investment destination for all businesses.

"UK companies such as BP, Prudential and Harvey Nash have led the way into Vietnam, but opportunities exist for all aspects of UK industry, from retail services to infrastructure development and financial services to IT outsourcing.

"Choosing the right offshore destination plays a critical part in shoring up UK businesses’ global competitiveness. UK-Vietnam bilateral trade has enjoyed double digit growth over a number of years and this is a trend we hope will continue and bring benefits to UK based businesses.”

The ‘Discover Vietnam’ business forum took place in London and was attended by Vietnamese trade representatives and senior Vietnamese businesspeople, as well as UK firms who are already successfully operating in Vietnam.

Traveling with a senior business delegation, the Prime Minister of Vietnam outlined the benefits of doing business in a country whose GDP growth is second only to China in Asian economic expansion and is now the third largest offshore software services destination in South East Asia.

Harvey Nash has been working in Vietnam since 2000 and recently acquired Silkroad, a technology and software development company to cement its position in the region further and widen its international reach and service offering. The 2,500-strong business is one of the market-leading IT services companies in Vietnam and the move makes Harvey Nash the biggest single software player in the region.

Deutsche Telekom’s enterprise customer division, T-Systems, and global IT services provider, Cognizant have announced that they have entered into a global systems integration alliance. The alliance is primarily aimed at catering to European corporations with global delivery requirements for system integration services.

The partnership combines the onsite and offshore expertise of T-Systems and Cognizant across industry segments with an enhanced geographical footprint, a broader range of service offerings, and greater access to the best global talent. The new alliance will draw upon a combined talent base of over 110,000 employees worldwide, comprising more than 40,000 employees working offshore.

Expanded operations in key geographies – Europe, Americas and Asia – are expected to augment the growth of the two companies.

As part of the new business partnership, T-Systems India and its approximately 1,150 employees will be transferred to Cognizant, subject to appropriate regulatory clearance.

By harnessing the onsite, nearshore and offshore strengths of T-Systems and Cognizant, the partnership will facilitate the adoption of a global services delivery model in and beyond Europe that will enable the customers to save costs through labor arbitrage. "This new alliance will make global delivery a reality in Europe. Strategically we are the first to give our customers unprecedented access to a new service and delivery model,” said Reinhard Clemens, management board member for business customers at Deutsche Telekom and CEO of T-Systems.

"In partnership we can deliver truly unique global IT services, bringing together our complementary strengths with the goal of dramatically increasing the value provided to customers,” said Francisco D’Souza, President and CEO of Cognizant. “Both Cognizant and T-Systems have a long heritage of partnering with clients, and our joint capabilities will deliver a powerful combination of scale and agility in the key markets serviced by both companies.

We also look forward to welcoming the T-Systems employees in India to the Cognizant family. We believe that this alliance will provide our joint customers with a world-class combination of deep local knowledge and market-leading global delivery platform.”

T-Systems has announced the forming of a partnership with Cognizant, for providing system integration services to meet the global delivery requirements of European corporations.

This partnership combines the onsite and offshore expertise of T-Systems and Cognizant across industry segments with an enhanced geographical footprint and a broader range of service offerings. The new alliance will draw upon a combined staff of over 110,000 employees worldwide, comprising more than 40,000 employees working offshore, expanding operations in key geographies Europe, Americas and Asia.

As part of the new business partnership, T-Systems India and its approximately 1150 employees will be transferred to Cognizant, subject to appropriate regulatory clearance

US and European financial institutions will look to shift more technology operations offshore as budgets are squeezed following last year's credit crisis, according to the head of India's Infosys Technologies.

Kris Gopalakrishnan, Infosys CEO, told The Times that he expects offshoring to be allocated a greater proportion of budgets this year as banks look to keep budgets and wage bills down. He says many banks have kept budgets flat or even cut them from last year.

Bank clients have told the vendor not to reduce hiring levels, says Gopalakrishnan, because they will need "more support".

But Gopalakrishnan goes on to paint a bleak picture of the market and says banks are delaying budgetary decisions as they tighten spending. Some firms - particularly those hit hard by the credit crisis - are also being more cautious in deciding whether technology upgrades are needed.

The report says that service providers such as Infosys are also "re-visiting" plans to move away from low-margin work such as call centres and towards high-margin consulting services.

Gopalakrishnan's remarks chime with research conducted last year by European outfit Pierre Audoin Consultants.

The consultancy says, as a result of the crunch, banks will be seeking to do more with the same resources and budget, which will lead to increased demand for offshoring services.

Banks will look to lower costs by outsourcing horizontal processes such as finance and administration and human resources, as well as more core areas like mortgage and loans processing. Sepa payment processing may also be outsourced as some banks may not find it profitable to keep the process in-house, says Pierre Audoin.

EURIM, The European Information Society Group, has waded into the debate on public sector data and issued a report on information sharing. Documenting the experiences of data sharing, says the organisation, “allows for an understanding of how these arrangements can be supported and developed and thus embedded in confident future service delivery practice”.

The report, Information Sharing Protocols was produced by EURIM”s Personal Identity and Data Sharing Group, and highlights the following points:

• Information assurance is vital to maintain citizen confidence.

• The reasons for, management of and limitations of, information sharing must be clearly described to citizens.

• Where appropriate, protocols must permit citizens a single point of access to data that is shared about them – information sharing and information access go hand in hand.

• Over time a significant body of legislation regarding information sharing has developed, and case law is often required to demonstrate ‘legality’. As well as the complexity of the legislation this also creates uncertainty within practitioners.

• There is a great deal of guidance on information sharing already in the public domain. Some of this guidance is complicated and not all of it is consistent.

• There are many examples of successful information sharing that can be used as examples to learn from by authorities embarking on new information sharing projects.

• There is more work to do to ensure authorities make consistent and good decisions around information sharing projects.

The report also acknowledges that 'emergency situations' will be a challenge to established information sharing protocols.

EURIM makes the following recommendations:

National government

• Regional Centres of Excellence, through the Ministry of Justice, should incorporate a feasibility study into their programme of work that considers the whole of England or a regional approach to an overarching information sharing protocol model. One regional centre should be asked to take the lead in undertaking this work, working with the Ministry of Justice to ensure that the output will be appropriate to both local and central government. This work should include examining ways to reduce, simplify or in other ways improve the guidance pertaining to information sharing protocols, and build on the Information Commission’s framework code of practice for sharing personal information.

• The Ministry of Justice, in association with relevant departments, agencies and private sector organisations in each sector, should commission further work to map enabling legislation against citizen’s needs so as to inform the above work in each sector.

The Information Commissioner

• The Information Commissioner's Office (ICO) should endorse a common standard on information sharing that draws on those standards developed and in development by the Local e-Government Standards Body (LeGSB) group. This should be done in consultation with the Local Government Association (LGA) and other stakeholders.

• ICO should provide further guidance outlining in practical terms, using common language and terminology that enables organisations to make good quality decisions regarding information sharing. This would not be prescriptive but would stress the importance of using professional judgement in making these decisions.

General recommendations

• EURIM will produce an impact study to evidence the effect existing exemplar protocols have on the efficiency agenda.

• Citizen access to their own information, ability to change their information and knowledge of information sharing initiatives, is vital to the acceptance and smooth operation of information sharing schemes.

• An equally important aspect of security is ongoing training of all staff with permission to access databases containing personally identifiable information. Training should discriminate between legitimate and unacceptable use, and there should be electronic audit trail capability that enables all access to databases to be tracked back to the individual gaining access.

• Meaningful penalties should be enforced for misuse.