IBM inks private cloud deal with Westpac New Zealand

August 22nd, 2014 by Rahul Jain No comments »

Enterprise IT vendor IBM announced its private cloud deal with Westpac New Zealand.Outsourcing47

Westpac, one of the top outsourcing clients for IBM, aims to become New Zealand’s leading digital bank by utilizing IBM cloud.

The new five year agreement is part of an extensive services and technology contract which includes Westpac migrating some of its business critical IT systems into IBM’s Auckland data center, enabling enhanced customer service.

Utilizing IBM private cloud to develop and test tools within a dedicated environment, Westpac will deploy new online and mobile banking services and across multiple devices and platforms.

In addition, IBM is helping Westpac respond with enhanced online security features, such as the ability to manage identity and access through a single user ID.

“IBM’s private cloud platform will further enable increased development of Westpac’s digital capabilities as it responds to customer demands for a more personalized, convenient way of banking,” said Jason Millett, interim chief information officer of Westpac.

Gartner says poor return on equity will drive more than 60 percent of banks worldwide to process the majority of their transactions in the cloud by 2016.

Westpac will also optimize its IT infrastructure by renewing IBM mainframe services, midrange and storage platforms and migrating some services to IBM’s Level 3 data center providing even greater data resiliency.


HP Systems Get A Bump Thanks To IBM-Lenovo Deal

August 22nd, 2014 by Rahul Jain No comments »

The expected drawn-out regulatory approval process for IBM’s sale of its System x X86 server business to Lenovo Group has put somOutsourcing5e bounce into the X86 server line from Hewlett-Packard. In the third quarter of fiscal 2014 ended in July, HP said that it believes it has gained market share against its peers in systems. The company is also seeing market share gains against Cisco in networking and is getting good growth on so-called converged storage platforms even as traditional storage arrays continue to show weakness.

In the quarter, revenues across all product lines at HP rose by 1.3 percent to $27.6 billion. HP’s research and development costs rose by 11.3 percent to $887 million and it also booked $649 million in restructuring charges, which was a bit higher than expected. These and other downward pressures took their toll on net income, which fell by 29.1 percent to $985 million. The overall restructuring charges for fiscal 2014 will be in line with expectations. HP announced a broad restructuring back in May 2012, with up to 27,000 employees being let go, and earlier this year the company expanded that layoff to a total of 34,000 employees.

HP’s Enterprise Group, which sells servers, storage, switches, and services for all of this gear, had a 1.9 percent revenue increase in the quarter, to $6.89 billion, but earnings before taxes fell 5.6 percent to $966 million. HP does not provide pre-tax earnings for the various divisions within Enterprise Group, but it does break out revenues.

The Industry Standard Servers division, which peddles X86 iron and which is roughly analogous to IBM’s System x division, had $3.1 billion in revenues, up 8.6 percent and growing many times faster than the market at large. HP’s ProLiant and other X86 server sales rose across all geographic regions and average selling prices rose in the double digits as customers added more features and peripherals to the systems they acquired. HP is facing a tough compare for its fiscal Q4, however, after winning a huge deal last fall from Microsoft for its Bing search engine.

“We are seeing good early traction with service providers as a result of our partnership with Foxconn to produce a line of cloud-optimized servers,” explained HP CEO Meg Whitman on a call with Wall Street analysts going over the numbers, referring to a deal that HP inked with the giant Chinese manufacturer back in April to make a whole new line of as-yet unannounced cloudy systems. “And we moved aggressively to take advantage of the uncertainty customers feel about the IBM-Lenovo transaction. In head-to-head fights with IBM for deals, we are seeing clear improvement in win rates –all this while delivering stable growth margins.”

That seems to indicate that the margin pressure is not coming from X86 servers, but in other divisions within the Enterprise Group. The Business Critical Systems division, which includes machines running HP-UX Unix, OpenVMS, and NonStop platforms as well as the new high-end Xeon E7 systems such as the “Project Kraken” ProLiant Superdome ConvergedSystem 900 that debuted in June for SAP HANA in-memory workloads, had an 18 percent decline to $233 million, but was actually up one point sequentially and, importantly, HP saw order growth in the quarter for BCS products. This was no doubt an effect of the new Kraken systems, and the news that HP has licensed OpenVMS to VMS Software for future development and support will very likely help stabilize BCS sales going forward.

HP’s Networking division had $672 million in sales, up 4.4 percent, and Whitman said that the company had good growth in switching in particular but did not call out any specific figures except to say that the networking unit had outperformed Cisco once again.

On the storage front, sales of $796 million, down 4.4 percent, were lower than expected. Traditional storage arrays saw a 14 percent decline to $432 million, but converged storage, HP”s catch-word phrase for modern arrays, had 9 percent growth to $364 million and the 3PAR line returned to double-digit growth. If you add up 3PAR plus HP’s high-end XP and EVA arrays, revenues for these three as a group were down 7 percent year-on-year, but Lesjak said that HP nonetheless expected to gain market share in the external disk array market in the second calendar quarter. Whitman said that HP continues to grow its share in midrange storage, which frankly was always the strength of Compaq anyway. “As the market shifts increasingly from high-end to midrange storage, it is pressuring overall market growth,” explained Whitman. “But I believe this plays into a sweet spot for HP, which bodes well for us in the long term.”

Technology Services, the support arm of the Enterprise Group, had a 2.6 percent decline in the third fiscal quarter, to just a smidgen under $2.1 billion . Lower volumes of systems sales in prior quarters were the main cause of the decline, and Whitman said that margins were holding steady despite the decline.

On the cloud front, Whitman said that CloudSystem hardware showed double-digit growth in the third quarter, and that the commercial version of HP’s Helion OpenStack implementation would be ready for commercial use by October. HP has cooked up a Helion development platform for coders and is also getting ready to launch a set of OpenStack support and implementation services to go along with the Helion delivery. Whitman also said that HP would end up being the leading code contributor to the future “Juno” release of OpenStack, which is slated for release on October 16.

HP Software had its challenges during the quarter, with sales off 5 percent to $959 million. But pretax margins help up at $203 million in the quarter. The Autonomy tools for dealing with unstructured data and the Vertica parallel database both had revenue declines in the quarter, but security software revenues were up a bit. HP inked a big partnership with Hortonworks to integrate its Hadoop distribution into the Haven data analytics platform, and HP hopes this will bear fruit for the software group in the coming quarters. In general, Whitman said that HP software was shifting to a SaaS and subscription model for much of its software and away from licensing, which would have a near-time downward impact on revenues but would level things out over the long term. Bookings for IT management tools, including OpenView and other tools, delivered on a SaaS model rose by double-digits in the quarter, as an example. But across all of HP Software, license revenues were off 16 percent while SaaS revenues rose by 8 percent.

In other areas, HP Financial Services, which finances HP’s various wares for partners and customers, had revenues of $855 million, down 3 percent, and delivered $79 million in operating profits. HP Enterprise Services, which is mostly the old EDS systems integration and outsourcing business, had a 6.4 percent decline to $5.59 billion, and the printing business booked the same $5.59 billion in sales after a 3.8 percent decline. Thanks to the expiration of Windows XP support, the PC business had a nice uptick, rising 11.9 percent to $8.65 billion. That is probably not sustainable growth over the long term, but the PC business is actually helping HP’s bottom line right now, as hard as that might be to believe.


Employment in BPO sector hits 1-M mark

August 22nd, 2014 by Rahul Jain No comments »

Employment in the information technology-business process management (IT-BPM) industry has already hit the one million mark, or 1 percent of the population, as more and more foreign firms outsource work in the Philippines.Outsourcing4

Information Technology and Business Process Association of the Philippines (IBPAP) president and chief executive Jose Mari P. Mercado told the Inquirer that this year’s target of 1.04 million jobs would likely be attained by end-September.

“The employment figure from the first quarter was 930,000. We would have already met one million. And I won’t be sur prised if by the end of the third quarter we will already meet [the 2014 goal],” Mercado said.

The IT-BPM industry (also referred to as business process outsourcing or BPO) was also on track to cap 2014 with revenues worth $18 billion, he said. “I am confident that we will meet our targets at the rate we’re going now.”

Mercado cited the expansion of a number of companies as well as the tight office space vacancy rate as among the indicators that the industry was “maintaining the growth we achieved in the previous years.”

Last year, the sector generated $15 billion in revenues, up 17 percent from $13.2 in 2012. Employment stood at 900,000 as of end-2013.


Home Office to pay sacked IT provider £224 million

August 22nd, 2014 by Rahul Jain No comments »

The IT supplier, Raytheon Systems, sacked by the Home Office in 2010 for failing to meet targets, has been awarded £224 million.Outsourcing3

The amount consists of £50 million for damages, £9.6 million for disputed contract changes, £126 million for assets acquired through the contract and interest of £38 million.

It is reported that the eBorder programme was worth £750 million and when terminated is had cost the taxpayer £259.3 million including £195 million in supplier costs. The programme tracked passengers entering and leaving the UK, plus checked against police, security and immigration watch lists. According to Theresa May, it would have cost the government an extra £97 million had the contract not been terminated.


Why RPA Serves as a Lifeline to the BPO Industry

August 22nd, 2014 by Rahul Jain No comments »

Businesses demand that business process outsourcers (BPOs) increase their productivity while reducing costs. However, as BPOs Outsourcing2realize the limitations of labor arbitrage, they must seek innovative ways to gain competitive advantages by completing core operations quickly, accurately and cost-effectively. Robotic process automation (RPA) addresses this challenge by presenting a third alternative to onshoring and offshoring; serving as a completely new way for BPOs to manage processes across global industries.

BPOs that implement RPA can achieve drastically improved productivity levels since software robots (unlike humans who require breaks) can work around the clock, analyzing and extrapolating data efficiently. Not only that, but software robots are unsusceptible to human error – thereby boosting the accuracy of operations. As a result, BPOs can experience financial gains by quickly identifying the right opportunities to reduce debt and avoid unnecessary costs.

In addition to being able to complete core functions efficiently and accurately, outsourcers who leverage RPA also experience better security, audit, analytics and governance. Because most regulated industries need to demonstrate completely transparent and audited processing, RPA is helpful to BPOs since it offers powerful analytics capabilities and records of rules fired and transactions executed. Additionally, RPA allows BPOs to run in local jurisdictions. Because many types of data cannot leave host countries, this capability is revolutionary – enabling BPOs to execute locally while being controlled remotely.

While RPA may seem like a no-brainer, up to this point, many outsourcers have struggled to find a way to implement software robots into existing systems. The problem that many BPOs face is determining how to shed or reallocate human capital. To overcome this challenge and reap the benefits of RPA, BPOs must first identify processes that can be seamlessly automated. Routine, rules-based and high-volume processes that are susceptible to high-error rates are ideal for RPA. Any process that requires data transfer across multiple systems of record (which are often customer specific) can be achieved through software robots, since they can help drive customer systems of record without the expense of technical integration. By incorporating RPA into operations, BPOs can also develop one master process that the robots can translate to clients’ specific systems.

Once BPOs identify tasks that can be taken on by software robots, the next step is to run pilots that test technological challenges and evaluate how much time, and at what cost, the RPA solution completes the job(s) at hand. By assessing quantifiable data, BPOs can then determine the value of implementing RPA and its potential to drive business operations and savings.

Already, BPOs are seeing results through RPA implementation – experiencing better customer service and quality, dramatic process improvements, cost savings, and redeployment of resources to more strategic, revenue generating functions. As RPA becomes increasingly accepted as a better way to do work, BPOs will find that it is no longer a competitive advantage, but a must in order to stay relevant.

Just last year, BPOs started to explore RPA with pilots, investment reviews and works projects. Today, these projects have dramatically matured and are being deployed throughout the enterprise. We’re seeing outsourcers build distinct practices and centers of excellence around RPA, and investing in new technologies, methods and frameworks to harness the advantages of software robots. According to a Gartner report, eight out of the 15 largest service providers the analyst firm interviewed stated that they have either signed deals (or are in the process of signing deals) to incorporate autonomic and cognitive platforms into business processes, applications and infrastructure offerings.

In order to stay current and relevant, then, BPOs – if they’re not already – must consider how to work RPA into their operational processes. Not only will they find that it boosts efficiency and accuracy while cutting costs, but, according to Charles Sutherland, an analyst at Horses for Sources Research – the leading authority on the global services industry – RPA could even change “the way that we empower business advisors, knowledge workers, and judgment based role staff by removing the mundane and allowing them to truly spend their time on the remaining parts of the business process which can’t be broken down entirely into business rules.”


HCL Tech awarded life sciences outsourcing leader

August 22nd, 2014 by Rahul Jain No comments »

HCL Technologies has been recognised as a life sciences IT outsourcing leader and a star performer by advisory and research firm Everest Group in its 2014 report on “IT Outsourcing in Life Sciences Industry.”Outsourcing1

The report measures market success by the number, scale and growth of large life sciences’ ITO contracts, and ranks delivery capabilities by scale of operations, scope, enabling domain investments, and delivery footprint, according to a company statement.

“We’ve seen an uptick in the adoption of next-generation IT as companies struggle to combat multi-faceted challenges such as stifling research and design inefficiencies,” said Jimit Arora, Vice President, Everest Group.

In this evolving industry scenario, HCL’s mix of technology, domain and client servicing capabilities are translating well into significant market success and industry recognition, he added.


Toyota Material Handling outsources IT services to CGI

August 21st, 2014 by Rahul Jain No comments »

CGI signed an agreement with Toyota Material Handling Europe (TMHE) for the outsourcing of TMHE’s entire IT operations. Under the agreement, a majority of employees from TMHE’s IT department will be rebadged to CGI. The contract has an estimated value of SEK 230 million (approximately CAD 37 million) for five years.Outsourcing54

The company’s main purpose in outsourcing is to free up additional resources for business development. Cost savings, quality improvements and access to expertise and innovation from an experienced IT partner are other motivating reasons. CGI has been given responsibility for TMHE’s data centre, as well as its application management, service desk, email, network, collaboration, storage and security services. In addition, CGI will deliver its standardised IT services for workplaces for approximately 6,000 users in Europe.


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