Multi-billion dollar opportunity awaits India IT companies

September 1st, 2015 by Rahul Jain No comments »

Several outsourcing contracts worth at least $1 billion (about Rs 6,500 crore) each from companies such as US retailer Gap and British telecom firm Vodafone are coming up for renewal over the next one year, providing an opportunity to home-grown software exporters such as Tata Consultancy Services and Infosys to grab the deals from incumbent multinational rivals such as IBM and Hewlett-Packard and further increase market share over these companies.Outsourcing35

According to data from outsourcing advisory ISG, at least six such deals are set to expire in 2016. Further, another nine deals with a total contract value of at least $500 million each from customers such as Arcelor-Mittal and BAE Systems will also come up for renewal during this period.

According to the report, about $250 billion worth of deals are set to be renewed over the course of the next 36 months.

“The increasing number of contract expirations each year directly results from specific market trends. We’ve seen the number of outsourcing transactions increase dramatically over time. At the same time the average duration of contracts has declined. As a consequence, contract expirations are occurring at a faster rate,” said Dinesh Goel, partner and India head at ISG.

Even as IBM and HP are expected to strive to renew these contracts, India’s top outsourcing firms fancy their chances, having already grabbed significant market share from their multinational rivals over the past five years.

According to another ISG report, Indian IT firms increased their share of the market to 27.1% during January-June, from 23.6% a year ago. This gain came at the cost of European rivals such as Capgemini and Atos, according to the report.

Executives from both Indian and multinational firms are currently eyeing Vodafone’s $1 billion contract with IBM which is set to expire early next year. Preliminary discussions to renew the contract have already started, according to executives involved in the deal.

“There is no question that incumbency isn’t what it used to be – the non-incumbent win rate on competitive restructuring and renewal deals stands at over 60%,” said Goel. “India-heritage firms have been the significant beneficiaries of this trend as a winning provider. But going forward, they have their own turf to protect as an incumbent provider of large expiring deals.”

Indian IT firms have aggressively snatched large contracts by adopting tactics such as heavy upfront payments while bidding for large billion-dollar outsourcing deals and also using price to undercut rivals.

At a time when investors are worried about the economic slowdown in China triggering a global meltdown and with technology spending set to drop at least 5.5% this year, India’s top IT services firms will chase these upcoming deals even more aggressively, executives said.

Source:http://telecom.economictimes.indiatimes.com/news/enterprise/enterprise-services/multi-billion-dollar-opportunity-awaits-india-it-companies/48744239

IT outsourcing remains healthy, but the functions being outsourced are changing

September 1st, 2015 by Rahul Jain No comments »

Companies are increasingly farming out functions such as IT security and application hosting, according to a report from analyst firm Computer Economics.Outsourcing34

The company interviewed over 130 companies in North America for its report, IT Outsourcing Statistics 2015/16, asking them about their outsourcing practices. Overall, it found that outsourcing is keeping pace with a rising overall IT operating budget.

Median IT budgets rose 3% in the last year, and outsourcing continued to account for a tenth of that money overall. Large companies continue to be the leaders in outsourcing, spending a median average of 7.8% of their IT budgets on it. This compares to 6.7% for mid-range companies and 3.7% for small firms.

Under the covers, though, the functions being outsourced are changing. IT security outsourcing is increasing, as are web/ecommerce systems and application hosting, according to Computer Economics.

Application hosting is the most popular function to outsource, with 62% of organisations doing it, and two thirds expecting to do more so in the future.  The rise of SaaS is a big contributor to application hosting, the report suggested.

Not all IT functions are being outsourced at the same rate. Datacenters and database administration are  all flat, as is application development.

The percentage of work application development work farmed out by companies is typically low, and often project-based, the report suggested. The median average of a firm’s total application development work that it will farm out is around a fifth.

Customers just aren’t that happy with the service from application outsourcing providers. A third of those who outsource application development found the service worse than doing it in-house, while 42% found it the same.

Cost certainly isn’t a driver either. Fewer than one in five organizations who outsource application development work (17%) save money on it. In fact, 58% of them find it costing more.

The outsourcing of network operations and disaster recovery is also flat. That’s odd, because disaster recovery is one of the IT functions that the report says has the biggest potential for reducing costs through outsourcing. Another is desktop support.

Expect to see outsourcing increasing gradually over time, concluded the firm, as the adoption of cloud computing continues.

One reason for the general health of IT outsourcing could also be that it’s simply too difficult to find the staff. Canadian firms have resorted to temporary workers to fill the IT talent gap.

Some companies have also been found replacing Canadian workers with foreign ones in a bid to cut costs, sparking outrage. In 2013, RBC was found to have bought in IT workers from India via outsourcing company IGATE. The firms had been working together since 2005, it was revealed.

Since then, the Canadian Government has clamped down on workers entering the country under its Temporary Foreign Worker program. Perhaps this could also fuel the growth of outsourcing contracts over the next few years?

Computer Economics looked at 132 north American organizations with at least $50m in annual revenues, or $2m in IT operational spending.

Source:http://www.itworldcanada.com/article/it-outsourcing-remains-healthy-but-the-functions-being-outsourced-are-changing/376814

Edinburgh Council signs £186m IT outsourcing deal with CGI

August 28th, 2015 by Rahul Jain No comments »

Seven-year contract aims to introduce integrated digital services across the authorityStatistics Business Background

City of Edinburgh Council has signed a seven-year IT outsourcing contract with CGI in a bid to transform council services.

The £186m contract will see CGI update the council’s IT systems and support its “channel shift” programme, which aims to introduce integrated digital services across the local authority.

In 2001, the council signed a 10-year deal with BT for outsourced IT services. The contract was then extended for five more years, but will expire in March 2016.

Claudette Jones, the council’s chief information officer, told Computer Weekly that the first point on the IT agenda is to improve broadband speeds in schools. This includes introducing 1GB of bandwidth for high schools and installing 4,000 Wi-Fi points across the city’s schools.

“We are investing a lot in infrastructure for schools,” Jones said. “The work to get the schools’ networks improved will start in advance of our BT contract ending, so by next summer, the schools should be upgraded.”

CGI will also update IT systems across Edinburgh council and put in place a new enterprise resource planning system, which will integrate with “citizen-facing digital platforms”.

Forty of the council’s transaction services are already online, and Jones said a further 150 will go online “within the year”.

Alasdair Rankin, convener of the City of Edinburgh Council’s finance and resources committee, told Computer Weekly that another crucial part of the contract is to include small and medium-sized enterprises (SMEs) in CGI’s supply chain.

A council report published earlier this month said the project would contain a commitment by CGI to deliver 25% or more of the contract value to SMEs by 2018.

“SMEs are an important part of the contract,” said Rankin. “We have a lot of SMEs in Edinburgh and we are keen to support the local economy and businesses.”

Other projects include introducing Office365 for council staff and school pupils, introducing a document management system where staff can access their documents from any secure device, and introducing new collaboration tools.

CGI’s UK public sector SVP, Steve Thorn, said: “This is an ambitious programme that will change the way citizens access and use public services and will introduce new ways of working for the council’s employees, ultimately making their jobs more productive and satisfying.”

Source:http://www.computerweekly.com/news/4500252177/Edinburgh-Council-signs-186m-IT-outsourcing-deal-with-CGI

How and why billion dollar businesses make IT investments

August 28th, 2015 by Rahul Jain No comments »

Kable Global ICT Intelligence: Companies choose IT providers based on expertise and price to support revenue growth.Outsourcing33

Analysis from Kable unveiled enterprises with over $1 billion in revenues are or will be looking into outsourcing IT functions with nearly 60% (57.9%) of participants saying they are already outsourcing applications, service desk support and help desk or planning to do so in the next two years.

Only 36.8% admitted they are not outsourcing or planning to do so within these areas, while 5.3% answered ‘no’ but said they are considering outsourcing.

As for IT infrastructure, 52.5% of respondents said they already are or may be outsourcing solutions in this space in the next two years, with 36.8% not doing so and 10.5% considering this route.

Similarly to IT infrastructure, 10.5% of those surveyed said they currently do not outsource IT management but are considering it.

Kable has found that the most important criteria for businesses when choosing an IT provider are industry expertise, price and specific functionality expertise.

The research took into account respondents from businesses with over $1 billion in revenues.

Those surveyed rated the three mentioned criteria with a score of 3.3, with the rating scale going up to four points meaning ‘very important’.

Leading-edge technology was voted fourth with a score of 3.2, followed by financial stability, breadth of solution offerings and geographical reach with 3.1, 3.0 and 2.9 respectively.

At the bottom of the league, companies put financing options like payment terms (2.8) and contract flexibility (2.7).

Kable’s research also revealed that the importance of various IT objectives in influencing IT investment strategies do not have a big disparity between them.

Using the same measurement technique from one to four points, businesses said that using IT to support revenue growth, with an average rating of 2.7, is their main objective influencer when investing in IT strategies.

This is followed by aligning IT with overall business goals and better demonstrating the value of IT to the business, both with a rating of 2.6.

Organisations taking part in the report rated the objective to deliver new functionality to business users with 2.5, while meeting internal service level agreements scored the lowest with 2.4.

All figures come from Kable’s ICT Customer Insight survey, which polled 2685 respondents, from across the world in Q4 2014. The survey findings include data on criteria when choosing an IT provider, importance of IT objectives in influencing IT investment strategies and IT functions that are outsourced now, or which may be outsourced in the next two years.

Source:    http://www.cbronline.com/news/enterprise-it/it-services/how-and-why-billion-dollar-businesses-make-it-investments-4653297

Council’s IT outsourcing plan hit by delay

August 28th, 2015 by Rahul Jain No comments »

The implementation of a new outsourced information and communications technology (ICT) service for Scottish Borders Council – in a shared arrangement with Edinburgh City Council – has been delayed.Outsourcing32

A report on the future of the 80-strong in-house department at Newtown was due to be presented to councillors in October.

But a meeting of SBC’s executive heard this would be delayed until December following the announcement last month that Canadian IT giant CGI has won a seven-year contract to replace BT as the provider of ICT services to the city council.

“Once we have access to the proposals that CGI have put forward, the suitability and cost of individual services can be further examined,” said Rob Dickson, SBC’s corporate transformation director.

“This analysis and engagement phase will now run through September and October.

“It is now planned to finalise the full proposal on December 17.”

Source:http://www.thesouthernreporter.co.uk/news/business/council-s-it-outsourcing-plan-hit-by-delay-1-3869091

5 Steps to Outsourcing Your Business Tasks

August 28th, 2015 by Rahul Jain No comments »

With the various new forms of technology, there have never been more ways to enrich your life as an entrepreneur, reach your target audience and grow your business. The only problem is, how can you manage everything? Software, apps, and other tools might help, but the overwhelming list of tasks can be excessively time-consuming if you are a solopreneur.Outsourcing32

A solution that is exceptionally effective is to outsource your administrative and back end tasks. Some business owners balk at the idea, wondering if they will have enough resources and comfort level to make it feasible. However, statistics compiled over the last decade have revealed a growing trend, with over 43% of companies now using outsourcing to help successfully manage their business operations. It makes perfect sense, since the more power we have behind us; the more work we are capable of doing. You can achieve more by doing less.

If you are new to the outsourcing concept, these 5 high-level steps can help you streamline this process and get the ball rolling to free up your time and your mind.

DETERMINE WHAT YOU CAN OUTSOURCE
Typically, at Ace Concierge, LLC we assess the type of tasks associated with your business functions and daily management. They might fall under two categories: highly repetitive tasks, such as data entry, social media management, and blogging; or more specialized knowledge, such as accounts payable or web design. You may also have your own list according to your industry and niche in addition to the day to day necessities of processes and procedures. Once we have determined a list of tasks you’d like to outsource, we can determine the skill level needed and begin to narrow down your options.

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WEIGH THE COST VS BENEFITS OF OUTSOURCING
Begin with determining your own time value and where you should prioritize your efforts. If you tend to bury yourself in the daily minutia, for example, social media, editing, proofing, or curating content, it is here you need to ask yourself if this is the best value of your time? Is this your expertise, why you started your business? More often than not, it doesn’t represent your core genius, won’t provide an immediate return and isn’t a fundamental function of your company. While these tasks and activities represent daily necessities of an online presence, they don’t embody the crux of your knowledge and capabilities.

As an entrepreneur, your time needs to be protected, leveraged and highly valued. Outsourcing maintains these properties keeping you highly effective and focused on your business, growth, development and other primary structures of operations. Delegating allows you to forgo other things you would pay an actual employee, such as insurance, training, extra office space, supplies, and benefits. Instead, you are only paying for the project time which is a tremendous cost savings.

DECIDING WHO TO OUTSOURCE TO
One of the most popular questions we get asked is, “Who should we use? How do we know they’ll do a good job?” As the old saying goes, “You get what you pay for.” There are many opportunities to find cheap labor from developing countries, but the difference in hours, language barriers, and skills can sometimes pose a problem. These are options you must consider, especially if you are presenting their work to your own clients.

Consider partnering with another entrepreneurial like-minded individual as they will understand what it takes to own and operate a successful, viable company. If you only choose someone based upon price, a “one-off task master” then that is all you will receive. Point A to Point B with nothing in between. Think in terms of a virtual business partner who has your best interests at heart. Someone who invests in you, your time and your company to help you achieve your goals.

CREATE A PLAN AND EXPECTATIONS
One mistake we frequently hear from business owners is frustration when a project is delivered and it’s not what was expected, it wasn’t on time, or it was not successfully executed. Clearly plan and outline for accountability and outcomes, keeping all lines of communication open. We try to stress the importance of a strategy that all agree upon to ensure that all needs and requirements are met or exceeded. It is difficult enough to give up what you have always done so it’s vital to create a solid foundation with dialog, expectations, and feedback.

RELINQUISH CONTROL
The hardest step business owners tend to have is relinquishing control and letting the person or business you’ve hired do their job. Remember, you’re outsourcing for a reason. You need to focus your time and energy on other more important, high payoff activities relative to your business. It doesn’t make sense to outsource a project or task and manage it from afar. If that’s the case, you should save your money and do it yourself!

Assigning the control to someone else can be nerve-racking, especially if you’ve been involved in every aspect of the business from the start. As Ace Concierge, LLC has continued to practice outsourcing ourselves, as well as accomplishing administrative tasks and business management operations on behalf of our own clients, we’ve seen an increase both in productivity and the efficiency with which we can grow our businesses.

Leveraging time, expertise and a team is a growth mentality. It’s worked for us, and we’d love to show you how it can work for you!

Source:http://www.business2community.com/strategy/5-steps-to-outsourcing-your-business-tasks-01311080

Managed Private Cloud on the Rise as Data Center Outsourcing Service

August 28th, 2015 by Rahul Jain No comments »

Managed virtual private cloud services are gaining popularity as part of data center outsourcing contracts enterprises make with the likes of IBM, HP, or Dell.Outsourcing31

That’s according to the market research firm Gartner, which published its annual Magic Quadrant report on the North American data center outsourcing market published late last month.

Gartner puts managed private cloud in the category of “Infrastructure Utility Services,” or services that companies pay for based on resource usage or number of users served. “Increasingly, IUS are based on managed virtual private cloud services,” the report read.

Industrialized infrastructure services are what is going to drive future growth in the data center services market in general, according to the analysts. That growth will come at the expense of growth and margins for traditional services, which Gartner expects to face further pressure.

This category of services includes both Infrastructure-as-a-Service and Platform-as-a-Service.

IBM and HP remained top data center outsourcing providers on the latest Magic Quadrant for North America, ahead of everyone else in terms of both vision and execution. Other providers Gartner named leaders were Dell, HCL Technologies, and CSC.

Here’s Gartner’s 2015 Magic Quadrant for Data Center Outsourcing in North America:

Gartner Data Center Outsourcing MQ NAM 2015

While it named HP one of the leaders in the category, Gartner estimated that its data center outsourcing and infrastructure utility services revenue in 2014 was down about 5 percent from the prior year.

HP’s key strengths in the outsourcing market are its infrastructure scale – close to 80,000 physical servers across about 30 data centers – its ability to provide just about every kind of data center outsourcing service imaginable, and strong management and budget oversight in service engagements.

While a leader in every other respect, however, HP’s cloud services haven’t done as well as the company may have hoped, according to Gartner. HP says its managed cloud server offering called Helion has seen double-digit growth, but the penetration of its virtual private cloud, utility, or managed private cloud offerings remains below 15 percent, according to the analysts.

HP’s rival IBM is the largest player in the market for both cloud and traditional enterprise data centers. Gartner estimates that Big Blue makes about $3 billion in annual sales on its data center outsourcing services.

Its main strengths are focusing on solving specific business issues for clients rather than simply providing standard technology and support services, breadth and depth of resources, and willingness to switch to new service models.

One of Gartner’s cautions about IBM was the potential for impact on existing interfaces and processes of the company’s recent restructuring, which included melding of its former Strategic Outsourcing and Integrated Technology Services. The new unit, called Infrastructure Services, combines everything from networking to mobility.

IBM’s Global Technology Services segment, which includes Infrastructure Services, lost more than $1 billion in revenue in 2014, according to Gartner’s estimates. The analysts attributed this loss to new and emerging providers in the market who are agile and extremely competitive.

Gartner said IBM needs to review its strategy and be more open to enabling its clients to use competitors’ cloud services, such as AWS and Azure, as opposed to driving them squarely to its own SoftLayer cloud.

Source:http://www.datacenterknowledge.com/archives/2015/08/27/managed-private-cloud-on-the-rise-as-data-center-outsourcing-service/

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