Archive for March, 2010

Multi-billion dollar mega deals end in break up

March 31st, 2010

Ten years ago in IT, Y2K had come and gone without catastrophe, security chiefs were grappling with the ILOVEYOU virus, and the dotcom bubble was bursting. But in the IT services industry, the year 2000 was notable for another reason—it was the year of the giant outsourcing deal.

A total of 24 IT outsourcing mega deals (multi-year contracts worth a billion dollars or more) were signed that year—more than the industry had seen before or since. All told, they were worth more than $54 billion, according to outsourcing consultancy TPI. They included the EDS-U.S. Navy contract worth $6.9 billion, the Bank of Scotland’s $1 billion deal with IBM Global Services, and the $3 billion IT services contract between Nortel Networks and CSC.

The year 2000 was indeed a “defining year for the outsourcing industry,” says TPI’s director and chief research officer Paul Reynolds, and one that led to record profits for outsourcing providers.

But times have changed. “The outsourcing market today is vastly different than when the majority of these mega deals were signed,” says Reynolds. In 2010, outsourcing contracts tend to be shorter in duration and smaller in value. The average total contract value of an IT outsourcing deal in 2000 was $360 million. Today, it’s nearly a third of that, according to TPI.

What will become of the supersized IT outsourcing contracts of 2000? All signs point to some mega break-ups. (See The Demise of the Outsourcing Mega Deal.) Eleven of the 24 contracts signed in Y2K are set to expire this year, along with seven others signed in subsequent years.

“As large contracts approach their renewal dates, buyers in mature markets like the U.S. and U.K. are increasingly likely to divide the contract scope among multiple service providers,” says Reynolds.

He predicts more of what TPI is now calling mega-relationships—deals with an annual contract value of $100 million or more—rather than mega deals.

“Outsourcing buyers are likely to continue signing shorter, more targeted contracts that are driven by cost-saving goals,” says Reynolds.
From Outsourcing Mega Deals to Multisourcing

Increasingly mature customers, a more competitive IT service marketplace, and a greater acceptance of offshore outsourcing should lead mega-deal customers to unbundle their work, awarding it in separate contracts to specialized suppliers, a practice known as multisourcing. That’s exactly what the Commonwealth Bank of Australia did when its ten year, $5 billion IT outsourcing contract with EDS wound down in 2007.

While the course of mega-deal relationships may not always run smooth—EDS’s deal with the Navy, for example, hit some very public rough seas throughout the years—multi-sourcing is not necessarily a day at the beach for customers.
For many, however, the benefits of breaking up a big deal into smaller—and competitive—outsourcing relationships may outweigh the costs. “Spreading the work allows the clients to mitigate their risk and increase competition amongst service providers,” says Reynolds. “The trade-off is that there is added complexity to the governance function, but many companies are willing to manage multiple delivery models in exchange for cost savings.”

Mega deals continue to be signed, though at about half the level of a decade ago. Reynolds expects to see at least twelve new deals with a total contract value of a billion dollars or more this year, though they’re more likely to be inked in less mature markets within Asia and parts of Europe.

Meanwhile, some customers are sticking it out with massive, single-sourced IT services deals. DuPont bucked the trend toward multi-sourcing five years ago when it renewed its multi-billion dollar deal with CSC through 2014. And IT executives at Proctor & Gamble have said the 10 year, $3 billion deal they have had with HP for seven years gives them valuable preferred status with the vendor.

“The primary reason that a client would renegotiate a mega deal with their current service provider is that they are receiving acceptable benefits from the relationship and they find it easier than taking the contract to a competitive process,” says Reynolds.

Nevertheless, he predicts that these mega deals will be the exception rather than the rule. He adds, “In most cases the market has changed fairly substantially since these deals were originally signed and clients have more options available to them.”


Polaris International Holdings, Inc. announces first quarter 2010 financial report.

March 31st, 2010

Polaris International Holdings, Inc. (Pink Sheets: PIHN), a global IT outsourcing services company with a U.S.-Japan dual market base today announced unaudited consolidated financial results for the first fiscal quarter of 2010 ended December 31, 2009 (all figures in U.S. dollars).

During the quarter ended December 31, 2009, the Company completed the acquisition of the IT business of Staff IS Co., Ltd. and Polaris Technologies, Inc. in Japan and established its core operations. Polaris Technologies became an ASP division of Staff IS. These acquisitions have provided the Company steady revenues, experienced staff and high profile customers. An application service provider (ASP) is a business that provides computer-based services to customers over a network.

“Our subsidiary in Japan performed well, despite an increasingly difficult economic environment,” said Kuni Misawa, CEO/President of Polaris International Holdings, Inc. “Our operations in Japan continue to expand. Additionally, the Company currently plans to launch U.S. based business activities in the second quarter of 2010 while our focus remains on research and exploring additional outsourcing service companies as potential acquisition targets in North America.”

2010Q1 Financial Summary

2010Q1 Financial Statements include Real Estate division financials of Staff IS Co. The former owner of Staff IS has agreed to separate its real estate division from Staff IS within six (6) months from November 1, 2009. Until the separation has been completed, interest payments on the mortgage shall be deducted from the purchase price of $1.7 million.

IT division of Staff IS in Japan had $722,254.00 in revenues with $84,078 EBITDA for the two months, November and December, 2009.

Total consolidated revenue for the quarter ended December 31, 2009 was $722,254.00. The revenues were primarily attributable to operations in Japan.

Total consolidated expenses for the quarter ended December 31, 2009 were $750,153.00. The expenses were primarily attributable to cost of materials, salaries and management costs, and other general and administrative expenses.

The Company raised a total of $94,053 through the sales of restricted Series B Preferred Shares.


Web designers realize revenue increases by outsourcing to US-based tech company

March 31st, 2010

Web designers have long faced a multitude of problems when fulfilling client requests. For most web designers, a variety of services can be requested creating the need for outsourcing of different project deliverables. However, now these web designers can seek support from a company birthed as a result of the same problems they currently face. is a 100% owned and operated online service that provides access to its technical staff. Traci Knoppe, a web designer herself, conceived the idea to solve her own project outsourcing issues. “Since all my clients are US-based, it became too cumbersome for me – as a web designer – to outsource and manage workers overseas. There were time difference issues, language barriers, and cultural aspects that simply could not meet the needs for my clients,” Traci states. “When I looked inside the US, I found there was an abundance of highly qualified, skilled individuals to whom I could outsource. They delivered at a much higher quality level and at a surprisingly affordable price.”

As Mrs. Knoppe’s refined her outsourcing process, she found that other web designers wanted to utilize the US-based resources she had already uncovered. “It seemed obvious that I needed to create a business that would allow other web designers to take advantage of what I had found,” she shares.

In only six months, has become a hub for all kinds of online entrepreneurs – especially web designers wanting outsourcing options. Besides the obvious attraction factor of using only US based employees, contractors, and resource partners, offers a unique pricing structure that makes it affordable. The Platinum Plus plan was developed with web designers in mind as it offers the highest amount of task allocation for the price. In addition, the web designer receives a dedicated project manager who communicates via phone on a weekly basis, and oversees all active tickets the web tech team is handling. This allows the web designer the freedom to plan his or her time more effectively, have all project elements completed faster, close open customer invoices more rapidly, and still have sufficient time for cultivation of new business.


Tax authority begins outsourcing pilot

March 31st, 2010

Tax authority begins outsourcing pilot

The HM Revenue & Customs (HMRC), UK’s tax authority, has begun its offshore outsourcing pilot programme in India with Capgemini in a bid to reduce operational costs, says The Economic Times.

The pilot is part of HMRCs five-year $84 million outsourcing contract for tracking imports and exports. HMRC plans to save $7.5 million through the pilot, with the intent of further outsourcing after studying the initial programme.

“No taxpayer data will be leaving the UK. There will be no job losses in the UK as a result of this pilot, as this is new work,” says Andrew Bennett, HMRC spokesman. “No decisions about any further offshoring will be made until the pilot is completed and the results rigorously evaluated.”

Report reveals UK outsourcing trends revealed the results from a survey of its 50 000-plus business users, says OnRec.

The survey states 60% of UK businesses are outsourcing more than they did two years ago. Some 61% of businesses are outsourcing IT requirements to local suppliers instead of overseas alternatives, with only 6.9% of business awarding contracts to the lowest bidders. founder Xenios Thrasyvoulou says: “Responses to our survey and analysis of transactions on the site points to one conclusion: outsourcing is growing and offshoring is falling.” He says the fall in offshore outsourcing is attributable to the rise of the freelance economy and the availability of skilled IT professionals.

OL&T, Momentive in outsourcing agreement

Odyssey Logistics & Technology (OL&T) has partnered with Momentive Performance Materials in a five-year logistics management outsourcing agreement, states Bulk Transporter.

The partnership allows Momentive’s SAP enterprise resource planning system to be integrated with the Odyssey Global Logistics Platform to provide an integrated transport management system.

OL&T will manage Momentive’s inbound and outbound logistics including warehousing and transportation in North America, Europe, and Asia.


IAG earns IBM svp certification

March 31st, 2010

IAG Consulting, a leading business requirements consulting and requirements software solutions provider, announced today that it has earned IBM’s Software Value Plus (SVP) certification and has been accepted into the new and selective initiative for IBM Business Partners.

Through the program, IAG is authorized to sell and support its clients in the implementation, design, and management of IBM’s popular Rational software products including RequisitePro, Rational Requirements Composer, DOORS, and Rational Team Concert.

The IBM Software Value Plus (SVP) initiative is designed to meet the demands of clients who are looking to drive more value from their technology investments by working with trusted partners who possess proven skills. Being an SVP-certified solution provider enables IBM Business Partners like IAG to set themselves apart by asserting that they possess the key technical and industry skills necessary for the technology implementations that help clients achieve their business goals.

IAG is a Premier IBM Business Partner with a long history of delivering technology solutions built around IBM platforms to its customers. IAG has developed a substantial base of expertise integrating IBM Rational products and utilizing them on large engagements. IAG is also a reference site for Rational Requirements Composer having extensively tested and used the product in its own accelerated requirements definition environment. Learn more about IAG’s partnership with IBM.

“Our involvement with the IBM SVP program demonstrates our ongoing commitment to providing the best requirements solutions for our customers,” said Ross Little, Co-Founder of IAG Consulting. “IAG has been helping its clients implement and use Rational software for many years and we are honored to be recognized with this certification so that we can continue to provide the quality and value of service that our clients expect of us.”

Through the SVP initiative, IBM chose only those software partners capable of providing the absolute best-in class service and support on its software platforms.

“IBM is committed to supporting an ecosystem of skilled partners that can provide the most value to our shared clients,” said Sandy Carter, Vice President, IBM Software Group Channels. “Business Partners who invest in the proper skills and expertise are well positioned to help clients achieve a faster time-to-value with the right solutions, reduce risk in solution development, and increase their return on investment over time.”

IAG’s consultants are some of the most qualified and respected in the field of requirements definition and management. Customers rely on IAG’s practical experience, advice, and extensive capabilities in implementation, consulting, training, and outsourcing services in business analysis, agile project management, and requirements definition and management.


Xchanging signs a gbp 50 million 3-year procurement outsourcing contract with selex galileo

March 31st, 2010

Xchanging’s procurement processing platform to drive efficiencies and reduce costs in non-core procurement for SELEX Galileo

LONDON, 31 March 2010 SELEX Galileo, a leader in the defence electronics market has signed a three year contract with Xchanging plc (UK:XCH 194.30, -0.10, -0.05%) , one of the largest and fastest growing global business processors. The contract will see Xchanging manage an annual spend of circa GBP 17 million on behalf of SELEX Galileo’s UK business.

In providing an enhanced procurement service to SELEX Galileo operations in the UK, Xchanging will consolidate spend management and help reduce overall non-core procurement costs. As part of the contract Xchanging will be responsible for sourcing a number of spend categories including resourcing, learning and development, travel, protective clothing, office supplies, furniture, couriers and freight.

This contract enhances Xchanging’s position as the leading indirect procurement services provider to the defence industry.

Commenting on the deal, Nick Cramer, Head of Indirect Procurement, SELEX Galileo said, “Outsourcing of certain non-core procurement categories aligns with our strategy to improve procurement across the business. Outsourcing procurement to a specialist such as Xchanging provides us with added drive and focus from industry-leading experts and also global best practice in procurement processes and technology. Our goal is to spend smarter and constantly enhance procurement service and value.”

Richard Houghton, Chief Financial Officer, Xchanging added, “SELEX Galileo has an impressive global vision for greater collaboration across its spend. Xchanging will leverage its capabilities for SELEX Galileo Ltd to provide the best combination of people, processes and technology to deliver cost and efficiency benefits. This partnership will expand Xchanging’s procurement services presence. We are delighted to be the procurement processor of choice for SELEX Galileo Ltd.”

Xchanging manages annual indirect spend of over GBP 1 billion on behalf of large corporations and services multi-sector customers across a range of geographies and industries. With high-calibre procurement category experts and world- class technology, Xchanging offers a complete suite of services from sourcing-to- pay services for procurement. Xchanging has been recognised as a tier one Procurement Services provider globally by the Everest Research Institute.


IT and telecoms

March 31st, 2010

IT and telecoms firms are looking for more added value from recruiters and candidates alike. And the need to recruit masters of several trades rather than just one is lengthening the recruitment process and causing employers to emphasise education in delivering the next generation of talent.

“With organisations coming out of the recession there are still budget and headcount restraints, as well as market and outsourcing consolidations, mergers and acquisitions. In our sector, mobile-specific skills can be in short supply,” says Debbie Cole, technology recruitment manager atT-Mobile.

Meanwhile, employers are being more specific in the skills they require, Scott Simons, director of global recruitment services at Networkers International, told Recruiter. “Whereas a few months ago they wanted one of four skillsets, they now want four of four skillsets. The interview process has got more rigourous as well having more stages.”

Sej Butler, European recruitment manager at IBM, says the IT solutions provider’s priority is to bring the right mix of skills into growing areas. “A particular hot skill for IBM right now is in business analytics and optimisation. The world is becoming more integrated, more interconnected and more intelligent.”

For Nick Cole, head of resourcing, Orange UK, the focus is on making sure the mobile communications provider has the right people in the proposition development and sales fields.

“Our key demand areas are within project management and testing (both IT and networks). In terms of most highly prized skills, proposition development is essential to ensuring Orange has the ability to innovate faster than the competition and anticipate future market demand,” he says.

The speed with which technology moves is reflected in the changing requirement of firms operating in the sector. Martin Thomas, head of recruitment at BT, told Recruiter: “Keeping up with the pace of change continues to be a challenge -; some of our key challenges are in recruitment for new technologies such as cloud computing and services to support digital television.”

And IBM’s Butler says UK colleges universities must ensure that graduates get the skills the sector needs. “The industry needs the right sort of people coming out of our academic institutions with the right competencies in addition to the technology skills. Education curriculums need to be revisited to engage more students into IT.”

But Linda Kennedy, vice-president of people at Orange UK, says universities and colleges face their own challenges in keeping up with the sector’s needs, as education programmes can be outdated by the time a candidate comes to the market.

For NES, the solution has been to develop its own IT training division, says Keith Butler, managing director at NES IT. “We are working with one client within the financial sector to train 10 graduates over 12 months in both business and IT skills, and the appeal of combined training and recruitment solutions is expected to grow.”

Ultimately, says Kennedy, the sector’s future depends on training the next generation of IT talent. “Government programmes such as Young Britain, which focus on training and developing skills at an early age and providing youngsters with qualifications where they may otherwise not be in a position to attain them, will help.”


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