Archive for April, 2010

Driving change through outsourcing

April 30th, 2010

It’s not all about cost – change is a growing factor in companies decisions to outsource business processes. So says recent research by Horses for Sources, a US-based analyst firm and blog, into the ITO and BPO industry landscape in 2010.

Still, no one would dispute that cost is a huge factor in the decision to outsource, but the argument goes that as world economies emerge from a deep recession, companies’ approaches to outsourcing have shifted, both in terms of the maturity of their perceptions and their desire to implement innovative and sweeping changes to their business.

In a sample of more than 200 enterprises, the research found that seeking to achieve more effective operations at a global level was a key driver behind outsourcing decisions being made this year by more than half of respondents, with the desire to transform processes only slightly behind it in terms of importance.

“This is clearly a time when some enterprises are finally finding the appetite for profound and radical change to their business,” reads the research. “Many businesses are struggling to break out of the old way of running operations, and outsourcing is increasingly being viewed as a major change agent, with close to two-thirds of midsize customers citing this as a very important driver.”

“Outsourcing can be a vehicle for change,” says Phil Fersht, founder and CEO of Horses for Sources and editor of its popular blog. “It can drive some shock into the system… It can change the way things are done for the better and that ability to achieve positive business outcomes is becoming more of a factor in how businesses are looking at it.”

Fersht argues that “as more companies aim to become more globalised they have to look at how they’re going to make their processes global – so how are they going to manage payroll, for example, on a global basis?

“Coming out of recession, companies are asking questions about the ways they can change and develop to gain an advantage in the current market. The speed and skill with which they are able to deliver is crucial to them and if outsourcing can enable the company to focus on doing that better, then it is earning its consideration,” he says.

Still, for all those who believe that the current global market is on stable enough ground to look at bringing change to outdated systems and processes, there are also many who are more cautious.

“There’s a lag time, which we’re currently in, between the point when companies are looking to outsource to cut out every last bit of cost, and a more comfortable zone when they can start being more aggressive in looking for change and innovation,” says Gianluca Tramacere, research director at Gartner responsible for IT outsourcing.

“2009 was crucial for these cost-intensive contracts,” he says. “80-90% of the people we’ve spoken to who have been renegotiating deals were not doing it to achieve a huge revamp, but to squeeze even just 3% out of their existing contracts.”

Still, regardless of whether the current economy offers a platform for change, the outsourcing market itself has developed to cater for the demands of 2010. Outsourcing is perceived as a more viable strategy than it was even a couple of years ago, and, should change be on the agenda, outsourcing will, in most quarters, be an option. “In general, clients are much more open to the idea than in the past,” says Tramacere.

But, Fersht explains, there is still work to do in some quarters. “There is a lot of education involved and some companies aren’t getting the information,” he says. “They might be internally developing the competency to change, but there are lots of different considerations that only now are becoming obvious. This is a big challenge and it needs to be managed effectively, but certainly outsourcing is often an option to achieve a specific transformation program.”

The research finds that service providers’ ability to transform processes was critically important for more than a quarter of respondents, while the ability to provide innovation was at least quite important for more than 60%.

Change, then, is almost certainly on the agenda for both outsourcers and companies and there’s increasing acceptance that outsourcing has the capability to deliver. Whether that is now or further down the road, 2010 is shaping up to be the year when business gets a real understanding of what outsourcing can do.


Kerala IT floats Global RFP to invite Comprehensive Bids from Internationally Reputed Master Planners

April 30th, 2010

Kerala IT in its pursuit to become a leading IT/ITES destination in the country had recently announced the next phase of expansion of Infopark last year in 160 acres of land at the Kunnathunadu and Puthencuruz village. Hon. Chief Minister of Kerala V S Achuthanandan had laid the foundation stone for the new building on November 28, 2009. Now Kerala IT has floated Request of Proposals from internationally reputed master planners of IT Parks for undertaking Master Planning for Infopark Kochi Phase II for a total built up space of approximately 8 million sq.ft.

Infopark in the last two years have been growing fast and is already home to over 10,000 IT professionals working in world class companies like Wipro, Tata Consultancy Services, ACS, US Technologies, IBS, Arbitron, Zerone Consulting, NHR Outsourcing, SIT Mobile, Alcatel Lucent, etc. Spokes of Kochi Infopark in Koratty, Cherthala and Ambalapuzha were inaugurated along with ramp up of co-developer projects including L&T, Leela Group and Brigade.

With the phase II of Infopark, this growth will be fuelled by capitalizing the advantages that Kerala IT has to offer with its robust infrastructure and connectivity. The park will offer the first plug and play BPO facility in the State. The park will be operational by December 2011 and will house domestic parks as well as Special Economic Zones for IT/ITES. The domestic park in this new phase is aimed at creating cost effective infrastructure for the BPO industry. The current financial year’s budget of Government of Kerala has an allocation Rs.50 crores towards infrastructure development schemes for the phase II of Infopark.

“We are inviting RFPs from consultants of international repute to build up the Phase II of Infopark as a facility at par with any facility globally. Like past projects, Infopark will act as a single point developer of basic infrastructure facilities such as substation, power distribution, internal road system, water intake, treatment and storage, data& communication connectivity, land development, compound wall, guest house, common food courts, etc. The work on the first phase will commence after July, 2010 and Infopark Phase 2 will play a pivotal role in helping us sustain the current growth momentum” said Infopark CEO, Siddhartha Bhattacharya.

“The location for the phase II being very scenic, we also want the consultants to ideate how to utilize this location to simultaneously promote Green IT. We plan to develop the campus to tap into future emerging high growth areas like data centers, domestic services as well as renewable areas and the campus design will reflect high efficiency and employee friendly amenities.” He added. “The park when fully completed is expected to generate around 80,000 jobs in IT/ITES/BPO sector apart from the large scale of jobs expected to be created in the services sector.”

“Infopark, Kochi is gaining momentum with the series of developments taking place in the campus. With the RFP floated for phase II expansion, we hope to see some good internationally reputed firms associating with us to establish a world-class campus in Kochi for global IT/ITES companies. The Phase II expansion has already generated a great deal of interest among large cross sections of the IT industry. We will leverage Infopark’s current growth and tap Kochi’s untapped potential to generate differentiated value for the companies that will set shop in Infopark Phase 2″ Said Dr Ajay Kumar IAS, Principal Secretary of Kerala.


SoftCom, Parallels join to offer collaboration tools in the cloud

April 30th, 2010

Parallels, a cloud enablement leader, recently announced that SoftCom, a SaaS business enterprise applications provider, has launched Parallels Automation, which allows the company to offer full service in the cloud. Running the applications through Parallels cloud servers and using its name allows SoftCom to improve its visibility as it shifts its focus on sales and marketing from research and development.

As SoftCom expanded, it struggled to maintain its business operations and serve its customers. Moving to Parallels allows them to manage their business operations more efficiently without worrying about support issues that require constant supervision.

“Deploying Parallels Automation was a practical decision both from an operational point of view and from a profitability perspective too,” Celal Ulgen, chief marketing officer for SoftCom, said. “We looked at the alternatives prior to deployment and Parallels stood head and shoulders above the rest. This gave us the extra confidence we needed to be able to trust our entire hosting automation needs to Parallels.”

Outsourcing a portion of its IT operations gives SoftCom more time to handle customer service. A survey conducted early this year of American consumers concluded that companies in the United States lose an average of $83 billion every year as a result of poor customer service. ADNFCR-2178-ID-19751730-ADNFCR


Renegotiations dominate IT services activity

April 30th, 2010

At first glance, the numbers seem to indicate a robust rebound for the IT outsourcing industry. Total contract values for application development and applications-plus-infrastructure deals signed in the first quarter of 2010 more than doubled compared to the same period last year. Application development deals totaled $3.2 billion while applications-plus-infrastructure deals were worth $7.6 billion, according to IT services consultancy TPI. All told, IT outsourcing customers inked contracts worth a total of $16 billion over the three-month period-a 46 percent year-over-year increase, TPI reports.

But a closer look at the wheeling and dealing reveals that it was contract renegotiations-particularly mega-deal restructuring-behind those big gains. Three of the four mega-deals signed were actually reshuffled contracts, ranging in value from $1.2 billion to $2 billion and accounting for a third of this quarter’s total IT outsourcing contract value.

Thus, the IT outsourcing industry’s recovery began, not with a bang, but with a whimper.

IT outsourcing contract renewals tend to be cyclical and predictable-coming as the end of the deal’s term approaches, notes Mark Mayo, president of TPI Global Operations. But that’s not the case this year.

“Several of the larger examples took place well in advance of the scheduled contract end dates,” Mayo says.

A number of factors drove these mid-contract reorganizations. Tough economic times created a need for some clients to seek more contractual and pricing flexibility from their vendors. Others went through mergers and acquisitions. Still others found that changing business requirements necessitated revisiting their IT services deals to meet current demands.

While most clients chose to leave the bulk of their IT services with their incumbent outsourcing provider, they’re increasingly breaking up portions of the work and awarding it to other vendors.

“This is especially true in the larger multi-tower ITO restructurings,” says Mayo.

Offshore providers may benefit from the shift to a multi-sourcing strategy. “The Indian heritage companies are focusing on these split off scopes as a market opportunity,” Mayo says.

The number of contracts set to expire over the course of 2010 will put a considerable amount of work up for grabs in the coming months–nearly $12 billion in annual contract value, up 25 percent from 2009, according to TPI. And more mega-deals are due to expire this year than last year. So renewals, renegotiations and extensions-not new deals-will continue to be the focus of IT outsourcing for the rest of 2010, says Mayo, as the industry makes a “gradual, but uneven recovery.”


IT managers continue to risk company data with untested backups

April 30th, 2010

Although more than three quarters (84 per cent) of Australian organisations rely on backups to restore lost corporate data, only 35 per cent of IT managers conduct monthly or weekly checks to confirm that data can be retrieved from their backup systems. This alarmingly low figure is one of the key findings of an Australian data management survey released today by Kroll Ontrack®, the leading provider of information management, data recovery and legal technologies products and services.

Ten per cent of IT managers test the success of their backups annually, while only one third of organisations (39 per cent) sporadically check that their backups work. A further four per cent never review their backed up data.

“The need to protect company data is fairly well ingrained, with 97 per cent of organisations backing up daily or more frequently,” said Adrian Briscoe, General Manager, Ontrack® Data Recovery APAC, a division of Kroll Ontrack. However, far too many IT managers undo all this effort by not testing their backup systems. It doesn’t matter how often a company backs up; if the process doesn’t work and you can’t restore the data when you need to, you have a problem. Every instance of data loss involves risk to the company through increased costs, lost intellectual property, damage to reputation, delays and reduced productivity.”

Given the potential expense of data loss, it appears that some organisations are beginning to look for ways to mitigate the risk. When asked if they would consider taking on data recovery insurance just over one-third (35 per cent) of respondents answered “maybe” or that they were unsure of their intentions.

One of the biggest changes in data management over the last 12 months is that a growing number of IT managers are taking the time to update business continuity plans to accommodate new technologies. In 2010, 66 per cent of respondents revised disaster recovery plans within the last 12 months compared to 52 per cent in 2009*.

“New technologies are not always catered for under existing backup procedures. That’s why it is essential for organisations to review their processes and test their backups as they introduce changes to their IT systems,” Briscoe added.

The survey also shows that data end-of-life procedures continue to be a concern, with 17 per cent of IT managers unaware of their organisation’s policies relating to erasing sensitive data and 46 per cent stating that their organisations have no formal policies in place.

Following government guidelines for software destruction, erasure was the most popular method of erasing data, followed by the physical destruction of drives and outsourcing to a third party and shredding. Other alternatives ranged from the practical – degaussing, downloading a software erasure program, or overwriting and reallocating – to the imaginative such as smashing with a hammer, cutting with scissors, driving a nail into the hard disk drive, or writing zeros to the entire drive.

“Methods of erasing sensitive data tend to be haphazard at best and, at times, ill-informed,” Briscoe noted. “Some of the practices employed by organisations are unlikely to completely erase the data, leaving the potential for confidential material to fall into the wrong hands.”

The annual Kroll Ontrack Data Management survey seeks to identify current IT management views and experiences relating to data management. The 2010 survey was conducted last month and involved IT managers from 144 organisations across Australia.

Through its Ontrack Data Recovery products and services, Kroll Ontrack is the largest, most experienced and technologically advanced provider of data recovery products and services worldwide. Using hundreds of proprietary tools and techniques, Ontrack Data Recovery solutions help businesses and consumers recover lost or corrupted data from all types of operating systems and media and storage devices through do-it-yourself, remote and in-lab capabilities.

* Kroll Ontrack Data Risk Management Trends 2009 Survey.


Trading idea – computer sciences a doji close

April 30th, 2010

Shares of Computer Sciences Corporation  closed the trading day higher by $0.24 or 0.45% from its previous close. Computer Sciences’ shares price action formed what is considered to be a doji close, where the open and close prices are very close to each other, mainly signaling an indecision between buyers and sellers.

Computer Sciences Corporation  provides consulting and information technology (IT) services to industry and government. The Company provides consulting, systems design and integration, IT and business process outsourcing, applications software, and Web and application hosting.

Computer Sciences’ current stock range is defined by a trough, which marks calculated support at $50.51 and by a peak that marked the resistance point at $55.7. These levels are closely watched by traders managing their positions.

Traders wanting to establish a position in Computer Sciences or traders that are already holding the stock can use the doji close to their advantage, since the pattern present a short term pause in the stock’s price action. This pause results in an entry point for traders depending of which way the stock resolves this short term indecision.

Doji are important candlesticks that provide information on their own and as components in a number of important patterns. Doji form when a security’s open and close are virtually equal. The length of the upper and lower shadows can vary and the resulting candlestick looks like a cross, inverted cross or plus sign. Alone, doji are neutral patterns.

Any bullish or bearish bias is based on preceding price action and future confirmation. In the case of Computer Sciences, given that the stock finished the session higher, bulls should monitor their positions for confirmation that stock will continue higher by taking today’s intraday high. Below a Doji illustration:


Chilean IT group eyes Atlanta office

April 30th, 2010

A non-profit organization that promotes Chile as an information-technology outsourcing destination and helps firms from the South American nation expand abroad is eyeing an office in Atlanta.

Chile-IT was launched last year as the global services arm of Chile’s main IT industry group, the Chilean Association of IT Companies, or ACTI, which has more than 150 members.

The organization has an office in New York and will decide by June whether to put its second U.S. office in Atlanta or another city.

Chile IT is mainly focusing on assisting Chilean companies in their plans to “internationalize,” said Juan Carlos Munoz, the organization’s CEO.

“We’re thinking seriously about opening operations in Atlanta,” Mr. Munoz told GlobalAtlanta. “It’s a good hub for the Southeast of the U.S., (and) the infrastructure is very good and the pricing is very good compared to New York.”

Mr. Munoz also noted that Atlanta has the Chilean-American Chamber of Commerce of the South, an honorary consulate and a government trade promotion office, ProChile, which opened last year to help small- to medium-sized companies trade and conduct business in the U.S.

Alberto Valenzuela, president of the Chilean chamber, said the IT group would be another asset to help attract more Chilean companies to Georgia. The chamber, founded in 2007, has about 10 Chilean member companies. Among its charter members was Arauco Woods Products Inc., a forest products exporter from Chile with offices in Atlanta.

“Every opportunity when we see Chilean companies opening an office in the U.S., we try to capture their attention to Atlanta,” Mr. Valenzuela said.

Chilean IT firms have won many contracts throughout Latin America but haven’t done much business directly in the U.S. yet, Mr. Munoz said. Neither he nor Mr. Valenzuela could think of any Chilean IT companies that have invested in Georgia.

Chile’s IT sector offers advantages in software development, network security, managed security, remote management services, electronic banking and other sectors, Mr. Munoz said. Chile also shares a time zone with the U.S. East Coast, so companies can collaborate with their Chilean teams in real time.

“The Chilean IT industry grew less than 10 percent last year because it was a recession year, although the IT services provided from Chile grew more,” Mr. Munoz said. “The industry ($3.3 billion) is still a small portion of our GDP, but we expect to be able to provide services to the U.S. of more than $5 billion in the next 5 years.”


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