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Archive for October, 2010

Everest Q3 Report: Outsourcing Market Holds Steady from Renewals amid Concerns over Weak Economy

October 29th, 2010

The global outsourcing market remained steady in the third quarter this year due to transaction activity largely fueled by renewals and a healthy captive market, according to Everest Group, a global consulting and research firm. A one-hour Webinar will be held November 9, 8 a.m. CST, to present study findings and insights.

“The slowing growth in BPO is not surprising given a slow post-recessionary recovery as well as anti-offshoring sentiment in the United States.”

Everest’s Market Vista: Q3 2010, a quarterly report on global outsourcing and offshoring activity, reports global transaction volumes for the third quarter were similar to the previous quarter with deals accounting for US$3.4 billion in annual contract value (ACV). Outsourcing of IT services (ITO) improved while Business Process Outsourcing (BPO) activity marginally decreased compared to the previous quarter. ITO activity was led by five “mega deals,” each having contract values over $1 billion, that significantly contributed to the global sourcing market’s 13 percent increase in transaction ACV over the previous quarter.

Other second quarter 2010 findings include:

* North America continued to account for about one-third of total transactions; North America and the United Kingdom contributed toward about one-half of all deals. Notable activity was reported from select geographies including Spain, Germany and India.
* The BFSI (banking, financial services and insurance) and MDR (manufacturing, distribution, retail) verticals continued to dominate transaction signings with some high-value contracts also reported in the public sector.
* In addition to the five ITO mega deals, 60 large deals with contract values exceeding $50 million also were recorded during the quarter.
* A healthy captive market witnessed a fifth consecutive quarter of robust growth with 25 new announcements, including captive announcements in Africa and the majority in Asia.
* Offshore activity saw 34 delivery centers established in the second quarter, the majority in Asia followed by Eastern Europe and Latin America.
* Consolidated revenues increased across offshore-centric suppliers whereas traditional global suppliers saw a marginal decline during the quarter.
* M&A activity for suppliers substantially increased with 22 acquisitions, almost double the number in the first two quarters combined. The quarter also saw 57 new alliances compared to 52 and 61 in the previous two quarters.

“The global outsourcing market is holding steady and is being upheld by an increase in contract renewals and traction in the ITO segment,” said Eric Simonson, managing partner of Research. “The slowing growth in BPO is not surprising given a slow post-recessionary recovery as well as anti-offshoring sentiment in the United States.”

Everest’s quarterly Market Vista reports provide data and analysis of deal trends in the outsourcing and offshoring market, captive landscape, current and emerging locations, key supplier intelligence insights and key developments across the top 20 financial services companies globally. Everest’s recently launched industry trends research complements the Market Vista reports through quarterly updates focused on industry specific global sourcing data, developments and insights across four industries (BFSI, MDR, Healthcare and Energy and Utilities).

The Market Vista Q3 report also includes these focus sections:

* Geography profile of Asia includes analysis of labor arbitrage sustainability, operating costs, operating cost inflation and currency trends. Cities profiled include Jaipur, Pune and Bangalore in India; Guangzhou and Shanghai in China; Manila, Philippines; and Kuala Lumpur, Malaysia.
* Location optimization insights include recent enacted U.S. border security bill’s impact on onshore delivery costs for offshore-centric suppliers, recent U.S. regulatory developments including Ohio’s ban on offshoring state projects and emergence of locations in Central America for supporting voice work. The section also provides an overview of new captive set-ups in India for high value-add services such as R&D and engineering services, a topic explored in greater depth in Everest’s recent report, India Captive Market Landscape: Challenging Common Myths and Charting Future Role.

Quarterly Market Vista reports comprise key developments among 20 leading global suppliers. Traditional supplier profiles include Accenture, ACS Xerox, Atos Origin, Capgemini, Convergys, CSC, Hewitt, HP Enterprise Services, IBM, Dell Services and Unisys. Offshore-centric supplier profiles include Cognizant, EXL, Genpact, HCL, Infosys, Mahindra Satyam, Tata Consultancy Services, Wipro and WNS.

Source:http://www.businesswire.com/news/home/20101028006726/en/Everest-Q3-Report-Outsourcing-Market-Holds-Steady

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Guide to Outsourcing PCI Compliance

October 29th, 2010

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The Payment Card Industry Data Security Standard (PCI DSS) is an evolving set of requirements designed to ensure that all organizations and merchants that process, store, or transmit credit card information maintain a secure Cardholder Data Environment. Complying with the PCI DSS is mandatory but also serves as a sound business practice. This white paper from Data Pipe offers valuable insights that can help you selecting the right service provide for PCI Compliance.

Companies that fail to protect consumer credit card data experience serious repercussions including fines and lawsuits from non-compliance, as well as revenue loss, brand damage, and decreased market share due to customer dissatisfaction. Major credit card companies also reserve the right to prohibit the offending merchant from processing credit cards altogether. As a business grows and conducts an increasing number of annual credit card transactions, it is subject to increasingly complex compliance requirements.

Achieving compliance in-house requires a significant level of expertise, and maintaining compliance quickly becomes resource intensive. As a result, outsourcing PCI compliance solutions to managed service providers has become a popular business trend in recent years. However, you need to be careful as not all PCI DSS service providers deliver a comprehensive compliance solution.

As businesses seek to thrive in a digital economy, safeguarding consumer credit card data has become mission critical. This white paper will help you in selecting the right provider to enable achievement and ongoing compliance with PCI DSS.

Source:http://www.datacenterknowledge.com/archives/2010/10/28/guide-to-outsourcing-pci-compliance/

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Council debates outsourcing trash pickup services

October 29th, 2010

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The city of Rifle is considering whether or not to hire an independent trash contractor to take over trash services for city residents.

Currently, city residents have the choice of using an independent trash company or using the city’s for trash collection. According to City Manager John Hier, this topic has come up in the past and is a continuing discussion considering that the city is looking at continued budget cuts over the next couple of years.

Hier said that private companies have been interested in taking over the operations for several years. However, Rifle Mayor Keith Lambert was not quick to jump on the idea of outsourcing trash collection without more information.

“In order to change there has to be a benefit to the customers in the community,” Lambert said.

Hier said that the city now runs an efficient trash collection service with one employee and one truck.

“We have very few problems with this program,” Hier said.

The city keeps a second trash truck as a backup, in case of breakdowns so that service won’t be interrupted.

Despite the service’s efficiency, it no longer generates enough revenue to cover the costs of service. Fuel and landfill fees have increased costs over the past few years, according to Hier.

Keeping the program with the city adds other costs, such as purchase and maintenance of trash collection vehicles; the city replaces a trash truck every two to three years, according to Hier. The 2011 budget has funds stipulated for the purchase of a new trash truck at the cost of approximately $150,000.

Hier asked City Council if contracting with an independent contractor for service was something it would consider requesting proposals from private trash companies to get a clear picture of how much it would benefit or cost the city to keep or lose the service. Council members agreed that more information is needed before making any kind of decision.

“I think we need more information just to justify keeping it or not,” said Mayor Pro-Tem Jay Miller.

Mayor Lambert agreed with Miller, and the board requested that Hier gather more information and request proposals from trash companies to better determine potential costs savings or increases.

“If we are armed with more information, we can make a better decision.

Source:http://www.citizentelegram.com/article/20101028/MISC04/101029981/1002&parentprofile=1001

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Investors diverge over outsourcing post-RDR

October 29th, 2010

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Over half of wealth managers say advisers will outsource more of their investment business after the RDR is implemented in 2012. Some 30% say outsourcing will “increase significantly”.

But although half of advisers outsource client portfolio management, only 19% of advisers say they will outsource significantly more investment business, while a small number of firms say they will decrease the degree to which they outsource investments.

“Our research suggests these more conservative outsourcing expectations may reflect concerns among IFAs to rationalise their own ongoing charges after the RDR and also worries whether the performance of an outsourced portfolio will justify the cost to clients,” JPMorgan says.

JPMorgan’s research suggests only two-thirds of wealth managers propose to be classified as independent rather than restricted after the RDR, mainly because many wealth managers do not advise on pension or life insurance products.

More than half currently do not meet the requirements needed to be defined as an IFA, while a quarter of firms still need to bring three quarters of their staff or more up to the required qualification standards.

Source:http://www.fundstrategy.co.uk/markets/britain/investors-diverge-over-outsourcing-post-rdr/1021050.article

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Scottsdale’s outsourcing options may not add savings

October 29th, 2010

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Reports detailing outsourcing opportunities in Scottsdale suggest the city might not benefit from privatizing its solid-waste collection, fleet-parts management and parks-maintenance services.

City staffers analyzed services during the past two months and found that further outsourcing was not likely to result in cost savings in those areas. Staff is still exploring changes to the city’s after-school programs, which could include partnering with businesses or non-profit groups. The council last month directed the city’s Financial Services Department to come up with figures for possible costs and savings of the free programs.

The reviews are part of City Manager David Richert’s initiative to look into privatizing services as a cost-saving measure in the face of a $28.4 million budget deficit in 2011-12.

SOLID WASTE: A recent audit backed the Public Works’ findings that the city’s trash collection was lower or comparable to direct costs found in other cities. It is cheaper than service in Paradise Valley, where residents contract individually with private haulers.

FLEET PARTS: A review by staff found that further outsourcing of parts management for the city’s 1,000-vehicle fleet may not be necessary, and that a mix of city staff and contractors works best. At its Aug. 31 meeting, the council directed staff to seek competitive bids for fleet parts. An audit of the city’s fleet management is under way.

PARKS MAINTENANCE: Scottsdale uses a “hybrid” approach in its parks maintenance, hiring outside contractors for some services and relying on city staff for others. In the analysis, staff recommended that the city continue with the same mix of staff and contractors, a move supported by the City Council at its Oct. 12 meeting.

Source:http://www.azcentral.com/news/articles/2010/10/28/20101028scottsdales-outsourcing-options-may-not-add-savings.html

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Outsourcing sees its quietest quarter for five years

October 29th, 2010

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The total value of outsourcing activity in Europe is the lowest it has been for the past five years, according to a report released today by consultancy TPI.

Outsourcing covers a number of business functions as well as IT but most of them are underpinned by some IT elements.

The EMEA TPI index, which measures commercial outsourcing contracts valued at £17m or more, showed that 57 contracts worth a total of £4bn were awarded in EMEA in the third quarter. This is a declined of eight per cent quarter on quarter and 10 per cent year on year.

Duncan Aitchison, president and partner of TPI EMEA, said: “This is only one quarter and not necessarily indicative of a trend within the wider economy, there is stabilisation and signs of growth, but many of the contracts included took months to negotiate before they were signed. There is a time lag. That’s not to say the market isn’t still nervous. It is.”

EMEA IT specific outsourcing saw its third consecutive quarter of decline, with just over £2.6bn in contract value awarded in the third quarter, down 35 per cent year on year.

The UK and Germany continue to show a decline in outsourcing, having only awarded half of the total contract value this year to date compared with the same period in 2009. However, Germany is expected to see a substantial increase in outsourcing activity by the end of the year.

Aitchison said: “There are different reasons for the decline in the UK and Germany. The UK is the most mature outsourcing market in Europe and although contracts are re-signed, there is the absence of big new change contracts. Germany is just a bit slower to pick up. Again there is a time lag here.”

Total contract value for business process outsourcing (BPO) this year to date was £3.7bn in EMEA, an increase of 19 per cent compared with the first three quarters last year and largely driven by the award of a few, larger contracts.

Within BPO, most activity in EMEA is centred on financial services operations outsourcing, which has performed fairly consistently for the past three years. Industry-specific BPO is relatively strong in the region while the more traditional BPO areas such as human resources, finance and accounting and contact centre outsourcing remaining slow.

Source:http://www.managementconsultancy.co.uk/computing/news/2272390/outsourcing-sees-lowest-quarter

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India to Raise Issue of Outsourcing Curbs With Obama

October 29th, 2010

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Issues facing India’s outsourcing industry, such as an increase in U.S. visa fees, will figure in intergovernmental talks during U.S. President Barack Obama’s visit to the country in early November, India’s minister of state for communications and information technology, Sachin Pilot, said Thursday in Bangalore on the sidelines of an event.

Indian outsourcers should also reduce their dependence on a single market and diversify to other markets worldwide, Pilot said during a speech at an IT event hosted by the local state government. The U.S. accounted for 63 percent of the revenue of Indian outsourcers, he added. India should attempt to repeat its success in software outsourcing in the area of hardware manufacturing as well, while also focusing on niche software services, Pilot said.

Indian outsourcers are, however, worried because U.S. unemployment and generating jobs in the country are key issues in next Tuesday’s midterm elections.

Indian outsourcers have been disturbed by recent moves in the U.S. including an executive order by Ohio Governor Ted Strickland that banned the expenditure of public funds for offshore purposes.

Earlier, Obama signed into law a US$600 million bill for increased surveillance of the U.S.-Mexican border to prevent illegal immigrants. The funds for these measures are to be raised from an increase in visa fees paid by tech workers brought into the country by companies with more than 50 staff, and in which more than 50 percent of the staff are on such visas.

At a White House media briefing on Wednesday in connection with Obama’s India visit, officials tried to soften the outsourcing issue, emphasizing instead that Indian investment already supports 57,000 jobs in the U.S.

Large Indian outsourcers such as Tata Consultancy Services and Infosys Technologies have reported double-digit revenue growth in the quarter that ended Sept. 30, indicating that business in the U.S., their key market, is growing.

Infosys Technologies CEO S. Gopalakrishnan said Thursday at a speech at the event that the IT and BPO (business process outsourcing) industries in India would this year surpass earlier growth forecasts of between 13 percent and 15 percent. The industry grew by 5 percent last year.

Indian outsourcers have tried after the recession to increase revenue from Europe and other markets and to reduce their exposure to the U.S. market. But the austerity measures in some European countries are expected to slow down the transition, according to analysts.

During his trip to India, Obama is not scheduled to visit Bangalore, which is considered to be the outsourcing hub of India.

Source:http://www.pcworld.com/businesscenter/article/209102/india_to_raise_issue_of_outsourcing_curbs_with_obama.html

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