Archive for December, 2010

IT industry news: IT outsourcing ‘to be widespread in 2011′

December 31st, 2010

Companies will continue to outsource their IT services in 2011 [and it will be not only big businesses but also medium-sized enterprises, according to Gerry McLaughlin of

Many other companies would next year follow suit, but it would not only be business behemoths that turn to contractors, he said.

“Companies will continue to outsource some of their IT activities in 2011 and it won’t just be the big companies who will be outsourcing as it spreads to the medium-size companies,” he added.

The expert went on to say that contractors with the necessary skills to launch new projects, such as systems architects and business analysts, would be “much sought after as companies open the IT purse strings again.

However, he cautioned that outsourcing was not for everyone.

His comments emerged as technology giant HP recently announced it had secured a $400 million (£258.4 million) contract to deliver outsourced IT services to oil firm BP


HP, NASA Sign 10 Year (IT) Contract Worth $2.5 Billion

December 31st, 2010

According to latest reports, Hewlett-Packard (HP) signed a 10 year IT deal with NASA, which is estimated at $2.5 billion.

As per the terms of the agreement, HP will provide, manage, secure and maintain the space agency’s PC hardware, agency-standard software, mobile information technology (IT) services, peripherals, accessories, supporting infrastructure, and other computer technologies over the next couple of years… “basically everything IT.”

In its 10-year contract with NASA, HP will be taking over a number of services, currently being provided by Lockheed Martin (Corp.) – – except, computer networks and data centers.

HP is now ranked #2 in computer-services, next only to IBM, after it acquired Electronic Data Systems Corp. for $13.9 billion in 2008.


Rockford Housing Authority’s outsourcing idea draws offers

December 31st, 2010

The Rockford Housing Authority’s radical departure from business as usual has netted several offers from outside companies to take over management and maintenance of the agency’s properties.

In its effort to balance the budget amid a daunting economic environment, the agency turned to outsourcing this year as a possible solution to the demands of the federal government, which requires a balanced budget for each site.

A handful of the agency’s 10 sites aren’t in compliance, which Director John Cressman says is because the union workers are too expensive: 14 of the 104 employees on RHA’s payroll are not represented by a union.

The board approved cutting spending by $1.3 million in September, when members were already focusing on union wages.

The Housing Authority is in negotiations with its two major unions: the American Federation of State, County and Municipal Employees and the International Association of Machinists. Both are working on expired contracts.

Cressman said the authority’s interest in outsourcing maintenance and/or management at some or all of its sites is exploratory at this time.

“We are still very anxious to settle with our unions, too,” he said.

The bids are being reviewed by a team of Housing Authority staff and board members, Cressman said, and the team’s assessment could be shared with the authority’s board of commissioners as soon as next month.

Failure to improve cash flow at the troubled sites could mean government intervention, and that, Cressman said, could threaten redevelopment goals.

Still, any decision to outsource, thus eliminating jobs at the Housing Authority, would have to be approved by the authority’s board, Cressman explained; and under its contract AFSCME would be able to submit a counteroffer.

The authority assists 10,000 to 12,000 people with housing subsidies in complexes and individual apartments and homes. Its 2011 budget is $11.5 million.

The agency’s budget problems stem from increased labor costs and less money distributed by the Department of Housing and Urban Development.


DeKalb: Protecting teachers by outsourcing other jobs?

December 31st, 2010

Facing an estimated $50 million shortfall in next year’s budget, DeKalb schools may resort to outsourcing custodial and maintenance work now done by 700 employees. The district is exploring whether outsourcing the work will be cheaper than paying its own personnel.

While I understand the pain caused by any job losses, it seems that DeKalb is looking at a better solution than laying off teachers. If some of these non classroom jobs can be performed more cheaply by outside contractors, it would save the taxpayers money.

With the size of the shortfalls that DeKalb and other counties are confronting, jobs are going to have to be eliminated.


Outsourcing by U.S. firms add to unemployment woes

December 30th, 2010

Continued job outsourcing by U.S. companies in order to cut costs and maximize profits may be keeping the U.S. unemployment rate at a high 9.8 percent. For the most part, U.S. firms are doing fine during the economic recovery. Just 4 percent of the top 500 U.S.

corporations did not generate profits in 2010 while the stock market is nearing its highest level since the financial crisis began two years ago. Yet, this modest success has not trimmed down joblessness. U.S. companies are hiring, just not on U.S. soil. Many businesses are hiring overseas as they expand their operations there. According to Washington-based think tank Economic Policy Institute, U.S.

companies have created 1.4 million new jobs abroad this year compared to 1 million jobs back home. If those 1.4 million jobs were offered to Americans, then the unemployment rate would have gone down markedly, according to Robert Scott, the institute’s senior international economist. “There’s a huge difference between what is good for American companies versus what is good for the American economy,” he told AP.

As an example, Illinois-based Caterpillar Inc. hired 15,000 new workers this year, half of them outside the country, while UPS is also hiring more workers abroad as the two companies respond to much bigger demand of their products and services overseas. Caterpillar earlier announced that it is building three new plants in China. Outsourcing by U.S. firms is not a new phenomenon and has been around for at least two decades. But over the years, the nature of these jobs have changed from simple to complex. Whereas before clothes and toy production have been the norm, these days computer software, IT services and semiconductor manufacturing are increasingly being outsourced to countries such as India, Brazil and China.


Toshiba, Samsung ink logic production outsourcing deal

December 30th, 2010

Two bitter rivals in the NAND flash and logic markets — South Korea’s Samsung Electronics Co. Ltd. and Japan’s Toshiba Corp., have entered into an outsourcing deal which has come as a surprise. An unexpected report which surfaced states that Toshiba will be outsourcing an undisclosed percentage of its logic production to South Korea’s Samsung Electronics Co. Ltd.
The news came from Reuters which cited the Nikkei business daily as its source.

But as reported, Toshiba’s logic IC unit is going fab lite in a move to cut costs. The company’s so-called Logic LSI Division will expand its outsourcing of cutting-edge products, including 40nm chips, to multiple foundries from fiscal year 2011, according to Toshiba.

At the same time, Toshiba continues to back away from the leading-edge foundry business.

As part of the strategy for transforming its system LSI business and ”securing an asset light business model,” Toshiba has signed a memorandum of understanding with Sony Corp., expressing the intent to dissolve Nagasaki Semiconductor Manufacturing Corp. (NSM) and to transfer 300-mm wafer fabrication lines there from Toshiba to Sony. The move was expected.

At one time, Toshiba was in talks about outsourcing some of its 28-nm logic IC production to GlobalFoundries Inc. It’s unclear where that stands.

The reported foundry deal between Toshiba and Samsung makes sense, but it is also humbling for the Japanese company. Several years ago, the companies would never cooperate. They are fierce rivals in NAND, and, to some degree, logic.

Now, both Samsung and Toshiba are part of IBM Corp.’s ”fab club” or process technology alliance. Freescale, GlobalFoundries, IBM, Infineon, Renesas and ST are also part of the group, which cooperates on process R&D.

IBM, GlobalFoundries and Samsung are the main foundry vendors in the camp. Samsung is slowly gaining steam in the arena. TSMC, UMC and others compete in the arena.

”Samsung’s System LSI is prospering. While pre-2009, they had mainly snagged Qualcomm among marquee customers, they now have Xilinx for 28nm (a shared account with TSMC) and Apple, the biggest consumer of chips, as their customers,” said analyst C.J. Muse of Barclays Capital.

”In 2010, after many years of Rs.2,233.51 crore ($500 million) type capex, Samsung found itself crossing the Rs.4,467.01 crore ($1 billion) and the Rs.6,700.52 crore ($1.5 billion) capex bar in one swoop by likely spending Rs.8,040.62 crore ($1.8 billion), and has publically stated intentions to double capacity every year through 2014.


DeKalb school workers could lose jobs to outsourcing

December 30th, 2010

More than 700 DeKalb County school workers could lose their jobs to outsourcing.The school system is considering privatizing custodians and maintenance jobs, including grounds-keeping, painting, window glazing, heating and air-conditioning, equipment repair and pest control.

“The objective is not to eliminate employees, but to save taxpayer dollars,” DeKalb schools spokesman Jeff Dickerson told The Atlanta Journal-Constitution on Wednesday.

School officials said the outsourcing is still a proposal and the amount of potential savings was not available this week.

However, the proposal could mean layoffs. Dickerson said about 700 jobs would be impacted. Board chairman Tom Bowen said the proposal impacts 900 jobs – 600 custodians and 350 at the school service center.

Dickerson said the district “strongly encourages vendors to give preference to existing employees,” and it is too early to determine who would retain employment.

That’s not enough for the Organization of DeKalb Educators, which represents about 4,700 school employees.

“It’s a huge concern for us,” said David Schutten, the union’s president. “People in the schools are very upset that privatizing custodians will take away the family feel in schools.”

Outsourcing is one of several suggestions that came up earlier this year as part of budget cuts. Facing an estimated $50 million shortfall in next year’s budget, the proposal is back on the table.

Last week, the school system received several bids in response to Requests For Proposals advertised for custodians and maintenance positions. School staff are now reviewing those bids to determine if the move is cost-effective and will make a recommendation to the board over the next two months.

“This is purely an investigation of a possible cost-savings measure. If it turns out that it does not materially benefit the district, it won’t be pursued,” Bowen told the AJC. “It is a good idea to understand what other school districts across the country have done to cut costs in the area of support services.”

Schutten said he too needs more information. He plans to ask questions about employee pay, benefits, seniority and job security at Monday’s school board meeting. Other school employees have suggested a protest.

“Over the long haul, privatization will hurt us far too much,” Schutten said. “They think privatization will save money, but that’s not necessarily true.”

Last week, more than 100 employees attended an organization meeting to express concerns about the proposal, Schutten said.

Earlier this year, DeKalb cut about 250 jobs as part of budget cuts, including nine custodians and 19 maintenance workers. DeKalb schools have already outsourced its communications department to Dickerson and Cohn & Wolfe.

The Atlanta Public Schools has touted savings by using both contract workers and school employees for food services, maintenance, custodians, security and construction. In May, APS officials told the AJC that a contract with Sodexo-Jackmont, which operates 70 percent of the district’s food services, resulted in a $1.3 million surplus last year. Prior to outsourcing, APS’ food services department operated at a deficit.

Earlier this year, Cobb schools considered outsourcing transportation, but killed the idea after complaints.


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