Archive for April, 2011

CMS hires Brinks CEO to lead Securitas biz

April 21st, 2011

IT and outsourcing services provider CMS Info Systems on Wednesday announced the appointment of Anup Neogi as Senior VP and COO of the Securitas Cash Management business.

In his new role, Anup will focus on scaling the business operations, improving risk management and driving technology adoption, said a press release.

Anup has more than 20 years of experience in cash management and logistics services. Previously, Anup served as CEO of Brinks India, where he had overall responsibility for the Indian operations which includes cash management and bullion/diamond transport solutions. Prior to this, he spent nearly two decades with Skypak where he served various leadership roles.

Rajiv Kaul, executive vice-chairman and CEO, CMS Info Systems said, “CMS Securitas is our fastest growing division, with over 12,000 team members and reach across 2,100+ cities. It is a market leader servicing all leading banks in India. As we invest significantly to scale this unit, I am excited to have Anup, with his operational leadership across MNC and Indian environments, join us to help build Securitas into a 1,000cr unit.”

CMS Securitas is a division of CMS Info Systems. As an end-to-end service provider, CMS Securitas offers ATM Operations and Management, Transaction Processing and Retail Cash Management.

Source:http://www.ciol.com/Enterprise/Enterprise/News-in-Pictures/CMS-hires-Brinks-CEO-to-lead-Securitas-biz/149041/0/

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China’s outsourcers poised for growth

April 21st, 2011

The top 10 Chinese outsourcing providers employ a total of 85,000 people. That may sound like a lot, but it’s a small number in the world of global outsourcing.

India has a number of outsourcing companies far larger than the combined total of China’s 10 leading outsourcing firms. India’s Tata Consultancy Services , for instance, employs 187,000 people alone.

But China’s IT outsourcing firms are in a good position to grow, according to outsourcing consultancy TPI.

“What’s interesting, and perhaps coincidental, is that the size of the leading Chinese providers today by employee and revenue [counts] is roughly equivalent to the size of the leading providers in India a decade ago,” said Michael Rehkopf, a partner and director at TPI during a conference call about the outsourcing market.

A decade ago, Indian providers accounted for less than 1% of the outsourcing market; today they have about 20% of the market by contract value. Contracts were $1.5 billion 10 years ago and about $18 billion today, which represents a 32% annual growth rate, said Rehkopf.

Many of the major Indian providers count on business from U.S. customers for more than 50% of their revenue, a path that China-based firms may not need to follow.

John Keppel, TPI president, believes the Chinese firms won’t need to rely as much on the U.S. for work. They have a substantial domestic market to tap, and the large economies of nearby countries, Japan and Korea, to do business in as well.

But what could hurt China’s outsourcing growth is increasing competition from other nations and intellectual property protection issues, said Rehkopf.

Caveats aside, Rehkopf said he won’t be surprised to see “Chinese service providers take off quickly and dramatically in the decade ahead.”

China’s outsourcing firms have been turning to Wall Street to raise cash.

For instance, ISoftStone Holdings, a company with about 10,000 employees, held an initial public offering in December. Last year two other Chinese firms went public as well, HiSoft Technology International and Camelot Information Systems. All three are on TPI’s list of top 10 outsourcers.

The Chinese employment market is influenced by the country’s vast number of engineering graduates, more than 300,000 annually. One company, Bleum Inc., seeks to hire new Chinese graduates who score an IQ of 140 on the company’s test.

Source:http://www.computerworld.com/s/article/9215967/China_s_outsourcers_poised_for_growth

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OnForce Eases Outsourcing For VARs

April 20th, 2011

Bill Lucchini has a message for tech service companies–solution providers, integrators, and the like–outsourcing work: If you’re running your own network of independent contractors, you’re taking on too much and putting yourself at a huge disadvantage. You should be using a software solution, like the one his company offers, to do the work for you.

“There’s so much complexity to outsourcing these projects,” said Lucchini, COO of OnForce, in an interview. “We’ve invested a lot of money in a SaaS solution that does it all for you.”

Here’s an example of how it works. Let’s say you’re an SMB VAR in Chicago. You’ve just won a contract with a national retailer that wants to update its POS systems across the board. Great, right? This is a lucrative deal; the retailer has 1,000 locations, from New York to California. But how are you going to cover such a broad area with your limited resources? Sure, you’ve got talented staffers in Chicago. You’ve even got some connections in surrounding states. But you have no idea how you’re going to hook up with techies in the Midwest, or in Seattle, where the retailer has several high-profile locations.

With OnForce, you would create a work order online and upload info into the cloud-based system. From there, everything would pretty much be on autopilot. At each retailer location, technicians in the OnForce network would be notified that there’s work available. The software would profile each technician and, if you choose, select the independent contractors that are the best match for the job. The system even tracks performance and attendance and handles payments.

“The whole process is very simple,” said Lucchini. “There’s no contract; you just go to our website and sign up for account. You can immediately create a work order after that.”

Lucchini said about 90% of the service companies that use OnForce are SMBs–tech shops with five to 100 employees. And with 90,000 registered technicians, the OnForce pool of independent contracting talent is substantial. OnForce’s system is getting a lot of use from VARs that work in the healthcare and retail spaces, Lucchini said.

“With self-checkout becoming the norm and the growing popularity of mobile shopping apps, there’s a lot of integrator activity in the POS arena,” he added. “As for healthcare, clinics are becoming popular alternatives to hospital ERs, so there’s a big focus on updating those facilities and their technology.”

The key benefits of OnForce for tech service companies? Geographical reach (OnForce’s independent contractors are all over the country, from big cities to small towns), reduced costs and high-quality work (OnForce’s techies compete for work; for each project, the system chooses people who have the right skill set and are willing to do the job for the right price), and low risk (all OnForce technicians are fully insured).

Source:http://www.informationweek.com/news/smb/services/229401822

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1Q11 Global TPI Index: Outsourcing Restructurings Return to Historical Norms, Value of New Scope Awards Holds Steady

April 20th, 2011

TPI, an Information Services Group company (ISG) (NASDAQ: III) and the leading independent sourcing data and advisory firm in the world, today released global outsourcing market data for the first quarter of 2011 showing that restructuring activity returned to historical norms following last year’s record spike, but the value of new scope awarded in the market remained steady.

The Global TPI Index, which measures commercial outsourcing contracts valued at $25 million or more, recorded total contract value (TCV) of $17.5 billion during the first quarter of 2011. TCV dropped 25 percent over the fourth quarter of 2010 and 28 percent over the first quarter of 2010.

However, restructurings, defined as contracts that are renewed, renegotiated or restructured, accounted for nearly all of the decline. New scope TCV of $14.9 billion was unchanged year-over-year and declined just 7 percent sequentially.

“In recent quarters, unprecedented shares of global TCV involved restructurings,” said John Keppel, Partner & President-Information Services and Chief Marketing Officer, TPI. “That trend reversed itself in the first quarter, as we forecasted it would, but new scope values were right in line with previous periods.”

Now in its 34th consecutive quarter, the TPI Index provides a quarterly snapshot of the sourcing industry for clients, service providers, analysts and the media. It is the industry’s authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider metrics.

Among the highlights of the 1Q11 Global TPI Index was business process outsourcing (BPO), which recorded its second-best quarterly performance in the last two years. Clients awarded BPO contracts with a TCV of $6.6 billion, up 66 percent over the same period a year ago and more than twice the prior quarter’s tally. The number of contracts awarded also reached its second-highest level since the first quarter of 2009.

By contrast, IT outsourcing (ITO) contract values dropped significantly, driven by the decline in restructurings. However, as with the broader market, new scope of nearly $10 billion in the segment was well within range of first quarters historically.

Among the regions of the world, Europe, the Middle East and Africa and Asia Pacific turned in steady performances. Meanwhile, the Americas suffered its third straight quarterly decline, with TCV falling 56 percent year-over-year, but up 17 percent sequentially.

“The outlook for the rest of 2011 suggests an industry upswing based on healthy contracting activity and a modest amount of restructuring in the mix,” Keppel said. “Overall, we are cautiously optimistic about next quarter and more bullish about the second half of 2011.”

Source:http://www.prnewswire.com/news-releases/1q11-global-tpi-index-outsourcing-restructurings-return-to-historical-norms-value-of-new-scope-awards-holds-steady-120198079.html

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HCL Tech strong Q3 eases concerns on sector outlook

April 20th, 2011

HCL Technologies , India’s fourth largest software services firm, on Wednesday posted a better-than-expected rise in Jan-March profit, clearing the concerns that clouded the outsourcing sector after Infosys’ weak quarterly performance.

Shares of the company, which the market values at $7.34 billion, surged as much as 9.8% to a 11-year high of Rs522.35, in a Mumbai market that was up 0.91%.

The BSE IT index was up 1.70%. At 11.37 a.m, the stock was 7% higher at Rs508.9.

HCL, which follows a July-June fiscal, reported a 33% rise in net profit to Rs468 crore and 31.5% in revenue to Rs4,138 crore.

Profit was expected to rise 25% to Rs430 crore, according to a Reuters poll of 17 analysts. Revenue was seen at Rs4,079 crore.

“People also have it somewhere in their mind that what happened with Infosys was more of a company specific issue with changes in the senior management,” PINC analyst Rohit Anand said, adding HCL Tech’s earnings should ease investor concerns about a downturn in the sector.

Last week, Infosys Technologies Ltd kicked off results for India’s nearly $60 billion IT sector, sparking worries about the sector’s growth after it forecast annual sales lower than expected on slower client spending.

India’s No.2 software services exporter, in its latest management shakeup, said its human resources chief T.V. Mohandas Pai had quit. Pai, the former CFO, was widely seen by analysts as the only non-founder who could become CEO.

A slew of brokerages downgraded the target price of the Infosys shares, citing concerns over its earnings and lower forecast.

“We have seen Accenture and Cognizant growing much better. It will be further substantiated from the TCS results,” PINC’s Anand said.

“If they also give good results then we can take it for sure that it was a one-quarter blip at Infosys than a sectoral problem.”

Last month Accenture posted a strong quarter and raised its outlook for the full year.

In February, Cognizant Technology Solutions Corp , known for its conservative outlook, also forecast strong 2011 results.

January-March is a seasonally weak quarter, as clients generally finalize their budgets for the next fiscal during this period, leading to a spurt in spending in the first two quarters of the upcoming fiscal year.

During the third quarter, HCL’s business outside Europe and the Americas grew as much as 81%. All its service offerings also showed strong growth of 34-43%.

“Results were strong on various fronts. There was margin improvement, cash flow improvement, strong revenue growth momentum, volume growth was good,” said a Mumbai-based analyst, who did not wish to be named.

“All these things lead you to believe that there are no concerns in the industry per se and what happened with Infosys was a one-off case.”

Net employee addition — a key parameter of the IT sector’s health — stood at 1,153 for the period, taking the total headcount to 73,420.

HCL also said it bought certain software assets from Citibank International Plc during Jan-March for $26 million, revenues from which are expected to come from the middle of its fourth quarter this year.

Through the deal, HCL is also taking over 41 employees from Citi and an “assured revenue stream” of $135 million spread over 10 years, HCL said in a statement.

A slight depreciation of the rupee against the dollar, making up for a dip in utilization rates, somewhat aided HCL’s core operating (EBITDA) margins for the period, improving by about 1 percentage point from the December quarter to 17.3%.

The rupee weakened about half a percentage point against the dollar during Jan-March.

Indian software companies, which get most of their earnings in foreign currency, hedge some of the risk, but with a chunk of their costs being in rupees, currency appreciation tends to squeeze margins.

Source:http://www.livemint.com/2011/04/20092429/HCL-Tech-strong-Q3-eases-conce.html

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Radicon Takes IT into the Cloud to Beat Acquisition Deadline

April 20th, 2011

Radicon, a global supplier of engineering products, has signed a three-year deal to move its entire IT system from its own headquarters and remotely host it in the ‘cloud’ at ICM’s Birstall data centre.

The agreement will also see ICM transfer Radicon’s systems in record time as the power transmissions firm has just 150 days to separate its IT from its previous parent company, following its recent acquisition by Indian engineering giant Elecon.

As part of the three-quarter of a million pound contract, the systems hosted and managed by ICM will include Radicon’s Enterprise Resource Planning (ERP) system upon which it relies to effectively manage its entire supply chain, as well as all data, email and IP telephony. ICM will also deploy and manage a WAN to connect Radicon’s Huddersfield headquarters with sites in The Netherlands and Sweden, as well as provide service desk support for IT users within the business.

Chris Riley, Business Manager at Radicon, explains: “Radicon has just 150 days to become self sufficient in its IT provision and we realised that we would be unable to build our own infrastructure within this deadline. This is a huge task, especially as we have been part of a larger group for 150 years and that it can take up to ninety days just to get a new broadband communications line. We are sure that ICM will deliver against this challenge.

“If our IT fails then we can’t do business, so the security and reliability of ICM’s data centre was a key decision maker for us. Once completed, we will have a much improved IT system, supported by a huge knowledge base of ICM experts, which we could never employ in-house. Outsourcing has been a no-brainer in terms of the benefits it will deliver our business,” concluded Riley.

Martin O’Donnell, Managed Hosting & Cloud Services Director at ICM, said: “For many businesses the IT jargon of ‘the cloud’ is an enigma. Quite simply it is another alternative for businesses looking to improve the reliability and efficiency of their IT. Early adopters like Radicon are reaping the benefits of a fast and flexible hosted system that immediately delivers genuine business benefits. Without our cloud service, it’s unlikely that Radicon would easily meet the transfer deadline.”

Source:http://www.pandct.com/media/shownews.asp?ID=28799

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Outsourcing: IT Customers disappointed with results

April 20th, 2011

Forget all the discussion about IT outsourcing providers moving up the technology value chain to become partners in innovation; their customers’ biggest needs remain much more straightforward, according to the results of the IDG Enterprise Outsourcing & Service Providers Survey. (CIO.com is an IDG company.)

The three biggest drivers for outsourcing among the 1,176 IT and business executives who responded to the online survey were access to skills not available in-house (52 per cent), cost reduction (50 per cent), and managing variable staffing needs (44 per cent). Around one-third of respondents were looking to third-party providers to support or enable new business initiatives or to improve business and technology processes, while 19 per cent sought outsourcers to enable innovation.

The leading motivations for outsourcing were reflected in the factors respondents considered most important when selecting a provider. When choosing an onshore vendor, the most critical criteria were cost (94 per cent), technology or business process expertise (92 per cent) and available talent pool (88 per cent). When choosing an offshore provider, reputation leapt to number one (90 per cent), followed by expertise (89 per cent), available talent pool (88 per cent) and cost (87 per cent).

The survey also revealed that achieving the desired results from outsourcing remains a work in progress. Just 44 per cent of respondents said they had achieved a measurable positive impact accessing hard-to-find skills, while only 34 per cent achieved measureable cost reductions and 36 per cent attained the flexible staffing model desired.

The vendors themselves may not be entirely to blame for the lack of results. Survey respondents didn’t give themselves rave reviews for their management of their outsourcing relationships. Just over a quarter rated their own service delivery management and measurement practices as very effective, while 42 per cent said they were somewhat effective and 12 per cent said they weren’t effective at all.

Marks for overall outsourcing strategy were also mixed. Three out of five of those surveyed said their outsourcing strategy was somewhat effective-in alignment with their overall business strategy but not a main driver of business success. Meanwhile, 18 per cent said their outsourcing strategy was extremely effective-a key component of their success in meeting business goals. But 22 per cent indicated that their outsourcing strategy was ineffective and reactionary.

The middle-of-the-road results may not temper the use of external IT services (just seven per cent of respondents said they planned to decrease their use of outsourcing). But it could make cloud-computing options more attractive. Nearly three quarters of respondents said they are considering cloud computing as an outsourcing option; 13 per cent are working with existing outsourcing vendors to move to cloud-based services, and 10 per cent are replacing existing outsourcing services with new vendors who can tap the cloud.

Whether cloud-enabled providers will address the biggest perceived outsourcing risks according to the survey (i.e. poor service quality, data security/intellectual property protection, and loss of internal knowledge-remains to be seen. Customers will likely have the same concerns with cloud options.

Source:http://www.techworld.com.au/article/383839/outsourcing_it_customers_disappointed_results/

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