Archive for June, 2011

Czech regulator highlights flawed IT, terror checks

June 30th, 2011

The Czech Republic’s financial watchdog, the Czech National Bank (ČNB), has highlighted flaws in banks’ and other institutions safeguards against information systems failures and steps to counter organized crime and terrorism in its report on 2010. The report, published Thursday, highlights the increased risks to financial institutions from the growing trend of outsourcing information and technology services and increased reliance on the systems.

Stepped-up checks by the central bank in 2010 showed up failings in the compilation of data about systems failures and evaluations of the overall risk from them. Testing and updating of emergency plans for such breakdowns, auditing of information systems risks, and security safeguards for such systems were also found wanting, according to the ČNB report. Banks, insurance companies and brokerages were all identified as having insufficient safeguards against information system and IT failures.

Lax laundering checks
Checks on institutions in accordance with anti-money laundering and counter financing of terrorism legislation were also found to be lacking, the report said. Client checks were not properly carried out, risk factors relating to certain deals or clients not established, and flaws in tracking and detection of suspect deals, it added.

Steps to counter money laundering and pinpoint suspicious deals have been given high priority worldwide in a bid to starve terrorist and criminal organizations of funds and prevent them from transforming “dirty money” into legitimate, above board business.

The special Czech police squad for combating organized crime (ÚOOZ) this week drew attention to the increased trend of criminal gangs forcing legitimate businesses to go bust, for example by exorbitant protection payments, and then taking them over once they had gone to the wall.

More debt monitoring
The bank report also highlighted Czech’s ever increasing debts and checks in debtors through a central debtors’ register. The number of debtors registered in the central system rose from 497,726 in 2009 to 539,540 at the end of 2010 with an almost equal rise in the number of business and individual listings.

The number of debt profile checks, mostly carried out by banks and other institutions offering credit, climbed by around 15 percent over the year.

Source:http://www.ceskapozice.cz/en/business/markets-finance/czech-regulator-highlights-flawed-it-terror-checks

Gallop appointment at Alphabet highlights focus on outsourcing

June 30th, 2011

In the latest in a series of key leadership appointments, Alphabet has brought Martyn Gallop into its operational management team in the new role head of fleet management.

Gallop joins the company from Fleet Logistics, where he was operations director for the past five years. He was previously operations director at Hitachi Capital Vehicle Solutions and client services director at Arval.

He said: “The opportunity to join Alphabet, as it emerges as a leading UK and European leasing and fleet management provider, was not one to miss. Customers increasingly want to outsource non-core areas like fleet, and my role here will include developing our existing fleet and driver management services in line with the needs of the market.”

Gallop’s appointment follows last month’s announcement of a new senior management team structure for Alphabet, which is now operationally independent in the UK while remaining part of BMW Group Financial Services.

Richard Schooling, CEO of Alphabet, said: “Martyn’s knowledge, experience and abilities are widely known and respected in the industry. His appointment reflects the strategic importance of fleet and driver management and outsourcing in Alphabet’s development plans.”

Alphabet has created a series of new operational management roles in the UK over the past nine months. They form the platform for the next phase of the company’s strong growth and include: Nigel Trotman, head of strategic consulting; Russell Cain, accident management & insurance manager; and Jane White, implementation manager.

Further key new appointments are expected by Alphabet in the next few weeks.

Source:http://www.fleetnews.co.uk/news/2011/6/30/gallop-appointment-at-alphabet-highlights-focus-on-outsourcing/39993/

Bad macro in developed world good for Indian IT: HCL Tech

June 30th, 2011

Reeling under debt and other macro concerns, world economy is going through turbulent times. However, this is something to cheer up the Indian IT industry. In an interview to CNBC-TV18, Vineet Nayar, Vice Chairman and CEO of HCL Technologies said that bad macro-economic condition in developed world is good for Indian IT industry.

Confident to stay afloat in a tumbling economy, HCL Technologies is seeing robust demand the US and Europe. Nayar reasoned that the customers have realised that economy will remain weak and in such a condition outsourcing goes up.

He said that local vendors have lost market share to global players and this will see churn of deals within existing vendors.

Going ahead, the company is aiming to hike market share with investments and innovation, without sacrificing margins.

Below is the verbatim transcript of his interview with Udayan Mukherjee of CNBC-TV18. Also watch the accompanying videos.

Q: How is the demand backdrop as you see it because there has been a lot of commentary all around on things slowing down a bit, refuted in part by some of your peers but are you seeing robust demand from US and Europe?

A: The answer is yes. Let me give you the reason. The macro economic indicators are not very good and that has been true for the last couple of years. The customers are realising that is the truth which will remain for the next couple of years. Therefore they are moving in two directions. Direction one, is to reduce their cost of operations. Direction two, is to transform their business operations so that on a structural basis they can deliver their services to their customers at a lower cost.
Therefore, that is driving total IT outsourcing deals in a way which we have not seen before. It is driving transformation deals when people have their capital to re-invest in their business. For example, retail banks are their cost income ratios are amongst the lowest in the world, they have no choice but to invest in back office engine so that the cost income ratios go up. That cannot be done by outsourcing that has to be done by a structural shift.

Also Read: IT sector upbeat despite visa misuse controversy

Same is with the pharma companies which are coming under significant cost pressures. On the cost of medical care and therefore they have to do a structural investment in reducing the cost of benefits they deliver to their customers, same is to the entertainment and telecom companies.

So the macro economic indicators being bad is actually a driver for growth of both outsourcing to drive lower cost and drive in transformation. Therefore what you saw over the last few quarters was deals are shifting. There is a lot of churn in the market. So it is moving away from existing vendors who are not able to meet the cost targets or have the transformation ideas to be able to help the companies so the churn is high.

Therefore, when you see TPI index or any of the reports coming in they say the following two things. Number one, the overall IT growth will be flattish for some period of time and I agree. However, the deals will come in the market and they will be a churn within existing vendors. It will go to more innovative vendors who will solve customer problems on cost and transformation. So the deal flow is good.

Q: That is an interesting point this churn that you are talking about. In the last two quarters have you seen market shares shifting around then between the top 4 or 5 players?

A: I think there is. If you look at the top, the last three years and then last few quarters there are two mega trends which we see in the market share change. First is, the local vendors who are not very big, have significantly lost market share both to large global players and to Indian IT service providers and that trend is huge.

The second is, the global IT players and some of the Indian players who have not been able to keep track of the new emerging trends or the new demands of the customers are also loosing market share to a more innovative global and Indian IT service players. So, you are right in terms of the overall IT budgets are not increasing.
Therefore if you quote the top five Indian and the top five global players together you will not see spectacular growth. However, when you see the churn in market share you will see some very interesting indicators of what is going to happen in the future.

Q: What is the situation in Europe? I take your point about the macro indicators not reflecting on IT service growth because of the need to downsize or reduce cost but sometimes when the macro begins to look very weak then people go on freeze mode as we saw a couple of years back – you don’t see a risk of that happening in Europe?
A: You are right. That is what my fear is – will people go into freeze mode and approach this from an illogical point of view rather than within a logical point of view. I think there are two reasons why I believe it may not happen- although I cannot give you an assurance.

Number one, they have learnt from the lessons of their freeze or panic reaction which happened in the past. It clearly indicated that was a wrong reaction.

The second is, there is a significant amount of competitive pressure and for three years people have been thinking through as to what happens if the macro economic indicators become worse and not better.
There is a third dimension to this which is a new dimension in terms of socially responsible behaviour of corporations in these countries, where they have to protect jobs or they are accountable and answerable to their governments on how they guaranteeing business continuity and jobs. Therefore, I do not see opportunities of knee jerk reaction most places in the world markets and continents in Europe compared to what we saw in the past.

Source:http://www.moneycontrol.com/news/business/badmacroindevelopedworldgoodforindianithcltech_561453.html

Bad macro in developed world good for Indian IT: HCL Tech

June 30th, 2011

Reeling under debt and other macro concerns, world economy is going through turbulent times. However, this is something to cheer up the Indian IT industry. In an interview to CNBC-TV18, Vineet Nayar, Vice Chairman and CEO of HCL Technologies said that bad macro-economic condition in developed world is good for Indian IT industry.
Confident to stay afloat in a tumbling economy, HCL Technologies is seeing robust demand the US and Europe. Nayar reasoned that the customers have realised that economy will remain weak and in such a condition outsourcing goes up.
He said that local vendors have lost market share to global players and this will see churn of deals within existing vendors.
Going ahead, the company is aiming to hike market share with investments and innovation, without sacrificing margins.
Below is the verbatim transcript of his interview with Udayan Mukherjee of CNBC-TV18. Also watch the accompanying videos.
Q: How is the demand backdrop as you see it because there has been a lot of commentary all around on things slowing down a bit, refuted in part by some of your peers but are you seeing robust demand from US and Europe?
A: The answer is yes. Let me give you the reason. The macro economic indicators are not very good and that has been true for the last couple of years. The customers are realising that is the truth which will remain for the next couple of years. Therefore they are moving in two directions. Direction one, is to reduce their cost of operations. Direction two, is to transform their business operations so that on a structural basis they can deliver their services to their customers at a lower cost.
Therefore, that is driving total IT outsourcing deals in a way which we have not seen before. It is driving transformation deals when people have their capital to re-invest in their business. For example, retail banks are their cost income ratios are amongst the lowest in the world, they have no choice but to invest in back office engine so that the cost income ratios go up. That cannot be done by outsourcing that has to be done by a structural shift.
Also Read: IT sector upbeat despite visa misuse controversy
Same is with the pharma companies which are coming under significant cost pressures. On the cost of medical care and therefore they have to do a structural investment in reducing the cost of benefits they deliver to their customers, same is to the entertainment and telecom companies.
So the macro economic indicators being bad is actually a driver for growth of both outsourcing to drive lower cost and drive in transformation. Therefore what you saw over the last few quarters was deals are shifting. There is a lot of churn in the market. So it is moving away from existing vendors who are not able to meet the cost targets or have the transformation ideas to be able to help the companies so the churn is high.
Therefore, when you see TPI index or any of the reports coming in they say the following two things. Number one, the overall IT growth will be flattish for some period of time and I agree. However, the deals will come in the market and they will be a churn within existing vendors. It will go to more innovative vendors who will solve customer problems on cost and transformation. So the deal flow is good.
Q: That is an interesting point this churn that you are talking about. In the last two quarters have you seen market shares shifting around then between the top 4 or 5 players?
A: I think there is. If you look at the top, the last three years and then last few quarters there are two mega trends which we see in the market share change. First is, the local vendors who are not very big, have significantly lost market share both to large global players and to Indian IT service providers and that trend is huge.
The second is, the global IT players and some of the Indian players who have not been able to keep track of the new emerging trends or the new demands of the customers are also loosing market share to a more innovative global and Indian IT service players. So, you are right in terms of the overall IT budgets are not increasing.
Therefore if you quote the top five Indian and the top five global players together you will not see spectacular growth. However, when you see the churn in market share you will see some very interesting indicators of what is going to happen in the future.
Q: What is the situation in Europe? I take your point about the macro indicators not reflecting on IT service growth because of the need to downsize or reduce cost but sometimes when the macro begins to look very weak then people go on freeze mode as we saw a couple of years back – you don’t see a risk of that happening in Europe?
A: You are right. That is what my fear is – will people go into freeze mode and approach this from an illogical point of view rather than within a logical point of view. I think there are two reasons why I believe it may not happen- although I cannot give you an assurance.
Number one, they have learnt from the lessons of their freeze or panic reaction which happened in the past. It clearly indicated that was a wrong reaction.
The second is, there is a significant amount of competitive pressure and for three years people have been thinking through as to what happens if the macro economic indicators become worse and not better.

There is a third dimension to this which is a new dimension in terms of socially responsible behaviour of corporations in these countries, where they have to protect jobs or they are accountable and answerable to their governments on how they guaranteeing business continuity and jobs. Therefore, I do not see opportunities of knee jerk reaction most places in the world markets and continents in Europe compared to what we saw in the past.

Source:http://www.moneycontrol.com/news/business/badmacroindevelopedworldgoodforindianithcltech_561453.html

Private Equity Administration Outsourcing On the Rise

June 30th, 2011

Outsourced private equity administration services are gaining in prominence, guided by increased regulatory demands and demands for reporting transparency on private equity fund managers and institutional investors with direct private equity investments.

“There has been a lot of review around the regulatory/operational challenges that these organisations are going to face,” says Greg O’Sullivan, vice president and head of sales at State Street Global Services. “We are seeing an appetite for private equity to look to third-party administrators such as ourselves.”

J.P. Morgan, provider of outsourced private equity administration for the AU$ 37 billion AustralianSuper superannuation fund and the AU$ 74.62 billion Future Fund, says that demand for private equity administration has increased even though additional allocations to private equity investments have not increased.

“Over the last two years our business in Australia has experienced substantial growth in client base while total private equity fundraising has remained stagnant,” says Matthew Mackay, vice president of private equity fund services. “As laws become more stringent we foresee an additional increase in uptake over time.”

Outsourced providers of private equity administration are able to provide enhanced transparency, partially because they have invested in the technology for specialist reporting, O’Sullivan says.

”I would just say that third-party providers like State Street are raising the bar around transparency with clients, and that’s a big area as well,” he says. “We are providing that transparency and compliance. There’s a need to assure the limited partners that transparency really drives operations. I think in the big scheme of things, private equity is recognized as having played a negligible role in the global financial crisis, but nonetheless, private equity firms are adjusting to the significant new realities that are reshaping all businesses.”

As private equity funds grow larger, the demands of administering portfolios grow larger, guiding fund managers towards outsourcing, Mackay says.

“J.P. Morgan Private Equity & Real Estate Services (PERES) takes the administrative, processing and reporting burden away from clients allowing them to focus primarily on investing capital,” he said. “When a private equity portfolio reaches a critical mass of approximately 15-20 funds it becomes difficult to manage the assets in-house. The PERES team has extensive experience in private equity operations, proven industrial strength processes and industry leading alternative asset-specific technology.”

PERES offers processing services—cash and transaction management; reporting services—fund-level performance and portfolio-company drill down analysis; and online document management.

Custodian NAB Asset Servicing has also looked to get into the private equity administration office, introducing a BNY Mellon product to the Australian market earlier this year as part of banks’ partnership. At the time of the announcement, industry consultants looked favourably on the product’s introduction in Australia, saying it filled a gap in NAB’s product offering.

Providers also say that using specialist outsourcing providers can assist in providing more real-time reporting on valuations, counteracting some of the illiquidity risks that come with the asset class.
“As a result of the global financial crisis there has been increased scrutiny placed on the way fund managers value their investments,” Mackay says. “Given the illiquid nature of private equity and the lag in financial reporting, fund valuations do not always reflect current market conditions. PERES assists clients in providing more real-time reporting by cash-adjusting stale statement values, accounting for price fluctuations in underlying public securities and helping to identify variations between the methods different managers value commonly held portfolio companies.”

State Street also offers a private equity benchmarking service to allow clients to better measure their private equity managers’ performance and valuation, O’Sullivan says.

“It’s not only the illiquidity but the lack of a true benchmark or index that is another challenge,” he says. “That’s certainly been two of the considerations that super funds are looking at—how do we measure the success of our private equity managers, and how do we best manage the liquidity constraint. The private equity index attempts to do that. Clients are subscribing to this as a stand-alone, because we drill down and maintain the data and the partnership information to the portfolio information level.”

Source:http://australia.globalcustodian.com/news/Global-Custody/Private-Equity-Administration-Outsourcing-On-the-Rise/40379

Newport mayor: More outsourcing may be on horizon

June 30th, 2011

As the City Council approved $8 million in budget savings for the 2011-12 fiscal year, Mayor Mike Henn and other council members signaled Tuesday that they are looking to outsource more city services in the coming year.

One of the suggestions is to privatize residential trash collection, a city-run service that residents rank highly in satisfaction surveys.

The push to privatize and share services with neighboring cities fits into the council’s long-term goal of reducing employee costs and pension obligations. Newport’s measured approach to outsourcing has been to slowly shift services to the private sector.

“This year’s budget cuts are half the story,” Henn said after the council adopted the budget. “Our ability to meet next year’s goal … will require further consideration of contracting out of services, as well as regional collaboration on ways to save money.”

Beyond trash collection, Henn said other services that may be outsourced include jail administration; training for police officers, firefighters and lifeguards; restroom maintenance; oil well operations; the city print shop; and some financial operations.

There are no “sacred cows,” Henn said.

City functions that could be combined with neighboring cities, he continued, are the Fire Department; the S.W.A.T. team; police recruitment and investigations; vehicle maintenance; some information technology services; and police dispatch and jails.

They could be “in-sourced,” meaning Newport could become a contractor for other cities, Henn said.

He emphasized that each service would be analyzed and some may have a “perceived benefit” being in-house that would outweigh any cost-savings achieved through outsourcing.

The incremental approach Newport is taking is in clear contrast to the Costa Mesa City Council’s sweeping move to hurry and outsource many of its services.

Over the past year, Newport has, by piecemeal, contracted out its street sweeping, parking meter operations, beach trash collection, animal shelter and street-light maintenance.

The next round may stir more controversy, Henn warned, because trash collection is “a very large issue for the city” that some people consider “sensitive.”

In the city’s 2010 resident satisfaction survey, 92% of residents said they were “satisfied” or “very satisfied” with their trash collection. City Manager Dave Kiff in the past has said that people like the city’s custom service.

Rainbow Disposal charges neighboring Huntington Beach about $10 million per year. That works out to about $57 per resident, including some miscellaneous city costs.

Newport, on the other hand, spends about $69 per resident on its trash collection, which covers employee salaries, benefits and vehicle maintenance, totaling about $5.8 million per year. Salaries for refuse workers range from $49,000 for entry-level positions to $114,000 for the refuse superintendent.

If Newport were to spend as much per resident as Huntington Beach, it could save about 17% of its costs, or $1 million annually.

Council members Keith Curry and Leslie Daigle said they agreed with most of Henn’s suggestions.

In other action, the council:

•Unanimously approved its $255.5-million budget, which included $8 million in savings achieved through cuts or increased revenue. About 30 full-time positions were eliminated, although some of those were vacant.

•Allocated more than $200,000 in special event funding for community groups. Representatives from the various events, like the Susan G. Komen Orange County Race for the Cure, pleaded with the council for more money than a committee had recommended. Some of their entreaties worked. The Newport Beach Restaurant Week, for instance, received $10,000 more, for $34,000 total.

•Appointed Kory Kramer and Jay Myers to the Planning Commission and eight others to various boards and commissions.

Source:http://www.dailypilot.com/news/tn-dpt-0630-nbwrap-20110629,0,3871021.story

UK not against outsourcing: Grey

June 30th, 2011

(PTI) Inviting companies to set up shops in the country, the UK today said that it is not interested in restricting outsourcing and would promote overseas investment.
“We are not interested in restricting outsourcing and there is no interest from our side to make it difficult …
for companies who operate here, we want to make it easier for companies to come to the market, set up their business and employ people,” First Secretary and Head of UK Trade and Investment (North India) Paul Grey told reporters on the sidelines of a Ficci function here.
In recent times, there has been increasing criticism about outsourcing in many developed markets like the US and the UK, especially in the wake of huge job losses due to sluggish economic activities.
Promoting the UK as an investment destination, Grey said, “Indian IT companies are already promoting themselves very effectively, (offering) good quality, low cost (services) which is an excellent combination at the moment because we have our own challenges to reduce spending in the UK.”
The UK is the No 2 market for Indian software services, with the region comprising about 18 per cent of the over USD 60 billion Indian IT-BPO market, Grey said.
The US, which is the biggest contributor to the sector, has a 60 per cent share.
Most Indian software exporters, including TCS, Infosys and Wipro, have significant presence in the outsourcing market in the UK. Major work is outsourced from areas like government, utilities and banking and financial services.
Also, with growing IT spend by companies and government, these companies along with global players like IBM are in constant competition for multi-million dollar projects in the UK.
“UK remains still very open in that sense. We don”t want to make it difficult for companies who operate here, we want to make it easier for companies to come to the market, set up their business and employ people,” Grey said.
In the UK, our philosophy is to keep market open and to get the best companies from around the world for supplying goods and services in the UK, he added.

Source:http://news.in.msn.com/business/article.aspx?cp-documentid=5249854

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