Archive for August, 2011

When your offshoring fails: A guide to suing the outsourcer

August 31st, 2011

Dispute resolution is always an important consideration when outsourcing IT. If that fails, however, you can always sue if your provider has breached the contract. “But you probably shouldn’t,” says Edward Hansen, a partner with the law firm Baker & McKenzie.

Outsourcing lawsuits are notoriously difficult to prosecute, can create such a distraction that it puts the organization at operational risk, and rarely benefits either party in the long term. Offshore outsourcing litigation is even more complicated.

“Sometimes, however, litigation is necessary to resolve outsourcing disputes when all other reasonable or contractually obligated means of solving the problems in the business relationship have been exhausted,” says Shawn C. Helms, an attorney in the technology transactions and outsourcing practice at Jones Day.

How do you know if it’s time to take your offshore outsourcing provider to court? Ask these six questions first.

1. What is the nature of the dispute? “There is a huge difference between discussing litigation in the context of a vendor that is underperforming versus one that has been negligent or violated a trust,” says Hansen. “For example, breaching the privacy provisions of an agreement is very different from failing to deliver on transformational savings.”

A well-drafted contract contains remedies for a privacy violation. But underperformance can be murkier. There may be something about the underlying economics of the deal that encourage bad performance, says Hansen, or you may have chosen the wrong partner. In either case, litigation is unlikely to solve your problems.

2. Do you have informal dispute resolution processes at your disposal? “A good contract will provide many alternatives to a suit,” says Brad Peterson, a partner in the business and technology sourcing practice of Mayer Brown. Look for dispute resolution provisions in your deal’s project management or governance mechanisms.

In addition, most contracts lay out “mandatory, mandatory, detailed, multilayered, and gradually escalating dispute resolution processes,” says Shawn C. Helms, an associate at Jones Day, starting with informal dispute resolution procedures and going all the way through litigation. “Most outsourcing disputes are resolved confidentially through out-of-court settlements so that service providers can protect their business interests and customers can maintain an ongoing relationship with the service provider.”

3. Can you withhold payment? Customers may seek to use financial leverage to right a wrong. Some contracts contain a provision call “Right of Set-Off” or “Right to Withhold Disputed Payments” that allow the customer to deduct from payments otherwise owed to the service provider amounts of money representing damages that the customer claims the service provider caused as a result of failing to perform its obligations under the contract.

“If the service provider disputes the amount of the deduction, it may be required by a forum-selection clause in the contract to file a lawsuit in the U.S. to have a court resolve the dispute, or it may be required by an arbitration provision to arbitrate the dispute in the U.S.,” explains Robert Kriss, a partner and litigator at Mayer Brown. “In the meantime, the customer holds onto the disputed amount or deposits it in an escrow account, depending on the terms of the contract.”

4. Do you have a binding arbitration clause in your contract? A well-written deal contains a provision obligating parties to arbitrate any disagreements through a neutral arbitration body such as the American Arbitration Association or the International Chamber of Commerce. That becomes especially important with offshore outsourcing, says Helms, “because foreign courts are often more likely to enforce an arbitration ruling against a local provider than a ruling by a U.S. court.”

Many countries have agreed by treaty to enforce arbitrated judgments. Just make sure the arbitrating organization is one whose awards are enforceable in the country where the outsourcer’s assets are located.

5. Where is your offshore provider based? “You have to determine first how you would enforce a judgment,” says Kriss. “If the offshore outsourcer’s assets are located in a country that will not enforce judgments rendered by U.S. courts, then you will have to bring suit in the country where the assets are located.” Indian courts, for example, will not directly enforce the U.S. judgments because the U.S. is not a “reciprocating territory” under Indian law. And pursuing litigation in India can be painful. “The Indian court system is infamously slow,” says Helms. And bringing a suit against a vendor in its own country may not be worth it anyway. “The outsourcer may have a home court advantage,” adds Peterson.

6. Is there money to collect? Should you decide to sue your provider, a court may decide in your favor, but you remain responsible for collecting your judgment. And there may be little money to chase. “Offshore outsourcing companies often have few assets. They may be leasing their facilities and equipment and paying out cash to the owners as soon as it is received. The offshore outsourcing companies with assets may have those assets pledged to first-priority lien holders,” says Peterson. “Thus, even if the U.S.-based customer manages to get a judgment against the outsourcing company, there may be little or no cash to collect.”

Make sure your vendor is not what the legal community calls “judgment proof” before you look to the courts for restitution.


Tata Technologies Earns Autodesk ‘Consulting Specialization’ Status

August 31st, 2011

Tata Technologies, a global leader in Product Lifecycle Management (PLM), and Engineering Services Outsourcing (ESO) announced that it has earned the “Consulting Specialization” designation from Autodesk Inc.

As an Autodesk Consulting Specialized Partner, Tata Technologies has demonstrated a significant investment in its CAD professionals, presented a solid consulting business plan that includes referenceable customers, and has consistently offered the highest level of product and industry knowledge and support to its customers. The Autodesk Partner Consulting Specialization designation enables partners to highlight and brand their expertise in delivering related professional services in key industry areas.

By completing the required curriculum and training, as well as meeting the required levels of service and standards established by Autodesk, Tata Technologies further demonstrates its strong customer service focus and further establishes the company as a trusted adviser to customers worldwide.

“For more than 25 years, we have worked closely with Autodesk to provide our customers industry benchmark solutions with Autodesk products,” said Craig Radomski, vice president sales – NA. “This designation is the result of our dedication to customers, and the dedication of our professionals to serving those customers. I want to thank the Autodesk organization for this designation, and I want to thank all of our team members who have worked so hard to earn this.”

The Autodesk Consulting Specialization Program, newly introduced in 2011, helps Autodesk partners build world-class consulting organizations, enabling them to develop, manage, and deliver consulting services that help maximize the customers’ Autodesk software investment.

About Tata Technologies
Tata Technologies Limited, founded in 1989, is a global leader in Engineering Services Outsourcing and Product Development IT services to the global manufacturing industry. Tata Technologies, through its pragmatic approach to engineering and manufacturing processes, delivers best-in-class solutions for Product Lifecycle Management, Enterprise Resource Management (ERM) and Application Development and Maintenance (ADM) to the world’s leading automotive and aerospace manufacturers and their suppliers. Tata Technologies is headquartered in Singapore, with regional headquarters offices in the United States (Novi, Michigan), India (Pune) and the UK (Coventry). The company has a combined global work force of more than 4,500 employees serving clients worldwide from facilities in North America, Europe and the Asia-Pacific region.


Procurement companies ‘should consider all outsourcing service options’

August 31st, 2011

The boundaries between providers of full procurement services and those offering them on an interim basis are being blurred.

That is according to Peter Smith, writer for Spend Matters UK, who explained that many companies have varying strategies when it comes to dealing with indirect procurement, with some wanting full responsibility placed in the hands of the purchasing firm.

However, others will want only want to outsource parts of their business and there are some companies who will have particular requests, requiring firms to be flexible in their operations.

“The choice is not simply whether to outsource all indirect procurement, or the entire P2P management process. It doesn’t have to be all or nothing – you have a vast range of options to consider,” he explained.

Heinz may want to consider outsourcing after its gross profit margin decreased 90 basis points to 35.7 per cent in the first quarter of 2011-2012 financial year, which it put down to “significantly higher commodity costs”.


ATOS : wins major contract with HSH Nordbank AG

August 31st, 2011

Atos, an international IT services company, today announced that it has signed a major five year outsourcing contract with HSH Nordbank AG.

Atos will operate the take over management of the entire IT infrastructure and telecommunications at all HSH Nordbank locations worldwide. Services will include desktop and service desk management, managed servers, network solutions, back office and trader workplaces.

For HSH Nordbank, the contract will result in considerable cost savings as a result of IT industrialization, standardization and virtualization.

“Our extensive expertise in outsourcing and our sustainable technology services enables us to win this the deal. As a reliable partner we will support HSH Nordbank as it transfers to a new IT landscape,” said Winfried Holz, CEO of Atos in Germany.

About Atos

Atos is an international information technology services company with annual revenues of EUR 8.7 billion and 78,500 employees in 42 countries. Serving a global client base, it delivers hi-tech transactional services, consulting and technology services, systems integration and managed services. Atos is focused on business technology that powers progress and helps organizations to create their firm of the future. It is the Worldwide Information Technology Partner for the Olympic Games and is quoted on the Paris Eurolist Market. Atos operates under the brands Atos, Atos Consulting & Technology Services, Atos Worldline and Atos Worldgrid.


Dell, VMware bring first public and hybrid cloud offering

August 31st, 2011

Offers a multi-tenant environment for running virtual systems

Dell and VMware have jointly released the Dell Cloud based on VMware vCloud Datacenter Services to provide customers with a complete multi-layer enterprise security offering.

Dell said the new offering will run in its datacenters and offer a multi-tenant environment for running virtual systems.

Dell is one of the first providers authorised to provide VMware vCloud Datacenter Services for enterprise-class, secure, public, private and hybrid clouds.

Dell claimed that the latest release is the first public and hybrid cloud offering by the company.

Dell will also offer consulting, application and infrastructure services to help companies transform their IT environment and integrate cloud services in their business.

With the cloud offering, Dell aims to address one of the greatest concerns customers have with cloud implementations.

Dell and VMware will also provide Infrastructure-as-a-Service (IaaS) choice for customer organisations, hosting and outsourcing firms, system integrators and service providers.

This provides automation, multi-level security and availability in order to manage on-demand capacity, workload scalability, or as a platform to respond to changing business needs more rapidly.

Through the acquisition of SecureWorks and partnerships with VMware and Trend Micro, Dell aims to secure critical IT assets for the customer through the multi-layer provisioning of services.

Dell protects the datacentre’s infrastructure through the management and monitoring of network firewalls, web application firewalls, intrusion detection and prevention systems, and vulnerability scanning.

Dell Cloud with VMware vCloud Datacenter Services includes offers a public option for customers, as an enterprise-class, secure offer of Infrastructure-as-a-Service (IAAS) hosted in a secure Dell datacentre.

Dell will build private clouds at either our customer’s datacentre or Dell datacentres leveraging VMware offerings including VMware vSphere and VMware vCloud Director as well as Dell’s vStart offering.

Utilising VMware vCloud Connector, the hybrid cloud offering provides management of on- or off-premise private cloud and Dell’s Public cloud offering.

Dell is currently offering the Dell Cloud with VMware vCloud Datacenter Service with beta customers, and the offering will be available in the US in the fourth quarter of this year with rollout planned for EMEA and APJ in 2012.


IT Salaries Increase but Free Overtime Still the Norm

August 31st, 2011

Salaries for IT workers in the private sector have experienced healthy growth, outstripping the pay rates of their public sector colleagues.

According to new data released by the Association of Professional Engineers, Scientists and Managers Australia (APESMA), IT professionals have experienced a 4.2% salary increase since the lows of 2009, compared to 3.5% growth in the public sector.
It appears the good news is set to continue, and APESMA CEO Chris Walton said “Across the board, recruitment firms are predicting a rise in permanent hiring over the coming 12 months and salary expectations are likely to follow”.

IBM Australia Fujitsu Outsourcing
Despite business confidence remaining patchy for the immediate outlook, APESMA said most organisations in their industry are expecting a moderate growth phase, and hence further salary increases are likely to follow.

However, despite the positive salary forecast, IT workers continue to experience very high rates of unpaid overtime, with the problem particularly rife in private organisations.

Walton said the high instances of unpaid overtime was concerning, and said “Over 60% of IT professionals in the private sector reported receiving no additional compensation for overtime worked compared to 38.4% in the private sector- clearly there’s an issue there for private sector employees.”

However industry professionals have warned employers that the issue of unpaid overtime can mean the difference between losing or hanging on to specialist IT talent, and their skills often underpin “growth strategy and business objectives for the coming 12 months”.
Next week thousands of NSW government technology workers will closely follow the announcement of the new state budget, with widespread speculation some of its 10,000 contractor roles will be on the chopping block.

According to March figures, the NSW government had 5,730 full-time IT workers, and engaged the services of up to 10,000 contractors.
After the state’s Health Department cut 300 jobs last week, NSW tech workers who are not engaged in core projects believe they are in the firing line.
The government is tipped to announce outsourcing initiatives, and ministers Greg Pearce and Mike Baird are said to support the moves- reportedly seeing it as a way to not only slash costs but drive efficiencies in public-sector service delivery.

The government has not released any further information in advance of the budget announcement, however sources close to the government said outsourcing of technology jobs was not a matter of if but when.

The federal government has historically been a big supporter of IT outsourcing with the departments of Defence, Immigration, Customs, Health and more relying on big firms such as IBM, CSC, Fujitsu, Hewlett-Packard and Unisys as outsourcing partners.


Capgemini to take responsibility for the operation of EnterCard’s central IT systems

August 31st, 2011

Capgemini Norge AS, part of the Capgemini Group, one of the world’s foremost providers of consulting, technology and outsourcing services has been chosen as EnterCard’s partner to support their rapid growth ambitions. EnterCard is a Nordic company that issues credit cards on behalf of partners, or under its own consumer brand. Capgemini will be the main provider for application maintenance and development services supporting EnterCard to more rapidly deliver new innovative products to the market.

Capgemini’s global expertise within financial services, along with its lean delivery model will result in an increased speed of development, faster time-to-market, wider innovation capacity and cost reduction. The agreement runs for five years, at an estimated value of 30million. It entails delivery to all EnterCard’s business in Norway, Sweden and Denmark. Implementation will involve extensive use of Capgemini’s global delivery model Rightshore, using expertise in India.

Through the agreement Capgemini will provide end-to-end responsibility for application development and management including testing services. EnterCard has chosen Capgemini to consolidate the number of suppliers operating its central systems. By using one provider as opposed to several, processes will be more efficient and this will free up time that can be used to develop innovative solutions for EnterCard’s partners and customers. EnterCard’s choice of Capgemini confirms the company’s expertise within both financial and card services, with worldwide customer references, as well as its position as a leading provider of outsourcing services.

“EnterCard is growing rapidly and we are heavily focused on developing great propositions for our customers and partners. For us it is important to have an agile IT-partner that can match our market leading ambitions as the card industry develops and the needs of our customer are changing. To speed up the pace of development we have chosen Capgemini as the partner to help us continue our growth in the Nordic region” said Tord Topsholm, Operations Director for EnterCard.

“We are pleased with the confidence that EnterCard has shown us by signing this agreement.” says Ola Furu, CEO for Capgemini in Norway. “This is an important Application Lifecycle Services deal for us. We are confident that our expertise will secure a lasting and great partnership between our companies” says Furu.

Entercard – JV between Swedbank & Barclays Bank

EnterCard Group was founded as a joint venture between Swedbank and Barclays Bank in 2005, with clear ambitions to become a market leader in the Nordic region. The purpose with this was to share and benefit from each others’ existing knowledge, but also to develop new insights into how payment and credit cards can add value to an existing customer relationship for a banks, retailers or membership organisations.

EnterCard currently has more than 1,6 million customers and 11 strategic partnerships in place. EnterCard also issues credit card in its own consumer brand. EnterCard has approximately 350 employees in four offices around the Nordics; in Stockholm, Oslo, Trondheim and Copenhagen.


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