Archive for January, 2015

Ten ways to optimize IT team structure

January 29th, 2015

It’s hard to keep servers, applications and other data center components running smoothly, but it’s perhaps more difficult to build a productive, innovative IT team structure.Outsourcing62

“The idea is to have a team that’s high performing, that doesn’t have any turnover but is happy and seeks career growth in your department,” said Jennifer Torlone, senior director of technology and information services at Amerijet International, Inc.

Amerijet, a multimodal global transportation company, consolidated various data centers from acquisition and sprawl into two locations — production in Fort Lauderdale, Fla., with replication to Atlanta — to improve management, licensing and physical reliability. In a complementary move, Torlone overhauled Amerijet’s IT team structure and operations.

Optimizing IT teams via the 10 steps below pays off just as improving server utilization does. Turnover costs more than salaries: knowledge is lost, projects delayed and documentation left half-done. New staff training costs time and money.

Even if your data center staff meets deadlines and finishes projects, there is room for improvement. The goal is a sustainable work environment, not long hours and heroics.

“If you’re doing well but can’t improve, you’re not doing well,” said Michael Abrashoff, former U.S.S. Benfold commander and leadership speaker. That goes for leaders too: “Micromanaging causes the best to leave and the rest to become brain-dead.”

David Delvecchio, IT operations director at Newport News Shipbuilding, a division of Huntington Ingalls Industries, in Suffolk, Va., has rallied his team around ITIL processes, automation and orchestration. Delvecchio expounded upon how these efforts would further the business’s strategies for success to get his team’s buy-in.

These experienced leaders shared their tips on building and maintaining successful IT shops.

Ten steps for data center team leads

1. Hire IT staffers who work well in a group and learn easily. Give them a clear mission, time, resources and training. The sweet spot is a data center staff that is comfortably challenged and innovative, Torlone said.

2. Have common goals and communicate why you’re pursuing them, advises Delvecchio. How does this project relate to our strategic goals?

3. Invest most in training lowest-level employees, such as junior admins. Senior network engineers and other high-level IT staffers are independent, Torlone said, with a depth of knowledge to apply to their environment.

4. Connect IT to the users. If the business doesn’t believe in IT, they’ll take over purchasing decisions and shadow IT will run rampant. Conversely, they will heed recommendations and rules if communication is easy. To fix a disconnect, put IT staffers close to the end users — literally.

“Even a network engineer [has] to get … back in touch with why they have that job,” Torlone said.

Once cross-functional teams collaborate and act as an extension of the business, they make a difference in delivering products.

5. You can’t stop the world to dedicate time to fix problems. Integrating an acquisition’s data and processes? Moving to a new storage array? That doesn’t mean a new sales application can launch late. Every preventable delay or mistake is lost money.

6. Look outside the core to build a team. Outsourcing help desk functions, for example, takes you from 9-5 service in one time zone to 24/7 service everywhere. Vendor-provided monitoring means experts who know the whole product are available when you need them, without adding to payroll.

7. Outsource and automate functions wisely, then give the data center team time to innovate. Find one hour of unstructured time for them each day. Encourage employees at all levels to share insights and ideas they develop here.

8. Ask employees what they like and dislike most, and what they would change if they were in charge, Abrashoff said. If it’s a good idea, implement it and give them credit to show that you’re serious.

9. Take time to celebrate accomplishments. Celebrate small successes at the beginning, even if you’re far from the goal, Torlone said, to blend the developing technical skills with respect for fellow employees, and encourage leadership.

10. Finally, turn that attention to yourself. Hold yourself accountable, Abrashoff said. Ask yourself: How am I showing up?


IBM India staff still battle tech blues fearing more layoffs

January 28th, 2015

For employees of IBM India, once considered the jewel in the crown of Big Blue, the coming weeks are expected to bring yet more layoffs and soul-searching about the unsettled nature of working in the software industry which has helped create a new middle in India over the past two decades.
Across three of the biggest offices of IBM India in Bengaluru, anxious employees are scrambling to find new jobs in IT services industry or even new careers at online retailing firms, engineering or telecommunication companies. Layoffs are not new at IBM in India— they have been a feature for about a year as CEO Gini Rometty orchestrates a restructuring which she believes will help the 103-year-old company cope with the rapid changes in technology and business models.

“It’s a complete opposite to the emotions we had when IBM gave stock options to all employees in June 2011,” said Shekhar (he only gave his first name to protect his identity), a former IBM employee who now works at a Bengaluru security software startup.

From around 1.65 lakh employees on its payroll in 2011, IBM’s India headcount is expected to slide to one lakh by March this year. Globally IBM and its units had 4.33 lakh employees at the end of 2011 compared to an estimated 4.3 lakh now, suggesting that the layoffs have been particularly severe in India.


IBM, whose 2014 revenue was $93 billion, has denied a report on Monday that it is about to fire around 1.1 lakh staff globally, but it acknowledged that the reductions will affect “several thousand” employees. Last week, IBM said it was taking restructuring charges of $580 million, with one Wall Street analyst suggesting that could mean job cuts of just 8,000. ET spoke to at least a dozen people who were sacked by IBM India, apart from several company insiders, for this story. An IBM India spokeswoman had not responded to ET’s query sent last week.

“Work from home at IBM has a completely new meaning now,” said a source referring to the flexible work arrangement offered by IBM to nearly half of its employees.

For the software engineers who are leaving IBM, new opportunities are coming their way from the likes of rival Cognizant and India’s biggest online retailer Flipkart. But it is not just engineers who are losing jobs—sales professionals across divisions are being laid off units are merged. According to a person familiar with the discussions, IBM’s Integrated Technology Services (ITS) and Strategic Outsourcing units have significant overlaps, and with a proposal to merge these units, hundreds of sales specialists could lose their jobs.

Apollo and Chrome projects IBM, which has not seen its revenue grow since 2008, has launched two aggressive internal projects to trim its payroll. The first one, termed “Apollo,” is aimed at employees from the level of junior programmer up to midmanagers. Unlike in the past when managers had to identify “the bottom 5%” as part of annual pruning, the new norm is to identify “the bottom 20%.”

The second one called “Chrome” is aimed at senior executives, of whom are 150-160 in IBM India. “Around 40 of them could either get demoted or let go,” said another person familiar with the company’s thinking.

In some ways, IBM’s efforts to trim its payroll and selectively hire people with specialised skills in new technologies underscores a tectonic shift in the global IT industry. And India’s software outsourcing giants—Tata Consultancy Services, Infosys and Wipro—too are not immune to this shift. Indian IT companies only added 13,000 employees for every billion dollar of revenue in the 12 months to March 2014 as against 26,500 employees the year ago, according to Nasscom. The software and services industry in India employs 3 million workers.

As part of project Apollo, those with no skills in SMAC (Social, Mobile, Analytics and Cloud) or even analytics platform Watson, are being asked to go. According to people familiar with the development, the attrition rate at IBM is currently pegged at around 26%. “IBM is shrinking workforces not just in India -70% of costs in that economy are related to labor. That is grossly inefficient when you compare to modern factories or data centres,” said Vinnie Mirchandani, a technology analyst and CEO of advisory firm Deal Architect.

“I am not sure IBM optimised its global delivery model. Many of the Indian vendors were disciplined by customers like GE to optimise that model.” While IBM is laying off employees, it also creating new jobs those may be far fewer in number and not necessarily located in India.”In areas like social marketing, security and mobile app development, IBM and other firms are developing talent pools in newer global regions and so are not as dependent on India,” added Mirchandani.


Wipro inks $150 mn IT outsourcing deal with Allied Irish Banks

January 28th, 2015

Wipro has announced a $150 million IT outsourcing deal with the Allied Irish Banks (AIB), a bank in Ireland to provide infrastructure management services (IMS), data centre and hosting services over five years.Outsourcing59

The Bengaluru-based IT services provider said the IT outsourcing deal is its biggest win in Ireland. The deal may pave the way for Wipro to participate in other IT deals including the Bank of Ireland contract that’s coming up for renewal later this year.

Bank of Ireland had signed a five-year infrastructure contract with IBM in 2010, said a report in Times of India.

Besides Wipro, the bank has outsourced some of its IT projects to Ireland-based telecom company Eircom and IT security specialist Integrity Solutions. Wipro beat incumbent IT vendor IBM to bag the IMS portion of the contract.

AIB is likely to outsource 170 jobs in its IT division to the three IT vendors, and the bank committed that no staff would be made redundant.

Wipro is expected to absorb over 130 AIB employees into its new delivery centre that will come up in Dublin in the June quarter. The 200-seater delivery centre will create a mainframe centre of excellence to maintain and modernize business-critical mainframe applications.

Last year Wipro expanded its employee base at the Shannon development centre in Ireland that provides IT and business process services’ (BPS) offerings to retail banking and insurance customers. The centre employs over 300 professionals delivering services to banks and financial services companies across Ireland and the UK.


Koramangala IT Cos bet on price tweak tactics

January 27th, 2015

In a bid to compete against global IT majors like IBM and Accenture, Koramangala-based IT majors are playing the price card on delayed risk on fees pattern.Outsourcing58

Industry experts say that milestone-related payments have become a norm in the IT industry, while, bank guarantees that the vendors need to provide upon winning projects, have increased to as much as 20 percent of the deal value from the earlier 5 percent. Their strategies include coughing up money upfront to sweeten the deal and win large contracts.

T Umakanth Rao, director, Zarlina Systems, said, “India’s top IT outsourcers, including the traditionally conservative Infosys and Wipro, are becoming increasingly risk-taking as they chase commoditised contracts. While cut-throat competition is giving more bang for the buck for customers, technology vendors are risking future cash flow and locking up resources.”

Commenting upon the risk on fees or milestone related payments, Rao said, “While bank guarantees have increased to as much as a fifth of the deal value, the aggressive pricing strategies being adopted by the IT companies in the locale and their promise of value-added offerings to win contracts have made customers cautious and they want to see results before paying up.”

“In the last year and half, we have seen customers holding back the risk-on-fees which we normally get upon completion of certain milestones,” said a bid manager working with a large IT company based out of Bengaluru. The bid manager went on to add, “Across industries, we have seen customers holding back this money which they normally give more in a staggered manner than at the time when payments are due.”

Naved Ahmed, director, MN Associates said, “Indian firms play the pricing card often these days as they battle with global majors like IBM and Accenture to win bread-and-butter outsourcing deals.” He said that in earlier years, the top Indian IT services firms in Koramangala generally avoided heated price competition with their professional brethrens both in domestic market and in global merchandise. “However, the IT services industry has definitely become more competitive, and today, we as an industry observer, see certain IT firms actively pursuing price-to-win strategies,” said Ahmed.

Giving credit to the sizeable improvement in the operating margins of the local IT outsourcing companies Sushanth K Nair, proprietor, Innova Team Software, a Koramangala-based IT company which has base in New York as well said, “Operating margins of the home grown IT outsourcers have significantly improved over the past two years. One of the biggest cost components for IT companies, is manpower, and technologies like artificial intelligence and automation for completing repetitive low-end work have helped them cut down on this cost.”

Giving caution upon the upfront payment for wining a big ticket contract, Nair said, “Delayed payment by customers and upfront spending could prove to be an issue in the event of turbulence in the markets these companies operate in, or if the customers face financial troubles. Promising tough-to-achieve milestones is another problem that could affect expected cash flow.”

“A pricing trend I’ve seen is Indian firms taking on more risk by tying more fees to contractual milestones – milestones that in a number of cases are tough to predict and achieve, especially as work assignments get more complex,” he added and continued, “This trend tends to occur on deals in which the client is large and experienced with outsourcing contracts and on deals in which an outsourcing adviser is helping the client with vendor selection and pricing.”

However, a large number of IT professionals in the locale who avoided being named confirmed the trend and said that it was more a function of maturity of the deal and depends on how effectively a customer was able to negotiate with an IT vendor. “Agreed! More customers nowadays are holding back fees in some industries but then this is more a function of what kind of contract it is. As more customers mature in their use of outsourcing and are able to manage their IT vendors, they will explore different models,” the professionals said.


Time for IT jobs to be set aside for women

January 27th, 2015

With women accounting for only a fraction of people studying computer science, there have been calls for gender-related quotas for IT roles.
With new figures showing little change in the number of women studying computer science, one industry expert is saying it’s time for radical new measures to address the problem.Outsourcing58

Gillian Arnold, head of the women’s section of UK professional computing body BCS, said from her personal point of view firms should be obliged to employ women in a proportion of IT-related roles.

Her comments follow figures showing only 3,125 women chose to study computer science-related subjects in the UK this academic year, compared with 2,925 the year before, according to university admissions organisation UCAS.

More than six times as many men chose to study computer science, with 20,460 undergraduates this year. The numbers of male computer science university students also grew faster, up from 18,785 the year before. The gender gap is similar in the US, with only 20 percent of computer science degrees earned by women.

Overall, however, women outnumbered men on two-thirds of degree courses, with 57,800 more women gaining higher education places through UCAS than men.

Arnold, chairwoman of BCSWomen and founder of an IT services company, said progress in addressing the shortfall has been slow, stressing initiatives to get women interested in technical roles had been taking place for decades.

“Collectively, all the woman’s groups I’m aware of have been doing this work since the mid-1990s, certainly. Think about the collective hours of effort that have gone into trying to encourage women to join these professions. That’s an enormous amount. We haven’t issued any quotas but maybe it’s time,” she said, stressing this was her personal opinion rather than that of BCSWomen.

“Where have we got role models who say, ‘It’s cool to be a technical woman?’. There are so very few of them. If we could fix that, I think that would be a huge change. Personally, I would like to see quotas but I recognise not everybody feels that way.”

Once a critical mass of women work in IT-related fields, the gap between the sexes could close naturally, she said.

“There’s an academic in the states, Virginia Valian, who said once you’ve got about 30 percent [of women in a type of role], it becomes a self-sustaining figure. You see the women then bringing other women into the workplace, and it becomes a more attractive field to work in,” she said.

Schemes such as e-skills UK Computer Clubs for Girls (CC4G) also have an important role to play, she said, in showing girls a side to IT beyond negative stereotypes.

“The TV image of someone in IT is The IT Crowd and that’s not brilliant is it? The other image is some geeky bloke in the middle of the night with a half-eaten pizza, who doesn’t appear to have washed in a month, so what girl aspires to be that?” she said.

Dr Sue Black, who served as a role model in the BCS women in IT campaign, agreed there is a need for more figures to inspire girls to join the IT industry, but believes progress is being made.

“It’s a shame that the numbers of people studying computer science are not going up dramatically and especially that the number of women is so low,” she said.

“On the plus side, the number of women is higher than it has been since 2007, so that shows a trend upwards which is good news.

“Everyone is gradually waking up to the fact that we need diversity at all levels of the tech industry if we want to compete in what is now a global marketplace.”

Despite the sluggish growth, she believes people are less resistant to schemes trying to encourage more women to work in IT than they once were.

“The attitude towards diversity has changed dramatically in the past few years. When I set up BCSWomen in 2001, an online network for women in tech, many people, men and women, complained to me that it was ridiculous and sexist having a group to support and encourage women in tech [asking], ‘What about the men?’.

“Thankfully, attitudes are changing and there are lots of necessary and valuable initiatives now, not just BCSWomen, encouraging and supporting women and girls in tech.

“The change in attitude and all these initiatives working together will make a difference, but Rome wasn’t built in a day. These things take time.”


Why IT Honchos are Queuing up to Meet Barack Obama

January 27th, 2015

The US is the biggest market for India’s over $100-billion outsourcing industry and it also contributes to the creation of lakhs of jobs in the IT sector. Unsurprisingly, the delegation of Indian CEOs meeting US President Barack Obama is packed with IT honchos. Infosys founder NR Narayana Murthy, current CEO Vishal Sikka, M&M chief Anand Mahindra, who is also the chairman of Tech Mahindra, and Cyrus Mistry, who as head of Tata Sons is also the chairman of India’s biggest outsourcer TCS, are all representing India Inc at the meeting with President Obama on Monday.Outsourcing57

Here’s why the IT industry is key to Indo-US trade:

1) The IT industry is estimated to contribute nearly 25 per cent to total domestic exports (merchandise plus services).

2) Indian firms get a lot of business from US, while American companies benefit from lower costs in the country; they also gain access to extensive intellectual capital, which enables them to concentrate on their core competencies.

3) Initially, Indian IT firms provided low-cost technical support and fixed software bugs, but now they optimise financial transactions and develop advance technologies. So, companies are moving up the value chain.

4) Indian firms are increasingly expanding their presence in the US by setting up onshore businesses. Most of the leading Indian IT companies have set up their sales and marketing offices and delivery operations in various US cities.

5) Till 2010-11, Indian IT-BPO sector supported 2.80 lakh jobs in the US, according to Nasscom. Over the last few years, the trend has picked up. Infosys hired 2,000 employees in Wisconsin in 2012; TCS hired 1600 in 2013-14 and plans to add another 2,000 in 2014-15.

6) The IT industry leads in total merger and acquisitions with US companies. Between October 2012 and December 2014, the IT sector led the M&A pack with 29 out of 71 total outbound acquisitions in the US, according to a study by EY on behalf of industry body Ficci.

7) US is likely to continue to be the favourite destination for Indian IT-BPO players because of large scale reforms in the healthcare segment (being undertaken by the US government) and Big Data and automation wave is luring tech companies.

8) According to a study by Egon Zehnder, in 2011 S&P 500 companies had more Indian CEOs than of any other nationality except American. Shantanu Narayen (CEO, Adobe Systems) and Satya Nadella (CEO, Microsoft) are some of the leaders heading global US tech firms.

9) People of Indian origin dominate US-based tech-start-ups funded by immigrants. According to an EY-Ficci study, India-born entrepreneurs represented 33 per cent of such companies.

10) A significant number of workforce in tech companies such as Google and Microsoft are of Indian origin. Sundar Pichai is leading Google’s Android, Chrome and Google app divisions; Amit Singhal is heading Google’s core ranking team and Krishna Bharat is leading Google’s news product team.


The big three IT trends for 2015

January 27th, 2015

Digitalisation, Internet of Things and engineering services outsourcing will make businesses smarter than everOutsourcing56

It’s time to get over the squeamishness. The digital age is here and 2015 will not be a year for the weak-hearted. We watched 2014 change the rules of the game in business with the dawn of a new era. The new year is likely to enforce these new rules, without a safety net. So, if you’ve been watching tentatively from the sidelines so far, get ready to dive into the deep.

Let’s take a step back and look at some underlying changes in our business landscape. Presenting their assessment of the top strategic technology trends for 2015, research firm Gartner identified 10 diverse projections.

But, as pointed out by David Cearley, Vice-President and Gartner Fellow, these covered three broad themes: the merging of the real and virtual worlds, the advent of intelligence everywhere and the technology impact of the digital business shift.

These lie at the very core of the transformation we are witnessing around us. Keeping these seismic shifts in mind, here’s what I see ahead.

Enterprise digitalisation
Any lingering doubt that enterprise digitalisation is the way forward has been removed by the phenomenal success stories of digital giants such as Google, Amazon, Netflix, as well as new and nifty digital startups such as Airbnb. Most business leaders acknowledge this too.

Yet, only a small percentage has embraced digitalisation in a comprehensive manner so far. The majority have just dipped their toes in the new waters with digital experiments and ‘bolt on’ SMAC technologies (social, mobile, analytics and cloud technologies), while some are still in denial.

In a global survey of chief information officers, Gartner found that “51 per cent CIOs are concerned that the digital torrent is coming faster than they can cope” and “42 per cent CIOs feel that they don’t have the talent needed to face this future”.

This explains the erratic approach so far. However, 2015 will demand smart and decisive action to avoid falling off the radar. Business leaders will have to undertake digitalisation in a systematic and comprehensive manner.

According to Forrester Research, “Confused ownership of digital strategy, a lack of critical skills, and an ill-defined vendor landscape will leave many firms floundering over half-hearted digital strategies.” To stay in the game, they will have to commit themselves to being reborn as full digital businesses.

So, as I see it, 2015 will be the time for a total transformation through enterprise digitalisation across companies, industries, countries and continents.

And this transformation will envision collaboration across customers, employees, partners, suppliers and broader ecosystems.

Internet of Things
The Internet of Things (IoT) is promising to redefine every aspect of our lives. It is already connecting and embedding intelligence in billions of objects, affecting billions of people around the world. And yet, we’re just scratching the surface here.

The real giant wave in 2015 would be the Industrial Internet of Things (IIoT). While it may sound like it’s just the Internet of Things in an industrial setting, it is much more.

IIoT refers to a seamless integration of the physical and digital worlds through a set of actuators, sensors, embedded hardware and software that can track, optimise, predict and actuate.

Going beyond IoT, it weaves the power of Big Data with machine-to-machine communication to analyse the data being received so as to trigger improvement in operations, often in real time.

It is being touted as the next industrial revolution, with a potential to transform business and impact our lives far more than the Internet as we know it.

As companies across the board begin explore the limitless possibilities of Internet of Things, GE estimates that the IIoT could add as much as $12 trillion to global gross domestic product.

However, as in all things new, there will have to be cross-industry collaboration to build and adhere to the right standards for security and privacy.

Engineering services
That brings us to the third and final trend that I believe will see a huge upward swing in 2015: Engineering services outsourcing. In a product-centric world, R&D has traditionally been perceived as intellectual property.

It carried a halo of confidentiality, leaving little room for collaborative or complementary R&D. This bastion is now opening out. We are now entering into an era of ‘Software Defined Everything’ following a shift in focus from the product itself to an ecosystem of services focused on end user experience around the product.

There is need for development of the product, associated platforms, and industry and geo specific variants for companies to go to market.

Global competition and reducing product lifecycles are forcing companies to leverage their value chains to retain market share.

And, unlike earlier, cost and labour arbitrage are no longer the primary drivers. Several engineering engagements are being recast as win-win partnerships to leverage collaborative growth opportunities.

As companies begin to realise that 70 per cent of product development activities are domain neutral with only 30 per cent focused on product differentiation functionality, more and more businesses are opening up to outsourcing parts of their product development work.

There is also growing recognition that partnering with engineering service providers (ESPs) with a global footprint can help companies reach multiple markets faster, as they offer a ready talent pool for end-to-end product engineering involving a plethora of technologies.

With this clear advantage and their ready to use components, frameworks and methodologies, ESPs can accelerate time-to-market for companies seeking to be constantly ahead of their competition.

Moreover, as the world becomes increasingly connected through disruptive technologies such as mobility and smart products being applied across industry segments, ESPs can cross germinate best practices from unrelated industries to help their partners fast forward R&D.

As I see it, 2015 will see a buzz in the backrooms of business that are traditionally away from the spotlight: the digital teams, factory floors and the R&D labs, as they lead the way forward through smart transformation, smart machines and smart collaboration.

The writer is the president and CEO of HCL Technologies


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