Archive for October, 2015

Global Life Sciences BPO Market is Expanding at a remarkable CAGR of 21.5% from 2013 to 2019

October 27th, 2015

According to a recent market study published by Transparency Market Research (TMR), the global life sciences BPO market is anticipated to reach US$596 billion by 2020, from US$152.5 billion in 2012. The other factors that are expected to drive the global life sciences BPO market are, patent expirations which will give a major boost to the CMO industry, restructuring of pharmaceutical production, and the surging costs of research and development.outsourcing15

Expanding Contract Manufacturing Organizations Market to Fuel Market Growth

The global life sciences BPO market is segmented on the basis of pharmaceutical outsourcing and geography. On the basis of pharmaceutical outsourcing, this market is segmented into two broad categories namely, contract manufacturing outsourcing and contract research outsourcing. The segment for contract manufacturing outsourcing is subdivided into active pharmaceutical ingredients manufacturing, final dosage form (FDF) manufacturing, and packaging.

The contract research outsourcing segment is further categorized into the following: drug discovery, pre-clinical studies, early phase clinical research services (Phase I/IIa), Phase IIb/IIIa, Phase IIIb/IV, medical writing, pharmacovigilance, clinical data management, regulatory services, clinical monitoring, biostatistics, protocol development, and site management. The global market for contract manufacturing organizations is expanding rapidly, which in turn will stimulate the demand for generic drugs and will also lead to greater investments in R&D by life sciences enterprises.

Asia Pacific Life Sciences BPO Market to Record Highest Growth Rate

Geographically, the global life sciences BPO market is segmented into Europe, Asia Pacific, North America, and Rest of the World. North America is the largest regional player in the global life sciences BPO market, however it is the Asia Pacific region that will record the highest rate of growth during 2013-2019. Ongoing trends indicate that the Asia Pacific life sciences BPO market will develop at a CAGR of more than 21% from 2013 to 2019.

The factors that will propel the Asia Pacific life sciences BPO market are widespread adoption of newer technologies, improvements in intellectual property protection rights, and favorable government regulations. The other additional factors that will fuel the growth of the Asia Pacific market are availability of skilled professionals, low labor costs and miscellaneous overheads, and tax benefits.

Unforeseen costs that have hampered the growth of the CRO market have in turn hampered the growth of the global life sciences BPO market. Other restraints in the overall life sciences BPO market are stringent and differing regulatory approval systems in every country and data safety concerns.

The key companies in the global life sciences BPO market are Wipro Ltd., Quintiles Transnational Corporation, Piramal Healthcare, PRA International Inc., Parexel International Corporation, Patheon Inc., International Business Machines Corporation, Infosys, Fareva, ICON plc, DSM, Cognizant Technology Solutions, and Accenture plc amongst others.


Khaitan, Greenberg sell Volvo IT to HCL for $138m

October 27th, 2015

Khaitan & Co advised IT and software outsourcing company HCL Technologies on its acquisition of Swedish multinational group Volvo’s external IT business for $138m (Rs 895 crore) in an all cash deal. London based law firm Greenberg Traurig Maher LLP represented Volvo.outsourcing14

Khaitan Delhi partner Joyjyoti Misra, senior associate Shruti Singh and associate Sanchit Agarwal acted for HCL

The two companies have also signed a letter of intent under which the Volvo Group will also outsource its IT infrastructure operations to HCL Technologies for an undisclosed amount for five years. Around 2600 Volvo personnel affected by the transaction would be offered to move to HCL according to report by Firstpost.

The transaction will be closed during the second quarter of 2016 and will provide both cost savings and a capital gain, Volvo said.


Davao attracting IT-BPO firms

October 26th, 2015

Davao is turning to be a sweet spot for Information Technology (IT) and Business Process Outsourcing (BPO) ventures and investments, as the city in the south is more than ready to absorb the spillover of opportunities from the metropolis and opens its doors to urban development and a buoyant property market.outsourcing13

Local real estate consultancy firm KMC Mag Group, the Philippine associate of London-based property advisor Savills, made this observation in its website last week, as posted by KMC Mag’s analyst, Anna Maria Christina Marco.

Marco said Davao is emerging as a top BPO-IT destination in the country, as it offers a great blend of corporate environment and a laid-back countryside living in a tourist hotspot.

She pointed out that several micro-districts for the office sector have already been established in the area, just about three years after developers considered to tap Davao’s potential for office development.

Among these micro-districts are: the Lanang BizPark, Damosa IT Park, SM Lanang Premier, Davao Finance Center, Abreeza Complex, Pryce Business Park, Filandia IT Center, Matina IT Park, Matina Town Park, and the Felcris Centrale.

“With several BPO hubs and business districts developed throughout Davao, various contact centers have been set up in the city,” Marco wrote. “The BPO sector’s services have then expanded into data entry/transcription, software, graphics, and content development, as well as engineering and design. The service expansion has helped sustain the growth momentum for BPO and KPO (Knowledge Process Outsourcing) as well.”

For now, BPO companies Convergys, Concentrix, Ibex Global, and VXI Global have set up offices in Davao.

In 2013, according to Marco, the BPO office supply in Davao was approximately 66,000 square meters, and has grown steadily since then. She said there is now about 92,400 square meters of available office space in the city.

Given the robust office market, Marco foresees some 47,000 square meters of office space being added yearly to the present stock in the next couple of years.

“By 2017, the BPO office supply is anticipated to grow to as much as 139,800 square meters,” Marco said. “With this expansion in Davao’s office market, the city is poised to become a new BPO frontier.”

In the first half of the year, office vacancy rates in Davao rose to 15.89 percent, due mainly to the completion of new office spaces, according to Marco.

The market, she added, also awaits new office supply from major office developments, such as the 4,810-square-meter Ayala Business Center at Matina Town Square in the first quarter of 2016, the 14,000-square-meter Matina IT Park Building 2 in the third quarter of 2016, and the 28,620-square-meter Davao Finance Center at the Davao Park District in the fourth quarter of 2017.

Marco also noted that Davao offers investors a lower cost of doing business, since upper rental prices in the city are at around P480 per square meter, while the lowest net rental rate in the area is at P350 per square meter.

Marco said the challenge that the Davao office market faces is the need to build office developments that would cater to services other than the what the BPO industry offers.

“Landlords looking to building in Davao should focus on building BPO-ready office spaces, which won’t only cater to BPO firms, but will also be attractive options for other investments and businesses,” Marco pointed out. “These offices are designed to meet modern business needs and match the current office trends, focusing more on efficiency instead of the traditional setup.”

She further advised: “Developers should not just build offices with modern business amenities and 24/7 support facilities, but should also aim to create a live-work-play environment. Putting together various residential options, office spaces, shopping outlets, and leisure venues just in one easily accessible area would make Davao a forward-thinking BPO destination.”


Toll dumps IT outsourcing plan

October 23rd, 2015

Logistics giant Toll has revealed plans to dump its plans to outsource key parts of its IT infrastructure, as well as application support and development, in a rapid and unexpected turnaround.outsourcing11

Yesterday, Toll group director of Corporate Affairs Andrew Ethell issued an internal email at the company, which has been sighted by Delimiter. In the email, Ethell announced a decision to “stop” Toll’s Global Technology Transformation (GTT) project.

Not much is known about the GTT project outside Toll, but Crikey reported in February this year that the company was considering outsourcing key aspects of its IT operation, with suppliers such as Optus and Infosys in consideration. At the time, Toll Group spokesperson Christopher Whitefield told Crikey that the program of work would take about 18 months.

In Toll’s February results session, Toll Group managing director Brian Kruger said: “The Toll Global Technology Transformation, the next stage of Toll’s IT strategy, will drive significant efficiencies throughout the company, reduce IT operating costs and provide Toll with a leading edge platform to support its growth.”

Ethell said in his email that the GTT project had been established to outsource part of Toll’s IT infrastructure and application support and development tasks. The project was one a number of significant transformation projcts currently underway in Toll, he said.

However, Ethell noted that a GTT project review of the last six weeks had validated the net business benefits as being “lower than expected”.

“As a result the Steering Committee has made a decision to stop the GTT project. This is effective immediately. We will continue to focus on our other transformation projects,” the executive wrote. “These will continue alongside our projects that are client critical, regulatory, risk driven or have a compelling business case.”

Ethell said Toll remained committed to its technology principles which were “an important plank” in the company’s strategy, and included: A best in class, streamlined and cost efficient IT environment ; Resources focused on value-add activities; Industry leading technology capability; The ability to rapidly deploy new business solutions globally; And the ability to leverage Toll’s scale to maximise procurement opportunities.

In the email, Toll Group CIO John Ansley said: “While we realise this decision will impact our people, service partners and vendors, this decision is a sign of the strength of governance processes in place for all of our projects. We will be having face to face communications; as scheduled, with our impacted employees to communicate this change and our priority remains to support our customers and employees. Toll remains committed to its technology principles which includes making Toll the industry leader in technology capability.”

Delimiter has invited Toll to comment further on the situation.

Very interesting move from Toll. It is quite rare that a company decides to go through an IT outsourcing process and then abandons the effort as it is being implemented.

So what do I think is happening here?

I suspect that what is going on is that Toll has realised that its business — logistics and transportation — is fundamentally based in 2015 on having solid internal technology platforms. As it went through the process of IT outsourcing, I suspect it realised that it would be trading away some of its competitive advantage if it did not retain some of these systems in-house and keep on focusing on developing them itself.

Either that, or its IT infrastructure is not mature enough to go through an outsourcing process (you see this in some organisations that have not stayed up to date with their underlying base IT infrastructure platforms — hardware, software, virtualisation etc). This article from iTnews would appear to support that theory, detailing as it does a number of legacy platforms at Toll.

Either way, it is fascinating to see this happen. I would welcome (probably anonymous) comments from anyone who could fill us in on what is likely to be happening inside Toll at the moment.


Brazilian IT outsourcing group opens third center in Romania

October 23rd, 2015

The local subsidiary of the Brazilian IT outsourcing group Stefanini will open its third IT support center in Romania next month. This will be located in Targu-Mures, central Romania, and will hire about 50 people in one year, according to the company.outsourcing10

Stefanini already has an IT support center in Bucharest, which employs 1,000, and another center in Sibiu, with a team of 250. The new IT support center in Targu Mures should reach 100 employees in two years. The company has already started recruiting people who speak German and Hungarian for the “service desk analyst” position.

Romania is the fourth most attractive market in the world for investors in outsourcing, according to a ranking carried out by Cushman & Wakefield’s this year.

Over 50,000 Romanians are currently working in the local outsourcing companies, according to US company CGS.


Nationwide Building Society outsources IT infrastructure

October 23rd, 2015

Nationwide has outsourced its IT infrastructure to Capgemini for the next five years to bring it up to date for the digital age

Nationwide Building Society has outsourced its IT infrastructure to Capgemini for the next five years as part of its digital transformation.outsourcing9

The contract covers service integration, service desk and user services.

Nationwide will use Capgemini’s Intelligent Service Centre, which uses data and analytics to improve business processes over time, and My Workspace, which will provide a single platform for staff to access data and services via any device. This is part of the building society’s strategy to provide employees with new and flexible ways of working.

Finance firms need to re-engineer its underlying technology platforms to support modern technologies. Once this is achieved, the infrastructure will support the introduction of digital services in the back office for staff and at the front end for customers.

Nationwide CIO Debra Bailey said IT infrastructure services are vital as customers and staff change how they are services by the company.

“In the age of always-on connectivity and mobile banking, customers expect 24-hour access and value-added services from their financial institutions,” she said. “To keep and attract new customers, we are creating a world-class IT function that can better handle these changing demands.”

In recent years, Nationwide has become a leader in terms of adopting modern technology to transform its operations and customer interactions.

Read more about IT infrastructure outsourcing

International logistics firm TNT outsources its IT infrastructure to HP in a six-year deal that will see it move to the cloud.
Deutsche Bank signs a 10-year deal with HP to re-engineer the IT that underpins its wholesale banking arm in preparation for the next phase of its digital transformation.
South African diamond company De Beers transforms its global IT infrastructure in an outsourcing deal with HCL to enable industrialised services.
In 2008, Nationwide embarked on a £1bn project to transform its technology after years of under-investment, typical in the financial services sector. The project involved upgrading its datacentre, outsourcing IT for the first time and implementing Microsoft technology in the front office and SAP at the back.

The building society has since increased its adoption of digital technology. For example, it enabled mortgage consultants, planning managers and personal banking managers to meet customers via high-definition video links using Cisco technology. It also claimed to be the first high street finance firm to offer an Apple Watch app.

In September 2015, Nationwide announced it is using artificial intelligence (AI) technology from Tata Consultancy Services (TCS) to reduce the complexity of back-end systems as it introduces more digital products.


IBM sales shrink for 14th consecutive quarter

October 22nd, 2015

IBM’s big bets still aren’t paying off fast enough to offset its weakening core business.outsourcing8

Sales at the company were down for the fourteenth consecutive quarter as a result of continued investment in “strategic imperatives” like cloud services, and analytics — and decreased focus on legacy hardware, software and mainframe related business and consulting services.

During the past three months of the year, IBM revenues shrank 14%, according to its latest earnings report.

At the same time, combined revenue for cloud, mobile, analytics and security products continued to grow, climbing 27%.

“Those results show a lot of progress and there’s just more work to be done,” CEO Ginni Rometty said during the WSJD conference on Tuesday.

Rometty added that since taking the reins, the company has invested in 37 companies and divested $8 billion of products, including its mid-tier server products, customer care outsourcing, and micro-electronics unit that built its chips.

Analysts weren’t surprised by the company’s latest performance, given that IBM has said its transition would take multiple years.

“We’re certainly not pleased with the quarter, but we don’t think IBM’s business is broken,” Morningstar analyst Pete Wahlstrom wrote in a research note.

About half of IBM’s annual sales come from legacy services related to running IT infrastructure products like DB2 and IBM WebSphere.

Forrester analyst Andrew Bartels calls this a “foundation of revenue” that has been flat, but still core to IBM’s business.

The key to getting IBM (IBM, Tech30) back to growth is getting the company’s cloud, data analytics, mobile, social and security products to become a bigger contributor to revenue.

Getting to that point from where they are now will take about another two to three years, Bartels told CNNMoney. The “strategic imperatives” only make up about 20% to 25% of IBM’s overall sales at the moment.

“Once they get there, they’ll be well-positioned for the long run,” he said.

In a prepared earnings statement issued on Monday, IBM said that its transformation was always going to take time, and that “progression wouldn’t be a straight line.”


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