Study Predicts Further Growth of IT Outsourcing in the United Kingdom

July 3rd, 2015 by Rahul Jain No comments »

A new study of IT outsourcing customers and contracts in the UK projects that demand for IT outsourcing services in the UK will grow, and shows that some service providers meet customer expectations more consistently than others. The study—conducted by Whitelane Research in collaboration with PA Consulting Group and published on June 11—surveyed top sourcing executives from 260 of the UK’s biggest consumers of IT services that hold more than 800 contracts with a collective value of more than £15 billion.Outsourcing26

Among other questions, respondents were asked to describe their company’s future IT outsourcing plans and to rate their satisfaction with their service providers.

Key findings from the study include:

69% of survey respondents reported that their companies will maintain or increase the IT services they receive from service providers, and 40% of respondents said that they intend to outsource more.

15% of respondents said that they will outsource less. According to the study’s authors, anecdotal evidence suggests that companies are selectively in-sourcing certain services, particularly customer interaction functions.

More than half of respondents are using (or intend to use) public cloud vendors such as Amazon, Rackspace, and SAP.

86% of respondents report satisfaction with their IT outsourcing service providers.

When asked for the key drivers of their needs for IT outsourcing, 68% of respondents cited a need for their companies to focus on core businesses. However, respondents also expressed the need for better resources or a business transformation more frequently than in past Whitelane Research studies on the UK (Whitelane annually conducts studies on the market for IT outsourcing in 14 European countries). More UK companies are looking to service providers to help drive change in their company’s business model, not just its IT services. Vassilis Serafeimidis, Head of IT Sourcing at PA Consulting Group, describes the heightened demand for business transformation through outsourced IT services as a move by customers toward “digital everything,” such as offering their customers seamless service across multiple channels, including mobile.

The study includes a point-system ranking of IT service providers based on customer satisfaction. According to the authors, some respondents expressed frustration with service provider shortcomings in innovation, proactivity, and ability to drive change—critical competencies in a business transformation. While choosing a service provider should always be a careful decision, companies that intend to rely heavily on outside providers (especially those that seek business transformations through IT outsourcing) should do their due diligence and consider the strengths and weaknesses of various providers. Serafeimidis suggests that price may not be the most important factor, depending upon the particular IT function(s) to be outsourced.

Of the various sectors of the IT outsourcing market studied, telecommunications companies were among the most maligned. However, the authors argue that customers may have “unrealistic expectations” of low prices, customized services, and service levels from providers of commoditized, large-scale IT services.


Sebi plans new outsourcing policy for exchanges, key entities

July 3rd, 2015 by Rahul Jain No comments »

To safeguard capital markets from outside risks, regulator Sebi will soon issue a new set of guidelines to govern outsourcing by stock exchanges and other key entities in the marketplace.Outsourcing25

The new guidelines will ensure that exchanges, clearing corporations and depositories do not outsource their core and critical activities to third-parties, while they would need to put in place a robust system to monitor outsourced activities on a real-time basis.

The outsourcing policy for stock exchanges and clearing corporations has been discussed by Sebi’s Technical Advisory Committee (TAC), while its Depository System Review Committee has also given its recommendations on the need to regulate outsourcing by the depositories, a senior official said.

Consequently, Sebi has decided to issue a consolidated circular on outsourcing for stock exchanges, depositories and clearing corporations, he added.

Major exchanges in the country include BSE and NSE, both of which have their own clearing corporation arms. The two depositories registered with Sebi (Securities and Exchange Board of India) are NSDL and CDSL.

It has been felt that there is a need for further focus and strengthening of guidelines in the area of outsourcing by depositories.

In its recommendations, the Depository System Review Committee said that caution should be exercised while outsourcing and wherever possible depositories should put in place various controls to ensure that there is check on the activities of outsourced entity, especially to monitor that outsourced activities are not further outsourced downstream.

Besides, core and critical activities of depositories should not be outsourced, while similar recommendations have been made for the exchanges and the clearing corporations.

It has also been suggested that the core IT support infrastructure and functions for running core activities of these market infrastructure institutions should not be outsourced to the extent possible.

Wherever outsourcing is allowed, the key market entities will need to ensure that risk impact analysis is undertaken, only reputed entity with proven high delivery standards are selected and appropriate back-up and restoration systems are put in place.

Besides, they would need to monitor and have checks and overall controls over the outsourced entity on a real-time basis.

The depositories and other key market entities would also need to ensure proper audit of the implementation of risk assessment and mitigation measures listed in the outsourcing policy document, the outsourcing agreement and the service- level agreements pertaining to IT systems, among other measures.


HP re-energises NHS Trust with complete IT systems overhaul

June 30th, 2015 by Rahul Jain No comments »

Computing has reported that the ITO partnership between Cambridge University Hospitals (CUH) and HP has been a resounding success, acknowledged by both sides of the outsourcing relationship.Outsourcing24

HP has digitalised CUH’s services in a way that allows frontline staff to quickly and securely access data and patient records.

“All of our IT is now managed by HP – and the system is already delivering real benefits,” commented Dr Afzal Chaudhry, CUH’s chief medical information officer.

However, some of the NHS workers have struggled with the transition, particularly those that are less “tech-savvy” than their younger colleagues. Chaudhry continued: “If you take some of the senior consultants who’d never left notepad and books.

“They’d trained as a student, used them as junior doctors all the way through and some of these people, they’d been there for years. Then overnight we took everything that they knew, then threw it away.”

Nevertheless, the majority of staff have transitioned well and are working more efficiently as a result of HP’s input.

The new platform installed by HP is being widely adopted and utilised, with 3,200 people using the system onsite, and further staff using it offsite, on a daily basis. Even during its quietest periods in the early hours of the morning, CUH tends to find 300-400 individuals logged in at any given time.


Tech Mahindra posts profit warning: The end for Indian outsourcing?

June 30th, 2015 by Rahul Jain No comments »

Indian outsourcer Tech Mahindra, which bought disgraced rival Satyam in 2012, has issued a profit warning — the first sign of trouble in the buoyant market for some time.Outsourcing23

In a regulatory filing to the Bombay Stock Exchange, it blamed a “seasonally weak” mobility business for dragging down first-quarter revenue, with shares falling over seven per cent to 482 rupees ($7.54).

It said: “Some headwinds and tailwinds could see a risk of marginal decline in both revenue and EBITDA on a sequential basis.”

Anthony Miller, analyst at TechMarketView, said the warning was noteworthy given the pace of growth in most Indian outsourcing outfits.

“I can’t remember seeing a profit warning from an Indian pure-play,” he said.

Tech Mahindra had recently announced a £50m, 10-year deal with CircleHealth which operates a network of NHS and private hospitals

The firm first bought a controlling stake in Satyam in 2009 after the firm became embroiled in one of India’s biggest ever corporate scandals.

Last month the former chairman of Satyam, Ramalinga Raju, was jailed for seven years for his part in a $1.4bn (£953m) accountancy fraud scandal.


Catalina Marketing IT jobs being outsourced

June 29th, 2015 by Rahul Jain No comments »

In thousands of stores across the country, you’ll find Catalina Marketing’s coupons, apps and rewards programs.Outsourcing22

Inside the company’s St. Petersburg headquarters, the company’s IT infrastructure employees help keep all that technology running.

That’s about to change.

About 50 Catalina IT workers will be replaced by employees from Mindtree, one of the largest outsourcing firms used by companies in the U.S. , according to sources familiar with the matter. Employees affected by the layoffs told FOX 13 they’re being asked to train their foreign replacements.

Catalina Marketing wouldn’t answer any questions. The company sent a statement from a California-based PR firm saying the decision to transition some operations to Mindtree was part of their “ongoing focus on enhancing Catalina’s unique business competencies, building new capabilities, and focusing on core business strategies.”

Some of the company’s employees told FOX 13 they’re simply being replaced by less expensive workers.

“Employees are expected to personally train their Indian replacements, reverse roles and watch their replacement work,” said one IT worker who spoke on the condition of anonymity, fearing retaliation by the company. “Once management is satisfied with the transition, the American worker is laid off.”

Former Disney employee Keith Barrett says the IT outsourcing sounds similar to what happened to him and about 250 other workers in Orlando six months ago.

“I was only seven years away from retirement when I was laid off,” said Barrett, who is still looking for a full-time IT job.

News of the Disney layoffs earlier this month sparked more public debate about the H1-B Visa program, which was designed to allow companies to hire highly specialized foreign workers to fill in crucial gaps in the American workforce.

Some say IT jobs don’t fall into that category.

“Those skills are actually incredibly common in this country,” Barrett said. “If you ever open up a job for applicants, you will get hundreds of people applying for it that are adequately or overly skilled for that.”

Catalina wouldn’t say how many of the outsourced jobs would rely on H1-B Visas for foreign workers. Mindtree did not respond to requests for comment.

A New York Times report on Disney’s layoffs earlier this month prompted Sen. Bill Nelson (D-FL) to ask the Department of Homeland Security to investigate how the Visa program is being used.

“I plan on delving further into this issue in the Senate and request that the U.S. Department of Homeland Security also investigate potential misuses of the H1-B visa program,” Nelson wrote in a June 4 letter to DHS Secretary Jeh Johnson. “I want to know if there are abuses going on in the system.”

A week later, the Labor Department launched a similar H1-B Visa program investigation into Southern California Edison and two Indian technology firms over allegations the companies may have used the Visa program to replace American employees with less expensive workers.

Barrett says employees face being replaced with foreign workers have more to contend with than an impending loss of income.

“You’ve still got to do your job while you’re there…and job hunt and then add training those that are actually coming in to take over your responsibilities: that’s a lot of stress,” he said.


Supporting enhancement of IT governance and acceleration of globalization while further reducing IT operational costs centered around U.S. and Japan

June 29th, 2015 by Rahul Jain No comments »

Accenture today announced that it has signed a contract to provide information technology (IT) system maintenance and operations, as well as monitoring and operations of servers and networks for Eisai Co., Ltd. in the U.S. and Japan.Outsourcing21

“We will use our experience accumulated in the pharmaceutical industry, our IT operational processes that are standardized globally, and our deep expertise in continuous business improvements to support Eisai’s successful business.”

Under this contract, Accenture will deliver services including operations, maintenance and monitoring of Eisai’s applications and infrastructures (excluding a portion of research and development) in the U.S., and a part of Eisai’s enterprise resource planning systems including accounting, production management and related systems, as well as its IT infrastructure, such as servers and networks in Japan. This contract runs for seven years in the U.S. from April 2015 until March 2022, and for nine years in Japan from April 2015 until March 2024.

The global pharmaceutical industry is undergoing significant standardization in areas of new drug development, medical practices, and regulations for new drug review and approval. This contract will enable Eisai to strengthen its global competitiveness by further reducing global IT costs and enhance its global IT solution delivery framework. This, in turn, will enable Eisai to build a global IT governance structure that is more efficient and effective.

“During Eisai’s recent growth, Accenture has been supporting Eisai in many initiatives, and it is our pleasure to have this opportunity to play an important role in this key project that is designed to ensure even greater growth for Eisai in the future,” said Atsushi Egawa, senior managing director, Products, at Accenture in Japan. “We will use our experience accumulated in the pharmaceutical industry, our IT operational processes that are standardized globally, and our deep expertise in continuous business improvements to support Eisai’s successful business.”

These contracted services will be delivered from the Accenture Delivery Center for Technology in Manila, Philippines, and a part of application services for the U.S. will be delivered from the Accenture Delivery Center for Technology in Pune, India. These are both part of Accenture’s Global Delivery Network, which is comprised of more than 50 locations around the world.


Getting A Piece Of Business Process Outsourcing

June 25th, 2015 by Rahul Jain No comments »

The intersection of technology and globalization has changed the way business is done and created new business opportunities in the international marketplace.Outsourcing22

Business process outsourcing (BPO) has evolved with time and the rampant innovation in technology. The BPO trend is accelerating. It is a subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider. Originally, outsourcing was associated with manufacturing firms, such as Coca-Cola, that outsourced large segments of its supply chain.

BPO is typically categorized into back office outsourcing, which includes internal business functions such as human resources or finance and accounting, and front office outsourcing, which includes customer-related services such as contact center services. In addition, other outsourcing segments within the global industry include business services, energy, technology, healthcare and pharmaceuticals, retail, travel and transport, and telecom and media.

The revenue of the global outsourced services industry rose steadily year over year from $45 billion in 2000 to just under $100 billion in 2012.

India is a clear leader in this area, offering a highly skilled, educated, cost effective, English-speaking labor pool. Still, many organizations are understandably apprehensive about having people on the other side of the world support critical business functions. However, some of the best outsourcing providers have mitigated the risk and addresses the concerns that clients may have about placing their work offshore through their innovative project management strategies.

WNS Holdings (WNS) operates in two segments: WNS Global BPO and WNS Auto Claims BPO. Its clients are primarily in the travel, banking, financial services, insurance, healthcare and utilities, retail and consumer product industries. WNS Global is a global business process management company headquartered in Mumbai, India. It has more than 29,000 employees working in 37 “delivery centers” across the world, including India, the U.S., United Kingdom, China, Costa Rica, Philippines, Poland, Romania, South Africa, and Sri Lanka.

Another company that has embraced the BPO model is Accenture (ACN). One of the top multinational management consulting, technology services, and outsourcing company, ACN reported revenues of over $30.0 billion with approximately over 330,000 employees, serving clients in more than 200 cities in 56 countries. In 2012 Accenture had about 80,000 employees in India, more than in any other country, about 40,000 in the US, and about 35,000 in the Philippines.

While there has been push back from U.S. consumers regarding poor service at certain international call centers, it is clear to me that the more a company is willing to think globally, they open themselves to greater profits. The BPO model should be expected to grow for years to come.


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