IT Staff at Scottish Borders Council Oppose Outsourcing

March 23rd, 2015 by Rahul Jain No comments »

Information technology staff at the Scottish Borders Council (SBC) have reacted furiously to the news that the SBC plans to outsource 80 of their roles.Outsourcing14

The SBC is entering into a joint arrangement with Edinburgh’s City Council which will result in 80 public sector IT staff being outsourced to a supplier in October.

Over 60 of those staff, along with Unite union officials, orchestrated a mass meeting to oppose the decision.

Tony Trench, Unite’s regional industrial officer, said: ‘it’s not just IT staff at the council who should be worried about their jobs, IT staff at places like NHS Borders should also be concerned.

‘We disagree totally with plans to outsource any jobs and want to see the figures they have used to justify this.’

Another meeting will be held in the week beginning 23rd March 2015, accompanied by the launch of a petition to oppose the planned outsourcing.


Infosys, Accenture in last lap for Rs 900-crore deal in Australia

March 23rd, 2015 by Rahul Jain No comments »

Infosys and Accenture have entered the final lap to clinch a Rs 900-crore ($150 million) IT outsourcing contract from Australia-based financial services provider Macquarie Group. The five-year contract will include application development, testing and infrastructure management services (IMS), said sources privy to the development. Outsourcing13

Macquarie provides banking, financial, advisory, investment and funds management services. It employs more than 13,900 people in 28 countries. As of last September, Macquarie had 295 billion euro worth of assets under management. When TOI contacted Infosys and Accenture, they declined to comment on the deal. Both Accenture and Infosys have engaged with Macquarie in the past. Accenture has assisted Macquarie in its core banking implementation, while Infosys had won a $25-million procurement and account payable BPO deal in 2012.

Sources told TOI that HCL, Cognizant and Genpact-Headstrong are some of Macquarie’s incumbent IT service providers.

“Under Vishal Sikka (Infosys CEO), and with his focus on digital technology, design thinking and automation, Infosys could well be positioning itself to return to its former glory, especially in the financial services sector where it is still a very strong performer,” said Phil Fersht, chief executive officer of US-based IT advisory firm HfS Research.

“There is a cut-throat race to close out deals like Macquarie – much will depend on which provider wants it more and is prepared to take a risk on the margins down the road. It also depends on how much ancillary business the providers think that can glean if they win the application development and testing pieces,” Fersht added.

Infosys’s cross-town peer Wipro has bagged an IT contract from Greater Cincinnati Water Works (GCWW) to transform the utility’s CRM (customer relationship management), billing and service bureau operations. GCWW provides about 133 million gallons of water a day to over 1 million people across the states of Ohio and Kentucky in the US.

Hewlett-Packard (HP) has won three multi-million dollar IT outsourcing contracts with sizable work expected to be done offshore (much could come to India). It has signed a seven-year infrastructure and applications services agreement with Dutch retailer Ahold, which has presence in the US and Europe and which did net sales of 32.8 billion euro last year.

“This is a major deal renewal. Originally it was an EDS contract (EDS was acquired by HP), but HP pulled out all the stops to provide end-to-end services. This was not easily won as the Ahold team sought concessions for giving HP more of its business but should be a win-win for both companies,” said Ray Wang, CEO of US-based Constellation Research.

When TOI contacted Ahold on the deal, spokesperson Tim van der Zanden said, “We do not disclose all the partners we work with, and cannot comment on speculation regarding contract values.”

HP has won a $52-million (Rs 312 crore) IT contract from Victoria Police. HP pipped IBM, Fujistu and Capgemini to bag the five-year deal to provide application development, workload and cloud solutions and managed mainframe services. HP has also bagged an over $3.2 million (Rs 18 crore) contract from JP Morgan where HP will support critical processes for its investment banking business and trading floor for securities services. When TOI contacted HP for comments on the Ahold and JP Morgan deals, the company said, “Request you to direct your enquiry directly to the organizations concerned.”


Learn About Software Outsourcing Options in Costa Rica

March 23rd, 2015 by Rahul Jain No comments »

Costa Rica is not only popular for her tourism attractions; the country is gaining popularity for professional software development services asOutsourcing12 well. Many businesses from across the Americas decide to opt for software outsourcing in Costa Rica services. If you are operating from a neighbouring country and thinking whether software development can be done inhouse or whether it can be outsourced to the best company operating in this country, here are some reasons why you should opt for Software development in Costa Rica, rather than carrying out the task inhouse:

Reduce and control operating costs: When the work is outsourced, you can eliminate the cost to be spent towards hiring a developer on a full-time basis. This will bring about a considerable reduction in your operating cost. This is because you will have to make only a single-time payment to these service providers as against hiring a full-time employee and paying him on a monthly basis.

Improve company focus: It is neither practical, nor possible to take care of all the operations inhouse. When you opt for software outsourcing in Costa Rica, you can just focus on the core operations of your business, while the service provider is preparing the best application for your business.

Gain access to exceptional capabilities: When you choose for software development in Costa Rica, you are handing over the task to a firm, who is specialized in the areas, wherein you need their help. As against getting benefited from the knowledge of one person, you can be benefited from the collective experience of a team of IT professionals. Generally, these professional service providers, would have employed well-trained professionals to make sure that their customers can get the right kind of output they look for.

Utilize internal resources for other purposes: You might have someone in your company with specialization in software development. But, the particular individual, whom you are thinking about might have been hired by you for some other work. When you suddenly handover the task of software development to that individual, the purpose for which he was appointed will be affected. When you outsource the software development work to a professional firm, you can utilize the particular resource for the purpose for which he was actually appointed.

Other specialization areas: Some of these development organizations in Costa Rica are also specialized in digital marketing in Costa Rica as well. When you handover both software development and digital marketing in Costa Rica to the same firm, you can be rest assured about the best output at the best cost. is a leading open source software development company specializing in agile software development, mobile app development, digital marketing services and Software outsourcing Costa Rica.


Why Companies Opt to Insource for IT Innovation

March 20th, 2015 by Rahul Jain No comments »

Companies are increasingly taking a multisourcing approach to IT outsourcing, signing shorter, smaller deals with a mix of providers. At the same time, some are pulling certain pieces of the IT portfolio back in-house.Outsourcing11

“As you get into the second and third generation renewals, each renewal sees a bit more work being sliced off and taken back in-house,” says Mike Slavin, Managing Director of outsourcing consultancy Alsbridge. “And those functions being repatriated are often related to innovation.”
Outsourcing customers seek innovation

Lack of innovation remains one of the top complaints about outsourcing. Outsourcing customers say that providers fail to bring any new ideas to the table. Providers protest that clients don’t know what they mean by innovation and aren’t willing to pay for it. And traditional outsourcing bidding and contractual processes aren’t designed to drive innovation–in fact they thwart it.

“Because of competitive pressures, providers have to do internal cost take-outs to win deals. That squeezes margins and profit expectations, and means that most of the upside for the service providers is during the latter portion of the deal,” says Slavin. “This gives account management teams little room to provide creative ideas and fund innovative pilots and projects.”

In addition, few outsourcing agreements call for a standing innovation committee or an innovation fund, for example.

Traditional IT service providers — like IBM and HP — built their businesses on the transfer of both human capital and physical assets to the supplier, creating an environment that discouraged innovation, says Slavin. Indian vendors developed business models on a foundation of labor arbitrage and price competition, which also obstructed innovation.

Little has changed about either approach in the last decade. “Rather than hiring and training a new style and culture of technical talent to support what IT looks like in 2015, clients often see 20- and 30-year veterans who have survived the many layoffs and workforce reductions being rebranded as cloud or mobility experts,” says Slavin. “But the reality is that these veterans have little grounding in those technologies.”

Innovating for customers vs. supporting in-house customer innovation
Traditional players with significant infrastructure assets are digging in, arguing that their years of experience running those systems makes them best suited to innovate on behalf of their customers, Slavin says. In addition, they employ various “handcuff” strategies that make the process of exiting agreements and moving operations back in-house difficult for a customer, according to Slavin.

Some Indian firms, however, are encouraging their clients to take some services back in-house, even offering their staffing resources to support in the transition to and management of the new model, says Slavin. “These providers do not have the large asset base in fixed assets such as data centers and are happy to provide services to a client in their own data center or perhaps a [co-located center].  Several pitch this strategy as something that mitigates the traditional sourcing risks, allowing the clients to potentially move services more readily if they are not happy.”

Meanwhile, consultancies like Accenture and Deloitte are pitching themselves as sources of IT innovation to companies. “These players have generally stayed out of the highly price-competitive and sometimes asset-heavy infrastructure marketplace,” Slavin says. “These consulting firms have a business model built on human capital, one that focuses on skills and experience and is better-suited to deliver technology relevance and alignment with the client’s business. They’re also committed to ongoing training and are willing to carry out needed trimming of non-performers. Finally, they’re able to avoid the episodic large mass workforce reductions that plague the large outsourcing firms.”

It’s too early to say which approach will win out long term.

“The most challenged players will continue to be firms like IBM, HP and CSC,” says Slavin. While they are trying to reorganize to provide vertical solutions like mobility, cloud and analytics, they remain desperate to hold and serve their big clients to avoid revenue run-off.

“HP and IBM have great hardware, and clients expect innovative solutions that take advantage of that great hardware,” Slavin says. “Unfortunately, the outsourcing organizations seem to be lagging at enabling and accessing the emerging technologies needed to drive innovation.”

Indian providers will continue to grow their market share, says Slavin. “The challenge for this group is to grow into more profitable markets and expand footprints in clients fast enough to stay ahead of aggressive pricing, which is built into their deals as an investment to win.”

In the short-term, IT outsourcing customers will either be looking to providers who can provide real business outcomes or taking their innovation-related business back in-house to run themselves.

“Innovation is always in the eye of beholder. It’s hard to argue with something that aligns with the client’s business and moves that business forward,” Slavin says. “So the winners will be those who can provide applications and the supporting infrastructure and link them together as a product, service, or offering that focuses on and is tied to the business.”


When to consider outsourcing your IT department

March 20th, 2015 by Rahul Jain No comments »

There will be a point in a manager’s lifetime where one must look for the most effective way to get the job done and keep the business moving forward. And concerning the IT department, there are several things managers should consider if they’re making an attempt to outsource. Especially if you’re stuck on how to manage IT service requests for most of your technology issues, it may be time to consider outsourcing.Outsourcing10

Here are some situations that signal a time to start outsourcing your IT department.

The infrastructure of the organization is changing
When the company is in a growing stage, leaders within the organization must access the needs of the employees. They have to ask whether there are enough technicians in place to handle all that is going on.

Companies that grow at a fast pace will often have a harder time getting a full IT staff in place to keep up with all the internal issues. The network may be a lot more difficult to handle if there are more employees increasing the workload of the IT department.

Too many technology changes are in place
In many instances, the IT staff may not know about the new technology that may be needed as the company grows. It can be expensive to train a growing IT staff and is always cheaper to hire contracted workers that have a pool of different employees with various skill sets. A leader that needs someone who is proficient in hardware, software, desktops, servers and routers will spend a fortune. There may simply be too much technology in place to actually keep a full time IT staff.

The increased cost of technical support
Sometimes, the budget just may not allow it. Paying for healthcare and providing retirement options like a 401 K can be quite expensive for a company. Especially if there are already a lot of employees in place, it may not be feasible to pay for more people to support the technology. In many cases companies get money to buy the technology, but there isn’t always a lot of money to fund the support of the new technology.

If budget cuts in the IT department result in layoffs there will not be much of a choice to make and will have to get outsourced help. Remember: it is not logical for a company to function without IT support, but IT support is the most logical thing to vanish when budget cuts are made.

Many of the servers and network technology is managed through virtual servers and cloud hosting. Contracted IT teams will usually have software applications in place that can monitor equipment. This usually allows companies to cut down on the amount of workers that are needed to physically access servers and switches. Since a lot of the equipment is managed through the clouds, many preventive maintenance issues can be addressed this way. Outsourced workers can inform you about hard drives that are about to crash. They can warn about space allocation issues on servers. All of this can be done through remote support sessions. There does not have to be technician on site to provide this type of information.

It doesn’t make a lot of sense to pay a person full time to monitor network activity if an outsourced group provides information that is just as beneficial. Instead of having someone in place to monitor issues constantly, you can have a team that only notifies you when someone actually goes wrong. The cost of this is going to be a lot less than having a full time staff in place.

Stable IT environment
If your IT environment if fairly stable you will not have a real need for a full time IT department. Many networks are equipped with Cisco switches that are configured to function without a lot of errors. Even old equipment will be able to be utilized for a lengthy period before it is time for upgrades.

Companies that only have a need for troubleshooting on an occasional basis can do without the full time services of an IT department. A contract IT team can handle issues that may only occur when companies experience power outages or equipment failure.

If the staff for your organization spends a lot of time working from home there may not be a need for a full time IT staff. There may be some issues that occur sometimes that require professional help, but this may be rare. Small organizations that have field technicians or employees that work from home will benefit greatly from outsourcing.

Lastly, any company that rarely has workers in the office should not go to great lengths to get a full time IT department in place. There won’t be enough work for them to do. Instead, it’s better to get outsourced help that only needs to be paid when issues occur.


A brain drain of IT staff at Charlotte’s banks?

March 20th, 2015 by Rahul Jain No comments »

The banking sector has had its share of challenges since the financial crisis. Here’s another, according to one expert: a brain drain in tech talent.Outsourcing9

I talked about this issue this week with Derek Britton, spokesman for Micro Focus, a company based in England that helps other businesses modernize their core information technology systems. Britton was in Charlotte on Tuesday for a Micro Focus seminar, whose attendees included tech professionals who work for local banks.

In our interview at the Marriott City Center hotel, where the seminar took place, Britton explained that banking and many other industries still rely heavily on a programming language that dates to 1959. That language, COBOL, over the years became widespread in the business world and today runs critical applications for companies, Britton said.

The concern, Britton said, is that tech professionals who understand COBOL and the systems built on it are reaching retirement age at a time when an incoming, younger crop of tech talent has little to no familiarity with the more-than-50-year-old programming language.

Britton said that’s because many colleges and universities are no longer teaching COBOL but, instead, newer programming languages like JAVA and C# (pronounced c sharp). Micro Focus has worked with hundreds of universities to put COBOL back on their curricula to meet demand for the language, he said.

It adds up to perfect storm for the IT world, leading to worries among various industries about a skills gap. But the issue is of particular concern for the financial services sector, where COBOL is used to operate systems that are at the very core of banks’ businesses, Britton said.

“Those systems have become more and more valuable over time,” he said. “The very health of the business relies on these systems.”

Looked at another way – these are systems that, for banks, are too important (and maybe even too big) to fail.

For example, whenever any of us make a deposit at an ATM or transfer money on a tablet device, we’re able to do so in part because of COBOL, Britton said.

Banks are using newer programming languages, too, he said. But they still need people who know COBOL in order to keep their mainframes operating and make updates to systems based on COBOL, he said.

“It’s not hard to image the anxiety a CIO (chief information officer) faces when he’s told that some of his key developers, some of the people who really understand the systems, really know what’s going on … are reaching retirement age,” he said.

The demand for COBOL knowledge is so high that, according to some studies, a person with COBOL skills on their resume can command on average about $10,000 more in annual pay than a tech professional without it, Britton said.

Wells Fargo and Bank of America, Charlotte’s two largest banks by deposits, declined to comment when I asked them about whether this is an issue affecting them.

What’s the solution for banks?

On the bright side, Britton said, COBOL isn’t complicated (as far as programming languages go, anyway). So, presumably, younger techies could quickly learn it from their older colleagues before they retire from banks.

Some companies have already taken steps to provide such training, Britton said.

“I can’t give you their name,” Britton said, “but one very large U.S. insurer had a brain drain concern.”

“They had a deficiency of certain COBOL programmers in a certain line of business area. They had a glut of other programmers who had (programming tool) Visual Studio and, I think, C# skills. What they did is they basically challenged them to see if they could understand the COBOL systems (and) were able to cross-train themselves in COBOL in a matter of days.”

In another solution, some banks are also outsourcing to other companies to help support their COBOL-based systems, he said.

But Britton said it would also be helpful if companies and higher education worked closely together to ensure that schools are teaching the computing skills financial institutions still need – no matter how outdated those skills may seem.

“One of the other ways organizations need to look at this issue is by partnering more effectively with academia, because obviously it’s going to be through the colleges, through the higher-education institutions, that the next generation of skilled talent could become available.”


Wipro’s long search for a dogma breaker

March 20th, 2015 by Rahul Jain No comments »

Ten months. Five candidates. Three countries. That is the journey Wipro Ltd chief executive officer T.K. Kurien and human resources head Saurabh Govil undertook before the company named Abid Ali Neemuchwala as chief operating officer (COO) on 16 March. Outsourcing8

Kurien and Govil, who flew to London, Seattle, Dallas and New York between April and November on this mission, had at least a dozen meetings with external candidates.
So secretive was the management about the hunt for a COO that even the Wipro board was informed only a day before India’s third largest software services exporter announced the appointment.

“This thought process started in March (2014), but we kept it under wraps. For a long time, only two of us knew,” Kurien said in an interview on Wednesday. One executive privy to the developments said on condition of anonymity that he got to know about the COO search only in November.

In the summer of 2014, Wipro reported another set of feeble growth numbers, recording annual revenue growth of 6.4 % for the year ended 31 March last year. Although this was better than the 5% growth in 2012-13, Wipro’s revenue increase paled in comparison with that of larger rival Infosys Ltd, which posted 15% growth.

Both Kurien and Govil realized that it was time to act.

Kurien, who took the helm of Wipro in February 2011, had first discussed the need for a COO with Govil in March.

One theme that recurred during Kurien’s interactions with many of Wipro’s 986 customers was the impact of technology on the way the traditional outsourcing work was done by Indian outsourcers. Is Wipro embracing open source software to which many of its biggest clients, including Citigroup Inc.,were switching? Is it investing enough in next generation technologies, including automation of back-end infrastructure maintenance?

Although by now Wipro had a team working under intelligent technology platforms, Kurien knew it would take some time before results start to show up. He needed someone who could execute his plans.

“If you look at the way technology is being bought, it is very different from the way three years ago,” said Kurien. “Three years ago, CIOs (chief information officers) took infrastructure from us, took application from someone else, and acted as integrator. But now more and more specific workloads are getting stack-based. People take a process view and say how do I integrate applications, hardware and data. So which means how can you (an IT vendor) integrate applications, infrastructure and data together, and present it before the customer.”

“So we started meeting people from April,” said Kurien, who a few days later read in the press that cross-city rival Infosys, too, had started its hunt for a CEO to replace S.D. Shibulal, who wanted to leave. Infosys asked two search firms, US-based Development Dimensions International, a specialist in executive evaluations, to rank leaders within the company and executive search firm Egon Zehnder to help it identify leaders outside the company.

“Executive names normally come through referencing. But TK is one CEO who is always meeting clients and he knows most people well enough,” said Navnit Singh, country head for India at executive search firm Korn/Ferry International. “I think that explains why they did not seek any outside help,” said Singh, whose firm helps companies, including Wipro, fill senior management ranks.

Two months later, in June, Infosys named Vishal Sikka as the first non-founder CEO and MD-designate of the company. Unlike Infosys’s hunt for Sikka, which took two months, spanning three continents and the three-member nominations panel of the company meeting a dozen external and internal candidates, Wipro’s search was a long-drawn affair.

By now, Wipro leaders had just had two meetings with executives, names of which the management declined to share. Mint now learns that these executives were from Microsoft Corp. and Google Inc. But Kurien knew their decision to bring in an outsider was the right one.

“We wanted someone who could challenge the existing dogmas that sat within the enterprise. Within an enterprise you typically don’t question things which are done for many years. We wanted a little bit of external challenge the way we have worked,” Kurien said, explaining the rationale for selecting an external candidate.

A few months later in August, both Kurien and Govil first met Neemuchwala in Dallas over dinner, according to the executive cited above.

Neemuchwala, 48, was no stranger to the outsourcing sector: He is credited with having doubled the revenue at Tata Consultancy Services Ltd’s (TCS’s) back-office division in the six years he headed the business and also helping the company win some billion-dollar deals, including a multi-year contract with Nielsen.

Wipro’s management declined to share details of what transpired in the dinner meeting, but this it was followed by at least two more meetings in Dallas, according to the executive cited above, before Neemuchwala flew down to Bengaluru to meet Wipro chairman Azim Premji in late December.

“Such meetings with chairman are never so short,” Kurien laughed when asked if it was a quick 15-20 minute meeting, again declining to share details.

To be sure, once Premji approved of the choice, Wipro knew by February it had found the right candidate to lead the operations team. But it wanted to wait for another six months before naming Neemuchwala as COO.

“Things in the last month moved way too fast than we had anticipated. He (Neemuchwala) left TCS (in early February) and by then, other than Wipro, he had four other offers (including one from a private equity-backed technology firm). So he took a decision and we are happy he joined us,” said the executive cited above.

“The biggest quality he (Neemuchwala) has is the ability to execute. He integrates all these stacks. All the stacks (technology service lines at Wipro) report to him. He will be building service integration layer that sits on the top,” said Kurien.

“He (Neemuchwala) genuinely understands how to marry business process delivery with IT delivery—an expertise also shared with T.K. Kurien, who used to lead Wipro’s BPO business before becoming the company CEO,” said Phil Fersht, CEO of US-based HfS Research, an outsourcing-research firm. “He can truly help globalize an indian-heritage provider with his experience, which is essential for a firm like Wipro.”

For now, Neemuchwala lives with his family in Dallas. But Wipro won’t dictate where Neemuchala should work from. “He will be wherever he wants to be, be it in India or the US,” said Kurien.

Neemuchwala declined to comment.


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