Nationwide Building Society outsources IT infrastructure

October 23rd, 2015 by Rahul Jain No comments »

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 by Rahul Jain No comments »

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.”


Wipro joins Infosys for a bright second half

October 22nd, 2015 by Rahul Jain No comments »

Wipro Ltd, India’s third-largest information technology (IT) services firm, on Wednesday joined larger rival Infosys in forecasting higher growth in the second half of the current financial year than the first. The company, however, cautioned that lower productivity for clients during the holiday season in the US and Europe could hit business in the October-December quarter.outsourcing8

The firm reported seven per cent net profit growth in the September quarter to Rs 2,235 crore. With a revenue of Rs 12,513 crore, it met the lower end of its guidance. Margins, at 20.7 per cent, were slightly lower than the 21 per cent reported in the previous quarter. The impact of wage increases given in June also showed in the results for the September quarter.

Wipro’s 3.1 per cent revenue growth for the quarter was lower than those of larger rivals TCS (3.9 per cent) and Infosys (5.9 per cent). While HCL Technologies’ dollar revenue had grown a mere 0.5 per cent on a sequential basis, TCS, Infosys and Wipro reported growth rates of three per cent, six per cent and 2.1 per cent, respectively.

Wipro forecast its revenue in the December quarter to be in the range of $1.84 billion to $1.88 billion — year-on-year growth of 0.5 per cent to 2.5 per cent — as it anticipated unprecedented closure at its clients in the manufacturing, retail and banking sectors during the holiday season. The Street had been expecting a growth guidance of 2-4 per cent.

Analysts say Wipro might meet the upper end of its guidance due to stability in the energy vertical, which had been down due to low oil prices and reduced global demand, and client additions.

“It seems the company was hinting that the financial year (2016-17) will be a better one. The commentary remains similar to those of other players. Wipro, too, is saying that the second half will be better. TCS, Infosys and HCL Tech have maintained that their order books are much stronger,” said Sarabjit Kour Nangra, IT research head, Angel Broking.

Wipro added 67 customers in the September quarter to take its total tally to 1,100.

Infosys expects its full-year growth to be between 10 per cent and 12 per cent. Its CEO Vishal Sikka had said on October 12 after announcement of the September quarter results: “Even if we are flat (in July-September) we will end up at the higher end of the 10-12 per cent guidance… the second half traditionally has seasonal dips in growth, so we are going to work very hard to make sure we buck the trend.”

TCS, which does not provide revenue forecast, was cautious. On October 13, its CEO N Chandrasekaran said: “In terms of our outlook for the rest of the year, we expect a tapering of sequential revenue growth in the second half, like in earlier years.”

Indian IT services firms are faring better than their global peers, even as their biggest market, the US, is showing higher economic growth. On Tuesday, IBM, the world’s largest computer company, saw its third-quarter revenue declining 14 per cent to $19.3 billion, a 14th straight quarter of shrinking sales. IBM’s services revenues, which Indian IT firms benchmark with, were also down. Its global technology services fell 10 per cent to $7.94 billion. IBM Chief Financial Officer Martin Schroeter said the strategy shift towards cloud computing and data analytics had an impact on existing business, but the future seemed bright.

Wipro CEO T K Kurien said in an interview on Wednesday: “We see that the US market is clearly on the upswing for us. If you see the share of the US as part of the overall business, it has grown to 52 per cent from around 48 per cent a year and half ago.”

Wipro said it was witnessing faster growth in businesses using digital technologies, with more transactions from customers in lower value deals, but there was an opportunity to mine those for increased business. This was also due to a reduction in larger deals from customers who traditionally rolled out tenders of hundreds of millions of dollars to IT vendors.

“We continue to see strong competition around large deals and there is pressure on pricing with respect to new deals. The deal sizes are getting smaller and the number of multi-hundred-million-dollar deals has reduced in the market place,” said Kurien.

Like peers TCS and Infosys, Wipro also said its digital business was doing well. Wipro HOLMES, its cognitive intelligence platform, is engaged in 12 projects in business-critical areas for marquee customers. “There is no large outsourcing deal in the digital business. It is a series of small deals that drive business,” Kurien said.

What continue to be pulling down the company are its energy and utilities verticals (constant currency growth of 0.3 per cent) and the Europe geography. The company, however, said the verticals like health care and life sciences had bounced back with 4.2 per cent sequential growth. Global media and telecom grew by 4.4 per cent sequentially, though the company did see some pressure going ahead. The US grew 3.6 per cent and Europe was soft at 1.4 per cent.

During the September quarter, the company’s headcount increased by 6,607 to 168,396.

Ahead of the announcement of the quarterly results, the Wipro shares on Wednesday closed at Rs 577.9 apiece, 1.04 per cent higher than their previous close. The BSE IT Index rose 47.8 points, or 0.43 per cent, to close at 11,284.36.


British Airways to replace IT workers with Indian recruits flown in on temporary visas

October 22nd, 2015 by Rahul Jain No comments »

British Airways is set to replace IT workers in the UK with Indian recruits flown into the country on temporary visas, writes Emily Davies.outsourcing7

At least 55 jobs will be outsourced to Tata Consultancy Services, with a possible 128 more to follow, under plans from International Airlines Group (down 11.5p at 592p), the parent company for British Airways.

The cost-cutting move is expected to involve employees being sent over from the Indian-owned company on a rotational basis from spring next year.

British Airways, which employs 35,000 people in the UK, is on course to outsource up to 80pc of roles in its IT department, meaning a total of 720 British jobs could be lost.

A source told The Sun: ‘Some of the BA jobs will transfer to Tata from spring. One very likely option is to use their own staff from India to fill the posts.

‘It will be cheaper, but it is an insult to BA staff who have been there for years. It’s a very cynical move by IAG to save a few quid.’


Luxoft Named a Top 10 Outsourcing Service Provider by ISG

October 21st, 2015 by Rahul Jain No comments »

Luxoft Holding, Inc (NYSE:LXFT), a leading provider of software development services and innovative IT solutions to a global client base, today announced it has been named a Top 10 Outsourcing Service Provider by Information Services Group (ISG), a leading technology insights, market intelligence and advisory services company.outsourcing7

For the third consecutive quarter, Luxoft was among the leading providers in The Breakthrough Sourcing Standouts category for the Americas and EMEA regions based on annual contract value (ACV) won over the last 12 months, according to the ISG Global Outsourcing Index®. Now in its 52nd consecutive quarter, the ISG Outsourcing Index provides an independent quarterly review of the latest sourcing industry data and trends for enterprises, service providers, analysts and the media. Luxoft’s inclusion in the ISG Outsourcing Index is based on data the company submits to ISG each quarter.

“We’re very excited to have earned our third consecutive listing on ISG’s Top 10 Sourcing Standouts list,” said Luxoft President and CEO, Dmitry Loschinin. “In line with the recent results from the ISG Outsourcing Index, business for Luxoft continues to grow within the North American marketplace and Western Europe, particularly within financial services. We are seeing tremendous opportunities within our key verticals – financial services, automotive, and telecommunications – driven by changing demands of the sourcing, information technology, and business stakeholders at these organizations. They want suppliers who can drive change, lower cost, and ultimately improve the business output. We see the results of the ISG Outsourcing Index speaking to these overall trends.”

“For more than a decade, the ISG Outsourcing Index has been the authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider performance,” said Paul Reynolds, chief research officer of ISG. “Luxoft continues to establish itself as a leading and growing player in the global market for custom software development and product engineering services, based on its volume of business in relation to other industry providers.”


Why Uganda is an up-and-coming IT outsourcing option

October 21st, 2015 by Rahul Jain No comments »

Strong English language capabilities, low costs and attrition, and a stable and supportive government give Uganda potential as the latest offshore outsourcing alternative in Africa.outsourcing6

A number of African nations have been working to build their IT service capabilities over the last decade with some degree of success. Here are three examples:

South Africa, for example, has made a strong push as a destination for outsourced IT serving both the domestic and global market. The country has a particularly well-developed Westernized market structure which, combined with its rich talent pool, has made it “a highly credible destination” for Web services, application development and applications maintenance, according to Craig Wright, a managing director for business transformation and outsourcing consultancy Pace Harmon.

Financial center Johannesburg ranked No. 21 (ahead of Sao Paulo in Brazil, which gets much more attention as an IT service destination) on Tholons’ 2015 Top 100 Outsourcing Destinations list. However, concerns about white-collar crime and personal safety persist.
English-speaking Kenya has made strides securing lower-end business process outsourcing work like contact centers. A number of multinationals, such as IBM, have set up shop in Nairobi and Indian providers exploring expansion there as well. But the country “has struggled to get much traction on higher-end technology because of low availability of a trained labor force, particularly with deep technical skills and inadequate infrastructure and power supply,” says Wright.
Morocco’s strong French and Spanish language skills and time zone and proximity to European cities have made it particularly attractive as a low cost location for EU firms. Suppliers like CapGemini and Atos have service centers in Casablanca. However, the country ranks No. 34 on A.T. Kearney’s Global Services Location Index.

In contrast to shrinking populations in India and the Philippines, Africa’s population is growing, meaning more individuals will be entering the workforce. Foreign direct investment (FDI) boomed to $60 billion, five times the continent’s 2000 level, according to the World Bank, making Africa the second most attractive destination in the world behind North America, according to the World Bank.

The positives for Uganda as an outsourcer

But the most interesting player for IT services today may be Uganda. “It has a strong infrastructure with a powerful and reliable hydroelectric power source from three damns on the River Nile,” says Wright. “Uganda has also benefitted from Google’s Project Link.” The company’s continental high-speed fiber optic network project kicked off in Ugandan capital Kamapala.

The national government is stable (current president Yoweri Museveni has been office for nearly three decades) and has established an initiative to develop an upper middle class in what has been a largely agrarian society. As a former British protectorate, Ugandans are taught English in school, with it being the single common language among the more than 50 tribes in the country. “Other strengths of Uganda for outsourcing include the stable geo-political environment, the creation of incubator units for new IT and BPO business, incentives for growth, and cyber laws to protect IT and BPO investors.”

The challenges for Uganda as an outsourcer

“The challenge for Uganda is similar to that throughout Africa as only 22 percent of university graduates have STEM-related degrees,” says Wright. High-volume offshore outsourcing destinations typically see more than 40 percent technology-related degrees. There is also some continued fallout from former president Idi Amin’s decision to expel the country’s Asian minority population in 1972. “This has certainly limited any influence from the Indian providers,” Wright says. “Also, there is a large religious missionary presence in the country that has influenced the culture and limited the acceptance of progressive lifestyles and views.”

However, the National Information Technology Authority, Uganda (NITA-U), the Ugandan Investment Authority, and the country’s ambassadors are working together to raise awareness of the regional strengths capabilities and invite global delegations to the country with the goal of attracting corporations that will build out the country’s IT and BPO capabilities, shape future educational programs, and provide infrastructure support. The country has also set up incubators for IT and business process service business and other growth incentives.

“Anyone considering English language-based services in Latin America or the Philippines should consider Uganda,” Wright says. “There is a strong European and American influence leading to good cultural alignment with Ugandans.” Service desk, call centers, web development, and applications development and maintenance are all viable services available at a lower cost than in South Africa, for example. While salaries for software developers are higher in Uganda than the Philippines and India, attrition rates are less than 5 percent.

However, notes Wright, “owing to its landlocked location and the East African road challenge, Uganda would not be ideal for data center work or anything capital intensive.”


HMRC launches 20 million tender for IT consulting

October 19th, 2015 by Rahul Jain No comments »

The HMRC has launched a £20 million tender for consulting firms to guide its IT department in a move away from a one sized mega-project IT system operated by one main contractor to one that is open to many smaller and mid-sized IT contractors. The reason for the decision is increased control over projects, as well as increased competition lowering profit-making. The department is looking to make the changes by 2017, when its current contract with Capgemini ends.
Since the mid-1990s, the HM Revenue & Customs (HMRC) has gone for a one player mega-contract approach for its IT needs. The first contract going to EDS, followed by Capgemini’s Aspire IT framework which started in 2004 and is contracted to run until 2017.

Whereas a one contract approach has advantages – such that the main sub-contractors Fujitsu and Accenture are all co-ordinated by Capgemini – there have also been issues raised by the approach. A 2014 National Audit Office report highlights that, by giving full control of IT to one contractor, the department lost direction and control of its ICT, lost flexibility to get things done with the right supplier quickly or make greater use of cross-government shared infrastructure and services.

Further issues highlighted by the report are that, through the HMRC’s dependence on a single supplier, the department becomes dependent on the expertise of its suppliers. Recent benchmarking studies also show that of the around £10 billion the project is expected to cost by 2017, Capgemini will be making a tidy 16% profit, amounting to £1.2 billion. This is more than double the £500 million original projection. HMRC one player mega-contract run by Capgemini

Changing direction
To end the excessive profit making, as well as gain more control over its IT estate, the HMRC is looking to change the way in which its IT systems are operated. It is seeking for consultancy advice worth up to £20 million to move away from its single Aspire outsourcing arrangement towards a more varied outsourcing approach that involves a number of smaller contracts that manage the HMRC’s IT systems. Under the new procurement system, the department will seek to have its IT systems managed by up to 400 IT subcontract suppliers, with no contract worth more than £100 million. The new way of operating is expected to generate a number of advantages, which include the ability for a wide range of contractors to tender, while opening up the government service to smaller and medium-sized IT contractors and services companies that can compete for contracts.

To make the changes, the HMRC recently advertised for a tender, stating it is looking for an expert firm that can see that the HMRC “needs an injection of strategic-level experience and capacity to support people and culture transformation… HMRC will require the supplier to provide strategic input to the planning of this activity and for support for senior line managers in delivering it.” HMRC seeks new IT procurement system

Future havoc
Not everyone believes however that bringing in a large number of small players will improve the quality of service or lower operating costs. For instance, Mark Dearnley, the department’s Chief Information and Digital Officer, says that getting rid of Aspire for a new system could itself cost up to £600 million. The government’s Chief Commercial Officer Bill Crothers warns that if wide-ranging changes are to be made then planning needs to start early. “This is enormous, risky and important, and that should guide what we do. Sitting behind this is getting better capability, being a better client and doing things in a phased way as much as possible…we should not be complacent,” he says.


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