News that Accenture Life Insurance Services has won an eight-year business process outsourcing (BPO) agreement with BNP Paribas Cardif may be a sign that the European life insurance and pensions market is set for increased outsourcing activity.
BNP Paribas Cardif, the life, property and casualty insurance subsidiary of BNP Paribas, has a strong international focus, generating nearly half of its premiums outside of France, with a particular focus on emerging markets including Taiwan, Russia, Ukraine, Turkey, Brazil, Chile and India. Insurance is sold principally through intermediaries and bancassurance channels.
Accenture will manage an important portfolio of BNP Paribas Cardif’s group life insurance policies business in France, including the administrative management of the insurer’s call centres and ancillary accounting operations.
According to Daniele Presutti, managing director of Accenture Life Insurance Services, the life insurance industry is undergoing fundamental change, driven by increased regulation and risk management pressure and more volatile markets. This provides an opportunity for some insurers to gain market share. Outsourcing can help them strengthen capabilities to reach their objectives.
Services to be provided by Accenture include policy administration, call centre services, ancillary accounting and enhancement of the current life processing platform.
Accenture has made no mention of any staff transferring under the Acquired Rights Directive. This legislation aims to protect employees when businesses are restructured, including in cases of outsourcing, but which often adds complexity, cost and risk to the execution of an outsourcing transaction, especially for services crossing country borders.
One interesting detail is that the scope of the Accenture/Cardif deal includes new insurance business. In the UK, traditionally, third party administration deals have focused on the outsourcing of processes in support of closed books, coupled with aggressive cost saving models, following the aggregation model pioneered by Clive Cowdery’s Resolution and subsequently taken up by Phoenix Life and others.
This announcement comes at a time when commentators have been suggesting that the UK market has reached relative levels of saturation and maturity, with large insurers such as Phoenix, Resolution, Prudential and Co-operative Financial Services having previously outsourced the administration of their books of business to the likes of Diligenta and Capita. Capita has a strong record of contract wins in the sector and says it has approximately 22% of the total UK market for insurance clients such as Zurich Financial Services.
It could be argued that Capita is currently suffering from indigestion as it grapples with the complexities of managing these large books of business, such as the need to transform the underlying technology on which the individual policies are administered. This has given the other main UK player, Diligenta (a wholly owned subsidiary of Tata Consultancy Services) the opportunity to increase its own share of the market.

Diligenta has impressed recently with its successful consolidation of multiple legacy systems onto a single integrated cloud-based system based on the TCS BaNCS Insurance platform. Diligenta built its business around a large contract with Phoenix in 2005, and subsequently its 2010 acquisition of UISL, the former L&P business of Unisys, which enabled it to pick up work for Old Mutual in the process. The end of 2011 saw Diligenta sign a 15-year, £1.37 billion deal with Friends Life under which some 1,900 employees are expected to transfer to Diligenta under TUPE (the UK’s version of the Acquired Rights Directive).

Other players include:

 International Financial Data Services (the State Street/ DST Systems joint venture) which entered the sector in 2010 with its acquisition of Percana Group headquartered in Dublin and is also reported to be working with Phoenix

 Swiss Re, which in 2007 took on the responsibility for 12 million life & pension policies under an outsourcing arrangement with Aviva, which included 3 million active premium paying policies

 The Indian outsourcer HCL Technologies, which in 2008 acquired Liberata Financial Services and subsequently inked a long-term deal with Equitable Life worth an estimated £125 million.

Although announced in 2009, the contract did not start until March 2011. Equitable Life expects to make cost savings of approximately £8 million in the first full year of the contract and will reduce its provision for future costs by over £100 million through committed savings and cost predictability under the contract.

The recent Friends Life deal with Diligenta and the BNP Paribas Cardif deal with Accenture suggest there’s still life in this sector with large savings to be gained. Friends Life, for example, reported expected savings of £60m per annum from 2015 with one-off costs of £230m, although a robust approach to contracting supported by ongoing service management and governance is needed to ensure that the promised savings actually materialise.

Source:http://www.sourcingfocus.com/site/opinionsitem/4857/

Infosys cut its revenue growth forecast for its fiscal year ending March 31, the outsourcing company citing slowing demand in Europe caused by the debt crisis.

The company, which is India’s second largest outsourcer, said yesterday that revenue growth for the year would be 16.4%, down from the 17.1% to 19.1% it had projected in October.

“There is still a lot of uncertainty,” said Ashok Vemuri, member of the board and head of Americas at Infosys.

Infosys revenue breaks £1 billion despite troubled economic times Infosys looks to UK public sector
While the economic indicators in the US appear to be looking up, the outlook for Europe is still dim, Vemuri said. The company is investing in its operations in Japan, Australia, China, and Latin America to increase revenue from these markets.

Partner at market intelligence and advisory services firm Information Services Group Siddharth Pai said that customers were delaying purchase decisions because of the uncertainty about the economy, and that this was affecting IT services companies across the world.

Infosys and most other Indian outsourcers earn most of their revenue from North America and Europe.

For the quarter ending December 31, the company’s revenue was $1.8 billion, up by about 14% from the same quarter in the previous year. Net profits at $458 million were up 15.4%. Revenue and profit growth was more than double in rupee terms mainly because of the fall of the Indian rupee against the dollar in which the company earns most of its revenue.

Infosys has been attempting to move from services priced around the number of staff working on a project, to value-added services around consulting and development of products and intellectual property.

Fixed price contracts accounted for 41% of revenue in the quarter, as compared to 37% in the previous quarter, mainly on increased consultancy contracts, Vemuri said.

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Some banks for example are asking Infosys to not only run some operations, but to also transform the bank’s processes, creating opportunities for some of the outsourcer’s platforms, including one for fraud surveillance, he added.

Infosys added 3,266 employees in the quarter, taking the total to 145,088 employees at the end of the quarter. The company continues to invest and plans to add 49,000 staff in the fiscal year, Vemuri said.

Infosys expects its fiscal year revenue to be about $7 billion, but Vemuri said that uncertainty will continue in the next fiscal year.

Source:http://www.computerworlduk.com/news/outsourcing/3329924/infosys-cuts-revenue-forecast-citing-european-crisis/

European corporations are all set to reduce spending on information technology owing to the ongoing sovereign debt crisis in the region, a move that could have a negative impact on home-bred software services firms.

For 2012, several corporations in Europe are planning to trim their IT budgets by between 5 and 10 per cent, Mr Sudin Apte, Chief Executive Officer of advisory firm Offshore Insights, said, citing the results of an yet to be published study of 100 companies in Europe.

“One in five client companies (that were surveyed) across sectors have told us that they are stalling some of the IT projects…all kinds of software projects are under the scanner. The bottom-line is that companies have less money to spend,” Mr Apte told Business Line. On its part, Nasscom has said that none of its member-companies have reported any cancellation of deals that have been awarded already. However, Nasscom Vice-President, Mr Ameet Nivsarkar, said that the industry body is ‘watching the situation closely’.

It may be recalled that Infosys Technologies was the first bellwether IT company to publicly warn its investors of a dip in demand due to project delays in a deteriorating macro-economic environment.
Tenure and pricing

In many cases, offshoring deals that are up for renewal are now being treated differently especially when it comes to the tenure and pricing. “There are instances where five-year deals are renewed for only 1-2 years as clients are uncertain and do not have enough visibility into the future…in some cases, deal renewals are happening for the full tenure but clients are asking for a reduction in pricing,” Mr Alok Shende, Principal Analyst of Ascentius Consulting, said.

Mr Ganesh Natarajan, Global CEO of Zensar Technologies, is of the view that the Eurozone crisis has not impacted IT spending in the UK, Germany and the Netherlands — countries where the RPG group company has clients.

However, he too agrees that ‘heavy duty and massive discretionary projects’ may be held back as clients assess the situation and prepare the roadmap to wade through the period of economic uncertainty in the continent.

Mr Hanuman Tripathi, Group Managing Director of midsize software products company Infrasoft Technologies, said: “There is no doubt that budgets allocated for research and development, new products and entry in new markets will be frozen. However, IT spends on maintenance and support will continue unhindered for the next 2-3 quarters.”

A decreasing IT budget could, however, spell opportunity for Indian IT companies especially when it comes to companies where the cuts are ‘mild’. “Companies which have reduced budgets by 3-5 per cent will tend to continue outsourcing the same work but at a cheaper rate. This could mean additional business moving to offshore centric Indian players,” said Mr Apte.

Source:http://www.thehindubusinessline.com/industry-and-economy/info-tech/article2689776.ece?ref=wl_industry-and-economy

Xerox Co. plans to acquire the Italian customer service firm XL World to boost its outsourcing business in Europe, the printer and copier maker said Wednesday.

Financial terms were not disclosed.

Xerox’s business services division, Affiliated Computer Services, is buying XL World. Xerox acquired ACS in 2010 to boost its services offerings for companies after its traditional office equipment business suffered a steep drop-off during the recession.

Founded in 2000, XL World is focused on the telecommunications sector. Buying it will help Xerox provide clients access to affordable European language services for call center and back-office services, the company said.

The acquisition, which covers XL’s 1,500 workers and facilities in Romania and Albania, will also help Xerox reach its goal of creating a global network of outsourcing centers, the Norwalk, Conn.-based company said.

Source:http://www.businessweek.com/ap/financialnews/D9PSTMR00.htm

The company has signed a 10-year agreement with Accenture to support the transformation.

Accenture will also provide technology infrastructure management, IT service delivery, service management, service desk, datacentre services, workspace services, network services, security services, and finance and accounting business process outsourcing (BPO) services.

Accenture is working with technology partners including Cisco and Lufthansa Systems. Cisco will provide networking capabilities such as VoIP, video, unified communications and collaboration. Lufthansa Systems expertise will support Accenture’s plan to use virtualisation, automation and cloud-based services to deliver infrastructure as a service (IaaS).

The deal will enable Thomas Cook to reduce the total number of IT suppliers it works with.

Gary Edwards, group CIO at Thomas Cook, said the new infrastructure will reduce costs and improve customer services. “This will help Thomas Cook deliver significant savings, while creating the agility we need to respond to customer needs,” he said.

Accenture and Thomas Cook have an established relationship. In 2007, Thomas Cook outsourced the management of application, infrastructure and business processes to Accenture for 10 years. The deal, which also covered finance, accounting and human resources, superseded an agreement the two companies signed in early 2002 and was necessary following Thomas Cook’s merger and integration of acquisition MyTravel.

Source:http://www.computerweekly.com/Articles/2011/09/20/247942/Thomas-Cook-creates-single-European-IT-structure-with.htm

The European Parliament has signed a €12m deal with Accenture which will see the Dublin-headquartered company develop and manage information technology applications across the institution’s operations.

Lasting for four years, the contract – won by Accenture, one of Europe’s biggest IT service providers, following a competitive public procurement process – is part of the parliament’s wider strategy to develop efficiencies.

Accenture, a global management consultancy, technology services and outsourcing business, which has 223,000 staff, will “provide application development, maintenance and support,” the company said in a statement. It will work across the parliament’s human resources, finance, logistics and administrative departments.

Sean Shine, managing director of Accenture Health and Public Service in Europe, Africa and Latin America, said: “Both businesses and governments are increasingly seeking application development support to ensure their organisations operate to the highest standards to drive efficiencies.

“For the parliament, Accenture will analyse, design, build, test and implement new functions and applications as a managed service over the next four years. We are very pleased to be working with the parliament.”

Source:http://www.publicservice.co.uk/news_story.asp?id=17343

Accenture has signed a €12million IT application services agreement with the European Parliament to develop, maintain and support a variety of applications across the Parliament’s operations. The agreement is designed to support the European Parliament’s overall information technology strategy and to drive greater operational efficiencies across the institution.

This contract, awarded after a competitive public procurement process, will provide application development, maintenance and support for the European Parliament. Accenture will oversee the development and integration of new applications across functional areas such as human resources, finance, logistics and administrative management.

Speaking on the contract, Sean Shine, managing director of Accenture Health & Public Service practice in Europe, Africa and Latin America said, “Both businesses and governments are increasingly seeking application development support to ensure their organizations operate to the highest standards to drive efficiencies. For the European Parliament, Accenture will analyze, design, build, test and implement new functions and applications as a managed service over the next four years. We are very pleased to be working with the European Parliament for the first time.”

Source:http://www.sunherald.com/2011/09/05/3400166/accenture-and-european-parliament.html

Despite a mixed outlook globally, the business process outsourcing (BPO) market in western Europe remains on a solid growth trajectory.

Research from Gartner projects the worldwide BPO market will expand 6.3 per cent this year and five per cent in 2012. The western European market is forecast to exceed the market growth rate, with 2011 revenue set to spike 8.9 per cent in dollar terms.

The analyst claims it “does not see a major wave of deals being brought back in-house” in Europe. Knowledge process outsourcing is singled out as a particular growth hotspot, especially in the UK.

Asia-Pacific is set to be the BPO market’s top-performing region this year, with growth pegged at 17.9 per cent. North American market expansion is forecast at a rather more muted 3.8 per cent, while the fallout from the March earthquake and tsunami is expected to see the Japanese market decline 0.9 per cent.

Gartner research vice president Cathy Tornbohm said: “Emerging markets are faring far better and, generally, multinational companies continue to look to BPO as a means both to reduce costs and to buoy their business operations during the protracted return to a growth environment.”

Source:http://www.channelweb.co.uk/crn-uk/news/2103687/european-outsourcing-market-growing

Tata Consultancy Services (TCS), (BSE: 523540, NSE: TCS), a leading IT services, consulting and business solutions firm was adjudged the “Outsourcing company of the year 2011” award at the Data News Awards for Excellence ceremony held in Brussels.
The Data News Awards are the leading award series for the Information technology (IT) and Telecom Industry in Belgium and recognizes exceptional performances by companies and individuals across 12 categories. The nominees are drawn up from a long list of contenders nominated by the editorial team which undergoes a first level selection based on online voting by readers of Datanews, after which a specialist jury of Chief Information Officers (CIOs) and Industry leaders decides on the final winner.
“A two phase process of having our readers (accounting for over 75% of all IT professionals in Belgium) vote on the nominees, followed by an expert jury deciding the winner ensures that the company that wins holds both a strong reputation for performance in the general market and also the respect of top CIOs and IT decision makers. TCS emerged as the clear winner, ahead of 25 other companies, a point that underscores its growing reputation in Belgium and indeed across Europe. It is also notably the first India headquartered company to ever win this award. ” said Luc Blyaert, Editor-in-Chief of Datanews ( a part of the Roularta Media Group ).
Shankar Narayanan, Director & Head of TCS Benelux said, “This award is a landmark recognition for us in Belgium, where we have been expanding over the years it is also one of our largest operations in Europe today. It reflects the trust and confidence that TCS has built within the IT and Business community through our approach of delivery excellence, deep industry expertise and most importantly – forging long term partnerships with our clients. This recognition belongs as much to each of our clients, as it does to us.”
TCS has been operating in the Belgian market since 1992, as part of its larger Benelux (Belgium, Netherlands and Luxembourg) business unit. The Belgian operations comprises over 1100 consultants providing services to leading firms in the country including several BEL20 companies in the telecom, retail, manufacturing and financial services sectors. TCS Belgium is a part of the company’s Global Network Delivery Model. (GNDM ™)

Source:http://www.business-standard.com/india/news/tcs-wins-top-european-award-for-excellence/435072/

IT Europa (http://www.iteuropa.com/), a leading European IT publisher and market intelligence organization, announced the winners of the European IT Excellence Awards 2011 – the pan-European awards event for IT and Telecoms channels. The finalists were honoured at a celebration dinner at The London Marriott Hotel, Grosvenor Square, London.

The contest was organized to recognise the crucial role that Independent Software Vendors (ISVs) and Solution Providers play in the delivery of real world solutions, and attracted entries from 31 countries. Entries were submitted by ISVs and resellers describing the solution provided and each had to be supported by an endorsement by the client. Sixty-two companies from 22 countries made the finals. The winners were selected by an independent panel of consultants and editors.
IBA Group (http://www.ibagroup.eu/ ) participated in the contest for the third time. The company was selected a finalist in 2008 and 2010. This year, IBA Group became the winner in the category Relationship Management.

In congratulating the winners, Alan Norman, Managing Director of IT Europa said:”The overall quality of entries was extremely high and demonstrated the depth of talent in the channel community across Europe. I congratulate all the winners and wish them and all the finalists every success in the year ahead.”
Sergei Levteev, IBA Group CEO and President, commented: “We are proud to be a winner in this renowned European contest. In the competition, judges evaluated not companies’ operations but individual projects that contributed to the clients’ success. In other words, they evaluated the everyday work of our programmers. The victory is just another confirmation of the high professional level of IBA Group’s IT specialists.”

Source:http://www.prnewswire.com/news-releases/iba-group-wins-european-it-excellence-award-2011-116228394.html

IT Sourcing Europe, a UK-based nearshore IT outsourcing (ITO) market research and consultancy agency, has started today its 2011 European ITO research. In the course of the research nine Western European and Nordic countries will be surveyed in terms of current level of ITO adoption, outsourcing behaviors, trends, challenges and problem solving practices. Additionally, European companies that do not outsource their IT function and develop their IT/software products within own house will be surveyed to measure their current readiness to involve in the outsourcing operations.

Overall, the 2011 survey aims to:
• explore factors that drive Western European companies to outsource their software development / IT function, challenges associated with offshore/nearshore outsourcing and problem solving practices;

• benchmark the European IT outsourcing demand in 2011;
• find out which practice works best with the outsourced software development;
• study factors keeping European companies away from ITO etc.

All survey participants will receive two complementary incentives for sharing their outsourcing experience / general attitudes towards ITO:
• “Central and Eastern European ITO Landscape Report 2011”, and
• Country-specific survey results

Last year, 3,334 Western European and Nordic companies participated in IT Sourcing Europe’s surveys. We expect to have more survey participants this year, as more companies understand the importance of sharing outsourcing experience and knowledge with a broader business community in Europe.

IT Sourcing Europe Ltd is a European company specializing in nearshore IT Outsourcing consultancy as well as market research and analysis.

Source:http://www.openpr.com/news/160750/European-IT-Outsourcing-Survey-2011-Launched.html

Governments across Europe want to cut their costs. Moving public sector IT to outsourcers is a starting point.

But it seems that the continental Europeans will have a lot more to gain from this than the UK.

I say this after reading TPI’s latest analysis of the European outsourcing market.

It revealed that the UK accounts for 92% of public sector IT outsourcing in Europe. This leaves plenty of potential for outsourcing for European governments.

For Example France and Germany have large populations and big economies but yet combine these two with all the other European nations and you only have 8% of public secto IT outsourcing spending.

Can it be true?

Robert Morgan, director at sourcing broker Burnt-Oak Partners says if it is measuring contracts in monetary value it is probably the case.

“Especially if it includes the UK Ministry of Defence (MoD),” he says.

He says the MoD, for example, has an outsourced training service that costs £10bn and if you compare this to Belgium’s outsourcing of its parliament work, which cost between 400 and 500m Euros, the UK’s big spending is clear.

We should also remember that the UK government has wasted shed loads of cash on failed and inappropriate IT outsourcing.

Source:http://www.computerweekly.com/blogs/inside-outsourcing/2011/02/continental-european-governments-will-find-it-easier-to-cut-it-costs-than-uk.html

A late rush of merger and acquisition activity in the European IT services sector in 2010 could be an indication of things to come.

In December French IT services firm Atos Origin took over the IT services arm of German supplier Seimens (SIS) for €850m. Also, fellow French supplier Capgemini, which is Europe’s biggest, took over German service provider CS Consulting.

More of the same could be on the cards as European players attempt to fight off competition from the US and India while US and Indian suppliers try to grow their European businesses.

In September Rheinhard Clemens, CEO of IT services company T-Systems, told Computer Weekly that mergers and acquisitions were vital if European service providers are to compete with US giants.

IBM and HP have a huge chunk of European business and as IT services continue to commoditise their scale will put them in a stronger position.

Indian competition

There is also an argument that European players have to grow to hold off the increasing competition coming from India.

According to Gartner in the year 2008 to 2009 Indian players made the biggest gains in the European customer base. For example, Cognizant grew 41.7% and HCL 27.2%. This compares to Capgemini, which reported a fall in revenues of 4% and Atos Origin’s 3.6% revenue drop.

European businesses are increasingly likely to use Indian suppliers. According to the latest research from sourcing consultancy Equaterra three Indian suppliers received the best ratings from UK customers.

Wipro, Mahindra Satyam and Cognizant were named the best suppliers to European customers in terms of general customer satisfaction after 220 UK businesses were questioned.

More M&As

Sam Kingston, UK head at T-Systems, says Atos Origin and SIS now have a platform to take on bigger competitors. He believes other companies will use M&A activity to compete in Europe. “I think we will see more of this in 2011.”

Robert Morgan, director at outsourcing broker Burnt-Oak Partners agrees. He says Europe’s biggest service provider, Capgemini, could be a target.

“We could see Capgemini either split up into managed services and applications/consulting or an outright sale.”

He says the applications and consulting business could go to a company like Accenture and managed services might be attractive to one of the big Indian companies.

Any outright sale could be a target of a big US player, he says.

Mark Lewis, head of outsourcing at law firm Berwin Leighton Paisner expects “significant consolidation in the IT and BPO sector in Europe.”

He says the next couple of years will be tough for European service providers and as a result their valuations might reduce and they will become acquisition targets. “I think there will be acquisitions made in continental Europe by Indian players.”

The combination of the low valuations of European suppliers and the European growth strategies of the Indian suppliers could create the perfect storm for consolidation. “The Indian companies will look for bargains and acquisitions that fit with their strategies,” says Lewis.

Wave of partnerships

But it might not be acquisitions that change the supplier landscape, but a burst of partnerships could arrive on the scene, according to Lee Ayling, managing director at Equaterra.

“Sometimes it is not about acquisitions and I think we will start to see interesting partnerships signed.”

He describes a recent deal between Indian supplier Patni and UK service provider 2e2 as an example of things to come. 2e2 customers will now have an offshore option under a five-year £20m contract with Patni. 2e2’s internal users and some customers will receive services including application support and internal IT helpdesk services from Patni.

Ayling also believes some of the big mobile telcos will partner with local service providers.

A combination of factors moulded by the recession look set to shake up the IT services sector in Europe. Consolidation is inevitable, but the form that it will take is less certain.

Source:http://www.computerweekly.com/Articles/2011/01/05/244707/How-far-can-European-IT-services-consolidation-go.htm

IT Sourcing Europe, a UK-based nearshore IT Outsourcing (ITO) market research and advisory firm, announced today the completion of its All-European ITO research 2010. The research was conducted between April and November 2010 and aimed to explore the major trends, challenges and problem solving among the European companies outsourcing their software development (SD) function offshore (at least 2 time zones away from the homeland), nearshore (no more than 2 time zones away) and/or within own country. As a result, 1,557 companies from eight countries – United Kingdom, Germany, Austria, Switzerland, Netherlands, Denmark, Norway and Sweden – took part in IT Sourcing Europe’s study.

The study results show obvious similarities and differences in the ways how outsourcing companies from different countries behave in terms of outsourcing destination and vendor selection processes.

According to the study findings, low cost of software development and maintenance is the major factor helping determine where to locate the outsourced development in all countries surveyed except Austria, where the major factor is geographical and cultural proximity. Additionally, Austria shows very high rates of outsourcing nearshore and nearshore and within own country. On the other hand, Austria (along with Norway) shows the smallest ratio of companies outsourcing their SD within own country (only 5% of respondents). Other most frequently cited factors (in all countries surveyed) are: available IT resource and talent pool and positive references. Factors such as political/economic stability, legal system maturity, IP security, strong R&D base and proficient English language skills are considered by companies in the lowest priority.

In order to select an ITO partner, most of the companies surveyed in the UK and Sweden consider low services rates, while most of German, Swiss, Austrian, Dutch and Norwegian outsourcers consider vendor references and positive track record. Availability of specific skills that are hard to find within own country appears to be important for the majority of the UK, German, Dutch, Swedish, Danish and Norwegian companies, while innovative business model is a very decisive factor for German, Swiss, Danish and Norwegian outsourcers.

More interesting and thought-provoking findings are available in IT Sourcing Europe’s “European ITO Intelligence Report 2010: Western and Northern Europe”

IT Sourcing Europe Ltd is a European company specializing in nearshore IT Outsourcing consultancy as well as market research and analysis.

The Meridian, 4 Copthall House, Station Square, Coventry, West Midlands,
CV1 2FL United Kingdom

Source:http://www.openpr.com/news/152726/Study-Shows-How-European-Companies-Choose-Their-Outsourcing-Partners.html

A colleague asked me the other day who are the top ten IT service providers in Western Europe? I must admit I didn’t really know the answer but while attending the Gartner outsourcing and IT services summit I got one.

Better than that here is the top 15 in Western Europe by revenue according to Gartner. In the second table I have the same 15 in order of revenue growth over the last year.

Useful reference point for any outsourcing enthusiast. I am trying to think if any of these companies will merge or acquire.

What do you think?

Interesting to see that combined the big Indian suppliers only account for 2.4% of total revenue in Western Europe. So lots of room to grow for them.

The second table show the companies that are growing the most.

Top 15 IT service providers in terms of Western European revenues

Company Market share Revenue in millions of Euros

IBM 7.8% 10.853
Capgemini 4.7% 6.573
HP 4.4% 6.112
Accenture 4.3% 6.050
Atos Origin 3.4% 4.733
T-systems 3.0% 4.117
BT 2.8% 3.971
Fujitsu 2.5% 3.858
Logica 2.4% 3.449
SIS 2.4% 3.364
TCS 0.8% 1.079
Wipro 0.5% 749
Infosys 0.5% 737
Cognizant 0.3% 392
HCL 0.3% 372

Top 15 IT service providers in terms of revenue change in last year

Company Revenue change 2008-09

Cognizant +41.7%
HCL +27.2
Wipro +4.8%
TCS -1.1%
Fujitsu -1.8%
Atos Origin -3.6%
Capgemini -4.0%
T-Systems -4.2%
IBM -6.5%
Logica -8.0%
HP -10.9%
BT -10.1%
Infosys -11.7%
Accenture -13.0%
SIS -16.4%

Source:http://www.computerweekly.com/blogs/inside-outsourcing/2010/09/who-are-the-top-western.html

Firms across Europe are to increase the amount of IT outsourcing they use during the remainder of 2010.

That is according to new research from IT analyst firm Gartner, which surveyed 20 organisations across the continent.

It found that 53 per cent of firms plan to increase their outsourcing in 2010, while 40 per cent plan to up their external IT services spending.

Claudio Da Rold, vice president and analyst at Gartner, commented: “Organisations in Europe are expecting – or are in need of – growth, but they are also still highly cautious.”

“Regardless of the future direction of the economy, European businesses and their service providers need to optimize their multisourced environments, while increasingly adopting industrialized IT services,” he added.

Gartner recently reported that many firms worldwide would need to take on extra IT staff to assist with a migration from Microsoft’s older operating system software, such as Windows 2000, to its latest package Windows 7.

Source:http://www.sageforconstruction.co.uk/oil_industry_news_selected.aspx?aid=1497

Infosys Technologies’ quarterly summary presents a surprise drop in the profits due to a weak European economy which in turn could curb new orders and dampen a recovery for India’s outsourcing sector.

Such were the views expressed by the top executives of the company, a leader among India’s software and IT services exporters at Bangalore on Tuesday.

The company, a trendsetter for India’s 60 billion dollars IT services sector, added 1,026 staff in April-June, its slowest pace of addition in four quarters, indicating a rebound from the global recession in the sector may be bumpy.

Ranked number two among India’s outsourcing companies, its profit fell 2.6 percent for quarterly period April-June while its sales contribution from Europe dropped to about 20 percent from nearly a quarter a year ago and 23 percent in January-March.

The disappointing profit and hiring sent its shares down as much as 3.8 percent in a steady market. Trading volume was nearly seven times the daily average over the past 30 days.

The shares ended 3.4 percent lower in its worst single day fall in more than a year after hitting a record high on Monday (July 12).

Nonetheless, Kris Gopalkrishnan, Chief Executive Officer of Infosys expressed optimism in overcoming the hurdles.

“There is optimism about our performance and where we are and what we see ahead of us. The way I look at it is now, there are some distant clouds in the horizon and we don’t know, whether they are simple rain clouds, then everybody will be happy, or, you know, there is a cyclonic storm ahead of us. You know, this is based on what is happening around the world, in Europe and other parts of the world,” said Gopalakrishnan.

The company, which counts Goldman Sachs among its more than 550 customers, forecast its 2010/11-dollar revenue to rise 19 percent to 21 percent, higher than 16-18 percent projected in April.

Known for its conservative outlook, Infosys has raised its full-year revenue growth forecast in dollar terms in the last three consecutive quarters.

Infosys and local rivals Tata Consultancy Services and Wipro have raised salaries by 10 to 20 percent on average to keep their staff from being poached by global rivals.

S D Shibulal, Chief Operations Officer, and Director of Infosys said that the problem in Europe is visible in the recent results of the company.

“Europe, as the percentage has come down, you know, as you know, Europe entered the recession behind North America. Europe still has challenges in various areas, and that is being reflected in these results,” observed Shibulal, COO and Director, Infosys.

Bangalore-based Infosys, whose sprawling campuses elsewhere in India house pizza and Subway outlets and golf courses, and local competitors have been targeting Europe and Asia Pacific over the past few years after a slowdown in the United States hit sales in their biggest market.

Source:http://sify.com/finance/european-crisis-hits-profits-of-infosys-news-news-khnuEeaadaf.html

A forecast return to relative economic stability has meant IDC is keeping its forecast for Western European IT services unchanged for this year, with demand set to pick up in the Nordics first.

IDC’s second quarterly revision for 2010 of its Western European IT services forecasts estimates that total end-user spending on external IT services in 2010 will be close to US$204bn in Western Europe, and that demand growth will pick up from 2011 to reach $232bn in 2014.

IDC revises its forecasts each quarter in the light of economic and industry trends, and its forecasts are in constant currency, thus excluding the effects of currency movements.

Demand in the Germanic and Nordic regions is expected to pick up first, while growth in France and the UK will be slower. Demand in the UK is subject to more uncertainty, as new government initiatives to be announced in the autumn could affect not only direct government spending, but also the overall economy in a manner that would lead to reduced IT services spending in the short term.

IT services defined

IT services include project-oriented services (such as IT consulting, systems integration and custom application development), outsourcing services (such as data centre outsourcing and application management), and support services (such as IT training and hardware and software deployment). IT services exclude business consulting and business-process outsourcing (BPO).

“The good news is that the economy seems broadly stable compared with 2009, despite the sovereign debt issue, and enterprises seem to be in a healthier state than last year,” said Douglas Hayward, research manager for European Services at IDC in London.

“With IT services spend dependent in part on enterprise and consumer confidence, and of course on levels of cash flow in enterprises and government bodies, we see a short-term period of relative stability where things don’t get much better but neither do they get much worse.

“We have kept our forecast for the European IT services market essentially unchanged for the third quarter in a row, as far as the big picture goes, only making relatively small adjustments to the UK and Greece,” Hayward said.

IDC surveys of end users earlier this year showed spend confidence starting to return, with growing interest in outsourcing and cloud computing, for example, but the reality at the coalface is that IT services vendors typically reported falling IT services revenues in Q1 2010 and IDC expects this also to be the case for Q2 2010.

“We expect that demand and vendor revenues will revive in Q3 and Q4 of 2010, so that IT services spend for the full year will end at same level as 2009,” said Hayward.

A return to demand

“We have not been expecting a return to demand growth until the second half of this year, and there are many signs that we were right not to do so. When looking at services contract signings in the first half of the year, it is clear that the situation is improving, but it takes six to nine months before revenue starts being booked in large scale by the vendors, so we believe a conservative forecast for 2010 is fully justified. We do not see customers enthusiastically opening their wallets yet,” Hayward said.

All major countries in Europe face public-sector debt issues that are likely to lead to cuts in IT spending in the public sector in 2011, but in the longer run IDC expects that the possible efficiency gains and cost savings promised through outsourcing will lead to increased outsourcing demand in the European public sector.

This is especially the case where vendors offer new payment models that allow the customer to spread its investments over the full contract length. Nevertheless, in the near future, IDC expects that governments will need to make immediate savings and will chose the “easy option” of cutting down IT spend instead of transforming IT spend.

Source:http://www.siliconrepublic.com/news/item/16895-us-204bn-european-it/

IT Sourcing Europe announced today the completion of its “European IT Outsourcing (ITO) Intelligence Report 2010: Central and Eastern Europe.”. This is a comprehensive study of the prospective Central and Eastern European (CEE) destinations for cost effective, yet highest quality outsourced development, and the factual capability of the CEE ITO providers to satisfy the rapidly changing business needs of their Western European clients.
Overall, IT Sourcing Europe’s Report shows that:

- Outsourcing to Central and Eastern Europe is expected to grow exponentially over the next 10 years;
- Investors and management anticipate 30% revenue growth in 2010;
- CEE, above all regions, is expected to leverage its competitive advantage in the high-growth areas of offshoring and nearshoring and possibly move ahead as the most attractive labour arbitrage alternative for Western European clients;
- Low labour costs are not necessarily the solution that Western companies are seeking in Outsourcing. The technological potential of young graduates in Ukraine or Poland is one of the primary reasons why Western companies choose to outsource to CEE.

Regarding the major ITO trends benchmarked in the Report, 2010 anticipates a significant change in the European IT Outsourcing landscape:

- More small and mid-sized organizations (SMOs) are expected to outsource their software/web development nearshore, compared to pre-crisis times.
- Additionally, buyers become more demanding and challenge their ITO partners to differentiate their position and value.
- Today’s Western European companies are seeking a combination of speed, cost management and growth supported by business agility and unprecedented technological innovation.
- Striving to evolve strategic long-term Outsourcing relationships, Western clients express readiness to move from project-based services and staff augmentation to more effective business models, able to handle core software development.

According to the Report, the following challenges will be facing Europe’s ITO industry in 2010:

- ITO suppliers in Central and Eastern Europe should be ready to respond to transformations caused by SaaS and Cloud Computing, adjust costs, upgrade delivery models etc;
- ITO suppliers will be forced to respond to client’s business demands through building capabilities to solve technical problems, expand services, build consultative front ends and customized solutions for client’s differentiation.

There are more thought-provoking findings presented in the Report.

IT Sourcing Europe believes that its European ITO research will help Western European companies to make the right Outsourcing decisions and CEE ITO suppliers to better understand the ITO landscape of 2010 and to be better prepared for upcoming challenges.

Source:http://www.pr.com/press-release/238364

The European debt crisis would not hamper the Indian Information Technology business and the current (IT) environment is expected to be much stronger than in 2009, a top official of US based Nasdaq listed IT firm Syntel International said on Saturday.

‘I dont expect it (debt crisis) to hamper..I expect the environment to be much stronger than in 2009. However, it will take some time for people to reconcile with what has happened in Europe. The crisis has, however, left some question marks,” Syntel International CEO and President Prashant Ranade said.

“There are some question marks about the situation in Europe….while demand is firming up, customers are thinking about releasing the projects and a cloud of uncertainity relative to Europe has got people thinking…we will just keep watching it and see how it unfolds’, he said.

Syntel, he said, has posted a stronger growth in the first quarter of 2010.

Ranade was speaking to reporters at the inauguration of Syntel’s second global development centre at SIPCOT-IT Park at Siruseri near Chennai.

He said the company would invest $50 million to develop the Chennai facility, which has 10,000 seating capacity.

“This will be one of the two major centres in India..after our Pune centre. The second phase of Chennai and Pune facilities are expected to be completed in two years”, Ranade said.

To a query, he said Syntel would invest close to the same amount at Pune. Besides these two facilities, they planned to set up two facilities each in Tirunelveli and Madurai,he said.

Syntel International General Manager and Administration Head N Saravanan said Electronics Corporation of India has alloted 25 acres for the Madurai and Tirunelveli facilities.

“It is in the initial stage.. we will be going there as a co-developer (along with ELCOT)”, he said.

Tamil Nadu Deputy Chief Minister M K Stalin,who unveiled a plaque to mark inauguration of the facility,welcomed Syntel’s idea of setting up facilities in Madurai and Tirunelveli, at a time when Tamil Nadu planned expand its IT business in Tier II and III cities.

Citing a department of Information Technology report, he said the industry has grown from $10.2 billion in 2001-02 to $58.7 billion, with a CAGR of 26.9 per cent.

He called upon IT companies to work with the Government in implementing the recently announced e-waste policy.

Early this month, Tamil Nadu IT Minister Poongothai announced the policy in the assembly. It would work towards minimising e-waste generation, utilise generated e-waste for beneficial purposes through reuse and recycling and ensure environmentally sound disposal of residual waste.

Source:http://beta.profit.ndtv.com/news/show/european-debt-crisis-to-not-affect-it-biz-syntel-54041