Posts Tagged ‘Outsourcing’

IBM leads infrastructure outsourcing segment: Forrester

February 27th, 2015

IBM is the leading supplier in the global infrastructure outsourcing segment, said Forrester Research in a new research note.Outsourcing6

IBM scored the highest or among the highest among 13 suppliers across three high-level evaluation criteria: Strategy, Current Offering and Market Presence.

Forrester recognized IBM’s vision for the future of infrastructure services, noting that cloud services has become a major element of IBM’s infrastructure management strategy, said the report called The Forrester Wave: Global Infrastructure Outsourcing, Q1 2015.

According to Forrester, the size of the global infrastructure outsourcing market is $187.5 billion, with North America comprising nearly 58 percent of this total.

Infrastructure outsourcing services are critically important as enterprises prepare their infrastructure for the digital age. Outsourcing providers are emphasizing qualities that include predictability through analytics, self-healing with autonomic computing and automation, and self-service with adaptation to cloud models and use of service stores.

IBM views the current infrastructure management services market as the age of outcomes, IP, and automation. IBM is pursuing several initiatives, including automation with IBM Workload Automation and integration across systems of record and systems of engagement. Since its acquisition of SoftLayer Technologies in 2013, cloud services have become a major element of its infrastructure management strategy.

The report says IBM has a very strong vision for the future of infrastructure services and a very well-balanced global delivery model.

Recently, IBM announced IT infrastructure services deals with enterprise clients including WPP, ABN Amro, Lufthansa and WOOX Innovations.


Impressive Gains Reported in IT Outsourcing for Small- to Mid-Sized UK Businesses

February 25th, 2015

Node4, a provider of cloud and data center services, reports positive news in the realm of IT outsourcing for small- and medium-sized enterprises (SMEs) in the United Kingdom (UK). Just how positive? Well, according to the Node4 2015 IT Infrastructure Report titled Responding to the IT Infrastructure Challenge, the quantity of UK SMEs surveyed for the report that fully outsource their IT infrastructure increased to 6% in 2015, a 600% increase from the 1% of UK SMEs surveyed for the 2014 report.Outsourcing3

The growth represented by the survey respondents, together with a lack of change in the number of UK SMEs surveyed that outsource at least part of their IT infrastructure, indicate that even these small- and mid-sized business recognize the benefits offered by a fully outsourced solution. In addition to this growth, Node4 reports an overall positive outlook for the IT outsourcing industry for UK SMEs and explains its view of the pragmatic approach that UK SMEs are adopting as follows: “whereas previously they may have shied away from giving up ‘control’ of their IT infrastructure, now cloud services and outsourcing are seen as a shortcut to achieving the streamlined IT provision that their business needs.”

Certain other findings from Node4’s survey of UK SMEs are highlighted below:

48% of survey respondents reported that their businesses could not survive for more than 12 hours without their critical IT infrastructure, and 70% could not survive for 24 hours.

60% of survey respondents expected their IT budget to increase in 2015, and only 5% expected an IT budget decrease.

50% of survey respondents had adopted some level of cloud-based IT infrastructure.

Survey respondents’ leading concern with respect to their IT infrastructure was the infrastructure’s reliability, followed in turn by infrastructure reliance on hardware that may fail and infrastructure security.

The 2015 IT Infrastructure Report was prepared by Node4 using a survey of 250 “IT strategy business decision makers” in businesses that employ between 50 and 500 employees.


TCS features as Leader in Life Sciences IT Outsourcing in Europe

February 25th, 2015

Tata Consultancy Services (TCS) has been recognized as a Leader in Life Sciences IT Outsourcing (ITO) in Europe by leading advisory and research firm Everest Group. The Everest Group report ‘IT Outsourcing in European Life Sciences Industry – Service Provider Landscape with PEAK Matrix Assessment 2014’, acknowledged TCS for its engagements across key infrastructure and application towers, substantial revenue, strong growth in the Life Sciences ITO business and a balanced portfolio of deals across geographies.
The report also recognized TCS’ significant and ongoing investments in proprietary solutions and research.

TCS is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT, BPO, infrastructure, engineering and assurance services.


IT infrastructure outsourcing in vogue, says Node4

February 20th, 2015

The number of UK SMEs fully outsourcing their IT infrastructure has shot up six times over the past year, according to research from Node4.Outsourcing72

The hosted service provider surveyed 250 IT strategy decision makers in SMEs with its Responding to the IT Infrastructure Challenge report.

The report found that six per cent of UK SMEs now fully outsource their IT infrastructure, up from one per cent the previous year. Sixty per cent of those surveyed said this outsourcing gave them peace of mind.

There are 31,000 UK SMEs, and according to the results of its survey, Node4 extrapolated that 17,900 have moved at least some part of their IT off-premise.
Andrew Gilbert, managing director at Node4, said: “Over the last few years we have seen more customers realise the value in outsourced and hosted services for IT management tasks so that their teams can focus on an ever-increasing list of strategic projects.

“I think for the vast majority of SMEs, outsourcing the management of their IT infrastructure is now an increasingly natural and logical choice,” he added.
The report also claimed that 70 per cent of UK SMEs would fail without critical IT infrastructure within a day. The SMEs surveyed said that reliability was their most pressing IT concern, followed by worries that their infrastructure is too dependent on hardware that might fail.

Paul Bryce, business development director at Node4, said: “With so many SMEs frustrated with technical limitations and the day-to-day administration of their infrastructure, it’s hardly surprising that local outsourcing has become a preference. The fact is SMEs just want their IT infrastructure to work.

“They can’t afford for their IT staff to be distracted by fire fighting and IT niggles. They want them focused on the applications and services enabled by the infrastructure – that is what really delivers value to the business.”


TCS recognised as a leader in European banking and capital markets application outsourcing services

February 19th, 2015

Tata Consultancy Services (TCS), (BSE: 532540, NSE: TCS), one of the leading global IT services, consulting and business solutions organisations, on February 17 announced that it has been recognised as a leader in banking and capital markets application outsourcing services (AO) in Europe by one of the leading advisory and research firms Everest Group in two reports – Everest Group PEAK Matrix: European Banking IT Outsourcing Service Providers’ Assessment 2014 and Everest Group PEAK Matrix: European Capital Markets IT Outsourcing Service Providers’ Assessment 2014.Outsourcing52

TCS helps businesses operating in capital markets and banking industries optimise investments, enhance operational efficiencies, minimise risk and maintain competitive pricing. In both its banking and capital markets IT outsourcing reports, Everest Group praised TCS’ scale, scope and domain investments, which were recognised as a major contributor to the company’s success, according to Tata.

Jimit Arora, vice president, Everest Group, commented: “The European banking industry has seen a strong return in discretionary spending in areas such as application development for customer centricity, digital technologies, and regulatory compliance. Demand for IT outsourcing grew within capital markets in Europe as firms leveraged technology for regulatory compliance, to cut costs and drive efficiency.TCS’ Leader position reflects its comprehensive offering and ability to deliver effectively for clients.”

Susheel Vasudevan, head banking and financial services, TCS, commented: “It feels special to be once again recognised as a leader in european banking and capital markets application outsourcing services by Everest Group. This recognition highlights the strong market success and continued domain investments we have made in the financial services industry. We work closely with our financial services customers, helping them to drive efficiencies and embrace the changes required in this new digital era.”

The Everest Group evaluated 20 vendors for its banking IT outsourcing report and 18 for its capital markets IT outsourcing report. The vendors were mapped against Everest Group’s Performance, Experience, Ability, Knowledge (PEAK) Matrix, which is a composite index of several distinct metrics related to a provider’s capabilities and market success. Service providers are then split into three categories: Leaders, Major Contenders and Emerging Players. The Everest Group also profiled the capabilities of these leading service providers in detail, giving a comprehensive overview of their service scope, scale of operations, domain investments, delivery footprints and market success.


Choosing an ‘outsourced’ investment solution

February 18th, 2015

Over the past couple of years, financial adviser resources have been squeezed to the extent that a number have decided to look to outsourcing solutions for investments for some clients. There are two main reasons for this trend.Outsourcing71

One is that, post-RDR, new research and compliance requirements have increased and at the same time product providers have come up with an increasing number of products, often more complex solutions.

Add to this the increased cost needed in terms of governance and regulatory compliance, and it can be cheap and arguably safer to outsource the investment function to a third-party specialist.

When advisory firms consider outsourcing their investment propositions, they can look at a number of options, such as multi-asset funds and discretionary solutions, and even multi-asset funds with a discretionary service attached to it.

In some cases they are seeking a ‘centralised’, or standardised, solution for lower-value clients to manage risk cost-effectively; in others a more bespoke solution is being sought that caters to the needs of higher-net worth customers.

The main reason for choosing a multi-asset over a discretionary solution is that multi-asset funds usually require much lower minimum investment sizes, often £1,000 or less, and fees are generally better expressed.

Beyond this, there can be other, more subtle differences between the two, so much so the lines between the two could be said to be blurring.

If an adviser decides to ‘outsource’ to a multi-asset fund they need to be confident that it does what it says on the tin
A flexible solution

The idea behind investing in a collective is that investor monies are pooled together and everyone benefits from the same investment portfolio. This very simple notion is at the heart of making sure that each client segment has basically the same portfolio and that investment decisions are applied consistently and at the same time.

Pooled monies often give investors access to solutions that require larger minimum commitments than an individual of the investor group would have been able to afford – and the manager of the pool typically has more power to negotiate costs and fees, which are then shared out among the investors.

Multi-asset funds give advisers an outsourcing solution that can be deployed across a variety of client segments, with multiple charging points, enabling ring-fencing of assets and providing access to a compensation scheme.

Of course, if an adviser decides to ‘outsource’ to a multi-asset fund they need to be confident that it does what it says on the tin. In other words, adviser cannot choose a fund for its name or managers’ reputation alone, they need to do detailed due diligence and see whether the fund has delivered on its promise.

Empirically, this means delivering on the stated investment mandate. Consideration should be given to the cost structure as charges can be higher with multi-asset funds. Picking multi-manager funds, which adds a best-of-breed sub-advisory element to the proposition, also comes with an extra layer of charges.

Researching funds

Historically, differentiation between funds was difficult. Charges were the same, areas of investment focus and style were similar; performance or return invariably became the main filter.

Nowadays, as client desired outcome, attitude to risk and capacity for loss can vary significantly, providers have come up with a wide range of funds to help advisers provide suitable solutions for their various client segments. This has left advisers with the huge task to pick solutions for their clients from a complex universe.

This infographic gives advisers a starting point in their research process. It defines the landscape and helps you map out a way to client solutions. To further help, Defaqto and other research agencies provide ratings services, which group together criteria we believe are important for the particular grouping.

We segment funds in many different ways, including whether they are return-focused or risk-targeted, multi-manager or direct (single-manager). A direct fund is where one fund manager or team manages all the investments in the fund, while with multi-manager funds different fund managers are used for different asset classes.

Funds are further categorised into predominantly active or passive, based around the Investment Association sector they’re part of in the case of return-focused, and by asset class in the case of passive funds. Passive funds include both traditional funds (Oeics/UTs) and the more recent exchange-traded funds or ETFs.

We believe that this level of granularity in the research process is necessary to build up a complete picture and compare like with like.

What the infographic visualises is that multi-asset funds come in various shapes and sizes. With over 500 UK-authorised funds available, comprising nearly 2,000 share classes, the landscape certainly offers plenty of choice.

To give this more context, the Investment Association recently announced their post-RDR methodology for nominating primary share classes. Where multiple share classes of a fund exist, the intention is to take the unbundled share class that has the highest charge but that’s free of any rebates or intermediary commission. The share class must also be freely available through retail third-party distributors.

At the end of 2012 many RDR share classes were launched, which makes it impossible to compare performance prior to the launch date unless synthetic performance history is added. The Investment Association has said that post-RDR share classes are to take the track record of pre-RDR bundled retail share classes.

The orange parts in the infographic show the areas we at Defaqto currently rate as part of our independent Star and Diamond Ratings. Given what we’ve just said about outsourcing, it probably won’t surprise you that it’s the multi-asset (and discretionary) areas we cover at the moment rather than single-asset and specialist.

Investment styles

Within the multi-asset space, we’ve identified two different styles: risk-targeted and return-focused.

Risk-targeted funds operate within strict risk bands, typically ranges of volatility, while return-focused funds aim to achieve outperformance, either absolute or relative to a peer group or benchmark – and typically with some risk control. Risk-targeted funds exist as families, with the same team and process behind each fund in the family.

Some of the individual funds within return-focused can also be viewed together as risk-focused families. These families are defined by having a similar management team and process, in some cases even the same team and process. They are set up to follow indirect rather than direct risk targets.

Some of the risk-targeted and risk-focused fund ranges are also unitised discretionary fund families – unitised discretionary fund management or unitised DFM.

Discretionary fund management or DFM (with the exception of unitised DFM) tends to be delivered to the client in two forms.

Firstly, there is the client-specific solution (usually known as bespoke DFM) which can provide a more individual service and investment approach designed for the individual client. This service also tends to focus more on the service aspects, for example including more detailed, perhaps on a face-to-face basis with an investment manager. Charges and minimum investments tend to be significantly higher.

Perhaps more familiar to the adviser is the second type of DFM, known as managed portfolio services. In this case, discretionary managers construct a series of portfolios that they believe will appeal to significant client segments and manage the portfolios according to their own mandates. It is up to the adviser to recommend the more suitable portfolio for the clients’ needs and risk appetite.

Similar to fund structures, all clients in a managed portfolio service solution will have the same portfolio. It is an off-the-shelf solution, so in theory, charges should be lower than for bespoke portfolios. Minimum investments could be as low as £20,000.

Advisers need to keep costs to the client in mind, though. These managed portfolio services portfolios are segregated, which means transactions are subject to potential capital gains tax, and the majority of portfolios are made up of collective investment schemes, so there could be additional charges.

To provide advisers with more resources to help them stay on top of the multi-asset universe, Defaqto has teamed up with the Institute of Financial Planning (IFP). The first document we have produced together, the multi-asset funds factsheet, can now be downloaded here. Rather than being an academic discussion of the universe, these factsheets provide advisers with a practical guide to each type of solution.

Maintaining an up-to-date list of suitable funds

Once suitable funds have been selected, the job is far from done for the adviser. They need to ensure that the solutions they originally selected remain roughly the same over time; the proposition needs to continue to match the original client mandate. If any of the solutions change and the adviser needs to make adjustments, they should already have other solutions ready and researched so that they can offer them in the original solutions’ place.

It’s also important to remember that it’s not just the solutions that can change. Client requirements can evolve as clients get older, their circumstances change or they may have a different attitude to risk or capacity for loss. Advisers should check on an ongoing basis whether changes on the client side need to be reflected in the investment portfolio.


Value of IT outsourcing deals in the UK up 15%

February 16th, 2015

The total value of IT outsourcing contracts agreed in the UK last year rose 15% on 2013 figures, according to new research.Outsourcing70

IT outsourcing (ITO) contracts agreed in 2014 totalled £3.44 billion in value, with nearly a third of that value accounted for by deals struck in the energy and utilities sector.

Those deals were worth £1.05bn and accounted for most of the 187% year-on-year rise in the sector on £373 million spent on all outsourcing deals in the sector in 2013.
The figures were revealed by BPO provider arvato in its UK Outsourcing Index for 2014. The data was based on information complied by outsourcing analysts NelsonHall.

According to the report, the UK’s outsourcing market was worth £6.65bn in 2014, with £3.1bn of contracts agreed business process outsourcing (BPO) deals. Contracts worth £109 million were agreed representing a mix of ITO and BPO arrangements.

“The most in-demand ITO services were multi-scope infrastructure management, with £899 million of spend, application management, worth a combined £772 million and network management contracts totalling £485 million,” arvato said.

The report revealed that public sector outsourcing contracts agreed in the UK last year had a total value of £2.49bn and that just 8% of all outsourcing deals in the public and private sectors signed by UK-based organisations in 2014 “involved work being delivered entirely offshore”.

Debra Maxwell, managing director of arvato UK, said: “Outsourcing has mistakenly become synonymous with offshoring, yet our research demonstrates that UK delivery is continuing to play a fundamental role in the industry as customer requirements become more sophisticated.”

“Offshoring will always have a role to play in meeting certain business’ needs but the demand for more sophisticated solutions, combined with salary inflation in traditional offshore locations, means UK-based delivery is set to continue to dominate,” she said.

The report also highlighted changes in the way that customer relationship management functions are being delivered by organisations. More than 60% of third parties delivering these services now provide “multi-channel” services, up from 40% in 2013.

NelsonHall said. “Whereas relatively recently contact centre outsourcing contracts in the UK were typically for voice only services, in 2014 it was the norm for customer management services contracts to be multi-channel in nature, with email, web chat, and even social media support commonplace. This was true across both the private and public sectors, with the e-government initiative ensuring that all local government customer services contracts announced were widely multi-channel in nature.”

In the financial services sector there was a rise in the number of outsourcing contracts entered into for platform-based services. In 2013, a quarter of all UK outsourcing contracts in the sector were for platform-based services, but this rose to 40% last year, according to the report. New outsourcing deals agreed in the sector in 2014 had a total value of £1.1bn, making it “the most active private sector”, it said.


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