Posts Tagged ‘UK’

TCS’ Diligenta secures deal with UK-based Friends Life

August 20th, 2014

Tata Consultancy Services (TCS)’s British business process outsourcing subsidiary, Diligenta, on Tuesday announced a new multi-million pound and a multi-year contract with UK-based Friends Life Management Services for its international operations.Outsourcing50

In a notification to the stock exchange, the country’s leading information technology services, consulting and business solutions company said Diligenta would configure and implement TCS BaNCS, a globally acclaimed core platform, to support the international operations of Friends Life—Friends Provident International.

However, financials of the deal were not disclosed by TCS.

With the help of TCS BaNCS platform, Friends Provident International will be able to deliver seamless services to its customers spread over Asia Pacific and West Asian region, said the notification.

“This new deal will enable us to streamline our systems, improve services to our customers and put us in a strong position to continue growing new business,” the notice quoted John Van Der Wielen, CEO International at Friends Life as saying.
Diligenta’s track record of successfully migrating over 6 million Life and Pensions policies on to our industry-leading platform solution TCS BaNCS, contributed directly to this win,” said Suresh Menon, CEO at Diligenta.

Friends Life is not a new client for Diligenta. In 2011, the TCS subsidiary had taken over the IT and customer services functions of the UK business of Friends Life for 15 years.

The deal worth $2.2 billion was one of the largest deals TCS had won through an organic route then.


Restructuring plans impact on outsourcing giants

August 15th, 2014

Two of the UK’s largest private sector outsourcing firms, Serco and G4S, have reported the effects of on-going restructuring plans.

Outsourcing giant Serco announced a pre-tax loss of £7.4m for first six months of 2014 on Tuesday (12 August), affected by “one-off” restructuring costs of £29.4m. The loss represents a 107% year-on-year decrease (2013: £106.1m).

Serco also reported “good progress” in strengthening its management team, with appointments including Angus Cockburn as CFO (as of October), Kevin Craven as CEO UK Central Government division (as of September), Liz Benison as CEO UK Europe Local & Regional Government division (as of September), and David Eveleigh as Group General Counsel and Company Secretary (as of November).

Rupert Soames, Group CEO of Serco, said: “As expected, trading was poor in the first half. Profits were in line with our revised expectations, and cash flow and net debt were better.

“We are making good progress with our Strategy Review, and in rebuilding trust and confidence with the UK government.

“Many challenges remain, and we have a lot of work to do, but I am confident that, in time, we can restore the company’s fortunes.”

In contrast, rival firm G4S today (14 August) posted pre-tax profits of £85m for the same period, up from a loss of £94m during the first six months of 2013.

The company has cited its “corporate renewal programme” and its performance within emerging markets for its financial turnaround.

Ashley Almanza, Group CEO of G4S, said: “The group made good progress and delivered a satisfactory financial performance in the first six months winning new contracts with a total value of £1.2 billion and producing a 13.2% increase in earnings.

“There remains much to be done to capture the full potential of our strategy and to strengthen the group’s performance.

“Demand for our services was robust, particularly in emerging markets. We are restructuring and rebuilding our businesses in UK & Ireland and in Europe. We have seen growth return to the North American market.”

Both firms are currently under investigation by the Serious Fraud Office after being issued bans on UK government contracts after a scandal over overcharging for criminal tagging services last year.

In April 2014, G4S was cleared to bid for government contracts again after it agreed to repay £109m.


UK manufacturers’ outsourcing spend grows 132%

August 13th, 2014

UK manufacturers spent 132% more on outsourcing contracts in the first half of this year (H12014) than they did in same period in 2013, according to new research.

In total, manufacturers agreed IT and business process outsourcing (BPO) deals worth £130 million during H12014, according to BPO provider arvato’s UK quarterly outsourcing index.

Arvato said that the number of outsourcing contracts concluded in the sector during the first six months of this year was up 50% compared to H12013 and that 66% of the deals agreed related to business functions that the manufacturers had never outsourced previously.

Manufacturing and outsourcing contract expert Jayne Hussey of Pinsent Masons, the law firm behind, said that manufacturers are looking towards outsourcing as part of a continuing drive to achieve efficiencies and, in some instances, are looking at outsourcing as an option to help them to meet in customer demand.

“The need to control costs and to satisfy the growth agenda is forcing manufacturers to review their processes and assess whether outsourcing can help them achieve efficiencies or alternatively react to a much more buoyant market where demand is outstripping capacity that the internal resource is able to deliver,” Hussey said.

“Increased demand and a more sophisticated approach by manufacturers is not only leading manufacturers to look at introducing new technology into their processes, but it can have a knock-on effect on back-office functions too. For example, manufacturers may have stripped back some of their in-house resources, such as payment processing teams, during the recession but now find that a fuller order book requires them to look to third party suppliers to supplement the in-house capacity they have or even assess whether they can achieve economies of scale by outsourcing that function completely,” she said.

Local government bodies spent on average 67% more on the outsourcing deals they agreed during H12014 than they did the previous year, with three quarters of all the contracts agreed during the first half of the year either extensions or renewals of existing arrangements or involved a change of supplier, arvato said.

The arvato data revealed that 34 outsourcing deals were agreed across all sectors in the second quarter of 2014 (Q22014) with a total value of £734m. In the first quarter of this year, 39 outsourcing contracts were signed and were worth £2.1 billion, arvato said. Of that figure, £1.5bn stemmed from public sector outsourcing contracts that were agreed between the beginning of January and end of March this year.

“A number of large individual deals meant that our index showed a bumper first quarter for the industry in terms of overall value, but the volume of new outsourcing activity has remained relatively constant,” Debra Maxwell, managing director of arvato UK, said. “Encouragingly, the number of first time contracts remained significant, which shows the continued popularity of outsourcing as a strategic solution, particularly in the private sector. As UK economic growth continues to gather pace, we expect outsourcing to do the same.”


UK manufacturing firm outsourcing spend increases to £130 million

August 11th, 2014

UK manufacturing firms increased spending on outsourced IT services to £130 million during the first half of this year, research has shown.

The UK Outsourcing Index report, compiled by business process outsourcing (BPO) provider arvato and industry analyst NelsonHall, revealed that the value of deals in the first six months of 2014 increased 132 percent year on year, driven by wider growth within the sector. A recent British Chamber of Commerce survey found that 42 percent of manufacturers reported a rise in domestic sales in the second quarter – the highest since the survey began in 1989.

The outsourcing data showed that the total volume of manufacturing deals was also up by 50 percent. Meanwhile the proportion of services outsourced for the first time doubled year on year to 66 percent.

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“While not seen as a traditional market for business process and IT outsourcing, manufacturers under increasing growth pressure are turning to outsourcers to help support non-core functions, allowing them to focus on their expansion strategies and product innovation,” said Debra Maxwell, managing director of arvato UK.

“The flexibility and efficiency savings outsourcing provides is the ideal tonic for their growing pains.”

The overall outsourcing spend reached £734 million from 34 contracts, with the private sector accounting for the majority. Telecoms and media, financial services and energy and utilities were the most active sectors, responsible for 70 percent, or £513 million.

The research showed that the local government market had matured, with three quarters of all contracts being extensions, renewals or the replacement of incumbents, an increase from 43 percent in the first half of 2013. The average deal value in local government also grew, up by 67 percent year on year.

BPO deals were the most common, accounting for more than half, 52 percent, of all contracts.


Sharp rise in value of outsourcing deals

August 8th, 2014

The average value of contracts between councils and outsourced providers has risen steeply over the past year despite a drop in the number of contracts agreed.

According to the latest quarterly index by outsourcing firm Arvato, the average deal value in local government increased by 67% year-on-year, from £25.9m in the first half of 2013 to £43.4m in the first half of 2014.

This is despite 50% fewer contracts being signed in the first half of 2014 than during the same period in 2013.

The total value of the 2014 contacts was 16% lower than that of the 2013 contracts. This was because of the fall in contract numbers.

Three-quarters (75%) of all the contracts issued during the first six months of 2014 were extensions, renewals or replacements. This is up from 43% in the first half of 2013.

The overall increase in the value of contracts has been attributed to “maturity” in the local government market.

Arvato UK’s managing director Debra Maxwell said: “UK local government has been at the vanguard of public sector outsourcing globally for many years.

“Our findings show that outsourcing strategies are continuing to deliver value for local authorities with experienced clients using partnerships to do more with less against a backdrop of continuing austerity.”


TCS CEO N Chandrasekaran sends AS Lakshminarayanan to head TCS’ Japan business

July 21st, 2014

Tata Consultancy Services’ CEO N Chandrasekaran has deputed one of his top lieutenants, AS Lakshminarayanan, to head the company’s Japan business and grow its revenue as the largest Indian IT player looks to grow in that large and largely unpenetrated market.Outsourcing28,

Japan was a very small part of TCS’ business — with just about $100 million in revenue. But in April, the company announced it was acquiring Mitsubishi Corp’s IT arm, which has about $500 million in revenue a year, and about 2,400 employees. The deal, which closed at the end of June, gives TCSBSE 0.30 % the greatest scale of any Indian IT firm in Japan.

Lakshminarayanan, who joined TCS in 1983, has a history of being sent to build businesses from the ground up at the Mumbai-based company. He built the UK-business at TCS almost from scratch and since 2011 has been leading the emerging verticals business — including hi-tech and media and entertainment — which now accounts for over 10% of TCS’ revenue.

“I am moving from one island to another. It is a personal challenge and it is hugely exciting. In the UK, we built our platform there organically. In Japan, with the acquisition, I am being given a platform that has its advantages and challenges. We have to bring our Japanese workforce onto the TCS processes and the TCS way of doing things,” Lakshminarayanan told ET.

The challenge is not just a personal one. When Chandrasekaran offered Lakshminarayanan the job, he also issued a target — to double the company’s revenue in a set period of time.

“I can’t tell you the time frame but knowing TCS, you should know we always have plans and they are ambitious,” Lakshminarayanan said. Japan is the second-largest market in terms of IT outsourcing. Its total outsourced IT spending is about $109 bn and it has been tough for non-Japanese vendors to gain a foothold. Of the total, almost 70% is serviced by Japanese players. Indian IT’s share of business is less than 1%.

But analysts expect TCS to grow quickly after its acquisition. “I expect their internal target should be to grow that business to $1-$1.5 billion in the next three to five years,” a Mumbai-based analyst said. He declined to be identified because he is not authorized to talk to the media. TCS’ Chandrasekaran has said he expects Japan to grow to a billion dollar business in the next few years.

One of the reasons that Japan has been tough for Indian IT is the insularity of the culture. TCS is already taking steps – from town halls to translating the internal magazine to Japanese – to welcome its new employees.

“We held a town hall and there were about 2,000 employees. And a lot of young people came up to me and they were very excited about working for TCS. We’ve met clients and the initial feedback is that they are also happy. Now we have to work to convert that excitement to actual results,” Lakshminarayanan said.

Talking to employees will be an on-going process, to explain the company’s long term vision for Japan and working with the middlemanagement. Lakshminarayanan is learning Japanese and is encouraging his top management to speak in English, a language they know but aren’t very comfortable with, to smooth communication.

He is relocating to Japan from the UK for the next few years. His wife will join him once his daughter, who is in her final year at school, goes to university. TCS, through Lakshminarayanan, will be spear-heading the biggest push into Japan and growth in that new market will help the company retain its lead over the rest of the industry.

“The law of large numbers would catch up with TCS if the footprint and capability were the same as other Indian IT. The reality is that growth leadership will sustain; what sets it apart is that its addressable space is the largest among Indian IT and capabilities wellspread across the entire IT spectrum,” Kawaljeet Saluja, analyst with Kotak Institutional Equities said in a note after Mitsubishi deal was announced.


UK outsourcing spend continues to grow, but contracting bodies must ensure value for money, says expert

July 11th, 2014

The figures, published by sourcing company Information Services Group (ISG), showed that the public sector spent almost twice as much under 585 contracts as the £30bn that commercial firms spent on 726 lower value contracts over the same period. The number of outsourced contracts awarded by public bodies since 2012 was almost triple the number of contracts awarded between 2006 and 2007, just before the recession, ISG said.Outsourcing15

It contracts and technology law expert David Isaac of Pinsent Masons, the law firm behind, said that the increasing outsourcing spend by both public bodies and commercial firms was unsurprising, given the economic climate in recent years and pressure on finances.

“It is not surprising that outsourcing contract spend continues to grow in the UK as there is an ever-increasing dependency on outsourcing companies to deliver both business as usual services and major change programmes,” he said.

“The challenge for customers is to ensure that these contracts deliver best value for money and are properly managed. This is especially the case in the public sector where the coalition government has delivered some improvements. However, there is still a lot to be done to ensure full value is delivered for taxpayers,” he said.
Over the past two years, commercial firms have tended to outsource smaller pieces of work. At the same time, the number of small contracts awarded by the public sector has shrunk, from 46% of the market in 2010-11 to 40% of the market in the period since 2012. Much of the increase in contractual spend by public bodies was in the ‘mid-market’ range, on contracts between £15 million and £30m. The number of large contracts at over £30m had also remained relatively steady, ISG said.

Luke Mansell at ISG said that much of the increase in the number and value of contracts awarded by the public sector was a result of “the complexity of the services required and the lack of appetite to utilise cheaper, offshore resources” to deliver public services.

“It will be interesting to see, over the next two years, whether the drive to procure services from small to medium enterprises via the G-Cloud will cause a shift to smaller contracts,” he said.

The G-Cloud programme allows public sector bodies to gain access to cloud-based IT services being offered by a selected list of pre-approved suppliers during a set period. It includes cloud infrastructure, platform, software and specialist services. The fifth version of the G-Cloud framework was made available to contractors in May. Among the stated objectives of the programme are offering a platform for public sector IT buyers to procure commoditised services more easily, while at the same time encouraging innovation and improved supplied performance.

According to ISG, central government accounts for the largest proportion of public sector outsourcing spend by value, at 42%; followed by local government at 30% and healthcare at 13%. During the pre-recession 2007 to 2008 survey period, these three segments each accounted for around 28% of the total market. The overall increase in public sector outsourcing spending meant that the total amount spent in each segment increased, despite the fall in healthcare spending as a proportion of the total, ISG said.

“The UK public sector is a significant market in its own right and is the largest public sector market outside of the United States,” Mansell said. “Looking ahead, we expect to see continuing growth in public sector outsourcing activity as initiatives like Value for Money make outsourcing a more attractive proposition, while the government’s G-Cloud initiative opens the market to a greater number of specialist service providers.”


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