http://www.sourcingfocus.com/index.php/site/newsanalysis en editor@sourcingfocus.com Copyright 2008 2008-07-23T18:59:00+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/online_brand_threat_requires_a_new_approach_says_ovum/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/online_brand_threat_requires_a_new_approach_says_ovum/#When:17:59:00Z The web, one of the most powerful tools for both promoting and undermining a company’s valuable corporate assets - brand and reputation, has also changed the entire nature of protecting them.  In a new report, ‘Brand protection services’, global advisory and consulting firm Ovum says the task will become even more challenging as Web 2.0 technology spreads. It points out that policy makers have yet to balance the legitimate concerns of organisations with respect for freedom of speech and truthful debate and organisations have to be proactive in protecting their online reputations. “The fundamental problem is that there is no quality control of content on the Internet.” says Graham Titterington, Principle Analyst and information security specialist at Ovum and author of the report. “The corporate mindset has been slow to adapt to the changing world. New techniques are needed to detect attacks and defend reputation in the online world, even when the remedy requires conventional legal action.” The Internet is now a major channel for the sale of fake branded goods, which in some cases results in danger to the customer. Copyright and trademark infringement are commonplace. Businesses have suffered real damage as a result of false allegations spread on the Internet. The annual revenue of online counterfeiting fraudsters has been estimated at $110 bn (source MarkMonitor). Another aspect of online counterfeiting is represented by the misuse of a web domain name. The attacker sets up a website with a similar name to that of a legitimate organisation with the deliberate intention of deceiving visitors. It extends to virtual services offered by fraudsters on the Web purporting to be the legitimate organisation. The issue will become more prominent as the Web becomes more interactive. A niche group of service providers has grown up to monitor the Internet for these offences and initiate enforcement action both at the ISP level and in the physical world. “For example MarkMonitor is a niche vendor offering services in domain management, online trademark protection, online channel monitoring, and anti-phishing. Larger IT vendors also offer protection services, such as IBM’s COBRA alerting service.” However, according to Ovum countering bad publicity needs a more subtle approach. Debate has to be matched by a positive involvement in online discussion forums. The wider issues of reputation abuse need to be tackled by a combination of prevention, detection and reaction. The first stage in protection is the registration of trademarks, domain names and intellectual property. Web monitoring can detect early stages in the development of an attack strategy. More detailed detection requires the co-operation of ISPs in identifying the use of specific IP addresses and their ownership. Reaction includes, forensic analysis, the issuing of legal notices and follow up action, and the closure of web sites and IP addresses that are engaging in illegal activity. topics, ITO 2008-07-23T17:59:00+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/outsourcing_booming_in_tough_climate_says_tpi/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/outsourcing_booming_in_tough_climate_says_tpi/#When:08:49:00Z Companies are responding to the effects of a tough economy by expanding their use of existing outsourcing agreements and awarding new contracts, according to the latest market data from TPI, the sourcing advisory firm. TPI data reveals that 282 outsourcing contracts totaling over €39 billion have been signed so far this year – the strongest half year performance in 10 years. This represents an increase of 24 percent on the total value of contracts signed at this point last year. Demand for outsourcing is being driven by companies looking to cut expenditure and deliver variability in costs in the current economic climate. Corporate strategies that were growth-driven during more prosperous times are becoming profitability-driven in response to the economic challenges. EMEA leads the way Growth in the outsourcing market is taking place predominantly in Europe, Middle East and Africa region (EMEA). TPI data shows that the EMEA represents 61.5 percent of the outsourcing market to date in 2008 compared with 51 percent a year ago. So far this year. 126 contracts totaling €25.5 billion have been signed – up 58 percent on the value signed at this point last year. Duncan Aitchison, partner and president, TPI EMEA comments, “European companies are expressing their concerns regarding the softening business climate by taking steps to reduce operating costs, and restructure the nature of their business-support functions to have a more variable cost profile. They are doing this to gain the benefits of near-term cost savings, but also to position themselves to respond more effectively when the economy strengthens and growth is once again at the top of the agenda. “While I wouldn’t call today’s corporate attitude towards cost-reduction ‘desperate’, there is certainly a tone of urgency in play.” Reflecting the increasing adoption of outsourcing by large European corporations, 10 of the 13 mega deals (contracts valued at €800 million or greater) signed so far this year were in EMEA. The average value of a contract in EMEA is growing in contrast to declining contract values in the US and Asia Pacific. This growth in contract values in EMEA is being fueled by this rise in mega deals. What does the future hold? TPI’s data shows unprecedented market momentum in terms of new outsourcing contract awards – the best sequential nine months in the history of outsourcing. To date in 2008, 237 new scope outsourcing contracts have been signed globally totaling €32.6 billion – an increase in total contract value of over 25 percent from 214 contracts totaling €26 billion a year ago. Considering this strong start to the year, TPI estimates that global annualised revenue from outsourcing contracts will grow by around 10% to over €70 billion by the close of the year. This would surpass the €64 billion in 2007 and 2006. “This surge in new scope outsourcing contracts indicates healthy market demand and underlines the fundamental momentum in demand for outsourcing,” explains Duncan Aitchison. “We could well see a record sum for the total value of outsourcing contracts signed in 2008. While third quarters are traditionally the softest for outsourcing contracts, we see little to disrupt the current momentum.” 2008-07-18T08:49:00+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/tcs_hit_hard_by_falling_rupee/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/tcs_hit_hard_by_falling_rupee/#When:12:58:00Z Tata Consultancy Services (TCS) has reported a massive drop in net income growth in the first quarter of its financial year: Q1 2008 net income was up just two percent, at $296 million, against Q1 2007’s figure of 55 percent growth. However, revenues were up 21 percent year on year at $1.5 billion, and margins remained steady. The reason for the collapse in income growth was a sudden fall of the value of the rupee: the company had hedged that the currency’s value would continue to rise against the dollar as the downturn hit. Instead, the value of the rupee has fallen sharply in recent weeks, leading to related losses of some $18 million. “We have been able to respond to the challenging macro environment and drive growth in the business under tough operating conditions and manage costs,” said S Ramadorai, TCS chief executive and managing director of TCS. 2008-07-17T12:58:00+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/hcl_makes_uk_financial_services_acquisition/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/hcl_makes_uk_financial_services_acquisition/#When:19:38:00Z The rise of India continues apace as global IT services provider HCL Technologies, part of the $4.9 billion giant HCL Enterprise, has announced the acquisition of the UK’s Liberata Financial Services (LFS) for an undisclosed sum. The British BPO specialist provides end-to-end administrative and customer services for the life and pensions industry. LFS’ parent company Liberata Ltd. will now focus anew on its public-sector business, where demand for its services is strong and growing, as pressures intensify to cut costs. Fulfilling predictions from sourcingfocus.com and other industry commentators that the strength of Indian outsourcing would inevitably mean acquisitions in the UK and Europe during the downturn, HCL will acquire four delivery centres in the UK, together with 800 staff who come to HCL with both domain knowledge and technical expertise. Acknowledging the significance of the deal, Ovum analyst Peter Clarke said: “The logic of the deal is clear. HCL Technologies has the capacity to take forward Liberata’s financial services platform, using it to develop its LP&I business. “Liberata has done well to win business in this space but has constantly faced questions from clients about its ability to sustain its interest in the long term, given its relatively small scale in this highly competitive market.” HCL’s insurance practice will be strengthened by LFS’s core capability to manage complex transactions, as well as a number of multiyear contracts with its customers which include blue-chip names. Ranjit Narasimhan, president and CEO of HCL BPO, said: “This strategic acquisition of LFS enhances HCL’s ability to become an end-to-end provider of business process outsourcing services in the financial services space. “This acquisition will equip HCL with a ready capability across the value chain by providing access to an existing revenue stream of policy management, actuarial and analytics catapulting HCL to become a leading service provider in the UK market for the life and pensions industry.” It may also, of course, give HCL some leverage with a UK parent business that has embedded connections with many local authorities – as well as the obvious long-term revenue streams from within the more stable end of the financial services market. For Liberata Ltd, the deal offers some relief from the private sector uncertainties of the Western money markets, while also allowing it to focus on public-sector deals where both local and central government make promising medium-term customers.Robert Gogel, CEO of LFS’ parent Liberata Ltd, confirmed this view, saying: “We are pleased to have found an appropriate buyer for this business, thereby assuring its long-term future development. We have made significant investments in people, platform and service line development which has allowed our clients to benefit from high levels of service excellence.” Of Liberata’s plans for a stronger focus on the public sector, Ovum analyst Peter Clarke said: “Liberata has clearly convinced its private equity parent General Atlantic that this is sound logic. “Its recent wins at the Local Government Association [the body representing all local authorities in the UK], where Liberata now runs the LGA’s whole back office, and at Rushcliffe and Charnwood District Councils, where it won preferred supplier status for a revenues and benefits shared services contract against old rivals Capita, clearly strengthen this argument. “Liberata recently demonstrated its long-term intentions in the public sector by becoming a Gold Partner with SOLACE, the Society of Local Government Chief Executives. “If the FSA approves [the HCL] deal, it looks like a win for all concerned and sends some important signals to the market.” Although LFS’ new owner HCL has built a thirty-year business from private-sector areas such as retail, telecoms, and media – along with financial services, of course – the public sector might be a logical next step for it too as it seeks to build a long-term outsourcing base in the UK. But for now, there is money to be made in the downturn for ambitious Indian outsourcers. 2008-07-16T19:38:00+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/uk_telecoms_outsourcing_on_the_rise/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/uk_telecoms_outsourcing_on_the_rise/#When:13:55:00Z Analyst house Pierre Audoin Consultants (PAC)’s latest figures for the UK telecom industry show outsourcing expenditure surpassing that of project services for the first time: outsourcing accounted for £860 million and project services £841 million in 2007. This trend was driven in particular by EDS’s applications deal with Vodafone that saw the Texan firm jump from fourth to first largest IT outsourcer to the UK telecom market. The UK telecom sector has historically been slow to outsource IT compared to other sectors such as financial services. However, Vodafone’s landmark applications management deal with EDS and IBM in November 2006 set the tone for change. The BT group was already actively outsourcing IT, but 2007 saw a step up in pace. It outsourced infrastructure management to Computacenter in March 07, F&A processes to Xansa in August 07 and HR processes to Accenture in September 07. Other examples include T-Mobile’s infrastructure management deal with T-Systems in November 07 and THUS’s application management deal with Nortel in May 07. This growing appetite for outsourcing results from the saturated UK telecom market. Operators can no longer rely on ‘greenfield’ customers, and must fight for the existing market. This requires operators to drop prices to remain competitive, and cut costs to protect their profit margins. An emergent trend in the UK telecoms market in order to achieve this is BPO, and BT is a company that has taken the concept to heart. It was amongst the first telecom operators off the mark in implementing BPO on a large scale, the deal with Accenture mentioned above being an expansion upon an initial deal signed in 2005, and the later deal with Xansa shows that it has the appetite for more. Other telecom operators are likely to follow suit in the hunt for further efficiencies. Another key trend is the growing acceptance of offshore IT. Where until recent years UK telecom operators were reluctant to outsource at all, they are now keen to make use of the reduced labor costs available offshore. This is helping offshore specialists like Xansa (now owned by Steria), TCS and Wipro to thrive. 2008-07-16T13:55:00+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/nasscom_reduces_indian_growth_forecasts/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/nasscom_reduces_indian_growth_forecasts/#When:11:00:01Z Indian IT outsourcing body NASSCOM has reduced its forecast cumulative growth rate for the Indian IT BPO sector for 2008-09 to 21-24%, a significant fall-off from the 28% growth reported in its year-end results for 2007-08, released this week. The reduced growth, while still stellar by US and UK standards, is the first evidence of the credit crunch and soaring energy and food bills impacting on the West’s outsourcing partners in the East. While the local economy in India remains strong and largely immune from the economic woes of the past twelve months, NASSCOM clearly sees the beginnings of an impact of reduced customer circumstances and decision-making on order books. It’s a significant issue for the Indian services market: NASSCOM president Som Mittal said that the estimated slowdown in the growth of IT-BPO spending would translate to revenues of $62-64 billion, with $50-billion of that coming from the export sector. Any real downturn in spending there over the next 18 months to two years would hit India hard. The report comes at a time when many in the broader outsourcing sector are bullish about prospects of increased spending, while NASSCOM’s own summary of the situation sees steady, if reduced growth. Its domestic market remains strong, with full-year growth rates for 2007-08 reported as being 26%, with revenues of $11.6 billion. 2008-07-10T11:00:01+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/atos_wins_biometric_passport_contract_ovum_comment/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/atos_wins_biometric_passport_contract_ovum_comment/#When:15:39:00Z French IT services company Atos Origin recently announced that it has been appointed by France’s National Secure Credentials Agency to manage the development and rollout of the biometric passport system in France. The new passport, which is the result of a European Union directive, is expected to improve personal security and reduce fraud. The introduction of a biometric passport is part of France’s modernisation strategy and secure identity programme, and will see Atos working with identity systems supplier Sagem Securite. The value of the contract was not disclosed, but it is clearly an ambitious programme and an important win for Atos. Under the deal, Atos and Sagem Securite will deploy nearly 5,000 data acquisition and processing systems in 2,000 French town halls and 350 prefectures and sub-prefectures before June 2009, making it possible to include fingerprints on passports. Cynics might say that being French helped Atos and Sagem win this contract, which has clear national security implications. However, both companies have a good track record in the area of security and identity globally. It is not a surprise to see Atos winning a biometrics contract: the company has extensive expertise and relationships in this field through its UK public sector business. It undertook a biometric technology trial for the UK Passport Service and defined an implementation strategy, framework and business case for the rollout of a citizen multi-application smartcard in Scotland. It also has strong relationships with GCHQ and the Border and Immigration Agency and, as IT partner for the Olympic Games, has security-specific offerings high on its agenda. Despite these existing relationships with key UK public sector security and identity organisations, it missed out on the e-Borders contract and has failed to win a framework contract as part of the procurement for the national ID card scheme (CSC, EDS, Fujitsu, IBM and Thales were the successful suppliers here). So it is likely that Atos is hoping that this flagship project in France will prove a useful reference site as it looks to grow its security and identity business across Europe. Biometrics will increasingly become important to many European governments as a way to monitor the flux of populations. If Atos can deliver this project successfully, to time and to expectations, then it could put itself in a strong position to meet future demand for these capabilities. Atos’ next major opportunity to demonstrate its security and biometric credentials could be the Olympic Games. As the official IT partner to the International Olympic Committee since 2002, Atos plays a key role in the supply of IT systems and services during the Olympic Games. With the threat of terrorism ever present, a large part of the IT requirements will be focused on security, and in particular identity management. 2008-07-09T15:39:00+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/data_risks_an_afterthought_when_outsourcing_it_says_isf/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/data_risks_an_afterthought_when_outsourcing_it_says_isf/#When:15:03:00Z Despite awareness of the information security risks associated with outsourcing projects and well publicised cases of data loss or theft, many companies still ignore the potential problems until it is too late. That is the warning highlighted by the Information Security Forum (ISF) – an independent organisation with some 300 major business and public sector Members from around the world. “The potential to cut significant costs and increase speed to market clearly make outsourcing and offshoring an attractive proposition,” says Simone Seth, author of a new report published by the ISF. “But without the right level of security expertise from the outset to fully identify information risk, there will always be important gaps in the business case.  If the necessary controls are not budgeted or put in place to mitigate the risks, it can have serious consequences and even threaten the long term success of the outsourcing project.” The ISF’s research shows that information risk management is often integrated as an afterthought, and information security professionals become involved too late in the lifecycle. This can often be explained by a lack of awareness at the highest levels and a failure to understand the importance of information risk management through all stages of an outsourcing project. “Failure to involve information risk managers at the start of a project and through its lifecycle increases the enterprise’s exposure to risk; whether it’s data theft, information leakage or disputes that may arise from questions of ownership of intellectual property,” says Simone Seth. Information mangers need to identify all outsourced processes, operations and technology and agree business criticality levels through all four steps that comprise an outsourcing lifecycle: Prepare, Implement, Operate and Review.  Information risk managers are also able to add contractual clauses that relate to information security regulatory requirements and offer additional protection from a legal standpoint. It is also important to understand regional compliance requirements and regulations as well as the wording of contractual terms to prevent future disputes over the ownership of intellectual property and the transfer of data. Typical risks at implementation and operational stages that can occur if the right controls are not effective, include fraud, data theft or hacking that can lead to data loss and confidentiality breaches.  The ISF is a not-for-profit international association of some 300 leading international organisations, which fund and co-operate in the development of practical, business driven solutions to information security and risk management problems. 2008-07-09T15:03:00+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/recruitment_process_outsourcing_an_upside_of_the_downturn/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/recruitment_process_outsourcing_an_upside_of_the_downturn/#When:14:35:00Z Recruitment process outsourcing (RPO) is growing rapidly and has the potential to be a multibillion dollar market, taking advantage of the trend towards single process deals in human resources outsourcing. This is according to the latest report by independent market analysis firm Datamonitor. The report Opportunities for Recruitment Process Outsourcing in a Changing HRO Market estimates the global RPO market in 2007 was worth $720 million and forecasts it will grow by 22% in 2008 to $880 million, and surpass the $1 billion level in 2009. According to the report, demand is predominantly from Fortune 1,000 companies in the US, but the market is growing rapidly in the UK and continental Europe and is beginning to gain traction in the Asia Pacific region.However, the predictions come at a time when many businesses are facing the prospect of redundancies, as the ‘perfect storm’ of the combined credit crunch and soaring food and energy costs are hitting many sectors hard – in some cases, very suddenly. While RPO vendors claim to reduce costs by up to 40% in some cases, it is the lure of recruiting a higher quality workforce that has been driving growth, says Datamonitor. Nevertheless, the growth forecasts themselves are extrapolated from 2007 data and presumably do not factor in the effects of a precipitous decline in the Western economy. Although the strategic importance of recruitment means quality will remain of utmost importance, says the analyst firm, it is likely in an economic downturn that it is those who can deliver on both quality and price that will succeed. “Despite the expectation that outsourcing will thrive as companies search for ways to cut costs, increased unemployment will result in lower business volumes which will be reflected in the variable price nature of RPO contracts. But, this will be mitigated by the increasing demand for RPO from new clients,” says Patrick O’Brien, IT and BPO analyst at Datamonitor and author of the report. “For RPO to continue its rapid growth in the near term, vendors may have to go to market by pricing more aggressively as recruitment will need to be seen as a primary function for easy cost reduction among company processes.” RPO vendors are split over the use of offshore provision. Many players have little experience or understanding of how to derive the fullest benefits from RPO, while others see it as unworkable in recruitment services which require constant contact with both the client organization and, using the client’s brand, with candidates. Approximately half of RPO vendors have some offshore workforce, mainly carrying out tasks around name generation, sourcing, early screening of resumes and other administrative duties. A few have moved tasks which involve contact with the candidate offshore as per customer demand. “While there is a lot of resistance from vendors, the increasing competitiveness of the market and the growing focus on cost cutting in the economic downturn will push vendors into examining ways in which to begin to increase the use of offshore delivery,” says O’Brien. The first half of 2008 has seen a wave of acquisitions as vendors attempt to build out their recruitment expertise, technology capabilities and geographic footprint. A number of competing vendors still need to broaden their capabilities, and many of the larger vendors are looking to expand further overseas. Some companies have put forward global request for proposals (RFPs), but these have subsequently been split into regions and handed to different vendors. The one-vendor global deal has not arrived yet, but a number of vendors believe that a breakthrough will occur in the next 12 months. The key reason for the break-up of global RFPs has been the fact that vendors do not have the capabilities to deliver on an international basis. Many have taken heed and are busy investing in international expansion, acquiring companies, building a global set of processes and forming partnerships with vendors in other regions.  2008-07-09T14:35:00+00:00 http://www.sourcingfocus.com/index.php/site/newsanalysisitem/shared_services_gaining_momentum_in_europes_public_sector/ http://www.sourcingfocus.com/index.php/site/newsanalysisitem/shared_services_gaining_momentum_in_europes_public_sector/#When:06:00:00Z The adoption of shared services programmes among European governments is going to accelerate over the next few years, according to new research by Ovum, a global advisory and consulting firm. “While the market is still in its early days, certain forward-looking governments in Europe are tackling the issue head-on as a means to both cut costs and improve public service delivery to their citizens,” says John O’Brien, senior analyst at Ovum. According to the consultancy, European governments are under real pressure to perform. “For many governments there is a growing need to respond to new socio-economic challenges,” says O’Brien. “These include finding solutions to the impact of an ageing population, increased international competition and now a more difficult economic environment.” Opposition is starting to recede among the more forward-looking Western European governments of Germany, France, the Netherlands and the Nordic markets of Sweden, Norway and Finland. Ovum believes these governments will present greater potential opportunities for suppliers of shared services over the next few years as investments are made in governmental modernisation and transformation programmes. But considerable barriers remain, which could restrict progress. Some European governments for example still remain resistant to change, and most have yet to develop coherent strategies for shared services adoption. Consequently, there is much to be done to raise awareness over the next few years. This will provide suppliers with an early opportunity to consult, educate and advise government organisations on future shared services investments. Software and IT suppliers with prior experience in implementing successful programmes will be at an advantage to help shape the opportunity. However, the cultural challenges will also present opportunities for consulting suppliers that can offer the softer skills to help shape the right environment for shared services. These include: · local knowledge and local customer relationships · knowledge of the target market and its drivers · an understanding of the customer’s specific pain points O’Brien concludes that “before shared services can really take off in the European public sector, governments must establish the right environment and remove long-standing organisational blockers. Departments that have traditionally worked in silos will need to change their working practices and begin sharing information and resources.” A copy of the report is available to subscribers here: The future of shared services in the European public sector. topics, ITO, BPO, call centres, HR 2008-07-09T06:00:00+00:00