Weekly round-up 25/04/08
This week has been a bit of a rollercoaster for the outsourcing industry with highs and lows across the board.
Tuesday saw more news about Vietnam growing as an outsourcing destination. Luxoft, one of the largest Russian ITO players, has set up shop there, banking on not only its attractively low costs but its promising and highly literate workforce. Its new delivery hub marks a couple of firsts: the first time Luxoft has moved into the Asian continent; and the first time a Russian ITO player has developed a global capability. The move comes as a further indication of the growing prominence of South-Asian outsourcing as costs continue to rise in traditional locations. Mr. Truong Gia Binh, head of the Vietnam Software Association said: “Vietnam’s economy is booming and we offer a skilled workforce, a fast growing education system, political stability and lower costs”.
Logica set tongues wagging on Wednesday with its decision to move over 500 UK positions to its Indian delivery centres. The £110 million restructuring plan is expected to save the company up to £80 million a year from 2010. While the move may please shareholders, as was to be expected, the UK national and trade press took a slightly less positive view of this decision choosing to focus on the obvious losers in the plan – the UK employees. However, Logica insists this is all part of a medium-term master plan to grow its nearshore and blended delivery offerings while, of course, save some money along the way.
Capgemini, which is currently riding a wave of good news, announced that Croydon Council is staying with them for another five years adding a lucrative £83m to the coffers over five years. The ITO deal will see Capgemini manage telecommunications infrastructure, networks, some 4,000 desktop computers and the Council’s key business applications. The Croydon deal is the latest in a spate of contract renewals with the company including Corus, the major steelmaker, which lined Capgemini’s pockets with a £26 million, five-year renewal deal last week.
