June 2010 Archives

Immigration caps make life difficult for some companies

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Just got this in from corporate law firm Dundas & Wilson in regards to the government changing immigration rules.

As there is a debate going on in this blog I will try and post the views of as many people as possible.

Dundas & Wilson says:

 "...employers are yet again having to deal with moving the goal posts on immigration rules. Changes to the immigration system are inevitable as a result of the Coalition Agreement however the imposition of the temporary cap and the forthcoming permanent cap make it much more difficult for employers to keep up with the changes and to plan their resourcing. Some employers may have their recruitment plans impacted by this new cap possibly leaving them with skills shortages in certain areas.

The Information and Communications sector as a whole in the UK employs around 9000 sponsored migrant workers."   

What has Spain got for IT directors?

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I was talking to Valueshore Spain this morning about the likely trends in offshoring. As I have recently blogged about alternative destinations to India such as Egypt,  Brazil and China, why not look into the nearshore options for UK companies.

Valueshore is a collaboration of Spanish consultancy firms which aims to give potential global clients information about outsourcing to Spain.

It is speading the word in the UK about why IT directors should buy services in Spain.

Daniel Naoum, co-founder of Valueshore Spain says the IT sector in Spain has grown despite recession and many companies are selling services overseas. Although it did only grow 0.7% compared to double digit rates in recent years.

The Spanish IT sector will make 42% of its money developing and integrating software, 37% in outsourcing and 21% in consultancy this year.

He says the advantage of Spain is that it has a developed economy therefore service providers are used to working on high-end projects. As a result businesses can outsource an entire project to Spain rather than sending some work offshore to get cheap labour and retaining the more complex work.

He says if you outsourced to Spain you would get suppliers that make recommendations, for example, rather than just completing what they are told to.

It could offer a similar proposition to Brazil with its value coming from industry expertise and not low costs.

Here are some facts about IT consultancy in Spain.

- At the end of 2009 there were 113,000 people working in the Spanish IT consultancy industry.
- The IT consultancy industry in Spain is expected to grow 1.6% this year
- In 2010 the Spanish IT consultancy business will be worth 9.7bn Euros

The Spanish Association of Consultancy firms, which together form Valueshore Spain, is made up of the following companies.

- Accenture   
- Altran    
- Atos Origin   
- Capgemini
- Grupo Delaware
- Deloitte
- Ernst & Young
- Everis
- Hay Group
- IBM
- Indra
- Insa
- IOR Consulting
- Matchmind
- Neoris
- Oesia
- Pricewaterhousecoopers
- Sadiel
- Steria
- Tea-Cegos
- Tecnocom
- T-Systems
- Unisys
- Vass Consultoria De Sistemas
- Institucion Vinculada Acec

Could China's offshore cost advantage become a handicap?

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I recently met a company that provides offshore IT services from China, known as Bleum. The company was clear to me that one of the big advantages of China is the fact that the wages are low.

But how long can this go on? Workers in Chinese factories have recently been striking over pay and the unrest caused has been beamed across the world.

So could workers soon be getting more money in China? Or will western comopanies be put off China after how the government clamps down on activities seen as a person's democratic right in the UK?

Also see an article about working conditions in China, and this picture gallery depicting life in Chinese factories.

In 2008 IDC said offshoring to China will grow 23% every year until 2013 when it will be worth $6,8bn.

IT workers at service providers face job insecurity in budget job backlash

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IT professionals at IT service providers face as much job insecurity as their private sector counterparts. According to a Guardian report 1.3 million jobs could be at risk as a result of the austerity budget.

The figures are based on estimates if the impact the budget could have on jobs.

While up to 600,000 public sector jobs could go a total of 700,000 private sector jobs could be lost, says the report.

This could mean 100-120,000 public sector jobs and 120-140,000 private sector jobs be lost per annum for five years through cuts.

With IT projects in government being postponed or cancelled unemployment in the IT suppliers sector is innevitable.

But Jean Louis Bravard, director at Burnt-Oak Partners, says this could be an opportunity for the government to transform how it does things. This he says could see public sector workers move into the private sector.

He adds that many of the contracts signed by the government are there to cut costs therfore cutting them would not make sense.

 

Also see how the government could be throwing the baby out with the bathwater.

 

Indian professional group opposes UK immigration cap

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Following a UK government announcement an indian organisation, which has challenged changes to the UK immigration rules in the past, says it will oppose what it describes as an illogical cap on immigration.

Director of Highly skilled Migrant Programme (HSMP) Forum Amit Kapadia said, "The [UK] government's move to impose an illogical cap will be opposed."

He is also reported as saying, "We don't think that any sort of cap would work out. It would be unworkable. The effects remain to be seen, but if the government really tries to implement drastic measures it is going to cause a lot of unhappiness, especially among migrants who work hard and pay taxes."

See the full article here.

Mixed reaction over government immigration caps

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Now that the government has began its strategy to reduce the number of non EU workers on visas in the UK the debate in the IT sector can begin.

In an effort to get a debate going here are the views of various people I have spoken to over recent months but what do you think?

1  - A senior IT professional at a large UK company from overseas: "Cameron will now go ahead with his plans to put a cap on immigration, but I'm not intimidated. There are many immigrants in my department and even though we are paid less money, we bring a significant contribution. Speaking for myself, I am a lot more skilled and produce a lot more compared to colleagues of about the same age."

2 - Mark Lewis, partner and head of outsourcing at law firm Berwin Leighton Paisner said there needs to be a limit on the numbers of migrant workers but warns that the cap should not be set too low.  "I see no reason to have a totally open-ended number of IT visas granted every year. Limiting the number at a sensible level for UK businesses is fine. But the government would be crazy to restrict the inflow of highly skilled migrants."

3 - Peter Skyte, National Officer at union Unite said there is a need for balanced rules that do not damage UK businesses and do not disadvantage UK workers.  "The points-based migration system and in particular use of the Intra-Company Transfer route in the IT sector is open to misuse or abuse by employers with the potential to undercut pay rates and displace skilled resident workers as currently operated."

4 - Bob McDowall, analyst at Towergroup  said if the government tightens the scheme, big businesses will have challenges resourcing for IT.  "This will be especially the case in the financial services sector."

5 - A campaigner against the alledged abuse of the Intra Company transfer system: "The use of the ICT system to bring in large numbers of IT workers to work at third-party client sites is purely about paying less for foreign workers who are tied to their sponsors and avoiding taxes. The workers need more protection to ensure they are not underpaid and discriminated against. And permanent migrants, residents and UK businesses need a level playing field to compete against companies that take advantage of lax rules around intra-company transfers,"

6 - Ann Swain, CEO at Apsco, said there was nothing wrong with the current system but it was being abused. "There seems to be no appetite to police it."

7 - An IT contractor: "UK contractors have been cut at one company he worked at and permanent staff have to train their Indian replacements, who will eventually take the permanent staff jobs as well."

8 - John Brazier, managing director of the Professional Contractors Group (PCG): "While intra-company transfer permits clearly have a value, their abuse and overuse is damaging. I hope the annual cap proposed by the Conservatives would be extended to intra-company transfer permits as a way of dealing with the displacement that has affected many contractors."

 

Is the government throwing the IT baby out with the bath water?

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Dell's Public Sector Services EMEA Vice President Ferenc Szelenyi, gives us view on the UK government's decision to make swingeing cuts to projects.

He says the government risks losing some of the good things that have been acheived through IT in the public sector if it makes indescriminate cuts.

Ferenc is a regular contributor to this blog and I welcome comment nand articles from all corners of the IT sector, whether user or supplier.

Here is his post:

"In response to the new Government's 10 IT reforms, it is my view that the coalition should take a second look at its move to centralise the current NHS agenda. It seems that as a result of the centralisation, the national programme for IT is likely to be put on hold. Now maybe it's just me, but the words baby, bathwater and throwing out immediately spring to mind.
 
The truth is that a large part of the national programme has delivered on time and has had a lot of success, especially in the N3 network. Don't get me wrong, a lot more could and should be done, as the UK healthcare sector is at least 10 years behind the financial sector in its thinking about technology. However, I am afraid to say that these latest reforms pose more questions than answers.
 
Healthcare is a prime example of a sector that is always being asked to fulfill the escalating needs of the patient, not to mention having to comply with ever-changing regulations. These latest reforms to put the programme on the 'back burner' could potentially increase headaches such as increased waiting list times. 
 
In light of this, all NHS trusts should look to grow with the rapidly-developing technology in order to survive in the exceedingly competitive market. One possible way is for the industry/sector to adopt IT outsourcing. As the healthcare industry has to continually deal with mission-critical information, highly sensitive data and high network connectivity, the challenges could be outsourced to a specialist services provider which could offer greater expertise and at less cost. For example, service providers are better placed than government bodies to transfer paper to electronic records, having already made the investment in the required technical equipment, training and skills.

Service providers from across the globe can also implement and manage functions such as electronic billing records, medical billing, transaction processing, document management, integration of existing back end systems with highly new and advanced tools. Unfortunately, this is expertise that the public sector alone simply does not have. 
 
In conclusion, the re-commissioning of ineffective services must stop and the elected government must look to service providers to do things differently. However, it is also clear that despite these latest reforms, service providers can assist in and add value to the administration of public sector IT projects."

See also an alternative view in this blog post.

Outsourcer 2e2 outsources to India

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IT service provider 2e2 is set to offshore its support desk function to Patni in India.

It is good to see that ousourcing service providers see the value in outsourcing.

See the full story on channel magazine Microscope.

2e2 has been on an acquisitive journey recently and probably has the scale to justify offshoring internal IT services.

 

Egypt guns for India, Brazil and China in offshore battle

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Countries have watched India's meteoric rise in the global IT market with envious eyes.

Everybody wants a piece of the action. And why not?

This blog has recently featured a series about Brazil and China about their ambitions as a destination for offshore IT services.

But let's not forget Egypt. It was praised in a report by the London School of Economics last year and has now won the accolade of Offshoring Destination of the year 2010, according to the European Outsourcing Association.

Chairman Martyn Hart says "Egypt stood out for its multilingual capabilities and developments made to its infrastructure. It has proven itself to be both a strong player for European outsourcers and a gateway to the Middle East and Africa."

Egypt is seen as one of the big opportunities beyond Brazil, Russia, India and China.

Here are some articles about Brazil and China.


 

Dell on the defensive after late payments criticism.

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Following yesterday's news that Dell had been placed in the Forum of Private Business' Late Payments Hall of Shame Dell's David Frink, in its corporate affairs department gives us a bit more information.

This is his statement:

"The 65-day payment term is being put in place on a global basis for Dell's non-production procurement, which includes vendors such as telecommunications companies, insurance companies, financial services, services vendors.

The change is being made to fully standardise Dell's payments; the company's production procurement already is on a 65-day schedule.

The standard does not apply to certain exempted diverse suppliers, including many certified small vendors, whose terms can be shorter, generally ranging from 20-45 days.

The standard does not apply in countries where there are restrictions; some examples include France, Japan, Korea, India; or in some countries in which credit costs are extremely high (Brazil)."

 

Tories limit immigration, let the debate begin

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The Tories have set their stall to reduce the immigration of non EU citizens to the UK.

With a little help from their new friends, the liberals, the government has cut the number of permitted immigrants over the next 12 months by 5%. An interim cap while the government decides what to do.

The Tories promised a cap in their manifesto.


Thousands of IT workers enter the UK from countries like India using the Intra Company Transfer (ICT) route. This is where workers can enter the UK without a visa if the employer has a UK operation.

This blog has stirred a lot of debate over the issue and I welcome comments from all corners of the IT industry. And for that matter anybody else with an opinion.

Let the debate begin. Is it good or bad for IT in the UK?

IT outsourcing service providers regularly use this route.

It is very controversial and there is loads written about it. Thousands of UK IT professionals are often overlooked or become surplus to requirements as a result of offshore workers undercutting them.

The counter argument is that UK companies need the skills on offer so a cap would be be bad news.

Some think caps on IT immigration will be the UK's loss.

Everybody wants to cut costs right now so limits on offshore workers in the UK might make life more difficult for CEOs, CFOs, CIOs. And of course public sector organisations.




National Grid to close office in Newcastle as outsources HR and finance to TCS

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The National Grid is apparently close to announcing a deal that will see it outsource financial and HR services to Tata Consultancy Services (TCS).

It comes as no great surprise given that the company said in October that it had completed a review of its internal shared services.

It also propose a deal with TCS which could affect 300 workers and see an office in Newcastle close down.

Dell put to shame by Forum of Private Business

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It seems a change in Dell's payment terms could put some of its smaller suppliers at risk.

The Forum of Private Business has put Dell into its late payment Hall of Shame after the company extended the time it takes to pay suppliers by 15 days.
 
Dell, wrote to tell what it called its 'valued' suppliers that it is 'standardising' its payment terms from 50 to 65 days from 10 July, citing 'current economic conditions' as the reason for the change.
 
Dell  enters the Hall of Shame with the likes of  Argos, United Biscuits and Carlsberg.
 
"Late payment causes serious cash flow problems for small firms, many of which are still struggling despite the UK's economy entering a fragile recovery.
 
Th Forum's says, almost one in five small firms (18%) said the problem of late payment and changes to payment terms and conditions has become worse. On average, 36% of respondents' turnover is tied up in late payment at any one time.

I wonder if Dell will be open to its outsourcing customers changing their payment terms. 
 

UK jobs created by India suppliers

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Indian IT companies are often criticised because their business model often means that UK IT workers are subsequently replaced by lower cost workers form India. So the allegation goes.

But as these Indian companies beome true global players they are establishing presences in the UK and other European states.

L&T Infotech for example has just announced a new operation in Northern Ireland which will provide development and support services to global customers.

It is creating 85 jobs initially but this will increase if business grows.

HCL also has an operation in Northern Ireland which has grown suignificantly since it was established in 2001. It now employs about 2000 people.

Maybe thes companies could help the UK economy by taking on the staff made redundant in the public sector. If they want to offer BPO and IT services in the public sector then it makes sence to get staff with experience.

It might also help Indian companies overcome potential problems caused to them by the caps on ICTs that the Tories have propsed,

 

 

Accenture in on insurance outsourcing boost

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I blogged last week about how the UK insurance sector is leading the way in terms of outsourcing. Even bigger than the banking sector apparently.

In line with this is news that Accenture has won a seven year deal to provide infrastructure and application outsourcing services to Aviva's buildings claims division in the UK, known as Asprea.

Asprea wants to focus on core competencies.

Neil Gribbin, managing director at Asprea saays, "By outsourcing our infrastructure and claims applications to Accenture, we can stay focused on continual enhancement of our core competency in claims and delivering further improvements in quality of service to our clients. Accenture's deep operational experience in  IT outsourcing, combined with its insurance expertise, makes it an ideal business partner for Asprea."

 

 

 

 

 

World Cup IT blogger gets writer's block

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Just to inform all of his fans that Mahindra Satyam's Dilbagh Gill has writer's block.

We can forgive him because, as you can imagine, being in charge of the event management software running the World Cup tournament in South Africa is clearly a stressful job.

In his abscence I am posting  links to all five of his blogs so far. Post 1, post 2, post 3, post 4 and post 5.

Hopefully number six is on its way.

Here is Dillbagh with Bafana Bafana players Aaron Mokoena and Steven Pienaar  as well as other Mahindra Satyam staff.

 

dilbaghpic.JPG 

 

 

Is Legal & General looking to outsource more?

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Legal & General seems to be on a bit of an outsourcing mission at the moment. Having just announced its decision to outsource its IT infrastructure to IBM it looks set to do more.

This time back office functions are being considered according to a contact of mine. These include things like application process handling, credit and risk checking and policy administration.

But maybe it is just rumour. I spoke to an L&G spokesman and he said as far as he knew this is not the case. 

IT deals only value for money if they reduce power consumption

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I wrote an article yesterday about research from the Economist Intelligence Unit and T-Systems.

It looked at the views of senior executives at corporates regarding power consumption. It seems most are worried about fuel shortages and increasing prices.

As a result of business fears of fuel shortages and steep price rises CIOs will be expected top play a key role on two fronts.

Power management is now in the boardroom.

CIOs will have to reduce the power used by the IT department and use technology to reduce power use elswhere.

When will outcome based agreements be tied to targets related to cutting energy use?

The DWP deal with Fujitsu to manage desktops had the need to reduce power consumption as a major requirement of the agreement. Thin client computing is the technology being used to help meet these targets.

Lee Ayling, UK head at sourcing copnsultant Equaterra, says there are a lot of datacenter deals currently linking contracts to power reduction targets. He said  companies are linking deals to something known as Power Usage Effectiveness (PUE) which is a measure of how efficiently datacenters use power.

"The problem has been that CIOs have not been responsible for energy budgets because it was with facilities. But now it is going to departments."

He says an outsourcving deal between Capgemini and the Environment Agency uses model.

 

See also T-Systems/Intel datacenter of the future.  

 

 

 

 

 

 

Accenture's UK recruitment strategy in more detail

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Having written a post earlier about Accenture's plans to use social media to recruit 40% of new employees this year, I thought I should guide you to the full article I wrote.

Here it is with more detail about how the recruitment team in the UK is using social media.

Very interesting, particularly when put alongside a prediction made by Andrew Rigby, head of outsourcing at legal firm Brodies. He told me outsourcing of social media could the next big growth area of the BPO industry.

With Infosys selling its social media platform and Accenture using social media to recruit, potential customers might look to service providers to take control their social media business processess.

Social media in the enterprise need not be a stepinto the unknown if service providers build expertise. Accenture, for example, could create a best practice for social media in recruitment.

 

If you want to work for Accenture check out Twitter and LinkedIn

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Just been talking to Accenture's UK recruitment head Suzy Style.

I will be writing a story later. But the long and the short of it is that in support of the company's strategy to recruit 50,000 people this year with 40% coming through social media, the UK HR operation is on that journey.

Style said that LinkedIn fits in well for the recruitment of senior consultants and Twitter is good for getting hold of the best graduates. She says there is a war out there for the best recruits and no stone is being left unturned.

There is a lot more to it than that. Accenture's HR department has really bought into social media and has seen a mindshift over recent months.

Style said it is all about developing relationships with professionals who may one day be the perfect employee.

Fat insurance firms outsourcing through fear of being taken over?

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The financial services sector is a hotspot for outsourcing at the moment. Within this sector Insurance companies readying themselves for major outsourcing deals.

Apparently there is as much activity in the Insurance space as there is in banking, which is a lot.

I am told Insurance companies are expecting a lot of mergers and acquisitions. The best way to avoid shareholders voting to sell to a competitor is to be lean and fit for recovery and not fat and unfit.

One of the best ways to become lean and mean is to outsource.


Banks are outsourcing everything with middle office savings a top target

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I was talking to Andrew Rigby, the head of outsourcing at legal firm Brodies yesterday. He says that now that we are coming out of recession banks are outsourcing everything to cut costs.

He said there is a major push by banks towards outsourcing the middle office.

He says this includes things that were seen as too core to outsource in the past. Fund management and all the IT related to it is an example.

"Now that we are coming out of recession banks are looking at their spend and where they can make savings. What I am seeing is banks are outsourcing everything."

Robert Morgan from consultancy Burnt-Oak Partners says banks are investigating outsourcing more than ever. "There are a lot being investigated but not many green lights at the moment."

He agrees that the middle office is an area banks are looking at outsourcing.

He envisages deals seeing, for example, IBM in the middle office and HP in the back office.

Legal & General staff fear the worst

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Sorry to repeat this post but the previous one was not showing up properly.

This is the views of some of the IT workers at pensions firm Legal & General (L&G)

These comments were posted on an unofficial forum for L&G IT staff.

It describes the feelings of IT staff at L&G after news that the company is now outsourcing its IT infrastructure to IBM.

Here is a thread of comments to give you a feeling of how staff feel:

1 - Before the big negative kick off let's hear what's actually going on and what is planned for us all first! I, for one am looking forward to the change and the possible opportunities for me, lets face it hasn't been great here for a long time!

2 - What is going to happen? let me use my crystal ball.

230 people will be outsourced to IBM. No redundancies, because that isn't allowed under TUPE.

After 6 months, IBM will announce that after a review of the service, they will be making 150-170 people redundant.

After 1 year there will be around 50 of the original people left. Desperately trying to keep the service going while working with a bunch of cheap under-trained assistants.

If that is something for you to look forward to, you are deluded I am afraid.

3 - If you think it "hasn't been good" at L & G - wait until you enter the doors of the big bad wolf that is IBM.

4- L&G don't care about their staff any more and anyone who thinks they'll be safe at IBM is deluded. They are TATA in another suit. Get another job while you are still employed, don't wait for them to get rid of you.

England victory doubles daytime online traffic

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The England World Cup 2010 victory over Slovenia created a 100% increase in daytime online traffic, according to analysis of internet use at  Star customer sites.

Managed service provider Star has been monitoring thousands of businesess during the World Cup and daytime traffic has been increasing steadily as workers turn to the web to watch games during work hours.

See yesterday's graph below.

england slovenia.jpg




If the NHS National Project for IT is dismantled will IT innovation in hospitals thrive?

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The NHS NPfIT has been one of the big talking points in IT for years. Biggest ever civil IT project ever apparently.

But has it held IT innovation back in hospitals? Are service providers just doing the minimum to meet the NHS targets, and failing in some cases.

I spoke to the CEO of a start up today. His company have just won a prestigious award for their technology. They make a BI type software that promises to improve the efficiency of hospitals processing patients.

The company, RealTime Health, already sells to two hospitals and the CEO thinks if the NHS wants to cut costs they could do so through this technology.

He told me:"A rolling back of the NHS National Programme for IT will benefit us because hospitals all over the country were holding back investment in their own IT initiatives."

 

Capgemini and Cognizant acquisitions reflect market trends

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Two acquisition stories last week give clues to where IT demand is coming from and how the big service providers will address this.

First there was Capgemini's acquisition of Strategic Systems Solutions. This gives Capgemini more resources to server the investment sector and strengthen its presence in Chna and the Phlippines.

With China pushing hard to grow rapidly in the offshore IT sector this will give Capgemini access to significant resiources. Also the investment sector is increasignly looking to suppliers to develop systems previously done in house.

The second story was about Cognizant buying testing company Galileo Performance which based in Paris. Again this is a trend. For example Capgemini integrated its testing business, Sogeti, into its main business earlier this year to increase its resources.

According to outsourcing analyst and advisory firm NelsonHall, the software testing market could be worth more than $11.2bn by 2013.

The fact that these companies are acquiring is a good sign for the sector. 

Office skivers get goals while employers get short changed

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Here is the latest World Cup internet traffic monitor from managed service provider Star. It has been monitoring the impact that live streaming of World Cup games during office hours is having on UK traffic.

The graph for Monday shows that workers are watching games in increasing numbers with unexpected games getting huge rises in daytime internet traffic.

When Portugal played North Korea at lunchtime internet traffic was 31% higher than the norm.

Could this have been viewers expecting the classic of 1966 when Portugal came back fro 3 - 0 down to win 5 - 3. Well they weren't disappointed if it was goals they wanted with Portugal sticking 7 in the back of the net.

Internet traffic during Germany's game and defeat against Serbia was 42% higher than the normal daytime internet traffic peak.

This compares to a tiny increase above the normal daytime traffic for the Argentina/South Korea game and a 14% increase above the norm for the the Greece/Nigeria match.

The Spain versus Switzerland game on wednesday saw a 26% increase on the usual level for that time. The previous day, when Portugal took on the Ivory Coast saw traffic 23% over the norm. Daytime traffic was 18% up the first few days of the tournament.

The traffic on the afternoon of the 23rd June, when England plays its final and decisive group game, will be interesting.

Here is the traffic for Monday 21 June:

portugal N Korea.JPG

 

Legal & General IT staff set for TUPE transfer as IBM wins deal

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Legal & General has made its decision regarding what to do with its IT infrastructure unit known as Business Technology Services (BTS).

It has chosen to outsource to IBM and Manpower.

The pensions company said earlier that it was considering outsourcing BTS.

It later announced IBM and Fujitsu as the two suppliers making the final cut and warned staff to be prepared to be transferred to a supplier via TUPE.

Well they will be TUPE transferred because the company has now announced IBM and Manpower.

I am hoping for more detail soon.

Never mind Rooney we have Dilbagh Gill

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I am very pleased to see Inside Outsourcing's current guest blogger, Mahindra Satyam's Dilbagh Gill,  grabbing headlines everywhere.

Mahindra Satyam's head of sport is currently in charge of the software that is running the event.

Here are a few of the titles that have written about Dilbagh in the last couple of days.

Wall Street Journal

ITweb

Tech Central

Well done Dilbagh for taking time to tell the world about the exciting side of IT and outsourcing. Here is an article I wrote about Mahindra Satyam's World Cup project.

And here are the five blog posts he has done for Inside Outsourcing already:

Post 1, post 2, post 3, post 4 and post 5

Also see Dilbagh interviewed by Computer Weekly.





World Cup IT blogger mixes with Zidane and reflects on journey

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Just over a week has passed for our World Cup Blogger. Although there are probably not enough hours in the day, World Cup bolgger gets time to rub shoulders with the likes of Zinedine Zidane (picture to prove it below).

This is the fifth of a series of blog posts from Dilbagh Gill who is head of Sports at IT supplier Mahindra Satyam.

He has the enviable task of making sure the event management software, that Mahindra Satyam has built for FIFA for the 2010 World Cup finals, runs smoothly. Dilbagh has agreed to blog from the event during the competition, which begins this month.

See his first, second, third and fourth blog posts.

Also see the World Cup blogger being interviewed by Computer Weekly.

World Cup IT blog 5, by Dilbagh Gill  
 
Well, week one of the World Cup is over and 25 games are done. Getting some breathing space now and have been able to reflect for sometime on the journey that got us here.
 
I may be a sentimental old fool - but the last 40 months has been one of the best rides I have been on. This is one trip where the destination has been as good as the journey. The sweat, blood and tears put in by the team has been worth it.
 
But - how did we reach here?
 
Mahindra Satyam was relatively new to the sport industry when we initially signed the contract with FIFA. So were the other technology partners MTN and Telkom. Working with three new firms did make FIFA's and their affiliate organisation MATCHs' life quite challenging. The spirit and enthusiasm from FIFA and MATCH in helping us understand the nuances of sport, while we delivered our respective obligations was simply awesome. The collaboration of working with internationally recognized consultants was very inspiring to our team which had the right attitude but may not be the same level of experience in sport. The biggest lesson for us, which is totally different from the conventional IT in this industry, is that it is not necessarily about "best practices but about best experiences".
 
We need to acknowledge the advice and commitment of FIFA and MATCH along with the support of Telkom and MTN in helping us navigate to our common destination  - we have fond memories.
 
Some down time also: (not talking about our software)
 
We have been quite lucky to take some time off to see a few games  - our team has really enjoyed these fruits of labour. The atmosphere at the opening game at Soccer City between the Bafana Bafana and Mexico was just inspiring. 85,000 fans and nearly the same number of vuvuzelas - can it get any better?

Thumbnail image for blog5 pic1.pngPhoto Caption: "President Zuma addressing the crowd at the opening game"

 
 
blog 5 pic 2.png
 
Photo caption: Zinadene Zidane sitting three chairs over

 
Also got to meet the "King of Poland" one of the most interesting fans I have ever met - his knowledge of the game was just amazing - able to rattle any statistic you could think of.

blog 5 pic 3.png
 
Picture Caption: Dibagh meets King of Poland

Today we got to meet the captain of Bafana Bafana and Steven Pienaar. Aaron Mokoena (Captain) spoke to us about some of his social initiatives. His focus and dedication to his causes was inspiring. You realize during these moments that leaders are leaders in all walks of life. Well we wished him and the team the very best for their next game.

Oh yes - our uniforms did arrive the day before yesterday. We desperately needed the jackets as it is getting cold here.
 



Germany World Cup defeat distracts most UK workers so far

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Here is the latest World Cup internet traffic monitor from managed service provider Star. It has been monitoring the impact that live streaming of World Cup games during office hours is having on UK traffic.

Internet traffic during Germany's lunchtime game and defeat against Serbia was 42% higher than the normal daytime internet traffic peak.

This compares to a tiny increase above the normal daytime traffic for the Argentina/South Korea game and a 14% increase above the norm for the the Greece/Nigeria match.

The Spain versus Switzerland game on wednesday saw a 26% increase on the usual level for that time. The previous day, when Portugal took on the Ivory Coast saw traffic 23% over the norm. Daytime traffic was 18% up the first few days of the tournament.

The traffic on the afternoon of the 23rd June, when England plays its final and decisive group game, will be interesting.

See traffic on thursday below: 

germany traffic rise.jpg


So what's the BT strike all about and what could be its legacy?

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A strike of BT workers could soon be a reality as the Communication and Workers Union (CWU) sends out ballot papers to members and encourages them to vote yes to strike.

This could lead to the first strike of its kind for over 20 years. If strikes are voted for and they drag on there could be possible service disruption because of a shortage of engineers. This could be a window of opportunity for BT's competitors.

As the BT strike ballot gets going and people are attempting to put the worker demands in context, here are some facts:

- BT offered workers a 2% pay rise and the unions want 5%

- BT's CEO Ian Livingston, took home total earnings of £2,105m this year compared to £1.179m last year. An 80% increase.

- BT Profit reported a profit of £1.007bn in 2010 compared to a loss in 2009.

- Former BT Global services head Francois Barrault, who left BT in November 2008, was paid just under £1.6m in 2009 and a further £10,000 in 2010.

- BT faces more competition than ever and a strike will give its competitors an opportunity. BT even said "Industrial action is unnecessary and would only benefit our competitors." This could lead to more job cuts in the long run.

- Competitors such as Cloud Net are already regarding this as an opportunity for them.

Click here to listen to listen to CWU deputy general secretary Andy Kerr discuss why BT's pay offer was not enough.

Argentina world cup match fails to distract UK workers

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Here is the latest internet traffic monitor from managed service provider Star. It has been monitoring the impact that live streaming of World Cup games during office hours is having on UK traffic.

Today we see how the daytime traffic was for the Argentina versus South Korea game and the Greece/Nigeria match.

There was only a tiny increase above the normal daytime traffic for the Argentina/South Korea game and the Greece/Nigeria match only increased 14% above the  norm.

The Spain versus Switzerland game on Wednesday saw a 26% increase on the usual level for that time. The previous day, when Portugal took on the Ivory Coast saw traffic 23% over the norm. Daytime traffic was 18% up the first few days of the tournament.

Below is the graph of UK internet traffic, during office hours on Thursday.

argentina traffic.JPG


Capgemini can console itself with Metropolitan Police deal

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If talk in the industry is true Capgemini can console itself after missing out on a deal with Cleveland police.

This is because it has apparently won an extension to its £350m seven year deal with the Metropolitan Police.

The original deal was signed in 2005 and included management and support of desktop IT networks, telephony and mobile devices, which includes around 30,000 desktops and laptops, 38,000 telephone extensions and 8,500 mobile phones.

As I said in my previous blog about the Cleveland deal, Capgemini and Steria have good stories in the police sector.

Bob Scott, who I also blogged about recently, was the Capgemini executive that did the original deal. See Bob in the flesh here.

General Electric plans to reduce its reliance on India for offshore IT

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General Electric in Latin America told Computer Weekly journalist Angelica Mari that it wants to use more countries for IT services and in the process reduce its reliance on India.

There is a lot of choice these days about where to offshore.

I mean look at Brazil and China.

See Angelica's article here.

See also Angelica's blog.

Multisourcing is a trend in outsourcing at the moment with businesses using multiple suppliers. Multi-shoring is already a well used term so General Electrics' strategy makes sense.

Multi-shoring will reduce risk and increase choice. Here is a story I wrote about it in April 2009.

BT strike ballot could ignite competition

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Members of the Communications Workers Union (CWU) at BT will receive their ballot papers  tomorrow to ask them whether they want to strike or not over a pay dispute.

The workers will have until 05 July to cast their votes.

If they vote to take industrial action it could lead to the first strike of its kind for over 20 years.

Imagine if they vote to strike. Households and small businesses could be without telephone and internet if problems occur because their might not be engineers to fix them.

The competitors of BT see this as an opportunity. One commentator has already described the fact that BT might let the strike happen as "commercial suicide" because competitors might be given a window of opportunity.

One competitor already positioning itself to target BT's SME customers is Cloud Net.

David Hill Chairman of Cloud Net, a Voice Over Internet Protocol (VoIP) phone company, says, "We're urging consumers and small businesses that rely on their phones to consider their options before a strike goes ahead."



 



Recession could be straw that breaks the SME outsourcing sector

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Following a couple of blog posts I recently wrote about SMEs and the outsourcing sector I thought I should highlight more research suggesting small businesses are ready to significantly outsource IT.

According to the article SMEs do not want to take the risk of paying large sums up-front for hardware and software, but rather have the suppliers do that.

Also large suppliers, traditionally focused on the corporate sector, are weighing up their options in the SME space.

With competition hot and the corporate spending freezes of late leaving indelible marks on the large suppliers the want to broaden their services to reduce dependence on one sector.

TCS, for example, has said it is running a trial of SME software packages in the cloud in its native India. If successful it could come to the UK.

So has the recession created a match made in heaven. Or is it just a flirt being led by the suppliers?

Increasing numbers of workers distracted by World Cup

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Here is the latest internet traffic monitor from managed service provider Star. It has been monitoring the impact that live streaming of World Cup games during office hours is having on UK traffic.

The Spain versus Switzerland game yesterday saw a 26% increase on the usual level for that time. The previous day, when Portugal took on the Ivory Coast saw traffic 23% over the norm. Daytime traffic was 18% up the first few days of the tournament.

So it is getting higher. I wonder how much it will increase on 23 June when England takes on Slovenia its final group match.

See the graph below:

spanish game graph.JPG








Outsourcing recovering in mainland Europe faster than the UK

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I had a conversation with a contact in the sourcing consultancy space today. He says he is very busy in mainland Europe working on deals but the UK is picking up much slower.

The head of a major supplier told me today that things are pretty quite in the UK.

So why is the UK outsourcing recovery sluggish compared to Europe?

As the biggest market for outsourced IT services outside of the US you would expect the UK to lead the way in Europe. But is the UK's slower economic recovery having an impact on the outsourcing recovery?

Is social media maturing to the enterprise?

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When I look back at old stories for information about current works in progress, I often come across interesting comments made to me during interviews or at conferences in the past.

It is great when a comment made in the past can fit into the new story so succinctly.

About a year ago I was at an event about the use of social media in the banking sector. Basically the feeling was that social media will be an important advancement in banking, but not necessarily in its current form.

The comment I am talking about was in this article. It said: "Websites like Twitter and Facebook are just blips but it's what comes after that matters."

So what will come after I thought at the time. Then a year later Infosys launches its iEngage Digital Consumer Platform, which industrialises social media. A moment of clarity in the complicated world of the web.

I am currently working on analysis about the role the IT service providers will play in making social media ready for the enterprise.

Any thoughts?

Was Capgemini £10m more expensive than Steria?

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Talk in the industry is that Steria beat Capgemini to the Cleveland Police Authority outsourcing deal because Capgemini was £10m more expensive.

Given that neither supplier is supposed to know the bid of the other this is quite close.

Both Capgemini and Steria have good stories in the policing sector with shared services offering massive savings.

I have recently interviewed Capgemini's head of UK outsourcing Greg Hyttenrauch as well as Steria's UK CEO John Torrie. Both talk a good game when it comes to IT services for police forces so I expect them to increasingly come up against each other in bids.

Things like shared services and cloud computing really make sense for police authorities and for that matter many other public sector services. Most are identical organisations in the back end and can therefore share IT resources.

World Cup distracts workers as UK internet traffic surges 23% during office hours

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It seems like World Cup fever is now having an impact on businesses as a massive 23% increase over normal daytime web traffic in the UK is recorded by managed service provider Star.

With a big game between Portugal and Ivory Coast being held in the afternoon on Tuesday, workers desperate to watch the match turned to live streaming.

Here is the graph prepared by Star for internet traffic on Tuesday 15 June.

It will be interesting to see the surge when England play Slovenia during the afternoon an June 23rd.

star23peak.JPG




No redundancies at Cleveland Police, an IT outsourcing one off?

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One of the interesting things about Steria's £175m IT services deal with Cleveland Police Authority is the fact that there were no redundancies. Over four hundred staff transfered to Steria, while the remainig 200 or so stayed with Cleveland.

This is a break from the norm. Usually outsourcing means cost cutting with redundancies contributing a large chunk of the savings.

But Cleveland has become Steria's first customer of its new service offered to police forces. It needs staff after all. Perhaps when the next police force signs up for the shared service there will be redundancies.

One to watch.

If the savings can be found in areas other than cutting people costs the civil service might be more accepting of outsourcing IT in the public sector.


Steria takes cost cutting initiative for UK police

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Steria today won a big deal with Cleveland police authority. Perhaps more interesting than the £175m, 10 year deal, is the fact that Cleveland police became Steria's first customer of its new shared services offering for police forces.

We all know the massive savings that shared services can offer. Most police forces have to complete the samebusiness processess, therefore why not share the back office resources?

So with the government about to try and rip cost out of the public sector, £50m savings over 10 years, which is what Cleveland is expecting, looks good.

I hope the government recognises the long term savings of a capital investment in IT and not just slash projects to reach its cost cutting targets.

The more police forces that sign up the more efficient the service becomes.

Perhaps the Cabinet Office, now that it is charge of IT procurement, will use its cross department visibility to recognise and implement shared services. Public sector organisations that do the same work can obviously share services.

The previous government had already got the ball rolling with its cloud computing strategy.

Could Whitehall reshuffle lead to one massive government back office?

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The government has decided to move the responsibility for IT procurement from a department that is in charge of spending money to one that is in charge of making cuts.

The Office of Goverment Commerce and the public sector procurement agency known as Buying Solutions are moving to the Cabinet Office from the treasury.

Some of the comments from those that will lead the new body, known as the Efficiency and Reform Group, suggest costs will be squeezed out.

Sir Peter Gershon who takes charge of procurement issues said the government "will need to be creative and innovative in order to make a real difference and look at new ways of working".

Robert Morgan, director at sourcing consultancy Burnt-Oak Partners, says giving control to the cabinet office, which sits across all other departments, makes sense.

He says this could inevitable lead the government to realise the potential of of government back office sharing. He says if you bring government business processing capabilities together you would have a resource bigger and more efficient than any supplier.

The government could soon have its own Logica.





Would BT strike be commercial suicide?

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While writing an article about how a strike of BT engineers could affect UK SMEs, it was suggested to me that a strike, at this time could, be commercial suicide.

Neil Stephenson, CEO at ISP Onyx, says BT is in a very competitive market and the strike might bring enough publicity for SME's to consider alternatives.

If there are major faults while BT workers are on strike there could be major problems for SME's which are almost entirely dependent at some point on BT's infrastructure.

So if for example an entire exhange goes down there could be tens of thousands of people and businessess without the internet. Good reason to look for an alternative?

According to Stephenson his customer, which use BT's network at some point, have a major faulkt about every 18 months on average.

So what should BT do? The company is still hoping for an agreement. And it does appear to be a bit worried because it is asking managers to outline their skills because they might have to cover for engineers.

We have had quite a few strikes at IT suppliers lately. Many have been avoided because management have realised how damaging a strike can be for customer confidence.

People like  Fujitsu and Siemens are in very competitive markets and have worked hard to avoid strikes. BT is now in a competitive market and must avoid giving its competitors an inch because they might take a yard.

Still no outsourcing decision at Legal & General

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I recently blogged about talk that L&G would announce its decision on what to do with its IT infrastructure, known as Business Technology services (BTS).

I wrote the original story back in March.

Speculation has it that there would be an announcement in September. It is a choice between keeping it in-house or outsourcing it. If outsourced there remains a choice between Fujitsu and IBM.

Someone close to the situation told me last week that no decision has been made as yet.


Is the government being charged 40% too much for outsourcing?

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I always see best practice guides for IT buyers but what do you think a public sector bad practice IT guide would include.

Tony Collins reported the findings of a Compass Management Consulting benchmark exercise on government spending on outsourcing.

It reveals that the government is paying £6bn too much every year. This according to Compass is 40% over the market rate. I blogged about this very research last month.

According to Matt, one of Inside Outsourcing's regular contributors the way the government pay contractors could be a large part of the reason.  Commenting on a recent blog post he said: " I have worked for public sector organisations that typically pay 30% above the market rate to hire contract staff via consultancies, with the consultancies pocketing massively inflated margins and often importing cheap ICTs to do the work (poorly), while the public sector client has even been barred by the government's own regulations from seeking cheaper alternative suppliers or recruiting from the local market. Madness."

What do you think?


Which World Cup games will generate most UK internet traffic?

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Managed service provider Star has done us a prediction of the expected UK Internet traffic for every group stage World Cup game.

England's final group game against Slovenia on Wednesday 23 June is expected to be the biggest one.

See Star's predictions below:

Thumbnail image for Thumbnail image for Thumbnail image for SpikesGraph_Star.JPG






BT management asking staff if they can cover for striking colleagues

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BT management is asking staff that are not involved in the strike ballot to outline their skills so they could be called upon in the event of strike action.

This is part of the Telcos back up plan if thousands of engineers vote to go on strike.

Members of the Communication Workers Union (CWU) at BT have rejected a revised pay offer from the telco. A massive 50,000 workers could go on strike soon. This will be the first strike of this kind for well over 20 years.

World Cup IT blogger gives us exclusive pictures as tension is finally releases

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So the big day has arrived and the opening ceremony and the first match between the host nation and Mexico.

Soccer City Empty.JPG
This is the fourth of a series of blog posts from Dilbagh Gill who is head of Sports at Mahindra Satyam.

He has the enviable task of making sure the event management software, that Mahindra Satyam has built for FIFA for the 2010 World Cup finals, runs smoothly. Dilbagh has agreed to blog from the event during the competition, which begins this month.

See his first and second and third blog posts.

World Cup IT blog 4, by Dilbagh Gill  

The last couple of days have been an exciting - if extremely intense - few days of activity as we see the culmination of months of preparation and thousands of man hours of work. I'm sure like the teams in their pre-match warm-ups, we have a similar sense of nerves combined with real excitement to be a part of this global event.   There is now a tangible sense of World Cup fever across the city - in fact Johannesburg is pretty much gridlocked with traffic as visitors, teams and of course the world's media descend into the city.

From our perspective,  I'm pleased to report that things have run pretty much to schedule  and, whilst no project is without its challenges, we have done all that we can to ensure that the systems for logistics, IT assets and transportation are running as planned .  As more visitors arrive, the accreditation process has continued to run smoothly and have now completed some 120,000 accreditations, 50% of the way there!  We feel privileged to be able to report from our vantage point at the Command Centre, at the heart of the action.

The Soccer City Stadium was empty this morning at 08:00 Hrs (see picture below) -  the ambience as I write 2 and half hours before the game is amazing. You can hear the vuvuzelas everywhere, there are some rehearsals and the stadium is still empty.

soccer city dabncers.JPG










Brazil IT's four day flirt with the global CIO community ends

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This is the last in a series of blog posts about IT offshoring in Brazil. Angelica Mari has finished an exhausting week meeting the high and mighty of Brazil IT and their potential customers.

In this blog she describes Brazil's determination to seduce the IT world into at least taking a look at what's on offer.

For a nation that prides itself on being more exensive than other offshore destinations, for certain services, it really has its work cut out. Brazil has a massive internal economy with highly developed IT skills, as I blogged some time ago, but will it win business with English speaking organisations around the world?

I hope so. More choice is a good thing and the more minds that come together, the better IT innovation will become.

Here are Angelica's first, second, third and fourth blog posts and here is her own blog.

Brazil blog post 5, by Angelica Mari

So this is the end of the Brasscom Global IT Forum 2010. Over the past four days, the Brazilian IT trade body hosted the event, which included the Gartner Latin America outsourcing summit in Sao Paulo and a one-day event in Rio de Janeiro with government officials and analysts from various firms.

Brasscom spent more than £526,000 to produce the event, which included a large-scale advertisement campaign in most of the main business magazines, as well as flights, accommodation and entertainment for more than 100 people including IT buyers and suppliers, analysts and journalists.

Brazil is determined to position itself as one of the top three outsourcing destinations worldwide and increase its exports in the sector from $3.5bn to $5bn by next year. Growing GDP drives IT demand. And we were told by the Economist Intelligence Unit today that Brazil will be world's third fastest growing economy between now and 2020.

The country may be the world's 'darling' at present and the local technology industry may be attractive to some foreign buyers. Brasscom recognises Brazil hasn't done a very good job in promoting its IT companies in the past, so the investment in this week's event is part of a renewed drive to 'spread the gospel'.

"[The event] cost us a lot of money, but people are realising the advantages the Brazilian IT industry has to offer and if they are here, it means that they are interested," said the association's president Antonio Gil.

Apart from Brasscom's efforts, the suppliers themselves have gone to great lengths to charm their prospective clients. During the event, I heard stories from IT decision makers of vendor-sponsored helicopter flights across Sao Paulo, visits to swanky restaurants, clubbing until the crack of dawn and flirting with beautiful people, which didn't fail to impress.

"Although the true differential of some of these companies' offerings is unclear, but it is obvious that they are determined to get to the top and they are working hard on that. I can tell they are serious by the way they sold me the local culture, creativity and passion, the way they took me around and made me feel totally at ease," a CIO told me yesterday.
"If a supplier is not able to bond with their clients the way Brazilians do - as opposed to the Indian or the Chinese, who are always focused on pure business - they are likely to fail in what has become a relationship-driven world," the manager added.
 
Despite questions around the unique selling point of IT services firms in Brazil, local players seem very confident - even if a little smug  at times - that their aims will be achieved.
Of course, Brazilian IT services firms do have a wealth of vertical specific knowledge in key markets such as financial services and energy which was acquired by working with clients at home. Now if they will manage to repeat that success abroad, that remains to be seen.


Infosys industrialises Twitter, Facebook, Bebo etc.

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I interviewed Infosys' head of SaaS, Pradeep Prabhu, yesterday. We were discussing the company's latest platform.

I will write an article about the iEngage Digital Consumer Platform, as it is known, but here is a quick glance.

I found it interesting because I often read articles about businesses using social media to support their businesses. But I always think companies will have to use customised software packages to make it work rather than just use the applications available online such as Twitter, Facebook and Bebo. But they won't want to do it themselves and probably don't have the internal skills anyway. So service providers will be called upon.

The Infosys platform ticks quite a few boxes in terms of market trends.

So basically millions of people and corporates all over the world are increasingly using social media applications such as Twitter and Facebook to connect with customers. The Infosys platform industrialises these types of platforms with an enterprise ready bundle.

This is all to support the increased demand from businesses to use online tools to better serve and understand customers.

So that's one box ticked.

The platform:

1 - The first part of the platform supports sales and marketing through ensuring the business is getting the right online information, via social media, to and from customers.

2 - The first part links into an eCommerce system which enables customers to immediately buy in the same place as they receive information.

3 - Then comes the customer care part of the platform which manages the customer's purchase lifecycle.

4 - The final piece of the pie is employee collaboration platform that helps the business share knowledge. This enable information to flow between employees and customers, employees and employees and employees and managers.

The next box that is ticked is the fact that the service is available in the cloud.

And another box ticked is by the fact that Infosys customers in the finance, high tech manufacturing, pharmaceuticals and retail  sectors are trying it out.

This is a market segment that will see lots of innovation and IT buyers need to get their heads around it.

Do Brazilian IT professionals need to be proficient in English?

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Here is the latest report from Angelica Mari in Brazil, where she has been seeing what IT services are on offer. This time she reports the views of people at the event  about the importance of the English language.

Also see her first, second and third blog posts.

Here it is. I even get a mention.

Brazil Blog 4, by Angelica Mari

Following a recent post by my colleague Karl Flinders, I asked a few experts and IT buyers here at the Brasscom summit in Brazil about the issue of fluency in English.

One of the key areas of focus for Brazilian IT trade body Brasscom is to ensure that It workforce is equipped to meet future demand and that includes improving English language skills.

The association's president Antonio Gil said improving 'technical English' is a priority when it comes to increasing Brazil's market share in the IT industry, but the long-term goal is to get people 'learning English from the kindergarten.'

While most buyers I have spoken to at the event agree that improving English language skills is a must, they also agree that key people on the supplier side such as account and project managers, as well as analysts, all speak English fluently or at a passable level.

"[Lack of fluency in English in Brazil] has its challenges, but it depends on the service you are buying. For example, when it comes to negotiating contracts this may make things difficult, but somehow we get through it," said Julia Santos, head of worldwide strategic outsourcing at Johnson & Johnson.

The point that language can become more of an issue in other areas of outsourcing than IT is echoed by Mark Kobayashi-Hillary, offshoring director at the National Outsourcing Association in the UK.  

"There is no English-language BPO here, no call centres, no customer service agents. Brazil is focused far more on specialist IT areas, such as open source development. Of course, English is needed for relationship management with clients, but most IT professionals in Brazil do speak English well enough to handle the clients of IT projects," said Kobayashi-Hillary.

"The real difference that Brazil gives in relationship management is flexibility. Would you rather deal with a project manager who speaks English 90% fluently and is helpful, proactive, and ready to go the extra mile for your programme, or a project manager who is 100% fluent in English yet spends project meetings reminding you which Service Level Agreements need revision?"

"It's this Brazilian attitude to customer service in IT projects that will help them succeed globally, not vague ambitions to speak English so they can man call centres for IT help desks."

Will LinkedIn kill the IT recruitment industry?

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LinkedIn is increasing its focus on the recruitment industry with the appointment of Ariel Eckstein as managing director of its Hiring Solutions business.

I think the IT outsourcing sector could probably benefit from this and probably already does. The IT profession uses social media extensively so recruitment and job seeking on LinkedIn can become just part of the daily routine.

It is a good way of building teams quickly for projects because profiles of people and recommendations from others are trusted on LinkedIn.

I know that specialist IT workers are sometimes hard to find, but LinkedIn's social networking brings together groups of people with similar skills. I know Microsoft has used it to recruit specialist software developers because I did a story about it last year.

Even IT suppliers are finding it hard to fill specific roles .

LinkedIn's reach is massive and with stats like those below and LinkedIn's recruitment focus combined, the recruitment sector faces massive disruption.

• 4 million UK members

• 15 million European members

• 25% of FTSE 100 companies hire through LinkedIn

• 50% of Fortune 100 companies hire through LinkedIn

• 1 professional joins LinkedIn every second

• 1 million professionals joining LinkedIn every 12 days

• 1 billion people searched on LinkedIn last year

• There are 500,000 LinkedIn groups.

But does LinkedIn's rise mean more established recruitment companies will have to fall?

Will L&G IT staff learn their fate in September?

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IT staff at pensions firm L&G who work in the IT infrastructure department known as Business Technology Services could learn their fate in September, according to a source of mine.

L&G announced to staff in this department earlier this year that it was considering outsourcing the unit to a single supplier. Fujitsu and IBM are the companies up for the contract.

An internal email revealed this and told staff this could mean them having to be transferred to a supplier.

It read. "We are considering outsourcing these services with a single provider because we believe this will give us the most straightforward operating model - with clear accountability or provision of service. It will also allow us to make best use of the third party's technical and operational expertise," said an e-mail sent to the Legal & General workers affected.

"We will now be entering into a more detailed analysis phase with Fujitsu and IBM. This will enable Fujitsu and IBM to understand our current infrastructure and how we deliver related services in more depth."

But it is not guaranteed that the work will be outsourced if L&G cannot reach an agreement with a supplier.


What the BskyB/EDS case has taught us, according to Eversheds

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This is Eversheds' take on the lessons learned as a result of the decade long legal battle that resulted in  EDS paying BSkyB £318m.
 
Eversheds says:

"The epic BSkyB/EDS litigation has settled for £318m. The case concerned a failed CRM implementation, but key for IT suppliers on this case was that contractual limitations of liability (at £30m) were held void because the court ruled that one of EDS' key salespeople deliberately lied about certain elements of the system. Sam Jardine, Associate at international law firm Eversheds comments:
 
"Settlements in big IT disputes are not uncommon, particularly where future outcomes are uncertain; Coop v ICL also ended up settling out of court in recent times. It brings closure to a decade-long saga.

"So what lessons can be learned from this case?  Firstly, suppliers need to ensure that their sales teams and representatives are aware of the risk of misleading their customers or making representations without an honest belief in their truth. In addition, projects may need to be scoped and planned in more detail during the tender process and before a bid is made. This may increase the costs of putting together a bid but should provide evidence to back up all representations made if the basis of making the representation is subsequently challenged in Court. It's also vitally important that conversations that take place during the tender process and prior to the contract being entered into should be fully documented and all representations should be recorded. Also, suppliers may wish to review their entire agreement clause to ensure that they are effective to exclude liability for negligent misrepresentations (EDS's was not in this case). It's also worth noting that, from a customer's point of view, any pre-contract representations should be properly recorded in the contract and not excluded by any entire agreement."
 
 
 
 

 
 
 
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Brazil faces cultural challenges to break IT outsourcing

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Continuing my focus on Brazil this week here is Angelica Mari's third blog post from her visit to Brazil. This time she expalins some of the challenges facing Brazil if it is to succeed as an destination for offshore IT services.

Read her latest blog below.

Also see her first and second blog posts and her own blog.

Brazil blog 3, by Angelica Mari.

One of the main selling points of the Brazilian IT services industry is the culture, but yesterday I heard some interesting views around how some cultural traits here can work against local firms looking to gain an international foothold.

Talking to an IT buyer at a multinational firm based abroad, who requested to remain anonymous, some Brazilian companies have adopted the wrong attitude when attempting to do business overseas.

For example, he mentioned that Brazilian IT services companies do not offer a clear differentiator. He said that in all the requests for information where Brazilian firms were involved, their selling propositions looked exactly the same and as a consequence, they failed to move on to the next stage.

The executive in question also said that some of these IT services firms do not have a clear international strategy and instead of perfecting their knowledge around the needs of foreign clients - for example, legal requirements around information management in datacentres - their offices abroad "only serve the purpose of boasting about their little door in New York City and to put pictures up on their website."

The Brazilian "flexibility" can also be detrimental when it comes to winning business. Another foreign IT chief told me that a potentially interesting Brazilian IT vendor failed to submit its bid for a tender on time - later, he found out said supplier did not submit the proposal at the specified date and time because "they did not want to seem too keen."

An effective method Brazilian companies could be using in order to internationalise could be partnerships with firms based in low-cost locations offering innovative solutions that could provide synergies to their existing portfolios, the executive said. But again, culture could prove to be a major stumbling block.

"There are many IT companies in places like Israel, that are desperate to do business in Brazil, but do not have an integrator to partner with and that's where the opportunity lies. Microsoft's success came from partnering, so there is nothing wrong with that," he said.

"But the problem is that Brazilians are way too proud. They want to do their own thing but you need local knowledge to thrive in a foreign market and that is an established fact and the companies here have to realise that in order to succeed."



So what has Dell Services got?

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I have recently been talking to Dell about its services business. It is always hard to picture how a company with Dell's success in  hardware, stacking high and selling cheap, would do in the high end services space.

I have already blogged about Dell's bold claims but have not yet drawn a picture of how the Dell Servioce unit looks following its £2.4bn acquisition of Perot Systems in 2009.

This is how Dell Services looks:

41,000 Employees Globally
12.8 Million Desktops and Notebooks Supported
Over 2.5M Desktops Managed
Over 5,000 SaaS Customers
28 Delivery Hubs in North America, Europe, and Asia
60 Expert Tech Support Centers
7 Global Command Centers

Dell Services says it will focus on certain sectors and builkd up expertise in these to differentiate.

Strike at BT looks certain

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Members of the Communication Workers Union (CWU)  at BT have rejected a revised pay offer from the telco. A massive 50,000 workers could go on strike soon.

This will be the first strike of this kind for well over 20 years.

Last week the CWU moved forward with its plan to ballot its members at BT after it only recieved a 2% pay increase offer.

See more here.

Brazilian says English language skills in short supply in Brazil

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While I am focussing on IT offshoring to Brazil, as my colleague Angelica Mari is seeing it for herself, I thought I would tell a story about somthing that happened this weekend.

I was out shopping with my partner and two kids. Me and my little boy and girl were waiting as mamma was trying on clothes.

My son is eight months old and I have to say he is very cute. As such he catches the eye of many people.  This time it was a young lady working in the shop, who turned out to be Brazilian.

When she had finished being mesmerised by my son, we had a conversation.

She spoke excellent English so I asked her about the level of English in Brazil. She told me that when she is in airports in Brazil she often has to help English speaking people when they fail to communicate with airport staff.

So Brazil has a very well developed IT capability but could it, like China, be short on English?

We also talked about football obviously. She is Brazilian and I am a Geordie after all. She didn't like the fact that I fancied Argentina to win.



 

Indian IT service providers too tyrannical for Brazil

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Continuing my focus on Brazil this week here is Angelica Mari's second blog from her visit to Brazil.

People over there are telling Angelica that Brazilian IT workers are not like those in India and China and are much more productive due to their well developed soft skills. Indian management style is too tyrannical for Brazil.

I must tell you Angelica is Brazilian.

Read her first blog post from Brazil here.

Read her latest blog post below and see her own blog here.

Brazil blog 2 by Angelica Mari:

Following on the last post on Flavio Gryzspan's views on the potential of open source for Brazil, there were a few soundbites at a dinner last night around management culture that would be worth sharing.

According to several people I have spoken to, the Brazilian attitude towards work and management is part of its unique selling proposition. Here, they said, while IT pros are not attracted to the prospect of working 24/7 for little money unlike their Indian or Chinese counterparts, they are much more productive due to their well-developed soft-skills.

Major Indian players including Tata Consultancy Services, Infosys and Wipro are all present in Brazil, but some people yesterday went as far as saying that the Indian management style will not work here.

"[Brazilian] people don't like working for the likes of TCS because they simply don't fit into their tyrannical management style and also because they are not willing to work for peanuts," one senior manager said.

Most IT decision makers at the dinner seemed to agree that the Brazilian technology teams they work with follow the 'work hard, play hard' approach, are more flexible, business-oriented and relationship-driven than their peers in other offshore locations.

"I believe we are moving towards a relationship-based culture and that is one of Brazil's main strengths and also one of the weaknesses of process-driven Indians, who just tick boxes," said another senior professional.

According to the people I've spoken to yesterday, that cultural disconnect could also mean that even though the Indian players are closely following the fast development of the Brazilian IT industry, they are unlikely to get the best talent because of not-so-attractive wages as well as some fundamental cultural differences."

Any Indian and Chinese IT professionalsout there who might want to post a comment?

World Cup IT blogger counts the milliseconds

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This is the third of a series of blog posts from Dilbagh Gill who is head of Sports at Mahindra Satyam.

He has the enviable task of making sure the event management software, that Mahindra Satyam has built for FIFA for the 2010 World Cup finals, runs smoothly. Dilbagh has agreed to blog from the event during the competition, which begins this month.

Here he describes the pressure on the IT workers behind the scenes at one of the greatest sporting events on earth.

See his first and second blog posts.

Also see Dilbagh in an interview with Computer Weekly here.

Dilbagh Gill World Cup IT blog part 3:

"Our Uniforms have not arrived.

As I sit down to write this blog, per the countdown clock on our Mahindra Satyam website, www.mahindrasatyam.com, (which measures in milliseconds - why?) we have around 2 days 12 hours 59 minutes 44 secs and XXX milliseconds to go.

So where are we now?

Well our uniform kits have not arrived yet in Johannesburg. They are sitting at some airport somewhere with no traceability. Yes, they left the vendors a few weeks -we have confirmation of that.

This made me think - how can we help the courier industry? And as an extension - how do I kit out my guys?

Logistics is always complicated in our daily lives and you have to believe me when I say it's a 100000X (resembles a US stimulus figure) larger challenge moving material and equipment to the various venues. Part of our brief for this project has been to very accurately deploy a billion dollar of assets in the last few weeks and have 100% record of what is where. We did have our challenges though. But most of them were physical ones. Lifting multi-function printers up three flights of stairs is not so much fun. My wife would have been really pleased if I did more of that as she thinks I need the exercise. My claim always has been "I am not over weight - I am under height".

Mahindra Satyam has implemented a unique solution to identify and track all equipment being deployed - we have been able to introduce to the World Cup a lot of automation for example in terms of how equipment receipt and return is electronically captured. Venue Managers have really appreciated this as it has reduced their workload enabling them to focus on more critical activities. It is these smaller details, where we have to use our traditional IT knowledge in a non-traditional environment which demonstrates the value we provide.

Thumbnail image for blog1.jpg
We have completed around 80,000 accreditations so far  - nearly 1/3 there - this has been going quite smoothly. I got my accreditation on Friday. Was happy to note the process went smoothly -tested first hand our system and was assured that it works as designed. Below is a picture of the accreditation badge on which I will blog another day.

With the volunteer who printed the badge. I am now officially allowed to go everywhere.

blog2.jpg
Last evening we visited Soccer City Stadium to review the LED signage boards with our logos that will be aired during the games. Felt good to see Mahindra Satyam lit up in both the day and night versions of the logo. Learnt a lot about pixels and various fonts etc - every day is a new day.

blog3.jpg

Picture here. - One of our ace engineers.
blog 4.png
While we were there we could see the final preparations happening at Soccer City. The place is just looking awesome. There is a test game there today to do some final rehearsals.

Well it is now 2 Days 11 hours 20 Minutes 15 Seconds and XXX Milliseconds now - I did have to step out for some time in between - no panic.
 





Deloitte files counter claim against Marin County

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Here is Deloitte's response to being sued by Marin County in relation to an SAP ERP project that allegedly went wrong.

Very interesting because the consultancy is now filling its own claim against Marin County.

"It is unfortunate that the County has chosen this path.  As stated previously, we fulfilled each and every one of our obligations under the contract, as evidenced three years ago when all of our work was approved by the County officials responsible for the project.  To be clear, the SAP software was working properly when we completed our work in November 2007.  Not only is the complaint without merit, but we are filing our own claim against the County for breach of agreement and unpaid invoices.  Although we are confident that we will prevail in court, it remains our belief that this dispute can and should be resolved in a more logical fashion that benefits the County and its taxpayers."

I don't think this one will drag on for 10 years like the similar EDS versus BskyB case which finally came to an end this week. What do you think?

Will the £318m lie stop IT salespeople lying?

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HP has agreed to pay BskyB £318m in damages six months after a UK court ruled that HP owned EDS had misrepresented its capabilities in delivering a CRM system.

 

The CRM system was ordered in 2000 and the legal battle followed until the court ruled in BskyB's favour in January.

 

BskyB originally claimed for £700m. But HP/EDS has not got off lighltly because the payment is ten times higher than the original cap on liabuility in the contract, which was £35m.

 

A BskyB spokeswoman said both parties have come to mutually agreeable terms and it is now closed.

 

See more on BskyB versus EDS on Tony Collins' blog here.

 

I was wondering how the outsourcing industry might be affected by the case?

 

Obviously misrepresenting capabilities could cost suppliers a fortune but will it stop salespeople lying?

Open source could be Brazil's IT offshoring advantage.

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For the next week I am going to have a closer look at Brazil as an offshore IT destination. This is mainly because my colleague Angelica Mari is in Brazil now checking its IT delivery capabilities.

Where Brazil might not be able to compete, with destinations such as India, on wage arbitrage and English language skills its open source skills could be a real advantage.

Here is Angelica Mari's report:

"I am currently in Sao Paulo as a guest of the government and over the next few days, I will be talking to buyers and sellers of technology, analysts and influencers about the potential and challenges ahead for the Brazilian IT industry.

Yesterday, I had an interesting lunch with Flavio Grynzpan, formerly president of Motorola in Brazil. Now a consultant who actively promotes the Brazilian IT industry internationally, Grynzpan is one of those extremely well-connected people who have their ear to the ground, so it was good to get some alternative views before hearing the government pitch.

In essence, his opinion is that despite Brazil's potential as an outsourcing destination, the country simply cannot compete with other countries such as India in terms of wage arbitrage. The fact that many people in the IT industry don't speak English fluently - even though that is rapidly changing - is another significant issue.

Grynzpan reckons that Brazil has to find a unique selling proposition and its vast pool of knowledge in open source software could be the real advantage of the local IT industry and could lead to the country becoming a global leader in that segment.

Evidence of that potential is the work carried out by Serpro, the government-owned provider of ICT services to the public sector and one of the largest organisations of its kind in Latin America. For example, the agency generated R$ 370m (£137m) in savings between 2003 and 2009 just by allowing citizens to submit income tax self assessments online with open-source solutions.

In the private sector, noteworthy companies working with open source software include Metasys, which develops educational software based on Linux to promote digital inclusion in schools. The company's software covers thousands of schools across Brazil and its products underpin major projects led by the Brazilian digital inclusion taskforce.

According to Grynzspan, what started as a protest against Microsoft of sorts motivated thousands of Brazilians to contribute with the development of open-source tools. This market is now very well developed and is hugely attractive - particularly for cash-strapped countries such as the UK - however the Brazilian government needs to do more to unlock that potential and promote it to prospective buyers.

I have also heard some interesting views around the cultural advantages of Brazil when compared to its main 'rival', India. More on that in the next post."

Deloitte finds itself in an EDS -like creek, but has it got a paddle?

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Interesting story in the US.

In a BskyB versus EDS repeat we have Marin County in Califonia versus Deloitte.

Here is a copy of the Marin complaint. It says that Deloitte was not honest when it sold its capabilities to the organisation and the SAP ERP project was messed up. It is sueing for $30m.

The crux of BskyB's case against EDS, which it won, was that EDS fraudulently misrepresented its ability to deliver an ERP system that was no good.

So a UK court has ruled in favour of a customer against a supplier. But will the Superior Court of Califonia do the same?

Will this type of case become a trend?

Who can satisfy mid market demand for cloud computing?

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I was reading an article on IT channel website Microscope.co.uk

It was reporting on the views of research house Forrester on cloud computing.

Tim Harmon, senor analyst at Forrester, said that the mid-size market was "one of the most aggressive adopters of cloud" and many were planning to invest this year.

He said 38% of mid-size firms were planning spend on SaaS compared to only 30% of large enterprises.

I have been writing about the cloud strategies of many of the IT service providers lately and was wondering which supplier will have the best mid market offering.

Here are some of the blog posts about various suppliers and their approach to the cloud.

Wipro

Infosys

Capgemini

Fujitsu

Steria

 

Or will the smaller suppliers be the ones to satisfy the mid market?

Massive strike at BT could be on the cards

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The Communication Workers Union (CWU) is moving to strike ballot as BT fails to improve its 2% pay offer.

Staff and the union are unhappy that the CEO gets an almost 80% pay rise while they are offered 2%.

Ian Livingston CEO - received a basic salary of £850k plus annual bonus of £1,206k. This was up by 79% on 2009. He is also set to get a 6%% this year, but has pledged to take a 2% pay rise and donate the rest charity.

A strike, which could include over 50,000 people, would cause major problems for businesses that rely on BT services.

See full story here.

Should Indian suppliers be more like Microsoft than Accenture?

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Forrester analyst Andrew Bartels is quoted in an article on the Wall Street Journal website as saying that Indian suppliers, who currently make billions of pounds offering outsourcing services, would be better served if they did more sales of software.

Forrester says IT outsourcing will grow only 5.2% this year compared to 13.4% growth in spending on computer equipment, including software.

"Outsourcing is becoming a much more mature industry," said Bartells. "Growth is slowing in those categories. Even if volumes of deals are rising, the revenues are growing very slowly because of falling prices."

He said Indian vendors like Tata Consultancy Services, Infosys and Wipro can better should "take their development activities from systems integration projects and turn that into software that can be reused or potentially sold to new clients with much better leverage and much better margins."

Maybe MindTree's plan to white label Linux smatphones is a good plan.

Wipro's plan is to increase its consultancy business, so could this be an expensive mistake?

Is Fujitsu flirting with danger by rewarding some workers?

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Interesting story in the Mirror today.

Fujitsu has spent £200,000 on a jolly in Bermuda for about 50 workers and their partners, while it freezes the pay of the UK workforce as a whole.

Fujitsu has recently agreed to end a pay freeze for workers. Workers will receive a rise in August after it was put back from April. Fujitsu has put aside a pot for a 2.25% pay increase across the company in August, but some will get nothing.

Fujitsu said the Bermuda trip is a reward for workers that have done well.

Unite national officer Peter Skyte told the Mirror:  "We have no problem with Fujitsu recognising the contribution and achievements of its workforce. "However, rewarding a hand-picked few at the top while at the same time cutting the standard of living for the overwhelming majority of its employees is highly divisive."

But a spokesman said the rewarded group includes people from sales, marketing, accounts and is not just senior people.


World Cup IT blogger is in the thick of it

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This is the second of a series of blog posts from Dilbagh Gill who is head of Sports at Mahindra Satyam.

He has the enviable task of making sure the event management software, that Mahindra Satyam has built for FIFA for the 2010 World Cup finals, runs smoothly. Dilbagh has agreed to blog from the event during the competition, which begins this month.

He is now in South Africa putting together the final tests. See some of his photographs in this post.

Read his first post here.

Also see Dilbagh interviewed by Computer Weekly.

World Cup IT blog part 2 BY Dilbagh Gill:

"Since my last blog, the working days are getting longer as all processes and applications are now moving into production mode, sequentially.

From my perspective, it feels good to be back in an "event mode" - and personally l Iove the rush that a tournament of this scale brings.  There is also a heightened anxiety within the team as we do our final system checks and go through our checklists. None of us want to be in the position of that engineer who forgot the radiator shield on Jenson Button's McLaren  2 weeks ago at Monaco resulting in a very short race and a cooked engine (an analogy which motor sports fans will understand!)

One of the best parts of these long working days is the inspiring presence of Soccer City Stadium under whose shadow we work. This is how it looked this morning when I drove into work.

soccer city stadium.JPG16 hours and some 434 laptops configured later - here is what it looks like while we take a "coffee" break. It is just amazing the amount of visible effort that is going to get the stadium all dressed for June 11th. This is one civil project where you literally can witness something completed in a day. Amazing stuff - it is going to be a beauty.

soccer city at night.JPGTalking about coffee, I have been told we have consumed 21,600 cups so far (and have the invoices to prove this).

So where are we less than two weeks from the first match? We have now completed around 20% of the accreditation so far. That's over 40,000 individuals from VIPs and officials to media attendees that have been accredited through our Event Management System.

 Statistically this means we are pretty much running as per schedule. Some teams have arrived already including Brazil. This means that the unique "Team Services" system developed by Mahindra Satyam is now being put to use.  This piece of software helps each of the 32 participating teams to plan and request logistics for their training and practice games - and has been a widely appreciated value-add to the event. This was created by two dedicated guys on the team who identified this need and were able to provide this module in 6 man-months. It is these parts of the process  which have actually helped us provide an improved  stake-holder experience.

I had to go to the FIFA HQ during the day for a meeting and the courtyard outside the office which has this 10 foot countdown clock (not much help to my blood pressure!) was being decked out with Adidas balls replicating designs right from the first World Cup. You can see this here.

balls.JPG

Well I need to sign off now for tonight otherwise you are going to see the stadium again in daylight.





Don't act like outsourcing services is something new, says Dell

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Ferenc Szelenyi, vice president EMEA public sector services at Dell Services, says that although outsourcing is a hot topic at the moment it is actually a practice that is over 100 years old. As such people should not try to resist it but rather manage it better.

I think outsourcing is a lot older. Didn't the Romans outsource and even offshore soldiery and war?

But here is his view on the current hype surrounding outsourcing to cut costs in the public sector. He also gives advice about how organisations can avoid some of the pitfalls of outsourcing.

By Ferenc Szelenyi

"Although outsourcing has gotten a lot of press recently due to the Government looking into various ways to cut the national deficit, it's hardly a new phenomenon. More than a century ago, industrialisation gave rise to specialisation and the practice of companies working for each other. The trend abated briefly when Alfred Sloan developed the famed vertically integrated organisation of General Motors, but by the 1950s, competitive pressures had again driven companies to send work beyond their walls."

"Today, given the economic times we live in and relentless demand by customers for getting more for less, it's certain that work will increasingly be outsourced to partners around the corner and around the world. As various studies and decades of actual experience have shown, the value added through outsourcing not only benefits the outsourcing provider and customer, but the economy as a whole. Global sourcing is not a zero-sum game. However, as smart a business move as outsourcing usually is, effectively managing the workflow is tricky, since a company's knowledge accompanies its work--often to another shore. Executives need to avoid common pitfalls to ensure that their outsourcing relationships deliver maximum value. I call them the seven deadly sins of outsourcing relationships."

The seven deadly sins of outsourcing relationships and how to avoid them, according to Ferenc Szelenyi
 
1. Launching an outsourcing relationship without understanding the core competencies versus the work that can most effectively be outsourced.

"A key benefit of outsourcing is that it enables a company to focus on the work that is core to its value proposition. Obviously, it is vital to know exactly what that is. That might sound elementary, but the truth is that many companies have only a superficial knowledge of how they truly create value for their customers. If you're a pharmaceutical company, is your success based on the quality of your research, on your sales and distribution network, on your unique manufacturing capabilities, or on something different altogether? Don't be surprised if you find yourself considering outsourcing one of your operational strengths. Although you may be good at something tactically, it still may not be core, and someone else may do it better and at a lower cost."

2. Underestimating the importance of process standardisation

"Every company begins with the belief that the work it is outsourcing is unique and must be managed uniquely. The company expects its outsourcing service provider to maintain the complexity rather than to simplify and standardise the work processes. Processes and people are moved to the provider in their existing state and are independently managed next to countless similar processes of other companies. Consequently, the cost and service benefits of standardization and simplification are lost."

3. Not driving for true transparency with your outsourcing partner

"Certain kinds of work involve fairly stable processes, like order fulfillment. But others change over time. Companies may have new application needs in an IT outsourcing relationship or new transactional protocols in a business process outsourcing relationship. In such cases, full transparency between the client company and its service provider is a must."

"Managed well, an outsourcing relationship will affect how each partner works as it learns from the other. Work should move seamlessly across corporate boundaries, with breakdowns quickly identified and fixed.  This happens only when operational transparency is hard-wired into the relationship from the outset. Client's needs evolve."

4. Casting an outsourcing relationship in Stone

"No business stands still today. The breakneck pace of change demands flexibility on the part of companies and their service providers. But outsourcing agreements, too often focused solely on cost control, can lock in behaviors that inhibit the nimbleness a client company needs to maintain true operational excellence over time.

A relentless focus on costs will continue to be part of doing business for the foreseeable future, but the scope of outsourcing agreements should be subject to change as the client's needs evolve. At the same time, a provider has to have minimum commitments to be able to invest in the work of its customers.'

 5.  Being too one-sided in your view of the relationship

"The most successful outsourcing relationships--those that lead to long- term value creation for both parties. It is critical to never lose sight of the fact that the relationship is a bilateral one. Just as the client company seeks to save money, reduce risk, and/or enhance the quality of its operations, the service provider seeks to earn a profit, build on its service capabilities, and leverage its growing expertise for the future.

 Fortunately, these goals are complementary. An insurance company, for example, can not only gain efficiency and quality by allowing a partner to take on much of its back-office policy administration functions, but the added work volume may enable the service provider to accelerate release of the next advancement in the intellectual property it has brought to the relationship--a win-win scenario."

 
6. Not building in sufficient mechanisms to resolve issues

 "Outsourcing relationships, like all business relationships, are about people and personalities--and the marriage will inevitably hit a rough patch. This may stem from a management mistake by the client company, a service delivery hiccup by the provider, or some combination of both. Savvy partners, however, anticipate these episodes at the outset and build in mechanisms to guide their behavior when dealing with these issues.

 These may include ad hoc councils, defined escalation ladders to take issues up the management rungs, or creative guidelines for issue resolution. But notice the emphasis on "guidelines," not "laws." While it's smart to plan issue resolution approaches early on, they should not be cast in stone, lest they themselves become issues. More important than the specific mechanism is the mutual commitment to resolve issues quickly and amicably."

 
7. Tending the trust based relationship carefully over time

 "Don't think of your outsourced service provider as a "vendor." A vendor sells widgets; an outsourced service provider brings you knowledge and skills. Or it may be your knowledge and skills that you transfer and invest in the service provider to take advantage of their superior execution. No matter the specifics of the relationship, it demands a high degree of trust as well as a willingness to look continuously at the work with fresh eyes.

Many business alliances fail either because the parties don't share the same business values or because there isn't enough in the deal for everyone. When outsourcing relationships work, however, they can deliver value beyond expectations. An organisation should ask some hard questions of their service provider before consummating the deal: How does it treat its people? Its customers? What does it believe about service quality, innovation, and ethics? And how does it handle the inevitable bumps in the road?"

"Then structure a relationship where all parties enjoy financial benefits, growth opportunities, and the chance to contribute meaningfully. In business alliances, it's important to keep good partners strong. With that common ethic, trust will grow as the partnership flourishes.

 If executed properly, outsourcing is a win-win situation. The organisation receives the benefits of best practices expertise and the service provider earns new business opportunities. Taking the time to implement the tactics discussed will make outsourcing relationships more successful by mutually increasing understanding, transparency, flexibility, communication and trust."

 

Indian IT supplier to white label Linux smartphones

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I was just reading about the latest ABI Research announcement that Linux based smartphones, that use the Google Android operating system, will take a 33% of the worldwide smartphone market by 2015.

One of the things I picked up at a recent meeting with Indian IT service provider MindTree , but have not yet written in any detail about, was the fact that the company is going to launch a smartphone white label business. The smartphones it will manufacture use Google Android.

I thought the ABI research was probably the opportunity to flag up what MindTree was doing.

This strategy comes after MindTree acquired Kyocera Wireless in India to increase its product engineering capabilities and add wireless technology know how to its brand.

When I met MindTree's head of Europe Tridip Saha and chairman Ashok Soota, a pioneer of offshoring, they told me that the Kyocera unit it acquired also had the required skills to manufacture smartphones.

I am often impressed by the diversity of the businesses of many of the IT service providers, particularly those offshore.

MindTree already offers IT services encompassing internet based solutions as well as business intelligence and data warehousing software. It also does product engineering where it designs and engineers components of products.

Being able to offer diverse services and products can obviously benefit customers through a one stop shop but could also ensure the suppliers are less impacted by drops in demand for one particular business line.

Being small and nimble probably helps.

Linux is an example of how outsourcers could cut government costs

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The debate for and against IT outsourcing in the public sector has livened up as a result of government plans to cut costs.

Those that argue in favour of more outsourcing might say that the private sector can introduce efficiencies and deliver at a lower cost. Whereas those against it might say it would be better to use the skills and experience already within the public sector.

I was wondering if the real benefit of using service providers is their skills with a wider variety of technologies. Service providers are constantly investing in technology research and train staff and recruit new ones to meet a customers needs. Public sector organisations can't do this easily.

For instance we all know that Linux can offer significant savings compared to using Microsoft software for example. There are no license fees just maintenance costs.

But public sector IT departments might not have the confidence to shift to Linux. They cannot easily recruit new staff with the necessary skills.

Service providers however will recruit the skills for projects and will develop whatever technology the client wants.

There must be examples other than Linux?

Capgemini's work on the government cloud computing strategy is a good example.

How can the public sector keep its IT staff up to date with changing trends. Is the answer having them work for service providers?




IT insider reveals real problems for public sector IT as government strives to cut costs

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I thought I would dedicate a blog to a comment that was left on one of my posts about government IT outsourcing. This comment comes from Matt.

This blog gets some very detailed comments, which add considerable value.

Matt makes some interesting points about public sector outsourcing.

Here is his comment with just a little cut from the start.

"I have worked for public sector organisations that typically pay 30% above the market rate to hire contract staff via consultancies, with the consultancies pocketing massively inflated margins and often importing cheap ICTs to do the work (poorly), while the public sector client has even been barred by the government's own regulations from seeking cheaper alternative suppliers or recruiting from the local market. Madness.

In any case, outsourcing may not be the best solution to many of the problems in public sector IT, where massive budget over-runs, delays and ineffective solutions are often a product of organisations failing to take genuine responsibility for their projects, to understand what it is they are trying to achieve and how best to achieve their goals efficiently and effectively, and failing to communicate those goals clearly and consistently to their suppliers.
 
Delegating that responsibility even further away from those who should be exercising proper political and financial control will only make things worse. If government customers had enough understanding of their business requirements (and appropriate technical solutions) to ensure that external suppliers deliver the systems they actually need (rather than what they think they want) at a price they can afford, then they would already be doing so. The fact is that they do not do this now, so how is yet more outsourcing supposed to change that situation?

My view is that government organisations should not be downgrading their remaining IT resources, but should instead seek to re-generate and reinforce their in-house technical, managerial and commercial skills. They need to develop far better and more cost-conscious project management, and be prepared to confront the financial and business consequences of mistakes, as well as ensuring they acquire the technical insight and maturity to recognise an unworkable solution when it is presented to them with a hefty price tag by a "preferred supplier". It could be argued that instead of firing staff, they should actually be hiring the right staff with solid commercial experience to address these skills shortages in their own organisations - after all, with massive redundancies continuing across the UK IT industry there ought to be plenty of suitable candidates around.

Public sector managers need to wean themselves off their lazy dependency on grossly expensive external providers, and learn to identify for themselves which needs can be met by outsourcing, which can be best achieved in-house, and which can be met by changing business practices rather than IT systems. They need to be far more ruthless in forcing down external costs, and far more flexible in their willingness to adapt business processes to allow greater use of standard solutions, instead of giving suppliers free rein to indulge the client's ludicrously unrealistic expectations (while charging through the nose for every change request). Unfortunately, ruthless commercial acumen and adaptability are scarcely the hallmarks of most public sector organisations, while "Keep it simple, stupid" has rarely been a prominent feature of any government IT project that I've seen.

Sadly, political pressure to cut costs in the short term is likely to damage the potential for any public sector organisations to retain or invest in developing such skills in future. These organisations have spent years allowing themselves to be fleeced royally by external providers of needlessly complex and unsuitable solutions. With the loss of their few remaining in-house skills and with massive financial and political pressure for short-term fixes, this situation will only continue as there is more pressure to shift work from public to private sectors (and then straight on to India).
 
Our public sector organisations will become even more dependent on external suppliers, and even less willing (or able) to take responsibility for managing their own IT projects competently, effectively and responsibly. Those suppliers will be able to present themselves increasingly as niche specialists in a given government market, reducing competitive pressures on prices, and providing the ideal excuse to ratchet up costs once again as the 'preferred supplier' to that particular market.

Business as usual, in other words."

Anyone else?

HP's $1bn technology investment reflects customer demand

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Forrester analyst John McCarthy describes how HP's datacentre rationalisation process, which will lead to 9000 job losses, is a refection of how the market is moving.

He says suppliers are moving away from custom offerings because customers are demanding software as a service and prices are dropping.

"HP is applying the lessons learned from their own data center rationalisation process to EDS and its customers," he says. "In the long term, this is indicative of the market's movement away from custom offerings in the light of 'as-a-service' pricing and deflation."

Will this shift benefit the big product based companies that have acquired specialist service providers? They can use their skills to build infrastructures that can support the move to commoditised services.

As well as HP's acquisition of EDS in 2008, Dell bought Perot Systems for $3.9bn and Xerox spent $8.7bn provider Affiliated Computer Services (ACS) last year.

Will technology play a more important role in IT outsourcing, as IT as a service grows, while people and relationships take a back seat?

Does this leave gaps in the market for the mid sized suppliers?

HP is cutting 9000 more services jobs

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HP is investing $1bn in its services business to "enhance the client experience and better position Enterprise Services for growth." But 9000 workers will lose their jobs.

HP says it is consolidating commercial data centers, management platforms, networks, tools and applications to "create a more scalable, modernized and automated IT infrastructure that will better serve its clients' needs."

HP bought EDS in 2008 and has room to consolidate.

"Over the past 20 months, we focused on integrating EDS and improving profitability," said Tom Iannotti, senior vice president and general manager, HP Enterprise Services. "Now that the integration is largely complete, we have identified significant opportunities to grow and scale the business. These next-generation services will enable our clients to benefit from the combined technology and services leadership that only HP offers."

How will IT suppliers attract consultants that drive Bentleys?

Karl Flinders | 1 Comment
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I blogged last week about how IT service providers could take on the big consultancies by offering customers broader consultancy.

The challenge is massive. They can take staff from the big consultancies but these people will be expensive and hard to retain. Someone said to me the other day that "consultants that have two kids at private school and drive Bentleys will not move for less money?"

That is not the only challenge. The big players such as Accenture, Deloitte, IBM etc have the bank balance required to buy the skills they need and stay ahead. This was demonstrated today by Deloitte's acquisition if identity management specialist IM Global.

It is harder to integrate high end consultancy skills into an IT organization than the counter.

Read about the invisible hand that will run the World Cup in South Africa

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This is the first in a series of blog posts from Dilbagh Gill who is head of Sports at Mahindra Satyam.

He has the enviable task of making sure the event management software, that Mahindra Satyam has built for FIFA for the 2010 World Cup finals, runs smoothly. Dilbagh has agreed to blog from the event during the competition, which begins this month.

But here is one to get you warmed up:

Also see Dilbagh interviewed by Computer Weekly.

By Dilbagh Gill, head of Sports at Mahindra Satyam.

Firstly, let me introduce myself,

Dilbagh.JPGI'm lucky enough to run the Sports Division for IT services provider Mahindra Satyam, which is great because I get to combine two favourite interests of mine, sports and technology.  India (statistically the world's worst sporting nation) isn't best known for its sporting prowess - other than for Cricket - but my company won the contract to provide the technology for the 2010 FIFA World CupTM back in 2006 and I'm in charge of making sure that the online Event Management System that we've developed for FIFA to manage the accreditation, logistics, IT assets and transportation for all the volunteers, FIFA officials, players and international media behind the scenes is all working perfectly, as well as organising the ticketing systems in multiple languages to issue 3 Million tickets.  Incidentally - just so you know - this is the first time that a web based system has ever been used to manage an international sporting event of this size, so no pressure!   Still, I'm used to handling pressure, in my youth I was a semi-professional rally driver in India which definitely focused the mind, because mistakes could prove very damaging to your health!... Well rally driving holds good memories for me but it's a different story as it took me a long time to realise my enthusiasm was way ahead of my ability.

My team is also responsible for the onsite support for the network and all devices, all 30,000 of them, being deployed across twelve venues in South Africa.  That includes all ten football stadiums, the International Broadcast Centre and the FIFA Headquarters.    So when you're comfortably installed in your armchairs with your beer and friends, cheering for your team, spare a thought for me and my team scurrying around behind the scenes sometimes 3 floors underground, making sure that all the technology is running smoothly!

One of the most daunting aspects of the whole project is its sheer magnitude.  To try and give you some idea of the time and effort invested by my team so far here are a few statistics: we're responsible for 250,000 accreditations, 3 million tickets, 100 vehicles and nearly a billion dollar of assets, FIFA has  laid over a million kilometres of cable, we will be investing 106,656 man hours in operational service and support, my team have travelled 1,800,000 kms supporting this initiative and we will be expending 1,920 man -days of effort in supporting the EMS system.  

Yet, I have to say that I'm feeling confident that everything is falling into place.  After all it's not the first time that we've done this, we've had plenty of trial runs with last year's Confederation Cup and a bunch of other FIFA sporting events since we set out on this path back in 2007.  

The atmosphere here in South Africa is definitely hotting up now, as the countdown to the first kick off is within sight.  We've set up our Command Centre at the International Broadcast Center campus in the shadow of the Soccer City Stadium, you can see how it looks here.

broadcast centre.JPGWe've already printed up 14,000 badges for volunteers, officials, press and players and the FIFA delegation has officially taken up residence at FIFA HQ here in Jo'burg.    

This week has been pretty hectic and my working day is getting longer.  The work of the 135 people I have on the ground here, spread across all twelve locations, ranges from the really interesting, to the tedious but necessary.  Here's a shot of some of my staff preloading the SIM cards on the Sony phones for the officials and volunteers with short codes for all the important numbers they are likely to need during the tournament.

satyam final pi.JPG Well, I'll sign off now for the moment, but will be back in a couple of days with another bulletin to keep you up to speed with our progress as we prepare for the  first kick off  on June 11th between the Bafana Bafana and Mexico.  Waiting for the hums of the Vuvuzela's to ring through this fabulous country

Incidentally if anyone has any questions for me about what's going on here in South Africa (provided they aren't confidential) please feel free to ask and I'll do my best to answer them.
Ke Nako!




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