August 2010 Archives

Are banks ready to ditch core banking systems and move out of the box?

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Could it be possible that we have reached a tipping point that will transform banking technology infrastructures?

A story with a similar headline is probably written every year, but following the banking carnage of the last few years there might be more reason to take note.

Banks have had legacy systems purring away for 40 years in their IT infrastructures.

I met up with Cagemini's UK banking expert Christian Ball recently and he said we could be at a tipping point, never seen before, where banks finally replace legacy systems.

According to Ball a combination of events have lead to this potential tipping point. These are the confluence of pent up demand for change, mergers and acquisitions and demergers, the arrival of new banks and the fact that banks are looking for business in emerging markets. According to Accenture banks are spending again.

Ball says that the reason banks have failed to renew IT is partly related to the fact that senior execuitives are rarely arounfd long enough to even think about starting a project that will almost certainly outlive their tenures.

Legacy systems work so banks are reluctant to change. Also these systems are so deep within the banks that they are very difficult to remove. But they need top be removed and replaced with more flexible systems if banks want to compete in the future.

A good example of entrenched legacy systems were described in an article I wrote in September 2008 about Commerzbank's plans to buy Dresdner Bank. Dresdner's fund accounting system called Paladign, which it uses to balance the books at the close of business, is old and has been modified so often that few IT people can work with it. A Dresdner trading platform called Imagine, which covers parts of the bank's investment business, was another example of a legacy system hard to shift.

Commerzbank's challenge with legacy systems will be repeated across the banking world as the credit crunch resulted in mergers between banks and different parts of banks being de-merged

So what are the out of the box options for the banks?

Here are a couple:

SAP has been winning a few deals of late

Infosys' core banking product, known as Finacle


Could KPMG be about to buy Equaterra?

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I've been informed by a reliable source that sourcing consultancy Equaterra is being acquired by KPMG, one of the big accounting and consulting firms.

Equaterra has developed a good reputation as a specialist advisor on outsourcing issues, and you'll have seen Lee Ayling, managing director of its UK IT advisory services, mentioned in this blog on several occasions.

It's interesting to see that a firm like KPMG - which no doubt already offers sourcing advice and consultancy - is looking at a smaller specialist like Equaterra. If the move goes ahead it reflects what is happening in the wider IT sector, with big-name suppliers buying up a lot of small or medium-sized firms.

Is there a future for specialist sourcing advisers such as Equaterra, or is it inevitable that the market will come to be dominated by the big consultancy firms?

Can Xerox/ACL do well in European outsourcing?

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The unlikely marriage between IT hardware suppliers and IT service providers was probably hard to fathom a few years ago. But today it is common practice.

We all know about the take-over of EDS by HP and Dell's acquisition of Perot Systems is also well documented. There is an argument that these companies are turning outsourcing into a commodity.

But the rabbit in the European IT services hat could be the Xerox and ACL tie up. ACL does not have a large footprint in Europe, but Xerox does.

The interesting thing for me is that Xerox has a large footprint in the SME market as well as the corporate sector.

Xerox wants to be a giant of document and business process outsourcing. It plans to grow its sales by leveraging its brand and customer base to boost ACS's business in Europe, Asia and South America.

A contact in the outsourcing sector I met up with last week thinks it has the right brand to do this in Europe. It also has a good opportunity in the SME market which is hard to serve for the traditionally corporate focussed suppliers. Mind you Dell/Perot would say the same thing.

Can the UK government really offshore tens of thousands of jobs?

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Ever since the government announced its massive cost cutting initiative the people I have spoken to all seem to agree on one thing. Costs can be cut by offshoring work to India.

There is certainly scope for more offshoring because there are no Indian companies in the government's top 20 suppliers.

It does seem to make sense to offshore to cut costs but there are some strong counter arguments. There is an example from a reader below.

I write this blog because Ovum has become the latest analyst firm to suggest that now that the government has the drive to cut costs jobs will most probably be offshored to lower cost regions.

I wrote about this in February and got some interesting comments from IT professionals in the public sector.

Here is an example of the reaction the government should be prepared for. This was a comment left in the blog post I wrote in February. See this link for the blog and reaction to it.

"There is no justification whatsoever for the UK government using UK taxpayers' money to subsidise the export of skilled jobs from the UK to the Indian IT industry. Any moves to do so would destroy career opportunities for UK-based IT staff, eliminate skilled jobs, reduce tax revenues from people working in those jobs, increase the numbers of unemployed IT workers having to claim benefits, and contribute to the permanent long-term decline of the IT skills base in the UK.

Nobody who has seen the colossal amounts of money already wasted on government IT projects managed by New Labour's favourite consultancies, much of which has already flowed offshore to the Indian subsidiaries of those same consultancies, would believe that any savings on salary costs through yet more outsourcing to India will be translated into genuine savings for the end client - the UK taxpayer. After all, it's never happened in the past, despite plenty of offshoring and onshoring by government-subsidised consultancies.

So I'm damned if I see why our taxes should be used to support the Indian IT industry instead of our own. Any government that pursues this path had better count on losing a lot of votes - and tax revenues."



Could China be about to reduce India's offshore IT dominance?

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China offers a deep pool of IT talent. This talent is available at relatively low cost. Some would say very low cost.

I am trying to keep up to date with what's available in China and news of another official UK office for a Chinese service provider is worth a post.

It is interesting because China has the potential to become like India in IT services. These days an Indian IT company is never absent from a CIO wish list. But can China do it without an event such as Y2K.

Back in May I blogged about a company called Bleum. This is an offshore software development company based in China but managed and owned from the US. 

China has 350,000 computer science graduates every year and they cost less than their equivalents in India.

Now there is another Chinese company setting up in the UK. VanceInfo Technologies  , as it is known, is a software development firm based in China and is opening a UK office next month as it targets UK customers.

It already boasts Microsoft as a customer and has 300 software developers working in China for Microsoft. It also supplies companies including IBM, TIBCO, HP, EMC, NEC, Mitsubishi, Huawei, Lenovo, ABB and 3M.

For example it provides software development and system integration and is moving into the BPO space.

It has the developers in China but project management will be done from the region the customer is in. VanceInfo Technologies was set up and is run by Chinese Americans.

Its UK focus is in the financial services, media, technology and mobile as well as fixed telecom. It will design, develop and implement software and provide maintenance services. It will also provide ERP, CRM, supply chain management, IT integration and system support and maintenance.


Just to remind you this is Bleum, the company I mentioned at the top of this blog:

The company is 10 years old and is run by American Eric Rongley.

It has about 1000 staff in Shanghai and a handful in the US and Europe to manage the company and support certain accounts.

The main applications it develops are e-commerce, financial services, supply chain and retail. Walmart has an e-procurement system from Bleum.

Bleum has a policy that all staff to speak English while at work.

It uses biometric security to protect its different locations. Each customer will have a physically separate support centre.

Its recruitment process is rigorous. It gets 2000 applicants every month and takes on only about 50.

It has a four stage recruitment process.

1 - Candidates must reach 140 in an IQ test.
2 -There is a skills test and people are chosen depending on the demand for particular skill
3 - Candidates must speak a good level of English.
4 - Then there is a behavioural test.

If you are a Chinese service provider please contact us and tell us what you've got. Also if you are a customer of a Chinese company tell us about your experience.


Are IT services deals increasingly moving onshore?

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Lee Ayling, who heads up sourcing consultancy Equaterra in the UK, told me recently that he is seeing a trend for big businesses to move services back onshore.

This swing back to onshore services is seeing fewer deals provided from traditional offshore destinations, most notably India. More skills are now being based onshore. This does not mean Indian and other offshore companies aren't winning business just that more of the skills are onshore.

Ayling said two years ago 90 out of 100 deals might have been supplied from India. But he says at the moment about 30 out of 100 are supplied from India with the other 70 from multiple locations.

He says this is positive for the UK economy.

Will this trend continue or is it just a move by big business to keep the government and public opinion on their sides?

We have seen public opinion in the US turn against the idea of offshore services.

Massive UK job losses loom as change projects approach sign off

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Just because the economic climate is improving does not mean an end to UK job cuts and delayed job cuts could be round the corner.

According to a well informed source of mine it will actually lead to a round of massive cuts as delayed transformational projects, which include up to 30% reductions in workforce costs, are signed off.

The last year or so has seen large businesses delay huge change programmes because of the economic uncertainty.

Now as the economy is becoming more stable these projects could soon be back on the agenda.

So it is not just Public sector workers that face uncertainty but also those in the private sector.

If Wipro wants 50% of European staff to be locals it had better get its act together.

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When I met Wipro's European head, Jeffrey Heenan Jalil, back in May I blogged about the fact that Wipro said it was struggling to find European staff despite the its efforts.

He said Wipro is finding it difficult to find staff to fill roles across Europe and that there were hundreds of vacancies.  "We have hundreds of on site jobs not filled because I am finding it difficult to get the staff."

He told me at the time that he could fill the roles from India but wants to fill these roles with locals as part of its plan to increase the proportion of staff in Europe that is local. By the end of this year it wants to have 50% of European staff local to the region.

He said he was not sure whether this was a result of a skills shortage or if Wipro is looking in the wrong places. He also said that contrary to popular belief, bringing staff over from India is more expensive that recruiting locals in Europe. He said the combination of the salary they must be paid as well as flights and family support makes it much more expensive to bring staff from, India.

After I wrote that blog three experienced readers applied for UK jobs on the Wipro website. But after over two months their online applications are still stuck on the "To screen" point of the application process.

Is the system broken? How will Wipro hit its target to have half of European staff locals?

I asked Wipro what is going on and it seems Wipro's problem now is that there are too many people applying for jobs with it.

Pradeep Bahirwani, vice president of talent acquisition at Wipro had this to say: " In the past few months we have seen a significant increase in the number of job applications. We have a robust systems & screening process in place, in line with global standards. As there has been a spike in the volume of resumes, priority of screening is given to resumes tagged under specific job positions which are active and open. We have taken proactive steps to optimize the screening process given the recent increase in the number of applications coming in."

Has this Blog  increased job applications at Wipro? Sadley I doubt it? 

If Wipro wants 50% of European staff top be locals it had better get its act together.

Anyone else stuck in the Wipro recruitment system?

Shamed HP CEO could pocket $40m due to legal loophole

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This article in the Financial Times reports on how the terms of Mark Hurd's contract mean he still gets a big pay-off despite his "ethical Lapses."

Hurd was forced to resign last week after allegations of sexual harassment revealed expense claims that did not follow company policy.

The FT says, "The terms of the former HP chief executive's employment did not lay out any specific circumstances in which the company would fire him "for cause", which would have enabled it to avoid paying severance."

Hurd and other HP board members also face a law suit.

I still want people's opinions about who will replace Hurd?

Is the greatest IT acronym for Indian IT?

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The IT industry is littered with acronyms. It is something close to my heart.

When I went for a my first reporter job in the IT sector, having previously reported about business supplies and politics, a job advert asked whether I knew what ADSL was. I didn't have a clue.

After over a decade in the IT sector I have seen them all. WAP, WAN, SSL VPN, BRIC, EMEA etc. The more time that passes the worse they get.

But I heard a great one today, and useful too. Rather than refer to the Indian IT suppliers or reel them off, why not just say SWITCH. Satyam, Wipro, Infosys, TCS, Cognizant and HCL. Brilliant. Sorry Mahindra Satyam we know you changed your name but I don't want to spoil a great short-cut.

This was courtesy of Equaterra's UK head Lee Ayling who I met today. This is how staff at Equaterra make life easier when talking about thye Indian suppliers.

What is the best IT acronym you have ever seen?

Just a bit of light blogging for a friday.

HP's former CEO Mark Hurd and board members face shareholder law suit

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It seems the troubles might not be over for Mark Hurd following his shock departure from HP after a sexual harassment allegations and irregularities with his expenses.

Now, according to channel magazine Microscope, Hurd faces a law suit filed by a US pension fund. It was filed by Brockton Contributory Retirement System on behalf of HP.

The law suit is seeking to remedy what it claims are "breaches of fiduciary duties, waste of corporate assets, unjust enrichment and insider trading occasioned by the HP Board's dereliction of duty."

Read more here and here.


Open source already used in 80% of corporates

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This is an interesting story about the take up of Linux in the corporate sector.

On this blog I sometimes touch on the increasing use of open source software in large enterprises.

I feel it is important in this blog because the IT service providers are the ones that can make or break open source, such as Linux, in the corporate sector. They can become the support that can allay fears within IT departments that they will struggle to find reliable developers and support.

Deloitte recently told me that its customers are increasingly using open source to run pilots.

But Research presented at a conference in the US this week showed that Linux is in the mainstream. Forrester said at the event that companies started adopting Linux to cut costs in early 2009 but that by the end of 2009 it was seen as a driver of growth.

According to in the third quarter of 2009, 48% of Forrester's survey respondents were using an open source operating system, while 57%  were using an open source programming language. Meanwhile only one in five said there are not using open source at all (hence 80% already used).

A Forrester analyst said although Linux is used in mainstrean enterprises promoters need access to developers if they are to  get the entire company, rather than silos, using Linux.

A great success story for Linux is the London Stock Exchange, which is moving its trading platform onto it. The company bought an entire software firm that developed the Linux based system to make sure it had the developlm ent resources.

See also how open source could be Brazil's offshore advantage.  



Will the strong results of UK banks delay IT outsourcing projects?

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Banks are watching the government's poker face before major IT outsourcing projects are signed off?

The financial services sector, and banks more specifically, are notoriously heavy outsourcers. But currently despite a big pipeline of deals expected in the future the banks could be waiting for the government to show its hand before embarking on major strategic projects.

So what has the government got behind its poker face?

The first government hand:

The government, well the tax payer, owns large portions of banks and despite saying it will sell them quickly the shock results of the banks over the last week or so might make the shares worth retaining.

Also the banks know when they complete major strategic projects including outsourcing lots of IT they will probably be in better financial shape. So they probably don't want to do it until the shares are out of government hands.

The second government hand:

The banks are waiting for the government to show its hand in terms of what regulations it might impose on them. This might include taxation.

One company that is confident that IT outsourcing is firmly back on the banking agenda is Harvey Nash. It says it has opened another office in London's financial district in reaction to more demand for IT outsourcing and IT skills.

The company, which provides IT skills and outsourcing services, said: "The additional office will continue to provide talent to the Group's existing financial services clients located in the City and Canary Wharf areas of London and also leverage new client and candidate opportunities. Forming a crucial part of the Group's global footprint, the team will also seek to support financial services organisations headquartered in New York, Connecticut, Edinburgh, Frankfurt and Zurich who are increasingly looking to recruit talent in their London operations."

Robert Morgan, director at  consultantancy Burnt-Oak Partners says banks are currently "chatting" about projects but not signing them off. "They are waiting for the government to make its move."

Outrage as US senator labels Indian IT firms Chop Shops?

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A US senator has offended the Indian IT sector by referring to them as "Chop Shops." Unfortunate choice of words as it refers to an illegal business.

Charles Schumer made the remark during discussions on the Border Security Bill in relation to the idea to raise visa costs and pass on the money to improving boarder security. He singled Infosys out for criticism.

A Chop Shop is, according to the Encarta Concise English Dictionary is "a workshop or garage where stolen vehicles are disguised or broken up for spare parts."

See more on this video about the outrage:


The US recently increased the charges for visas and there is a growing feeling that Indian IT companies are taking US jobs.

He is reported to have said: "''...the emergency border funds will be paid for by assessing fees on foreign companies known as chop shops that out-source good, high-paying American Technology jobs to lower wage, temporary immigrant workers from other countries. These are companies such as Infosys.''

Infosys responded with this statement. ''we are distressed with this statement. Infosys is a good corporate citizen, pays its taxes and is law abiding.

''Our strategy is to create jobs in every jurisdiction that we work in. We provide a world class work environment for all our employees in every country and we add significant value to our clients, helping them to compete effectively in the global marketplace.

''Today we have around 1,300 citizens and permanent residents working for Infosys in the US and have been actively working towards hiring over 1,000 additional people over the past few quarters. The visa fees are discriminatory and do not help create an open competitive market.''

The US senate has voted to increase charges for employer sponsored skilled intra company transfer visas for companies with more than 50% non US workers in the US. They will target Indian outsourcers.

More on that story in the New York Times



Cognizant: When is an Indian IT supplier not Indian?

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I recently wrote a blog post about how well Indian service provider Cognizant was doing. The company has been growing faster than its Indian counterparts during the last few quarters.


Add to that the top ranking in Equaterra's customer satisfaction survey and you have a supplier doing something right.


I met up with Cognizant's managing director UK and Ireland today, Sanjiv Gossain, who has been with the company six years. He was previously CTO at Cambridge Technologies in the US.



Sanjiv Gossain.JPG 

So this is Cognizant:


It has about 85,000 employees. About 50,000 of these are based in India.


Cognizant is always referred to as one of the big Indian suppliers, number four to be exact, but it is actually a US firm with lots of staff in India.


"We are a combination of the 'can do' approach in the US and we have the engineering and process expertise of India," says Gossain.


Its customers are mainly blue chip companies with 79% of business done in the US with 11.8% in the UK. AstraZeneca is one of its bigegst customers.


In the UK, where its business is growing, it make 45% of its revenues in financial services, 18% in pharmaceuticals with the remaining 37% split between retail, manufacturing, telecoms and media.


It splits its business up by sector rather than technology or service.


Its biggest proportion of business is in application support, application testing as well as application development. It does BPO but what it describes as vertical BPO and not things like call centres.


Cognizant's approach to the cloud is around business process as a service. This is where a customer will outsource an entire business process to Cognizant, who will complete all aspects of the service, charge per transaction and deliver via the cloud.


This sounds like something that would work in the UK public sector. Departments would only be charged on what is used and suppliers could increase profits by becoming more efficient. That'll never happen.


Also see a former Cognizant director talking about effective cost cutting.

There is upheaval coming to IT services firms as business models are questioned

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Just when the IT service providers thought it was safe to go back in the water, following the recession, they face massive upheaval to reposition themselves in the new world.

Forrester has released its latest report about the tech services sector.

The Coming Upheaval In Tech Services report covers the consulting, system integration, professional services and outsourcing segments. It says the transformation will "call into question traditional business models."

Traditional delivery models will be undermined by cloud computing and software as a service says Forrester.

See this article about the report.

Forrester says: "As a result of these dynamics, the resulting changes will be much more severe and disruptive than we've seen over the past 10 years in terms of service lines offered, buying habits, key stakeholders, pricing, and delivery models. We believe that new offerings and models will eclipse traditional services. Specifically, technology services will be recast as follows:

1. More money and budget will go to services.
2. The operating model will shift from fixed to circulating capital.
3. The commoditisation of traditional services will accelerate.
4. Demand and growth will shift to new services with higher margins."



HP ousting Hurd is a repeat of "idiots" on Apple board ousting Jobs, says Ellison

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Not like Oracle's boss Larry Ellison to give his two-penneth.

Ellison thinks by ousting CEO Mark Hurd after the sexual harasment allegations, that HP decided were unfounded, and some falsified expenses claims, HP has made a mistake on the level of "the idiots" on the Apple board that ousted Steve Jobs in 1985.

"The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago," he said in a letter to the New York Times.

"In losing Mark Hurd, the HP board failed to act in the best interest of HP's employees, shareholders, customers and partners," Ellison said in the letter.

What do you think?

Infosys uses social media to promote its social media platform

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I blogged back in June about Infosys' latest platform. The iEngage digital platform as it is known helps corporates make better use of social media.

It is an example of a service provider industrialising a technology that customers are still unsure about.

Here is an article I wrote about iEngage when I interviewed Infosys' head of SaaS, Pradeep Prabhu.

But here is a video about the platform so judge for yourself. Good to see Infosys using social media to to describe the platform


Cloud computing will increase open source take-up in big business

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The value of this blog is often the comments posted about the individual blog posts. Inside Outsourcing is supposed to be a two way discussion forum.

This blog is about a comment left on a blog post I recently did about open source being increasingly attractive to corporates, according to Deloitte. This was about companies using open source to run pilots.

A regular commenter on Inside Outsourcing, Matt, had this to say about open source.

"I suspect that cloud computing might be encouraging more interest in open source [because] it is often easier to supply and scale up cloud-based services using open-source software, because you don't have to worry about exceeding the scope of your licensing. You can deploy as many Linux VMs or MySQL/PostgreSQL DB instances as you want, it won't cost you a penny more in licence fees."

This makes sense to me. What about you?

Was HP CEO's accuser a soft porn actress?

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Just saw an article about the HP marketing contractor that made a sexual harrasment claim against CEO Mark Hurd, which lead to his resignation.

The woman in question is fifty year old Jodie Fisher. See more about her here.

Although the sexual harrasment claims were unproved the investigation revealed some dodgey expenses claims.  Hurd resigned and the search is on for his replacement.

Who will replace Mark Hurd as HP CEO?

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Mark Hurd has resigned after 5 years at the helm of the world's biggest IT company HP. I thought I would open it up and allow people to make their predictions and give a reason for it.

Could, for example, HP go for someone with a strong IT services background to help its services business?

An investigation into alleged sexual harassment revealed that Hurd made false expenses claims. HP has already put the process in place to find a replacement.

"A Search Committee of the Board of Directors has been created, consisting of Marc L. Andreessen, Lawrence T. Babbio, Jr., John H. Hammergren, and Joel Z. Hyatt, which will oversee the process for the identification and selection of a new CEO and Board Chair," said HP.

See the Wall Street Journals top ten candidates for the job.

Gartner analyst Martin Reynolds commented on Hurd's tenure. This might give some food for thought in terms of who will replace him.

"Hurd drove an amazing turnaround at HP, driving a focus on measurement and results that transformed the company into a cost control machine. However, Mr. Hurd's approach branded HP as a low-cost supplier, suppressing the image of the company as an innovator (this is much better than being an unprofitable innovator). I don't expect HP's operational discipline to fade. Mr. Hurd achieved that result through his leadership team, and they will continue to execute his plan.
Given the operational foundation that Mr. Hurd built, HP has the opportunity to bring in a new leader who can take HP to the next stage. The company needs to be recognized by consumers as a cool brand, a company that makes products that you have to have. And there's no immediate pressure to do this, so the board has time to make the right choice for the future of HP - and its future customers. "

See more on Hurd's resignation here.

HP CEO Mark Hurd resigns after sexual harrasment and false expenses inquiry

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Just saw this article in the Telegraph today.

Just when HP seemed to be getting itself together in the services space, it has been rocked.

CEO Mark Hurd has, according to reports, been forced to quit following an HP inquiry that concluded he had made false expense claims.

He is also said to have been having a "close personal relationship" with a femal contractor.

See more on this story in the Wall Street Journal and Reuters

I wonder how all those former EDS workers, who have been made redundant and have had their pay and benefits cut, feel now?

I wrote an article about just how much Hurd earned at HP. It clearly wasn't enough for him. Here it is. Hurd is thought to be in line for a payout of up to $50m.

Will this knock HP back. Its share price has already tumbled.

See here what Gartner has to say about it.

The UK government should rent out spare datacentre capacity

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The government has about 130 datacentres and 9,000 server rooms. Add the police to that and you have another 80-plus datacentres.

Suppliers could virtualise government datacentres. This could lead to an 80% reduction in the datacentre space required so the government could outsource the operation and management of datacentres and allow the suppliers to use the spare capacity for other customers.

If a bank can do it why shouldn't a government. Citibank has outsourced a datacentre to Wipro and is enabling the supplier to use it to serve other customers.

So the government can outsource to a supplier. The supplier can virtualise the infrastructure. It will save a fortune on hardware and energy consumption and make money renting out computing power.

Capgemini told me it can  virtualise a customer's datacentre and free up 50% of the computing power. This could then be segregated through security technology and made available to other customers of Capgemini if they require more raw computing power during peak demand.

Goodbye some of the budget deficit.


TPI is now dedicated to cloud computing

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Sourcing consultancy TPI has launched a dedicated cloud computing advisory service. The TPI Cloud Computing Business Solutions Unit, as it is known, will help customers navigate the choppy cloud computing seas.

So if a consultancy has set up a business unit focussed on cloud computing a lot of its customers must be talking about it

Indeed TPI announced the results of a survey of 140 IT decision makers regarding Cloud computing and it found that 78% of clients have had internal discussions about cloud computing.

Other findings of the survey revealed major concerns with cloud computing.

These were:

• 79% of respondents say data security is inadequate or unclear
• 50% fear non-compliance with regulatory requirements
• 50% fear business continuity or disaster recovery issues
• 49% are concerned about integrating Cloud solutions with legacy systems
• 49% are concerned that others may gain access to company data


Wipro gets its first European datacentre through Citibank deal

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Interesting news that Wipro has now got a datacentre in Europe. It has signed a deal with Citbank to take over the operation and management of its datacentre in Meersbusch Germany.

The deal itself sees Wipro get its first datacentre in Europe and from it the Indian supplier will offer services to other customers.

With virtualisation technology datacentres have much more capacity and it is possible for suppliers to use their expertise to bring in multiple customers.

This could kick off Wipro's bold cloud strategy in Europe. 

Wipro CTO, I Vijay Kumar,  filled me in on Wipro's plans for cloud computing back in March. Its implementation in Europe depended on it getting datacentres.

In the US and India, where Wipro owns lots of datacentres it is already building its cloud computing infrastructure. Customers will soon be able to buy cloud services from Wipro.

Capgemini's UK outsourcing cheif Greg Hyttenrauch told me in March that there was no reason businesses should not sell the raw computing power they do not need?

Capgemini could virtualise a customer's datacentre and free up 50% of the computing power. This could then be segregated through security technology and made available to other customers of Capgemini if they require more raw computing power during peak demand.

Linux rises most but SQL, Java, C, C#, .Net and ASP skills most demanded

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Outsourcing is a great way to fill skills gaps so once again I am blogging about demand for particular skills. End user businesses need to know where they can go to fill skill gaps and service providers need to know what skills are in demand.

The latest report from and has revealed that in the second quarter of 2010, demand for Linux skills increased by 8%, overtaking Unix for the first time, while SQL, Java, C, C#, .Net and ASP continue to be the most sought-after skills.

See latest Linux jobs here

See more here

Earlier today I wrote about the fact that Perl, .Net and SAP skills were in short supply in the UK. This was according to the latest recruitment report from KPMG and REC.

SAP, Perl as well as .Net skills in short supply in the UK

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I blogged earlier this month about a shortage of .Net skills being reported in the UK. I had a lot of reaction from Indian suppliers, where there seems to be plenty of spare capacity.

Well the latest report from the same organisations, KPMG and REC has revealed futher shortages.

When I wrote about the shortage of .Net skills in the UK I had hundreds of emails and linkedIn messages from companies all over the world and in the UK. The skills are out there so why are people struggling to find them?

So how is India and other offshore locations, for SAP and Perl?

How should CIOs manage service integration?

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Stuart Rye, managing consultant at Fujitsu UK has given us his thoughts on service integration.

As businesses increasingly use services via multiple suppliers in the cloud, there is a need to manage all the different services and suppliers. System integration is being superseded by service integration.

Stuart Rye_photo.JPGCapgemini for example in calling itself a service integrator. Its recent deal with Royal Mail demonstrates this capability. See its Royal Mail supplier ecosystem here.

 Here is Stuart Rye's blog post: 

"Why service integration matters and four main rules of engagement 

As I am sure you are aware there are several different approaches as to how service integration should be 'done', but at the crux of any approach careful planning and upfront investment will fuel real benefits in establishing the supplier / client team - whilst maintaining the discipline that allows for the simplicity and efficiencies of a "plug and play" approach to any level of service integration.

Companies are turning to multi-vendor models to get the most from best-of-breed suppliers and create flexibility to respond to ever changing business needs. To make this work they need to mesh services together whilst maintaining the discipline that allows for a "plug and play" approach.  The introduction of "cloud" offerings will add to the demand for flexibility.  Service integration is the key to transforming the component service from being disjointed and IT focused into being business relevant, enabling and seamless.  

CIOs can try to do the service integration themselves - or better still they can entrust the role and risk to a 3rd party service integrator. This allows the CIO to concentrate their stretched resources on the business need but also to take advantage of the industry expertise and influence to make IT better and more relevant.

The growth in multi-sourcing and its implications was a core theme of the TPI EMEA Sourcing Industry Conference held in London on 22nd June 2010 where it was clear that to be competitive, suppliers must offer defined and supplier agnostic service integration services.  Interestingly, not all suppliers seemed to understand the need for this yet, clinging to the view that it's much better if they aim to provide all services themselves - which could be seen as better for the supplier but not necessarily the customer.

On the face of it, service integration might seem quite straight forward but in practice it quickly generates much discussion about actually how to make it work. The rules for good service integration include:

1) Service integrator must be accountable, objective and cost effective
2) One team across client IT, SI and towers, acting in client's interests and aligned motivations
3) Open, joint governance with clear accountabilities and measurable outcomes
4) Value add for the business and IT, year on year savings, continuous improvement

When the hurly burley of an outsource transition is in full swing, it's easy to lose track of where you are and what you are ultimately trying to achieve. Based on its experience as a service integrator and a component service provider, Fujitsu has a set of simple indicators for service integration which the partnership board should track.

These (or a similar set) need to be agreed as part of governance being established. As some of the key ingredients are soft, like trust and belief, feedback intra-team and from the business are important measures. Once these indicators are evident, the bones of service integration are in place. One of the most important indicators is the capture of the baseline against which change will be assessed. This is the baseline of performance, satisfaction and configuration. It is impossible to manage change and measure your progress if you don't know where you started.

The final test is the value-add to the business and the client IT team. There are hard measures such as incident volumes, improvement initiative trackers etc., but ultimately one of the most important measures will be the opinion of the business. Successful implementation of the service integration model with a 3rd party will result in seamless, business relevant, high performing services, a high degree of flexibility to support ever changing business needs and significant strengthening of the bond between IT and business in the client."

Recession changes IT outsourcing industry

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Thumbnail image for Thumbnail image for Thumbnail image for Ferenc Szelenyi_02.JPG

Dell's vice president public sector services EMEA, Ferenc Szelenyi, has once again provided us with his thoughts on outsourcing. This time he talks about how the industry is changing following the recession.

I was particularly interested in his view that companies will increasingly redeploy staff when they outsource rather than transfer them to suppliers. This is because I recently wrote a blog about this.

Here is Ferenc Szelenyi's latest contribution to Inside Outsourcing.

"Last year was not a great one for the IT outsourcing (ITO) sector, with growth slowing due to a confluence of factors that gave ITO service providers a serious body blow.

Many service providers were still suffering from the aftershock of the global recession, a far cry from a few years back when organisations raced to outsource because of the scarcity of their resources. New market entrants, alongside the big players such as India and China, put pressure on prices as buyers embraced the clear cost savings produced by labour arbitrage.

Today, various business sectors are going through a phase of consolidation and rationalisation within the context of the global economic meltdown. Therefore, potential and existing Customers of IT Service Providers including those within Dell are looking for opportunities to:

- Rationalise and de-duplicate their application services portfolio

- Upgrade and transform their IT platforms gaining potential cost savings from cloud technologies and lower emission hardware

- Rationalise back-office processes and in turn reduce complexity in their business and how their IT is managed today

- Not necessarily look to transfer staff to a provider but rather re-deploy into more strategic areas of the business or new projects

Furthermore, providers are now looking to provide "end to end" "open" solutions but that seek to transform the IT architecture in a modular manner providing flexibility around capex and opex and how these items are managed in a transaction. Partnerships with customers is not uncommon in the IT Services industry that enables the transformed state of a customers IT to be leverageable and scalable to suite other similar businesses or customers. In fact, this area of opportunity will grow significantly as public sector and private sector businesses consolidate and rationalise their IT Systems."

See also these blog posts by Ferenc:

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

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



Who are the best IT outsourcing service providers in Europe?

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As I blogged earlier Equaterra's latest 2009-10 Europe IT Outsourcing Service Provider Performance and Satisfaction (SPPS) study has put Cognizant at the top in terms of general customer satisfaction.

25 service providers were ranked based on an assessment of over 2,000 deals and feedback from over 750 of the top IT spending organisations across 12 countries in Europe.

graph.jpgClick on the picture (right) and see the full top 25 ranings in order.

It makes interesting reading. Three of the top five offshore service providers with most their capability in India.

Take a look for yourself.

Cognizant is the one to watch as it becomes Equaterra's clear leader

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I blogged back in May that Cognizant was a company to watch. After blogging about the achievements of HCL, readers wrote to me to tell me that Cognizant is blazing a trail.

Equaterra has now ranked it as the number one supplier in Europe in its 2009-10 Europe IT Outsourcing Service Provider Performance and Satisfaction (SPPS) study.

25 service providers were ranked based on an assessment of over 2,000 deals and feedback from over 750 of the top IT spending organisations across 12 countries in Europe

The categories the service providers were measured on include relationship management  innovation, transition, quality, price, and risk.

In the last study released in December Cognizant shared top spot with Capgemini.

I am going to meet the UK managing director on Monday so I thought I would do a quick blog and hopefully get some feedback.  

For its second quarter of 2010 the company has just announced a 15% increase in sales compared to the previous year with profits climbing to $172.2m compared to $141.3m in the same period last year.

Would a government CIO with sharp teeth drive IT standardisation?

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With the new government determined to cut the cost of IT standardisation seems inevitable.

This will mean the government setting standards and the suppliers working around them.

It seems pretty obvious that having standard IT platforms rather than bespoke systems in each department will save money.

But somebody has to set these standards and ensure that all departments use them. The current government CIO role does not have this power and instead CIOs in departments make there own decisions. So something has to change.

The appointment of former government CIO and Accenture UK managing director Ian Watmore as chief operating officer of the efficiency and reform group in government is one change. But how will John Suffolk's government CIO role change? Industry talk is rife that Suffolk will leave his post, but Suffolk recently told Computer Weekly he has no plans to do so.

I think most suppliers would welcome more powers to the government CIO.

Corporates have an appetite for open source software, says Deloitte

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Large companies are increasingly using open source software to conduct pilots, according to Deloitte consultant Mark Lillie.

I met up with Mark today, who is a consultant in Deloitte's technology group. We were talking about the IT market in general and some trends.

One trend he mentioned is that Deloitte clients, which are large corporates, are increasingly demanding open source software to use on pilot projects. It reduces the cost of running pilots because open source is free. "Creating something at low cost," he says.

If IT departments use open source to try things out they do not have to ask for any budget. They can then go get the funds when they have a version of whatever it is they are trying to build.

Why don't these big companies use open source for the finished products you may ask.

Well this is because these companies have commercial agreements with major suppliers and remember nobody ever got sacked for buying IBM.

There is also the strange problem of senior executives thinking that if the software is free it can't be any good.







Infosys welcomes special UK and India relationship

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Thumbnail image for BG.JPGBG Srinivas, European head of Indian IT supplier Infosys, has kindly offered his thoughts on David Cameron's visit to India.

I saw lots of Indians interviewed about the visit and most seemed lukewarm about a new special relationship between UK and India.

BG is far more positive.

Here is what he said:

"David Cameron's visit to India last week created much hype around the impending "special relationship" between the UK and India. Many commentators have questioned why India has been singled out by Mr. Cameron, and as the Prime Minister rightly put it, the most obvious reason is economic.

I have been an Infoscian for more than ten years, and in this time, I have seen India grow to become one of the most influential and successful countries in the world. Recent figures show that the country's GDP is worth $1,217bn and has grown by nearly eight per cent over the last four quarters.  Additionally, today it stands as the world's largest democracy.

In my view, Mr. Cameron's visit to India is clear sign of his commitment to increasing ties between India and the UK. India has a lot to offer the UK, especially in vertical markets such as retail, manufacturing, aerospace and engineering. For example, currently the Indian retail sector is worth around £227bn and is forecast to grow to £352bn by 2014. However, only a little over 10 per cent of this trade is in the organised sector, which means there is huge potential for big retail players.

The opportunities don't stop there. India is globally renowned as a centre for research and innovation, as well as for its vast talent pool. Goldman Sachs reported recently that by 2020, India will add an additional 110 million people to its working ranks.

While the UK delegation has acknowledged India's growth, a lot still needs to be done for the country to reach its full potential. At the moment, only 19 per cent of the population is employed in India's manufacturing/industry sector, it is important to have inclusive growth as well, the rural sector requires equal attention as well, this can happen only with close partnership between the Indian government and industry in general, and help make improvements by increasing opportunities and building better infrastructure, increase the general living standards, improve education and healthcare.

If the trade and opportunities for India and UK have to flourish, then there needs to be further engagement beyond the visit. There has to be a review of this every six months to assess the progress, only then we can see significant gains for both countries.

We were honored to host Mr. Cameron and his delegation at Infosys campus, as this gave us the opportunity to show him, and the delegation, what the 'new India' looks like. I look forward to seeing how the special relationship develops and believe we have some exciting times ahead."

Also see BG Srinivas' guest blogs from Davos in February 


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