February 2011 Archives

Most private sector companies not interested in recruiting former public sector workers

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Over half (57%) of private sector businesses are unwilling to take on redundant public sector workers according to research from the Financial Times.

The survey of 500 private companies found that 57% are not interested in taking on former public sector workers and 52% believe these workers are not up to the job.

There are hopes within the IT profession that the private sector will pick up the slack a bit as many IT workers in the public sector could soon be out of work with a possible 300,000 public sector job cuts to come before 2015. But this does not seem the case.

But IT suppliers might be an exception. If the public sector cuts a lot of IT staff they will still need the work to be done. This could mean more outsourcing and as a result demand for recruits in the IT services sector. Who better to recruit than an IT worker with bags of public sector experience?

I spoke to the head of an Indian company recently and he told me the company had engaged with the UK government to offer them the possibility of re-housing public sector IT staff that have been made redundant.

Then there is Bindi Bhullar, a director at Indian supplier HCL, who I spoke to last week, has a lot to say about this. "What we need above all is for the government to take a more active role in equipping public sector workers to manage existing and future IT projects. By training them in a broader set of skills, public sector workers will be more prepared for the transition into the private sector, and more suitable for the jobs that may exist there.

"One thing's certain - if we are to look back in the years to come and see the Big Society initiative as a big success, then it will be important to have everyone - in both the public and private sector working together.ˇ

 

The public sector is having its very own credit crunch but the IT sector is less concerned

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When the credit crunch struck in 2008 and the banks began to struggle, the IT services market knew it was in for a tough time.

The financial services sector was the life blood for many IT companies and there was suddenly a lot less money at banks to spend.

We all knew that the finance sector would bounce back and be the main source of sales for the IT service provider sector again. But it was strange to hear the words spoken again.

Last week I interviewed Logica's UK CEO Craig Boundy. The company reported decent results for 2001.

As well as speaking positively about the outlook for business this year he even said that the "financial services was a good sector for us in 2010."

To almost quote Ben Kanobi, "now that's a (phrase) I haven't heard in a long time."

But now that the finance sector is back on its feet the public sector, which is the other big sector for IT firms is having its own government concocted credit crunch, known as the deficit reduction.

But the level of fear I could sense amongst financial services IT suppliers during the credit crunch was massive compared to public sector suppliers who today see the deficit reduction as an opportunity.

I suppose that is one of the good things about having not very good technology. Banks have great IT and could not really justify spending more on technology to cut costs and improve efficiency. In contrast the public sector has a lot of room for improvement and IT will play a key role in achieving improvements.

Whenever I speak to suppliers they do say that the public sector cuts will affect them, but they are all reading from the government hymn sheet and talking about how they can help the public sector cut costs and improve service levels. I am sure that secretly they would love the government to throw money at them. 

Centrica outsourcing shake-up taking shape

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Back in December I revealed that Centrica was shaking-up its outsourcer pack.

T-Systems was being replaced in the datacentre and on the desktop by HP and Fujitsu respectively. Meanwhile T-systems is focussing on SAP services in the cloud and the development of smart grid technology.

Today sees the first of these deals officially announced. Centrica is paying $400m to HP in exchange for datacentre services including building a utility based private cloud.

This is part of a programme of change at Centrica which will lower costs, make it more reactive and lower its carbon footprint.

Perhaps more interesting is the way the market is going. HP and Fujitsu, which is being given the desktop contract, are big suppliers with economies of scale. The commoditisation of datacetre and desktop work might mean the big suppliers start replacing more niche players.

T-Systems is part of Deutsche Telekom, but in the UK is quite a small player. The higher value SAP services and smart-grid technology work might be good in the long-term.

But in the short term it might hurt. The Centrica deal was about T-Systems UK's biggest.

299,000 job cuts at IBM not as outrageous as it sounds?

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I wrote a story last year following comments made by a senior IBM HR executive.

Tim Ringo head of IBM Human Capital Management, said that in the future IBM might have 299,000 less staff than it has now (399,000), but will still be able to do the same amount of business. He said the company would reduce permanent employees and use freelancers on a project by project basis.

This is a form of crowdsourcing.

It reduces the overheads related to in-house staff. Pensions and office space for example.
Two stories I have written this week made me think of this story.

The first story was about KPMG acquiring sourcing consultant Equaterra. In that article one of my contacts describes how consultancy on outsourcing contracts is increasingly being provided by independent consultants. If these independent consultants get a big job they can just bring in lots of consultants for that project. These solo consultants are able to compete with large consultancies.

Bindi Bhullar, director at Indian IT supplier HCL, says that individuals with the right contacts can set up consultancies. "One you have the methodology and processes there is nothing stopping individuals doing this."

"It is about who you know."

The second story is about the surging demand for certain IT skills in the UK SME is actually forcing freelance IT workers to recruit other freelancers to help them on projects.

So the advantage to these solo IT workers and outsourcing consultants is that they don't have huge overheads and by working together can take on big projects and even compete with big suppliers.

Perhaps IBM's plan is not as shocking as it seems. Maybe this is how the market is changing and IBM will be the first big supplier to get there.

This could benefit both the suppliers and the freelancers.


 

Is Compass bait for Deloitte to acquire TPI or does TPI parent have bigger plans?

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Following the confirmation about KPMG taking over Equaterra talk of TPI being swallowed by Deloitte has re-emerged. Well that's amongst the people I speak to anyway

Sources have told me that the benchmarking capabilities of Compass, which TPI's parent recently acquired, make TPI a very attractive one stop consultancy. They also say that TPI parent Information Services Group (ISG) is an investment vehicle, which would probably look to sell TPI/Compass on.

For instance the Compass acquisition could have been made to make TPI more attractive to Deloitte. All just speculation.

But an industry source told me this is not the case. "ISG sees itself as a company with a portfolio of businesses that provide advisory services using fact based analysis as the foundation."

The Financial Services Authority has an enormous IT plan?

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I recieved a press release today from Steria. It was about a new framework agreement that it has signed with the FSA.

It looks like the FSA is preparing for some major IT work. Not just major but "enormous."

In a press note regarding a framework agreement Gareth Lewis, chief information officer at FSA, said: "The rationale behind the new supplier framework is to provide increased competition amongst our supplier base given the enormous volume of work we anticipate in the next 4 years."

A spokesperson at the FSA said this work is related to the FSA being split in two. The FSA has been one organisation for many years so there will be IT work to split the organisation and integrate the new ones.

The Steria press release says the framework agreement, which presumably other suppliers will sign, will help the FSA to be a more efficient regulator through technological upgrades, streamlined processes and enhanced productivity.

This could also mean a lot of work for the outsourcers.


 

Has an outsourcer suggested you do extra work when there was no need?

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I posed this question in a blog post last week. That post was about how IT outsourcing providers allegedly encourage customers to do unnecessary work.

I put a survey in the blog post to see how common this practice is. I have had 10 respondents so far. Eight of them said outsourcers have suggested they do work when it is not required ant two said it has not happened to them.

Ten is a tiny sample and the results do not mean anything yet. I am posting about this now to try and get more people to answer the question, which can be found in this blog post.

KPMG finally buys Equaterra, you heard it here first.

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In August this blog revealed that KPMG was in the process of buying sourcing advisory Equaterra. It has taken another six months for an announcement, but today KPMG told the world about the acquisition.

This is what KPMG had to say: "Through this acquisition, clients of KPMG member firms will benefit from the addition of a market-leading sourcing adviser to help them transform their organizations into more flexible enterprises in a way that meets today's complex market demands."

This acquisition reflects what is happening in the wider IT sector, with big-name suppliers buying up a lot of small or medium-sized firms.

Only last month the parent company of sourcing consultancy TPI, Information Services Group, took control of IT consultancy Compass.

Who will be next?

Are outsourcers using in-house knowledge gap as a license to print money?

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I was sent this interesting article by a company that makes security software.

Jane Grafton, director at Lieberman Software, says that outsourcing has a dark side in that in-house IT security bosses are being ripped of by some outsourcers, which are blinding them with science and jargon to force them to spend money on top of contracts.

She has put together a script of a typical conversation between an IT security manager and a security outsource service provider.

If this is the case is quite scary to think that the companies you outsource your security to might be breaking that vital trust that a business and outsourcer should have.

Click the document below to read the script. Please bear in mind that Lieberman makes software that automates some security activity before reading the attached document.

 

Outsourcing Tragedy.jpg

 

Campaigner against corporate immigration abuse says ICT rules open to abuse

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I blogged earlier about the final details of changes being made to the much criticised Intra company Transfer (ICT) immigration scheme.

I have since written a more detailed article. See it here.

This is what a contacrt of mine, whio campigns against the abuses of teh ICT syste, thinks about it.

"None of the proposed changes will make much difference. Tax free allowances for expenses will still count towards the minimum salary so the £24,000 is meaningless. The year gap before returning only applies if someone returns under the same category of ICT visa and their are now 4 categories of tier 2 ICT plus tier 2 general visas that allow someone to switch at the end of a year or return immediately and completely bypass the 1 year restriction."

In contrast the Professional Contractors Group (PCG) welcomed the changes.

 

What can we learn from De Beers UK's legal battle with Atos Origin UK?

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In December diamond mining company De Beers and IT firm Atos Origin were in a UK court battling over a failed £2.9m contract for a supply chain management system.

The battle offers lessons for IT service providers and their customers.

Peter Brudenall, partner at UK law firm Lawrence Graham, gives us his take on events.

 

"A refusal to perform may repudiate the contract.

In a judgment delivered in December 2010, the English Technology and Construction Court ruled on a failed contract for the provision of a supply-chain management system by Atos Origin to De Beers.  The judgment deals with some of the critical issues relevant to IT contracting, including the scope and management of IT contracts, and how such contracts may be terminated if the relationship breaks down. 

The project

Atos had been contracted in November 2007 to deliver the system to De Beers. It was a fixed-price, £2.9 million contract and the parties agreed they would use an iterative, "agile" method for developing the software - a method that requires both parties to work very closely together, sharing information and ideas, and testing each stage of development. De Beers needed the system by mid-200brudenall pic2.JPG8 to support its diamond supply chain management.

In short, the contract did not progress well.  Although the contract had been preceded by an initiation and analysis period, Atos had struggled to understand the complexity of De Beers' requirements, and the contract fell behind schedule.  Whilst these were not all Atos's fault - for example, the judge made clear that he thought that the delays were at least in part caused by De Beers changing the scope of the project - as a result of these issues, De Beers decided to withhold a key milestone payment.

In response, however, Atos threatened to stop providing any services unless the contract was renegotiated to reflect the increased scope, and the outstanding payments were made.  As De Beers was not willing to renegotiate the contract or pay the moneys due to Atos, Atos's project staff suspended work and handed in their security passes.  Thereafter, no further work was performed by Atos on the project.

Both parties claimed that the other had repudiated the contract.  That is, they both thought the other had, by their actions and stated intentions, breached the contract by indicating that they did not want to be bound by it. Repudiation entitles the innocent party to treat the party as discharged and sue for damages.

The Court's decision

Although the judge thought that De Beers had not been entitled to withhold payments, this fell far short of amounting to repudiation. However, the Judge did find that Atos had, by its actions in suspending work, wrongfully repudiated the contract as, although they were willing to complete the project, they had made it clear this was conditional on the contract being renegotiated. In other words, they were only prepared to work on their own terms.

It is worth noting that the Court found that Atos did in fact have a right under the contract to suspend work for the failure by De Beers to pay.  However, the manner in which Atos had communicated its desire to suspend services unless the contract was re-negotiated meant that they were clearly unwilling to continue with the existing contract - and therefore they were not seeking to exercise their existing contractual rights.

The Judge was highly critical of both parties' conduct.  De Beers had failed to provide senior staff with sufficient time commitment to Atos and changed the scope of the project.  Atos failed to appreciate the complexity of the project and did not appear to commit sufficient experienced staff to the project.  The agile process for developing the software was also highly dependent on De Beers being fully co-operative, as well as understanding what it was that they would be doing.

Lessons for Suppliers.

The case highlights the importance of understanding the customer's business before committing to a contract.  If the understanding of the business is less than ideal, suppliers should consider whether they have the expertise to fulfil the contract and should consider avoiding the "fixed fee" model in such settings, or committing to firm deadlines for delivery.

Moreover, detailed, enforceable, and actively managed obligations of support and co-operation from the customer are essential whenever project performance depends in part on customer personnel participation.  In circumstances where the customer is not providing support in accordance with the contract, this needs to be stated clearly and the customer reminded of their contractual obligations.

Lessons for Customers.
For customers, although it often appears attractive to try to transfer to the supplier the risk of understanding the complexities of the customer's business, it is often incredibly difficult for the supplier to fulfil this requirement, and any failure to do so can result in major problems for both parties.

In this case, De Beers suspected from the beginning that Atos had underestimated its requirements and they should have been more proactive in mitigating the risks of this gap in understanding.  De Beers relied instead on what has become a frequent practice in IT and outsourcing contracts: letting the supplier fail even though the customer sees the failure coming, rather than trying to prevent such failure by providing greater support."

 


 

Linux ultimate test begins with offshore captive under the spotlight

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The London Stock Exchange's new Linux based core trading system, which replaced its .Net Tradelect system, is now up and running on the main stock exchange.

See more here.

It also sees the London Stock Exchange's core trading platform supported from Sri Lanka after it bought an entire software development company, MillenniumIT,  to take it forward. It basically bought an offshore captive.

The stock exchange knew it had to replace its ailing Tradelect system because it was not capable of taking it forward amid the explosion of algorithmic trading.

Linux is used in the trading sector widely. The London Stock Exchange decision to use .Net was more of a surprise at the time.

Stock exchanges with ambition have to retain control of their systems development.  The London Stock Exchange had to build up its skills to be able to take a new system forward.

So it bought a service provider with a commercially available trading system, which it made its own. In one fell swoop it got the system and the people and for less money (£18m) than it used to pay Accenture every year (£20m) to support its .Net Tradelect system.

So all eyes will be on the stock exchange which liked the trading system so much it bought the company.

Because the London Stock Exchange is so reliant on its technology it could not go for a full outsource. Instead it in-sourced and outsource.

I met Tony Weeresinghe, the head of MillenniumIT in May last year. See my interview with him here.

UK government finally makes it easier for SME IT suppliers

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The government has kept to its word and changed its procurement process to make it easier for small suppliers to sell IT to the public sector. But will things change?

Yes the government's Contracts Finder website is up and running. See this article for more details.

IT suppliers with a great product and/or service will now have a chance of selling it into the public sector. At the same time public sector organisations will have access to innovative products and services from small, often local suppliers. The increased competition and choice would end the dominance of a few large suppliers.

Importantly the pre-qualification questionnaires for all central government procurements under £100,000 will be eliminated.

The government already launched a website for small suppliers to explain why the have trouble competing for public sector work.

Here is the most recent example of a complaint made by a supplier on this website: "The jargon used in contract notices/tenders is confusing and over complicated. So much of the time you are trying to understand what the contract notice is trying to say and what service they require. So it needs to be plain English."

There are loads more where this came from so once again take a look here.

E-skills pours cold water on UK IT skills shortage claims

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This blog has featured many articles and views on the debate about wheter there "is or isn't an IT skills shortage in the UK?"

I cannot avoid writing about this debate because proponants of offshoring often use the apparent shortage of UK IT skills as a reason to send work overseas.

There are good arguments made about the shortage of particular skills, but IT professionals in their thousands find themselves out of work.

This week one of my colleagues wrote a story about the latest stats from e-skills, which suggested that in the first alf of last year, when there were claims of a shortage, there was excess supply of IT professionals in the UK.

"...75,000 jobseekers plus 37,000 unemployed IT professionals led to an excess supply of 18,000 "ready candidates" in the market for the second quarter of 2010," redfas the article.

Here is Jenny Williams' full article.

Also see the survey promoted by this blog last month which revealed some interesting facts and views from within the IT sector.

Recession in outsourcing sector is over. Day three Nasscom 2011

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Here is PA's Alex Blues' take on the final day of the Nasscom India Leadership Forum.
Interestingly it appears the IT industry believes that the outsourcing recession is over.

See Alex's introduction to Nasscom 2011 as well as his blog post on day one and day two.

Also see his posts from last year in this blog post.

Thanks for your contribution Alex.

Alex Blues, IT sourcing specialist, PA Consulting Group

"It is close of play at Nasscom 2011, which this year has changed from a large Indian conference to a large global conference in India.

It would appear from the twenty senior IT industry representatives we interviewed - including ten CEOs - that the recession in the outsourcing industry is over. The industry is expecting growth to increase from 16 to18 per cent in 2010 to in excess of 23 per cent in 2011 for IT, with BPO being just slightly lower.

The key to many of our discussions has been focus, by both domain and geography. There is a need to be consistent - a big change from three to five years ago when the offerings were very generic.

The market is no longer interested in the inputs. What the market is interested in is the business output. As a result, the economic buyer is moving from the application owner, often found in the IT department, to the service owner, who is often outside the IT department.

In 2010 innovation was driven by cost. In 2011, innovation is being driven by many reasons.  Cloud has sparked many debates, and while there is a majority verdict that it will change the shape of the industry, people still want to know 'when will this happen?'. Other discussions have included; whether the cloud will add to revenues or cannibalise existing income, whether it will be used more widely - with new systems and in new geographies - or whether it will actually have an impact on the current systems of end users.

Consolidation has been and will continue to be a trend, particularly between the smaller suppliers. This will allow them to provide the focus I mentioned earlier in this blog, and makes my concluding thought a promising one - the market is definitely maturing.

 

Danish union claims Indian IT staff have to live like slaves and some IT firms try and get staff into UK under minimum wage

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I was sent a link to this interesting article on The Register by a reader.

It is all about CSC Denmark facing a bit of agro from the Prosa union in Denmark.

According to the article Prosa says that staff brought in from India are being paid between £341 and £568 a month when Danish law requires foreigners to earn at least £3,555.

Prosa has described this as "gross exploitation and says staff from India "virtually live in slave-like conditions..." See the story here.

CSC Denmark claims it is fair because staff get free accommodation and £971 Kroner a month in per diem expenses.

See the Prosa comment here.

A reader of this blog recently sent me the answers from some freedom information requests about the pay Intra Company Transferees, mainly Indian IT workers, would get if their applications from employers were accepted.

It appears that discounting allowances 6% of the 1,930 certificates of sponsorship made between 1 and 20 January this year would get less than the minimum wage if their applications were accepted.

Here is the full breakdown of the pay that theses workers would get if approved by the UKBA.

6% had an annual salary minus allowances of less than £11,564. 
7% had an annual salary minus allowances of less than £13,650. 
10% had an annual salary minus allowances of less than £24,000. 
0.5% had an annual salary including allowances of less than £24,000.

Cloud dominates Indian shindig. Day two Nasscom.

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Here is the latest blog from Nasscom written by PA's Alex Blues about the second day of the Nasscom India Leadership forum.

As expected the cloud is high on the agenda.

See his introduction blog post and his report from day one.

Also see this link for all his blog posts from last year's event.

A Cloudy Day

By Alex Blues, IT sourcing specialist, PA Consulting Group

Another great day at Nasscom with a further eight interviews with industry leaders, including the CEO and chairman of Steria and the CEO of Genpact. The messages today are consistent with yesterday, though the key area of divergence is around Cloud.

Cloud

There are people that are passionate about Cloud, who believe that Cloud is going to be at the centre of the industry very quickly, regularly citing statistics such as "25 per cent of all outsourcing business will be Cloud-based in two years". The feeling is that this will represent new business rather than replacing existing legacy business. A key message about Cloud is that it will empower the business user, and as we explored yesterday, the CIO really needs to watch out.

Others are slightly more hesitant, stating that Cloud holds promise for new or peripheral applications, but that it will be some time before it is suitable for core and critical applications. 

At the other end of the spectrum, references are being made to the "ash cloud". Here, there are concerns over integration, security and business uses not being coordinated.

I think the general conclusion is positive though, and again the key message is that the decision maker is going to change from application owners to service owners.

Consolidation

The general belief is that there will be two tiers of player - the largest Indian players (there are still rumours that one of the largest Indian tier one players are looking to purchase a major European or US company) and then the specialist tier two players. The only consolidation that will take place in tier two will be in order to strengthen specialisms.

More insight to follow tomorrow.

Follow PA at Nasscom

 

Could Egypt violence could leave its and other countries' offshore IT reputations in ruins?

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The recent events in Egypt have dominated the news over the last couple of weeks.

Before that we had the pro democracy protests in Tunisia.

It seems the globalisation of IT delivery makes many world events relevant today.

Egypt has been promoting itself in recent years as an alternative to traditional offshore IT locations such as Brazil, Russia, India and China, collectively known as the BRIC countries.

The Egypt Information Technology Industry Development Agency (EITIDA) even commissioned the London School of Economics (LSE) to carry out a survey of the best places to offshore IT outside the BRIC countries.

The 14 countries looked at were: Belarus, Bulgaria, Costa Rica, Czech Republic, Egypt, Mexico, Morocco, Philippines, Poland, Romania, Slovakia, Tunisia, Vietnam and Venezuela.

Egypt did pretty well.

But now we here that Wipro and Infosys have evacuated staff from Egypt and foreigners have been forced to leave.

Wipro said: "... our expatriate employees have come back (to India). With the curfew in Egypt continuing, we are urging our local employees to leave office early to ensure their safety. The BCP processes are also in place wherever required. We hope the situation is resolved soon so business can continue peacefully."

Robert Morgan, director at sourcing broker Burnt-Oak Partners, says political insecurity is rarely considered when businesses consider offshoring work.

The troubles in Egypt, which is seen as a good place to offshore, could change this.

"Many of the offshore locations offer helpdesk services which is at the forefront for a business. Workloads can be moved around if there is a problem in one place but it needs to be in a disaster recovery plan."

He says smaller offshore destinations such as Egypt, with a small number of places providing services will find it more difficult to shift workloads.

He says businesses largely ignore political considerations when agreeing offshore contracts but this should change. The political unrest in Egypt could happen in many countries, he says.

 

IT services ready for growth, growth and growth. Day one Nasscom.

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Yesterday was the first day of the Nasscom India Leadership Forum in Mumbai. We have a blogger at the event in the form of PA's Alex Blues.

Yesterday we posted his thoughts on the eve of the event and today here is his first blog post from the event.

Report from day one at Nasscom

By Alex Blues, IT sourcing specialist, PA Consulting Group

Alex Blues.JPG"I know they say that a year is a long time in politics, but a year is certainly a long time for NASSCOM.

Last year, there was a nervous and cautious optimism about 2010. This has now evolved to a greater level of certainty about growth in 2011. Everyone we have spoken to has talked about sustained pipeline growth in IT of around 16% o 18% although this is perhaps slightly lower in BPO.

The key messages from day one were:

- There has been a major move from project-based work, where every client's requirement is tailored to their need and to platform-based work. This has led to a lot more talk about specialism and domain knowledge and as a result, organisations are talking about requiring different skill sets.

- There has been very little talk of offshore. People are talking instead about globalisation. This can be seen just from the attendees at the conference - there are far more nationalities represented here than last year.

- The market has moved from 'lift and shift' or 'mess for less' to 'innovate and serve'. All of the CEOs that we interviewed talked about the move from 'time and materials' type contracts to outcome-based business solutions, where the client is looking to have a business problem solved rather than having the component of a problem solved, leaving the client responsible for the outcome.

- Organisations are therefore applying pricing formulae based on the outcome, not the input and component prior to that outcome. Again, this endorses the point that there is a greater need for domain knowledge and a greater need for different types of staff.

Given this backdrop, it was widely agreed that the role of the CIO is going to diminish as decision making moves from the CIO to the CFO and CEO. NASSCOM is a completely different place this year in terms of the level of optimism and the maturity of what people are talking about. I'm looking forward to tomorrow.

Follow PA at Nasscom here

Also see all of Alex's blog posts from Nasscom last year in this blog post.

Nasscom gets opening day boost as India tightens its grip on global IT services

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The Nasscom India Leadership Forum starts today and I expect the party mood to be in the air. Particularly after recent reports revealing that Indian IT companies are gaining a bigger share than ever of the global services market.

According to the report in the Times of India the global share of the outsourcing market that Indian companies had in 2010 is 55% compared to 51% in 2009.

Som Mittal, president, Nasscom, is reported to have said that the pent-up demand for IT-BPO services, return of discretionary spending, new business models that encouraged first-time buyers and re-invented value proposition for existing ones were the key drivers for the industry performance.

See the full article here.

This blog will have reports from PA Consulting Groups Alex Blues so watch out fro those. Here is his intro post. 
 

When will IBM become an Indian company?

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Cognizant is always grouped with Indian suppliers Satyam, Wipro, Infosys, TCS and HCL to make the India SWITCH group.

It doesn't really work now because Satyam has Mahindra in front of it. But it's a good acronym.

But as we know Cognizant is actually a US company that happens to use the low cost offshore delivery model, with most of its actual staff in India.

It lnow ooks set to increase the number of its workers that are in India, with a planned expansion of its campuses there.

How long it will be before IBM is an Indian company? It has thousands of employees in India, over 100,000 according to some, and it can only increase if the global IT services market continues the way it is going. Redundancies always seem to be in the US or Europe so India might catch up.

After all there is talk of the company changing its recruitment model to one that uses mainly contractors. See this article I wrote about it last year.

Will Nasscom reveal the new normal in outsourcing?

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Alex Blues, IT Sourcing Specialist at PA Consulting Group, has agreed to blog for me from Nasscom's big event again this year.

See all of his posts from last year by clicking this blog entry.

Starting tomorrow (08 February) Nasscom is the big get together, in India, of the IT services industry.

Here is his introduction post:

What is the new normal in IT outsourcing?

By Alex Blues

"The annual Nasscom India Leadership Forum in Mumbai from the 8 to 10 February will involve over 150 speakers, 30 trade delegations and over 3000 delegates.

Throughout the three days, PA Consulting Group will be interviewing industry leaders and CEOs of suppliers and end user organisations alike, looking at how their predictions for 2010 compare with the reality of the last few months - and discovering how they think 2011 will develop.

The official theme of the event this year is 'Drivers of the Decade'. Three key words, almost sub-themes in their own right, have been identified by Nasscom. They are 'innovate', 'redesign' and 'reinvent'. There are also ten different 'tracks' to the show, ranging from building alliances to innovation. There is anticipation that these tracks will reflect the Nasscom pre-event statement that "working on yesterday's logic could be risky and the 'New Normal' is yet to take shape".

Precisely how these ideas will manifest themselves throughout 2011 will be a prime topic of conversation over the three days. 

I'll be blogging throughout the event, reporting on how industry leaders believe 2011 is likely to differ from 2010, and on how the months ahead could herald the beginnings of a new industry."

Follow PA at Nasscom here.

 

Read the confidential document about Labour's plans to reduce immigration leaked by Wikileaks

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Immigration abuse by IT suppliers - There's a Wikileak for that

 

A confidential document revealing the discussions within Labour government about better managing immigration, including reducing the number of Intra Company Transfers (ICTs), has been given to the Telegraph by Wikileaks.

 

(see the confidential document here)

 

It reveals the options being proposed to the then Labour government.

 

In the memo the Migration Accounts Committee (MAC) suggested that ICTs in the UK could be reduced through increasing penalties on companies violating the rules, greater monitoring, increasing the fee for visas and increasing the minimum amount that ICTs should earn.

 

The Tory/Liberal government imposed an immigration cap but did not include ICTs. However it did set a pay threshold on ICTs of £40,000. But that is all and many in the IT sector believe the £40,000 threshold is too low in IT.

 

Proposed changes were being discussed in 2009 amid unemployment fears and the global recession. The memo explains how ICTs were specifically under review. It explains that most ICTs in the UK are Indian IT workers.

 

The government was obviously worried about how limiting ICTs would impact US companies. But Professor David Metcalf, who chairs the MAC, reassured than that they would not be hit because US ICTs earn over the pay threshold that will be set.

IT mega deals are not dead but have been sleeping

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The latest research from Ovum paints an interesting picture of the state of the IT services market. 

 

It appeared, in the UK and Europe at least, that the IT services mega-deal was a thing of the past.

 

But the final quarter of 2010 saw an upsurge in global mega-deal activity, according to Ovum.

So what do you think?

 

Do you think mega-deals will be phased out?

 

IT Jobs are still being sent offshore by the shipload, but what happens to the UK workers that lost jobs?

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When will the offshoring of UK bank IT jobs end?

Barclays is the latest to announce another round of offshoring. This time it is back office and call centre workers at Barclaycard in Northampton and Teeside. The jobs are going to India.

There have been so many IT jobs send to destinations such as India I have lost count. Lloyds TSB for example is another major offshorer.

Whenever I write the stories there is always a line from the company stating that new jobs will be created and the bank will try to redeploy the workers affected.

I would like to hear the views of IT and back office workers that have had their jobs offshored.

Please fill in this quick questionnaire.

 

40% of UK IT professionals have spent time out of work in the last 5 years

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Here are the final stats from the survey I have been presenting recently.

A reader set up the survey to help shed light on the debate surrounding the UK IT skills shortage. There was a healthy 170 respondents.

This post looks at how long the respondents have spent out of work in the last 5 years.

The questionnaire asked: How many months have you spent out of work in the last 5 years?

The survey said:

 

Time out of work.jpgThankfully the largest group (60%) have not been out of work in the last five years. Good going in the light of the recession.

But that still leaves a significant 40% that have spent time out of work and almost 10% that have been out of work for over a year.

It is important to realise we have not differentiated between in-house IT staff and contractors.

 Please click here to complete my latest quick survey about the how outsourcing contracts deliver against agreements.

Infosys signs off at World Economic Forum in Davos

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BG Srinivas, European head at Infosys, kept us up to date with the World Economic Forum in Davos last year and agreed to do the same this year. 

 

On wednesday last week we featured his first post from the event this year. On Thursday he talked about Russia's president and his defiance against terrorism.Then on Friday he said there was some urgency for global collaboration.

 

Here BG gives his main takeaways from this year's event.

 

1 - A Durable Ecosystem

 

The key take away from this year's World Economic Forum was that today's world is becoming increasingly more complex and people can no longer make assumptions about what is going to happen next. There is an increased urgency to collaborate and form partnerships at all levels - economic, political and social  to achieve peaceful and sustainable future. Today's world calls for better exchange of intelligence to tackle terrorism, a call which the Russian president made during his speech.  The event in Tunisia and Egypt calls for nations to work together to figure out a peaceful transition.

 

Leaders who participated at the event hope that greater collaboration, inclusive growth  will lead to economic growth; government, financial and economic reform; elimination  of terrorism;

 

2 - Growth

 

The need for economic growth was the phrase at the top of mind for every executive attending the event. Attendees were keen to discuss new business models, accessibility to growth markets, and new methods of working to make growth happen. Interestingly, all were in agreement that technology is a growth enabler, which will help to increase productivity, and act as a stabiliser in the global economy. The phenomenon of cloud computing was actively discussed too, especially as this new technology will in many ways take cost out, will make the model more flexible and scalable,   the savings can be  invested into new growth enablers.

 

3- Reform

 

Reform was a topical conversation at the forum and there was unity in the belief that this must be accomplished in order to reduce the levels of debt across the world and to drive financial stability. Likewise, it is believed that governments have to also act within their own organisations to restructure and streamline public debt. To establish the world of tomorrow, corporations, governments and social organisations must partner and work together to reform social legislation, as well as financial, to ensure the entire population is accommodated for regardless of wealth, religion, ethnicity or language.

 

4 - Elimination of terrorism

 

Despite the tragic airport bombing in Moscow last week the Russian Federation President, Dimitry Medvedev, used the World Economic Forum as a platform to deliver the message that we should not be daunted by terrorism and it will not be tolerated. He emphasised the need for nations and governments to collaborate with regards to security and terrorist intelligence to prevent any future attacks.

 

5 - Inclusion

 

As growth markets continue to develop there is a necessity to ensure the inclusion of the masses to eliminate poverty.   This can be achieved through investments  education, healthcare,  increasing transparency in Govt, corporates and individuals to play more proactive role.  Also, employees in the growth markets are becoming more demanding - they want flexible and part-time working, equal working rights for women, childcare support, maternity and paternity leave, the ability to network and employee friendly benefits; the same as the mature markets. There is a requirement for cross-segmentation collaboration between employees and corporations and corporations and governments, to modernise the infrastructure that will empower the population of developing countries to have the equal opportunities and rights of those in the mature markets.

 

6 - India is part of the future

 

I wrapped up my time at the World Economic Forum by attending an Indian soiree, which was attended by host of Indian cabinet-level ministers - from the home office, industry and trade, planning, and special projects. The evening was opened by the Head of the Confederation of Indian Industry, who proudly talked about India's partnership with the World Economic Forum and its pro-activity in economic, political and social issues. He went on to state that by partnering with India, businesses and governments alike, across the world, will be able to increase their opportunities and prosper.

 

 

Continental European governments will find it easier to cut IT costs than UK

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Governments across Europe want to cut their costs. Moving public sector IT to outsourcers is a starting point.

 

But it seems that the continental Europeans will have a lot more to gain from this than the UK.

 

I say this after reading TPI's latest analysis of the European outsourcing market.

 

It revealed that the UK accounts for 92% of public sector IT outsourcing in Europe. This leaves plenty of potential for outsourcing for European governments.

 

For Example France and Germany have large populations and big economies but yet combine these two with all the other European nations and you only have 8% of public secto IT outsourcing spending.

 

Can it be true?

 

Robert Morgan, director at sourcing broker Burnt-Oak Partners says if it is measuring contracts in monetary value it is probably the case.

 

"Especially if it includes the UK Ministry of Defence (MoD)," he says.

 

He says the MoD, for example, has an outsourced training service that costs £10bn and if you compare this to Belgium's outsourcing of its parliament work, which cost between 400 and 500m Euros, the UK's big spending is clear.

 

We should also remember that the UK government has wasted shed loads of cash on failed and inappropriate IT outsourcing.

 

See this document for the details of some of the UK government's biggest IT outsourcing mistakes.

Help navigating the IT outsourcing sector

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At Computer Weekly we offer readers premium content. This is free but we do ask subscribers to fill in some personal details. Once you are in you subscribe you do not have to re-enter your details.

There is a good selection of material about outsourcing and we have had thousands of subscribers since May last year.

If you click these links you can read the content for yourself.

Read about the flat UK outsourcing market

Read Morrison & Foerster LLP's legal guide to signing multi-source contracts

Find out about the state of the European outsourcing market with exclusive Equaterra research

Get advice about how to choose between in-house and outsourced SAP managed service

And find out what businesses think of the service providers

Are IT outsourcing and offshoring contracts failing to deliver?

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The questionnaire I posted yesterday has so far had 8 respondents. Very small I know, but a start.

Here is the link to the survey. I urge IT professionals to reveal their views about the outsourcing contracts signed by their business decision makers.

The last survey I promoted got 170 after a slow start.

Ok only eight respondents but here are some results.

All 8 respondents said their employer has offshored some IT and 6 out of 8 said the contracts have delivered less than expected.

So far half (4) said IT outsourcing contracts have delivered less than expected. Three have delivered as expected and one more than expected.

5 out of 8 respondents said their business will outsource more this year.

We have had 7 UK respondents and one from the US. Thanks to all.

Once again here is the link to fill in the quick survey.

Only 4.2% of India's engineers are fit to work in a software product firm

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Only 4.2% of India's engineers are fit to work in a software product firm and just 17.8% at an IT services company.

These are the statistic revealed by a company set up by two Indian techies, which has tested thousands of Indian engineering and computer science graduates.

According to an article in the Economist, brothers Himanshu and Varun Aggarwal have set up the company known as Aspiring Minds.

The Economist said the test, used by the brothers' company, is similar to the Graduate Record Examination required by American universities. It tests analytical, verbal and quantitative skills and looks at people's personalities. It has used this standardised test on thousands of engineering and computer-science students in India.

Indian computing graduates are used in their thousands by UK businesses.

And there are mixed views on whether they have the skills to to the job here in the UK.

A questionnaire promoted by this blog recently had some interesting findings in regard to the suitability of offshore workers onshored in the UK. There were 170 respondents.

- The questionnaire asked the question: If you have worked with offshore suppliers, do you think their staff really have better skills and experience than UK IT staff?

The survey said:

do offshore have better skills.jpg- The questionnaire also asked: What proportion of these onshored staff actually have the level of experience and skills you would expect for these roles?

The survey said:

 

Offshore onshore do the job.jpgMy latest quick questionnaire is about the success of IT outsourcing contracts. Please fill it in here.

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About this Archive

This page is an archive of entries from February 2011 listed from newest to oldest.

January 2011 is the previous archive.

March 2011 is the next archive.

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