March 2011 Archives

How do I understand the true cost of putting IT in the cloud?

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Cloud computing seems to be on every IT director's shopping list, but do they really understand the costs of moving in-house resources into the cloud.

IT service providers are the companies doing cloud implementations. Not many businesses will build their own cloud infrastructures.

So the service providers need to be able to show CIOs how much it will cost to move systems to the cloud and how much it will cost to keep it in-house. But this information is not easy to gather.

But there are start up companies that are building businesses around this gap and they appear to be winning big customers.

I met a start up known as Romonet the other week. CEO Zahl Limbuwala, told me about the company's software, Prognose, which allows IT directors to quickly work out how much it will cost whenever you put a new resource, such as a server, into the datacentre.

The application allows datacentre planners to drag and drop devices into a template that matches their datacentre. It can calculate the additional costs in terms of power use.

The software has a huge database with detailed information about all the equipment a datacentre might use. For example if you choose a particular IBM server the software calculates the costs based on the database information.

It also forecasts the costs in the future. Romonet is still only a small company and still really a start-up, but it has big customers including Dell, Thomson Reuters, Arup and Fujitsu,

With businesses looking at the cloud the technology will help them decide whether it is cost effective. It will allow them to compare in-house against cloud as well as private versus public cloud.

Users only need three days training to learn how to use the Java application.

Another Start-up, known as Apptio, which has recently received $40m in venture capitalist funding has developed software to help businesses work out the true cost of IT.

Apptio software, which uses information from the general ledger, the Configuration Management Database, the support desk and one of projects gives businesses detailed information about total cost. As a result they can make informed decisions about things like outsourcing IT and moving to the cloud.

Facebook, Microsoft, Cisco, Google and Starbucks are already customers with a major European bank soon to join this list. Again it is a small company but it has massive customers.

Roy Illsley, principal analyst at Ovum, said CIOs need metrics to help them make decisions regarding cloud computing.

"There'll be a big mash-up and it needs managing. Predictive modelling enables companies to analyse and compare scenarios and say whether the move makes sense or not. Such level of knowledge and information is a great basis to make decisions, based on better assessments."

Here is an article I wrote about this in November last year.

Will ending the IT services to government Oligopoly improve things?

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The government has reconfirmed that it wants to end the current situation that sees a few large IT services firms dominate central government accounts. See its latest IT strategy report in full here.

Francis Maude said the oligopoly of big business supplying government IT must be ended by "breaking down contracts into smaller, more flexible projects. This will open up the market to SMEs and new providers." IBM, HP and Accenture dominate government contracts.

It sounds obvious given the number of high profile IT failures in central government and the wastage, that the government would like to open up its options.

I have spoken to suppliers and advisors and below are their comments. I would appreciate your comments so please fill in the comments section.

1 - Minister for the Cabinet Office, Francis Maude said: "We will end the oligopoly of big business supplying government IT by breaking down contracts into smaller, more flexible projects. This will open up the market to SMEs and new providers."

2 - Mark Lewis, head of outsourcing at law firm Berwin Leighton Paisner said: "The problem in the past is there has been laziness and the government has not taken time to consider alternatives. The government should no longer default to the suppliers it knows."

"This is doable and I do not believe it will create difficulties."

However Lewis thinks there will be challenges if the government wants to go beyond the tier 2 suppliers and into the third tier made up of SME suppliers. "It becomes more of a problem because you have to quality assure solutions from SMEs for example."

3 - Steve Nicholls director at CSA Waverley, which is a small supplier, says that many of the processes required to audit small suppliers are already in place. "They already have agencies such as Buying Solutions that do this."

He says the benefits that the small suppliers include niche knowledge and flexibility.

4 - Robert Morgan, director at sourcing broker Burnt-Oak Partners, says "It is virtually impossible for the government to bring in multiple suppliers. It will require much more governance and project management of suppliers." He says the government would face difficulties if it multisources because conflicts between suppliers can occur and it is not always clear where one supplier's responsibility begins and ends.

He believes the only way this can work is if the government names a prime supplier and dictates to them that some services should come from other suppliers. "For example the government could say that in year 5 of a contract a prime supplier would have 15% of services delivered by a third party."

5 - Duncan Aitchinson, head of Europe at sourcing consultant TPI, says conceptually there is no reason why the government shouldn't multi-source but stresses that there are challenges. "Managing a complex portfolio of suppliers in a multisourced contract is challenging for any organisation not only those in the public sector." But he says because it has been done in the private sector there are models in place that the public sector can follow.

6 - Sam Kingston, UK head at T-Systems, says there will also be challenges for tier 2 suppliers in identifying which contracts to go for. "We would definitely be interested in government work but tier 2s will have to be careful about what deals they go for."

"Because of the [limited] experience and resource constraints they cannot chase large chunks of business."

He says when you get down to tier 3 suppliers it compounds the problems that the government will have working with tier 3s.

7 - Vikram Nair, UK head at Indian service provider Mahindra Satyam, says for central government to become a consideration it would have to open up long term contracts with payments over a longer period of time.

The government has set its stall to get a more diverse group of suppliers involved in government IT. Following some of the IT disasters of the past its decision seems to make sense. But whether the opening up of contracts to more suppliers improves government IT and makes financial sense is less certain.

Things could get worse for Fujitsu as customer consults solicitors

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The Highland Council in Scotland has taken legal advice on a deal with Fujitsu which has missed service delivery targets.

The £66m deal is for IT services.

Councilor Carolyn Wilson at the Highland Council told me the council is giving Fujitsu time to sort the problems out but has also had legal advice on the matter.

Fujitsu does appear to be on a bad run at the moment. The IT services firm lost its £300m plus desktop services deal with the Department of Work and pensions recently as well as a big deal with Thomson Reuters.

Both these deals were said to have problems with the supplier transitioning services from the incumbent, HP in the DWP's case and an in-house operation at Thomson Reuters.

The Press & Journal, a Scottish publication, has written an article about it

See video about how bringing offshoring IT workers to the UK is destroying UK IT profession and ripping off the taxman

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Since I have blogged recently about the problem caused by businesses bringing offshore workers to the UK I thought I would promote a Youtube video (see below) sent in by a reader.

This video, which is part of a campaign against government policy, explains how both the UK IT profession and the UK government suffer as a result of the practice of businesses bringing cheap IT workers to the UK to replace IT staff. More to the point allowing them to class a tax free allowance as part of the salary and avoid paying tax as a result.

See these blogs I wrote last week they also explain the issue but the video makes it clear:

Offshore IT workers in the UK avoid paying taxes but are not breaking the law.

Masochistic government IT offshoring rules that reduce tax revenue and increase discontent.

All eyes on Fujitsu's desktop deal with Centrica

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Following Fujitsu's loss of two major deals recent customers might be forgiven if they are worried about decisions to outsource desktops to the supplier.

Fujitsu lost its £300m plus desktop support deal with the Department of Work and Pensions before it had even got going as a result of a failure to transition the services from HP.

It also lost a major deal  with Thomson Reuters recently after about three and a half years. A source said it hadn't managed to take on all the services in that time from the in-house team and Thomson Reuters, like the DWP, ran out of patience.

Back in December Centrica named Fujitsu as its desktop services provider which saw it replace T-Systems.

All eyes will be on Fujitsu to see how the transition phase goes.



IT professionals shed light on differences between public and private sector

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I posted a blog yesterday asking IT professionals to share their experiences working in the public and private sectors.

I put in a questionnaire as an attempt to crowdsource a guide for IT professionals moving from the public to private sectors. I am going to interview various people myself to try and get information but thought it would be good to initially get the views of IT professionals with hands-on experience.

I have so far had two readers fill in the questionnaire. They have provided some really good material, which I will use.

But I am reposting the article in a call to IT professionals to add their views.

Here is a link to the questionnaire.

Orange and T-Mobile UK operation outsources its IT to T-Systems

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I was told that the T-Mobile and Orange joint venture in the UK known as Everything Everywhere has outsourced its IT to T-Systems.

The deal could be worth about £700m and will see a couple of hundred Everything Everywhere staff move to T-Systems.

T-Systems already provided IT services to T-Mobile, which is also owned by Deutsche Telekom but the Orange UK IT infrastructure, which is done in-house, is said to be twice as bog as its T-Mobile equivalent.

The deal is said to include datacenter services, computing services for about 16,000 staff. It will also see a lot of IT move into the cloud.

A source told me that before Orange and T-Mobile formed Everything Everywhere Orange was about to outsource its IT to HP.

Crowdsourced guide to transferring to private sector IT from public sector IT

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I have recently been writing quite a lot about the opportunities in the private sector for IT professionals with public sector IT backgrounds.

With the public sector haemorrhaging jobs, workers could either be forced to work for suppliers through outsourcing contracts or will be made redundant and seek opportunities in the private sector whether it is as an in-house IT worker or at a supplier?

For example Socitm believes that most local government IT staff will end up being employed by suppliers.

And according to a survey of 66 IT directors by ReThink Recruitment, 79% believe private sector staff offer better value than IT professionals from the public sector.

I am asking anyone that can help to answer as many of the below questions to give me their views. I am also going to speak to as many experts as possible to create a resource for IT professional to get help when planning a career switch or who find themselves out of work?

This is the first time I have intentionally dipped my toes into crowdsourcing so if you can contribute your views please fill in as many answers as you can?

I have also been running a survey for a few weeks asking IT professionals whether they think public sector IT workers have the right skills to succeed in the private sector. So far I have had 72 respondents. A total of 37 said public sector IT workers are not equipped for the private sector while 35 said they are. If you want to answer the question the survey is here.

So let's see what those public sector IT workers that aren't equipped to do a private sector job need to do to make suire they have a fighting chance.


Fujitsu loses £500m 10 year IT services deal with Thomson Reuters after less than four years.

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It has not been a good couple of weeks for Fujitsu and the bad news could be set to continue with the DWP ending its desktop services contract before it started..

Now it turns out it has lost a £500m 10 year outsourcing deal signed with Reuters which it signed back in 2007 to provide IT services globally. Reuters is now of course part of Thomson Reuters. Like the DWP deal it looks like problems in the transition of services could be to blame.

See this article in the Telegraph about the Thomson Reuters deal when it was first signed.

Fujitsu said the contract was terminated a month ago. But I have seen no reports.

One source told me that it is common knowledge in the industry that Fujitsu is going to lose this deal. But he said as far as he was aware there has been no announcement.

Another said that after over three and a half years of the deal Fujitsu has not been able to transition all the services from the in-house team. "It is looking increasingly likely that the services are going back in-house."

Fujitsu said: "We can confirm that Fujitsu and Thomson Reuters have mutually agreed to terminate the IT infrastructure contract agreed with Reuters prior to the Thomson acquisition. Over the coming months Fujitsu will be working to ensure the smooth transition of services to the Thomson Reuters in-house IT operation."

Fujitsu recently lost a £300m plus desktop support deal with the Department of Work and Pensions (DWP) because it failed at the transition phase of the deal.

79% private sector CIOs prefer private sector IT skills

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I recently blogged about some research from the Financial Times which suggested that 57% of private businesses were not prepared to take on public sector workers with over half claiming they were not up to the job.

I asked IT professionals to give this issue an IT angle by asking whether readers thought public sector IT workers were equipped to do a private sector role. The questionnaire is below so you can still fill it in.

So far out of 31 respondents 16 said public sector workers are not equipped to do a private sector role. The other 15 said they are.

But ReThink Recruitment has gone one better. The company has asked 66 IT directors in the private sector what they think. The results showed a staggering 79% of them think they would get better value from IT workers with private sector experience.

Here is my survey if you want to fill it in.

Masochistic government IT offshoring rules that reduce tax revenue and increase discontent

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George Osborne would have a tax boost if Coalition was tougher on IT offshorers bringing workers to the UK.

In my job as a business journalists I am constantly hearing the phrase "It's a win, win" but when it comes to offshoring IT it seems a "lose, lose" for the UK government.

There would be hundreds of millions in extra tax for the UK if the government made it easier for UK IT workers to compete with offshore workers who are brought to the UK by suppliers. This is because offshore staff working in the UK, on Intra Company Transfers, pay much less tax as you will see below. This is because the way living expenses, which are not taxed, are bundled into salaries.

Also a result of the UK unemployment resulting from offshoring the government has to pay more out to the thousands of IT professionals that find themselves out of work.

As we have a budget this week I thought I would expand upon last week's blog post about the tax revenues that the UK is losing as a result of the offshoring IT.

A reader has sent a link to a document he has put together about the double whammy of UK workers being undercut by offshore workers and UK tax revenues reducing as a result.  Within the document he created an example of the costs of IT workers both onshore and offshore and reveals the different tax revenues generated (Click on image below to see full size table).


The document has some very interesting links within it.

This is what the reader had to say: "When the government is announcing cut backs and increases in taxes people will ask why are migrant ICT workers and their companies being given tax advantages at our expense?"

Did Fujitsu misprice the DWP deal?

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Following the ending of the £330m plus desktop services agreement between Fujitsu and the Department of Work and Pensions, the industry is discussing how Fujitsu managed to fail to take on the services from HP.

As revealed last week Fujitsu was not able to complete the transition of the service from incumbent HP.

I spoke to a contact this morning and he tells me that Fujitsu mispriced the deal. He says the price was too low and Fujitsu would have lost lots of money.

He even suggested that the DWP probably realised it was mispriced but had to sign the deal because it was a public tender.

Another source told me that the Fujitsu price was very aggressive and "much lower than the competition."

He says government contracts give marks for the price and if Fujitsu scored well on other apects of the deal and had the lowest price it would win.


Lloyds Banking Group removes another 1000 in-house jobs

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Lloyds Banking Group is continuing its strategy to cut and outsource UK roles.

The bank is going to cut 570 jobs and outsource another 450.

See this report in The Guardian.

In the summer of 2009 union Unite accused Lloyds of having a strategy of death by a thousand cuts.

Since Lloyds TSB took over HBOS in a government brokered deal in 2008 it has cut about 27000 jobs.

Offshore IT workers in the UK avoid paying taxes but are not breaking the law

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I write a lot about how UK IT professionals are often replaced by workers from overseas using Intra Company Transfer (ICT) visas.


These workers are attractive to UK businesses because they cost much less. But there is also a huge tax advantage for these workers that means they can afford to come to the UK on minimum wages. 


Not only do workers in the UK on ICT visas get more of their money, the UK government gets less.


The way expenses are bundled with salaries and how the tax is calculated means government attempts to raise the minimum salaries required for these workers are futile.


In the current situation UK IT workers who pay a lot of tax are being replaced by offshore workers that don't pay much if any at all.


If you click on this link you can see all the statistics, as presented by the government, for the total number of immigrant workers by occupation, the total number using ICTs by occupation and the total number using ICTs by nationality. These show all occupations but IT stands out as a major recipient of immigrant workers.

Because it is complicated Migration Watch has provided me with a summary of the problem. Migration Watch is calling for a change to the taxation rules.


Here is Migration Watches explanation of how the tax system benefits ICTs:


Intra Company Transfers


-          good for the employer, bad for the Treasury, by Migration Watch



1. Tax and National Insurance rules are heavily biased towards ICTs to the dis-advantage of UK workers.



2. Intra Company Transfers (ICTs) have been excluded from the government's cap on economic migration.  Their numbers have been significant in the recent past, rising from 22,000 in 2008 to 29,000 in 2009. 


3. Meanwhile, there have been some significant changes to this route. The salary threshold for a visa valid for up to 5 years has been raised to £40,000 while a new visa has been introduced, valid for 12 months in a 24 month period, for those earning between £24,000 and £40,000.   The latter are unlikely to show up in immigration figures which include only those who arrive for more than 12 months. 


4. In recent years only 50% of ICTs have earned salaries of £40,000 or more.  This might suggest that the numbers will fall to around 15,000 visas a year.  However, there are very significant financial advantages for both the employer and the migrant worker so the numbers could increase considerably.


Financial Advantages of ICTs


5. The three main advantages are:


a)                 No National Insurance is payable for the first year by either the employer or the employee.


b)                 Accommodation allowances can make up to 30% of the salary.  Other "cost of living" allowances mean that over 70% of the salary can be in the form of allowances.  These allowances are not subject to income tax for the first two years.


c)                  The salary offered is supposed to be consistent with the going rate in the UK so as to prevent British workers being undercut.   For this purpose, each Standard Occupation Code (SOC) has a minimum salary[3].  However, the UKBA accepts the lower quartile of salaries based on the UK as a whole.  Thus it is perfectly legitimate to offer a salary for a job in an expensive area like London based on the bottom quartile of salaries for the whole of the UK.


6. For example, the average salary of a UK programmer in London is £32,820while the average salary of an Indian IT programmer sent to London in December 2010 on an ICT visa was £27,981 with allowances making up an average £21,139 or 75% of the salary. This basic salary, excluding allowances, is well below the minimum wage level.


7. Table 1 below shows the breakdown of costs and net pay for a UK worker and Indian ICT worker for the first year of employment, each with a salary of £40,000; the ICT worker received 70% of salary in the form of allowances.


Table 1:  Breakdown of costs of a UK and an ICT worker for the first year




Table 1 migration watch.jpg

8. The UK worker takes home £29,000 from his £40,000 salary and £15,390 is paid in tax while the cost to the employer of the salary plus their NI contribution is £44,390.  However, if the same employer hires an ICT worker, the take home pay of the employee is £38,210, the total tax paid is only £1105 and the cost to the company is only £40,000. So for a salary of £40,000 the company saves over £4,000 in costs and £14,000 of tax revenue is lost. The employee also gets to take home an extra £10,000 a year which perhaps explains why they are happy to be brought in on salaries that appear to be well below the going rate.


9.  After the first year the national insurance is paid but it is only on the non-allowance component of the salary.


Table 2 below sets out the costs for the second year.


Table 2:  Breakdown in costs of a UK and an ICT worker for the second year



Table 2 migration watch.jpg 



10. These financial advantages to a company in hiring an ICT worker rather than a UK worker incentivises a company to replace UK workers on cost grounds  and means that the numbers of migrants in this uncapped category have the potential to grow substantially. Changes to the taxation rules to create a level playing field are essential.

It was a bad week at the office for Fujitsu

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This week has not been a good one for Fujitsu.


The IT service provider was dumped from a £300m plus desktop services deal by the DWP and was also criticised in a National Audit Office (NAO) report on the UK Border Authority's Immigration processing system, which Fujitsu provides IT for.


On the DWP deal Fujitsu was dropped because it failed to transition the service from HP. This is a massive desktop deal and HP-EDS was the incumbent. This will not reflect well on Fujitsu when it targets desktop deals in the future because the ability to successfully transition is essential in any deal.


I wonder how easy HP made the transition.


Somebody suggested to me that HP might have made life difficult for Fujitsu but a former HP executive told me it is more likely to be the opposite. This is because third party advisors look at the past records of suppliers taking on and passing over contracts. He says if they are good at it they are more likely to win more deals. "EDS would pay particular attention to getting good marks for transitioning."


"They do not need HP to screw up a client."


I must admit when I initially wrote about the DWP deal with Fujitsu I thought it sounded great. The long term savings on the cards as through using thin client technology were high.

Joe Harley, then DWP IT director general and chief information officer, who is now government CIO said at the time. "[Thin clients] provide a number of benefits, including little or no maintenance required to the kit and reductions in power consumption, which supports our sustainability agenda."

Meanwhile the NAO said many delays, to the immigration system's introduction, were due to Fujitsu trying to design a complex system while legal, policy and business requirements for the system were still being resolved.

"The UKBA also believes that Fujitsu underestimated the complexity of the project and did not have the right staff in place for a fast start-up, although this is disputed by Fujitsu," said the NAO.

MindTree and 2e2 deal shows mid market offshore opportunity

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An agreement between 2e2 and Indian IT service provider MindTree is an interesting one.

The deal sees MindTree provide SAP helpdesk, support and development work for 2e2's clients. The interesting part is that this will open up offshore resources to customers that would not normally be able to access.

Tridip Saha, head of MindTree in the UK says mid market find it too expensive to use offshore services. "The threshold for the mid market to access offshore services is quite high."

But he says a company like 2e2 can aggregate its customers and create a larger virtual customer which makes the offshore service affordable.

He says the mid market would require a heavy investment for offshore companies to target directly because it is so big and made up of smaller companies that spend less than FTSE 100 companies for example.

"Some of these markets are too fragmented for us but through 2e2 we can reach them."

TCS's UK head A S Lakshmi told me last year that TCS could target small companies through the cloud.

He says the problem for suppliers attempting to succeed in the SME sector is the fact that it is fragmented and companies do not all fit into a single mould. "They have the same requirements of large companies but it is difficult because they are very fragmented."

But cloud computing will reduce the overheads of serving a fragmented market.

So through a combination of partnerships between IT suppliers specialising on the UK mid market and offshore services firms as well as cloud computing the UK SME could soon have enterprise level services with the advantages of offshore delivery.

See this link for an inteview with offshore service pioneer Ashok Soota who is the chairman at MindTree until later this month when he leaves to set up his own venture.

Fujitsu never gave DWP confidence in its ability to transition desktop deal from HP

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The DWP's decision to cancel a £300m-plus contract with Fujitsu to provide desktop support came as a shock but according to a source close to the deal the termination has been on the cards for six months.


The deal was signed in February last year and has been canned before any Fujitsu work has been done. Incumbent HP will continue to provide the services.


The contract would have seen Fujitsu provide support and services to 140,000 desktops across the UK as part of a £300m-plus deal. It was planning to use thin client technology to cut the DWP's desktop IT costs.

According to a source close to the deal Fujitsu failed to perform any of the transition activities. "Fujitsu never managed to give the DWP confidence that it could do the job."

He added that it must have cost Fujitsu a fortune and thinks it unlikely that the supplier will get the money back.

iPhone helps avoid nearshore outsourcing cock ups

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This one is just a bit of fun but it does have a bit of an outsourcing angle. The iPhone now has an app that can help businesses overcome some communications problems when sending their IT to nearshore destinations.


rude.JPGFor example in Bulgaria a nod of the head means no, while a shake of the head means yes. Just be careful when you are making requests to Bulgarian service providers.

Also if someone in Greece imitates spitting at you they are being nice. Take a look at this article about the iPhone app in question.

It is also quite possible that some people outside the UK might think the V sign always means victory. 

Are there thousands of IT professionals in the UK illegally because government lets wolves look after sheep?

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The National Audit Office's (NAO) latest report, which looked at the UK immigration points system, had some interesting findings.

Obviously the headline that everyone went with was the fact that there could be 181,000 overseas workers in the UK illegally because their visas have expired.

With IT professionals accounting for a large part of economic immigrants in the UK, it would make sense that a large part of this 181,000 workers in the UK on expired visas are IT workers.

Part of the problem, it seems, is that fact that The UK Border Agency leaves it to the employers to manage the workers and make sure they leave. Problem is they are not really set up to do this and they probably don't care anyway.

The report also revealed the up to date figures on immigration, including details about the use of the controversial Intra Company Transfer (ICT) route. ICTs were excluded from the goivernments immigration cap.

Between April 2008 and December 2010 there were about 64,000 workers in the UK on ICT visas. A massive 55% of these were employed by IT consultancies.

Also 80% of applications for ICTs were made from outside the UK. So UK companies are not the ones making the applications, but by the looks of it offshore IT consultancies.

IT professionals supporting operations in Afghanistan

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I have written articles about the opportunities for IT professionals working for IT suppliers.

I mentioned how IT workers at Logica were out in Afghanistan working on the implementation of a healthcare system at Camp Bastion supporting British troops.

Here is a picture of a couple of the team working on the project at Camp Bastion.

Logica in Afghanistan.jpg


Green is back on the IT agenda, at least for the suppliers

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A few years ago sustainability was at the top of corporate agendas. Whether this was to improve efficiency or look caring to customers, or both, there was genuine interest.

But the last couple of years has seen green IT take a back seat as survival becomes the most important aim of any company during an economic slowdown.

I spoke to Jeff Chater, head of UK sustainability at Atos Origin, following the company becoming carbon neutral.

This means that Atos Origin offsets the carbon emissions it is responsible for by investing in green projects and buying carbon credits. Chater said it does this voluntarily.

He says the company doesn't just offset carbon but actually has a global programme to reduce its carbon footprint.

On the customer side Chater said there has also been a change in that it is private sector customers that are making the most noise about sustainability rather than the public sector before. Perhaps the cuts have found a victim in green IT.

He said these private sector customers are today interested in finding out the emissions of their supply chain rather than just trying to reduce their own emissions. So all IT service providers should be ready to show customers what they are doing to minimise emissions.

Logica for example is part of the voluntary Carbon Disclosure Project (CDP). Businesses report their carbon emissions and receive targets to help them reduce emissions. Logica is also an accredited adviser through the CDP and can support businesses.

And don't forget Capgemin's activity in sustainability. I visited its state of the art datacentre in Swindon last year and was impressed. See pictures of the Merlin datacenter in Swindon here and read this Computer Weekly article about it.

Low cost offshore labour closing-down sale is on and rush from Indian IT suppliers expected

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The errors in the UK Border Agency's 2011 minimum salary figures for offshore workers brought to the UK mean they have reverted to the 2010 figures until the problem is fixed.

This gives offshore suppliers an opportunity to bring staff in now before the final changes to the salaries are published.

The new figures were originally published at the beginning of this month but were later changed as a result of errors. The UKBA said it is reverting to the 2010 figures,.

So for a limited period only bring in offshore labour for almost 50% less than it will soon cost.

Here are some examples of the changes to salaries in the 2010 UKBA figures and the 2011 figures that have now been removed.

-Senior Systems Administrator increases 47%
-Software Engineer increases 22%
-Senior Software Engineer increases 29%
-Senior Business Analyst increases 33%
-Senior Systems Developer increases 40%

See the full details here. Unless the errors are the actual salaries these will be the changes.

Don't be surprised if there is a rush for Intra Company Transfer (ICT) visas. A contact tells me that last March when the right to permanent settlement was going to be removed for applications from April 2010 there was a 50% increase on monthly ICT visa applications.

UK Border Agency says errors in immigration rules led to details being pulled from website

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I blogged yesterday about the fact that the government (UK Border Agency) had withdrawn new details on salaries for immigrant workers from its website.

Many people in the IT sector were quite surprised about the increase in the minimum salaries for offshore IT workers. This was welcome news for many. So when they were pulled there was obviously a bit of suspicion. Until we see the revised data there is little more to this story, but for the record the UKBA have got back to me and told me the data was withdrawn because of errors.

Here is what Steve Lamb, regional operations manager at the UKBA said: "We have been alerted to errors in two of the recently published Codes of Practice and these are now being corrected. In the meantime, the previous codes have been reinstated onto our website."

Lets hope the errors aren't the salary figures themselves.

Is the government about to do a u-turn on IT salary increases for offshore workers in the UK?

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I wrote last week about the changes the UK Border Agency (UKBA) was making to the codes of practice for immigrant workers which resulted in many IT roles having to be paid a lot more money. I also blogged about it.

This was welcomed by many in the IT industry because they believe the pay levels were set too low and made it easy for businesses to offshore IT jobs.

I hope I didn't speak too soon and fill IT workers with hopes of a level playing field, but it looks like the salaries might change again because the UKBA has taken the details down from its website and said it is reviewing them.

To be exact this is what the statement says: "The occupational codes of practice for skilled occupations under Tier 2 of the points-based system are currently being reviewed and will be republished here as soon as they are available."

Obviously there is a chance that the salaries might be being raised as a result of pressure from campaigners against the practice of replacing UK workers with low cost staff from overseas. But there could also be a bit of pressure from industry and even some of the IT suppliers it might have been worried about having to charge more and as a result become less competitive.

I am waiting for a statement from the Home Office to clarify things but as the changes were only put on the site last week it seems strange to be doing a review already.

Here are some of the changed salaries in IT announced last week:

IT or IS director minimum salary was £83,200 a year in 2010 and is now £92,628

Computer services manager leapt from £43,000 to £53,516

Software managers or programme managers have to get paid at least £57,837 now compared to £40.500 last year.

Offshore Systems developers working onshore had to be paid at least £31,200 last year but will now earn £41,891 and Systems Auditor minimum pay moves from £34,600 in 2010 to £47,880 this year.

Here is the full table of changes to the IT salaries expected for offshore workers in the UK that was announced last week. I link to Intellect because I only had a link to the UKBA figures which have now been taken down.

Do IT professionals want to work for IT suppliers?

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Most industry sectors seem to be reducing their IT departments in terms of workforce size to cut costs. At the same time the practice of outsourcing IT is on the up.

As a result of the recent recession and the increased delivery of outsourced services coming from offshore locations more and more IT professionals are unemployed.

There are thousands of experienced IT professionals currently out of work following the interlinked banking crisis, recession and now public sector cuts. Then there are figures from the Higher Education Statistics Agency (HESA) showing that Computer Science graduates are the largest group of unemployed graduates in the UK.

But what about suppliers? If more work is being outsourced there should be jobs available at suppliers. Or have the swingeing cuts made by companies like HP and IBM put IT professionals off a career on the supply side?

I wrote analysis about moving to the 'dark side' this week. There are rewarding careers for IT workers at suppliers.

But what do the IT professionals think?

Please fill in this survey to help us get a feel for the attitudes of IT professionals to working at suppliers.


Are IBM, Accenture and Cognizant really the most admired IT services companies in the world?

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According to Fortune Magazine's survey to find the most admired companies in the world IBM, Accenture and Cognizant are the three most andmired IT services companies in the world.

IBM and Accenture even make it into the overall to 50 at number 12 and 49 respectively. See the top IT services list here.

But when it comes to IT companies the pace setters are Apple and Google who are number one and two in the overall best companies in the world. See the list here.

This link lets you chose a sector and see who are the most admired companies. Have a play.

Click on this preview article and then click on the download button for a free independent white paper about Accenture on Computer Weekly.

See this blog post for more information about Cognizant.

See IBM's Western European performance in this blog post.

Public sector IT workers have a 50:50 chance of success in private sector

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I have been blogging a quick survey about whether public sector IT staff have what it takes to succeed in the private sector.

This followed a survey from the FT that suggested that 52% of private sector companies do not think public sector workers, in general (not specifically IT), are up to the job in the private sector.

I put a quick Google questionnaire together to see whether this applied to IT and got 28 respondents.

Exactly 14 said public sector IT staff are not equipped to work in the private sector while the other 14 said they were. Similar to the FT findings although a tiny sample. Perhaps the split was just between public sector respondents and those in the private sector.

I really want some comments from people that have worked in both sectors so we can really understand the main differences, if any. Please let me know your thoughts by filling in the comment section below.

Is Accenture going to swap stilettos for hobnail boots in UK local government?

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With the government tightening the purse strings and reducing spending on IT projects the suppliers have to quickly adjust to a new reality.

Accenture is one of Europe biggest IT service providers and it has a big footprint in the UK central government. But in local government it has more of a stiletto print.

Well that is until this month when Accenture signed its first major local government outsourcing deal in the UK. I upset Accenture last week by referring to the deal with the City of London Corporation as its first major local government deal. This is because the company already has major local government deals outside the UK, including New York.

Could this deal be the first of many? When times are tough suppliers have to move outside their usual hunting ground to keep shareholders happy.

Click on the preview article and then click on the download button for a free independent white paper about Accenture on Computer Weekly. Once you are signed in you will have access to lots of premium content.

Also see Accenture's Technology Vision for 2011.

Dell Services is the new giant on the block but why chose it over HP, IBM etc?

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Dell is now a consideration for IT services. But little is known about it.

The supplier won a big deal with TUI travel recently to provide desktop services across Europe.

There is a feeling in the industry that Dell needs to increase its capability and the supplier said itself that it will acquire to bulk up.

This is what Dell Services has globally today:

41,000 Employees Globally
28 Delivery Hubs in North America, Europe, and Asia
60 Expert Tech Support Centers
7 Global Command Centers

If you want to get some independent information about Dell Services you can download some premium Computer Weekly content for free. For the content on Dell Services just click here and if you are not already signed up fill in the details. You will then have instant access to all Computer Weekly premium content.

Kit Burden, who heads up the technology and sourcing practice at law firm DLA Piper, was inviolved with TUI's deal with Dell says this is an important one for Dell services.

"It is an important deal because it is big, multi-jurisdictional and group wide and shows that Dell can do propere managed services."

He says if you compare Dell Services to more established companies such as HP, IBM and Fujitsu they are "not as quick at coming with the answers."

But this will change as it establishes itself he says.

Evidence that outsourcing doesn't guarantee savings unearthed in Cumbria

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One of the biggest advantages promoted by suppliers of outsourcing services is often that it will cut costs. Fixed costs are passed over to a supplier and replaced by a one off payment or increasingly more common by smaller recurring payment.

But outsourcing, as we know, is not guaranteed to save money. I am often guilty of making that presumption mysel

Here is a link to an article about how a Cumbria County Council is bringing previously outsourced road maintenance work in-house to save money.

"By bringing some of the services back in-house we will have more direct control and flexibility over the work our teams do. They will have a greater sense of pride and ownership in their work and will be able to work more locally than the current arrangements."

Does this quote apply to IT teams? 

Here is the full story

FTSE 100 firms voice concern over IT benchmarking independence dwindling. Are lessons from Enron being lost?

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I had a conversation with an industry source yesterday about IT benchmarking. The back ground to this is the fact that many advisories and the like want good benchmarking skills.


The acquisition of benchmarking firm Compass by the International Services Group, which owns sourcing consultancy TPI, came up in the conversation.


He told me that some of his clients, who happen to be FTSE 100 companies, have expressed concerns about benchmarkers being swallowed up by groups offering other services.


They want a benchmarker to be completely independent and as a result not produce results that might lean the customer towards taking a particular service or service provider.


He said the outsourcing service providers also want benchmarkers to remain independent for obvious reasons.


This can also be applied to the sourcing consultancy sector where there is consolidation with big consultancies buying sourcing capability. An example of this is KPMG's acquisition of Equaterra.


One source told me said there are potential conflicts of interest. "After Enron three of the big four accountancy companies sold off their consultancy practices because government regulation said they had to. Today it seems that companies are building up again."

Capgemini to help stop repeat of Habitat Twitter cock-up

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The increased use of social media to engage with customers has cost some business dear.


But Capgemini could soon have a consultant near you to help you avoid the pitfalls, amongst other things. The company's latest digitalisation strategy includes social media consultation.


When Habitat tried to attract visitors to its Twitter page using words related to the political turmoil in Iran in 2009 it was heavily criticised. It deserved the slating it received.


Twitter uses hashtags to bring attention to particular issues. In Habitat's case it used things like #Iran to attract people to its posts which were actually sales promotions.


Habitat is not alone. Dominos Pizza suffered untold damage when an employee was filmed sneezing on food and stuffing cheese up his nose. The video was posted on You Tube and viewed over a million times.


See this link for other examples of corporates suffering as a result of social media mistakes. 


As a result of businesses need advice on social media and a new breed of advisor has emerged. These people that are advising huge corporates are not the normal public school educated types providing consultancy via huge firms.


These types are often sole traders that have grown up with the web and could be some of the types Capgemini will be looking for as part of its digital transformation strategy.


This strategy will try to support customers embarking on digital transformations. This includes, as well as social media, the use of mobile internet access and broadband, mobile devices, smart products, and e-commerce.


Read here what Capgemini has to say about it. 


If you have any doubt about whether corporates are taking social media seriously  have a look at this article about how Indian offshore IT service provider Infosys has invested in creating a corportate social media platform.


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


See a video about Infosys' platform in this blog post.  

Offshore IT staff brought to UK have suddenly become a lot more expensive

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I was sent the latest updated rules from the UK Boarder Agency about how much overseas workers doing particular roles should be paid if the are granted a visa.


It seems that many IT workers brought to the UK from offshore locations such as India will suddenly be a lot more expensive.


Forget the cap, which didn't include the controversial Intra Company Transfer (ICT), these increases will make it less attractive for service providers to bring staff in from overseas.


Here are examples of the changes to the minimum salary overseas workers should get for certain roles.


IT or IS director minimum salary was £83,200 a year in 2010 and is now £92,628, which is about an 11% increase.


Minimum pay for a computer services manager leapt from £43,000 to £53,516


Software managers or programme managers have to get paid at least  £57,837 now compared to £40.500 last year.


Offshore Systems developers working onshore had to be paid at least £31,200 last year but will now earn £41,891. And Systems Auditor minimum pay moves from £34,600 to £47,880.


Analyst programmers had a minimum of £29,100 in 2010 and now a minimum of £35,719


The programmer minimum was £26,000 and is now £31,243, while the software engineer minimum jumped from £30,100 to £36,578 and the systems administrator minimum pay moved from £28,000 to £36,634.


Notice how many roles are moving above the government's £40,000 minimum salary for offshore workers coming to the UK on ICTs for over a year. These increases will also make it less attractive to bring IT staff in for less than a year.


See the 2011 minimum salaries by occupation for yourself here.


The minimum pay is based on the Salary Services Limited data in its salary surveys. Perhaps they have started basing the minimums on SSL median pay level rather than the lower quartile.


Suppliers from India, who are often criticised for bringing in low cost staff to replace UK workers, say it is more expensive to do this. But critics say this is not the case.


Indian companies say they are currently trying to increase the proportion of workers local to customers. This could make this more urgent.

Public sector IT staff are ready for private sector say 55%

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I have been blogging a quick survey about whether public sector IT staff have what it takes to succeed in the private sector.


I put a quick Google questionnaire in this blog post. 


The background to this is an FT survey that revealed that many private sector businesses don't think public sector workers are equipped to transfer successfully to the private sector


I asked the question: Are UK public sector IT workers equipped to do the job in the private sector?


So far I have had 20 responses. 11 said yes and 9 said no.


I want a lot more views on this so please fill in the survey on this link.

Legal & General workers to blow lid on overcharging by IT supplier

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Workers at UK insurance firm Legal & General (L&G) have informed the company about alleged deliberate overcharging by a major supplier.

The details of the allegations, which were made in August last year, could be revealed at the L&G AGM in May.

Workers at L&G originally informed the company's CEO Tim Breedon of the allegations, by letter, in August last year.

The allegations involve claims that some workers at a major outsourced service supplier have been deliberately mischarging L&G for units of work. This is said to include a practice of charging for extra days of work that have not been done.

Workers could reveal the details of the letter, which has details of the alleged overcharging, including names of some people involved.

In an email to a whistleblower, in response to an update request, the L&G Financial Crime and Information Protection department said it was unaware of the letter sent to L&G CEO in August.

L&G declined to comment.

The group of workers say they have contacted the Financial Services Authority and the Serious Fraud Office. Neither organisation would comment.

Are public sector IT professionals equipped for private sector jobs?

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I did a blog post yesterday about a survey carried out by the Financial Times that found that 57% of private businesses are not interested in taking on former public sector workers and 52% believe these workers are not up to the job.


In a quick survey I asked the question: Are UK public sector IT workers equipped to do the job in the private sector?


Since yesterday I have had six responses. Three said yes and three said no. I need more views.


Please click on this link to fill in the survey.

Infosys faces charges in US and accused of "stupid American" slur and Christian criticism

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An  employee in the US at Indian offshore IT service provider Infosys has filed a complaint with the Alabama court alleging Infosys is involved in visa fraud and tax evasion.

In the UK companies like Infosys are often accused of bending the visa and tax rules.

To make matters worse the employee, Jack Palmer, who has been working with the company as a principal consultant in the US,

Since filing his report, he says, he has been "subjected to constant harassment, threats, and retaliation" including "numerous threatening phone calls"; monitoring of his e-mails; "racial taunts or slurs, including being called 'a stupid American' and criticised for being a Christian"; refusal to pay his bonuses; refusal to "reimburse him for customary and substantial expenses"; and being forced to work more than 70 hours a week "without appropriate compensation," reported the Court House News Service.

Read the full story here.

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