May 2011 Archives

Nasscom hits back at Public Accounts Committee report

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The use of Intra Company Transfers is contentious at the best of times. But when the economy is struggling, the practice of bringing offshore workers to the UK, is highly contentious.

A recent report from the Public Accounts Committee  (PAC) criticised the controls to prevent the abuse of ICTs as well the inclusion of living allowances in the salary. 

ICTs allow companies with a UK operation to bring its workers offshore to the UK. If you have read this blog before you would have noticed I have written a lot about it.

The reason I am writing now is because I saw an article in the Indian press about Nasscom's view on some of the PACs recent criticism of how Indian IT firms use the ICT system.

Nasscom represents the Indian IT service providers.

Criticism 1 - The government recently introduced a rule that stated that a worker coming to the UK for more than a year should be paid at least £40,000. If ICTs come for up to a year they should be paid at least £24,000. This is heavily criticised because living allowances, which are not taxed, can be included in the salaries. This means ICTs cost a  less than the UK worker to the employer. Here is Migration Watch's explanation of how the tax system benefits ICTs.

According to Business Line (Hindu Times) Nasscom 's response is: "Allowances are critical part of the salary of the foreign workers and cannot be excluded as it is a significant cost that sponsor has to bear to fill in the position by ICT worker."

Criticism 2 - There has also been criticism of the policing of the ICT system. For example the National Audit Office recently said there were potentially thousands of ICTs still in the UK despite their contracts being over.  There have also been criticisms that applications for ICT visas are not checked out properly. The PAC said that the Border Agency does not have the management in formation it needs to control the ICT scheme. See this article about a Public Accounts Committee report.

According to Business Line (Hindu Times) Nasscom 's response is: "We also believe that the current mechanism has enough controls already at the hands of the UK Government -- including audit rights -- to ensure that the system is not misused."

According to the same article Nasscom also said it regretted the fact that the committee had not had the opportunity to examine the issue in similar depth as the Migration Advisory Committee (MAC), an independent body that advises the Government on migration matters.

The MAC reported on ICTs and the immigration cap back in November.

 

Shared services not worth the time in public sector? It can't be true.

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I have written fairly extensively about shared services in the public sector.

It seems to make perfect sense for public sector organisations, which share common processes, should share the people and systems that complete these processes.

It is already happening across the public sector. There are examples in the NHS, the police and local authorities of organisations that have already taken the plunge. Recent research, by Chartered Institute of Public Finance and Accountancy, said that 96% of local councils are moving towards shared services.

But although examples such as the NHS Shared business service, have gone some way towards providing a business case for shared services in the public sector, not everyone is convinced.

Analyst company Ovum this week revealed the findings of research of public sector CIOs towards shared services.

It seems in Europe about half are concerned that the cost benefits are not enough to justify the major upheaval.  A quarter of the same group said that they would avoid shared services out of loyalty to existing staff, who could be surplus to requirements in a shared service.

A third of them were concerned about losing control.

I am interesting in hearing what IT professionals as well suppliers working in the public sector think of this.

UK legal profession cetain of uncertainties of Indian data protection law

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The Indian Data protection law, which was introduced last month, has created uncertainty in the outsourcing sector and clarification is needed on a rule that could create a burdensome business process.

Although it is being welcomed, the outsourcing industry wants clarification  on the finer details.

The law, the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, was introduced last month. There have been fears that an article within it, that states that processors of data must gain consent from the person the data is about, will be over burdensome.

The new rule is section 43A of the Indian IT Act. According to the Times of India it states "that a corporate shall have to obtain permission through letter or fax or email from each client before collection of sensitive information. Thus, BPOs will have to inform the client regarding purpose of usage before collection of such information, if they go by the new IT rules 2011."

This would create additional work and potential hurdles for Indian suppliers obtaining consent from the customers of their clients.

Peter Brudenall, lawyer at UK law firm Lawrence Graham, says businesses are worried about the new rules on obtaining consent. He said the Indian government seems to have gone further but he added that there needs to be some clarification.

Katherine Ollerhead, lawyer at Berwin Leighton Paisner, says the rules suggest that any company that processes data needs to get consent. This is because the rules do not seem to differentiate between the controller of the data (the client of the service provider) and the processor (the service provider). If true it would mean service providers in India having to seek consent from all the customers of a client to process the data.  

But she says there is a waiting game to see the clarification from the Indian government. She agrees with Brudenall that the Indian law appears to go further than the law in the UK.

This article in the Times of India suggests there will be clarification soon.

If you want to see the new rules in full see click on the image below.

Thumbnail image for india pdf.png


 

Indian suppliers are processing and storing the personal data of their clients' customers. For example if an Indian company provides BPO services to a bank it will have the details of customers on its systems. Until last month India did not really have data protection laws that matched the levels of protection of the law in the US or Europe.

Not surprisingly this was always seen as a risk with offshoring to India. UK corporates have got around this problem because most companies providing outsourcing services from places such as India sign up to standard EU-approved contractual clauses to govern the security arrangements for the data processing.

But the panic amongst the outsourcing industry over news India's data protection law is unnecessary according to outsourcing lawyer Kit Burden.

Burden at DLP Piper says there has been a lot of panic, mainly from the US, about the new law because it requires businesses to gain consent from people who have their data stored or processed by an outsourcer.

Burden says he has been through the legislation and it actually means that consent only has to be given once. This would be given by the controller of the data, who would be the client of the service provider.

He welcomes the new legislation and he says if Europe accepts it as being as strict as its own it would negate the need to put workarounds in contracts.

Phil Lee, a lawyer at Field Fisher Waterhouse, is an expert in this area. He gave me his thoughts.

"There's uncertainty as to when and how the new rules apply.  On a narrow reading, they might apply only where no contract exists between the outsourcer and its service provider - seldom the case in international outsourcing (generally only in on-shore, intra-group outsourcing).  
 
It's also unclear what the rules are for processing "sensitive personal data" (such as medical records and financial data).  Service providers need consent before processing "sensitive personal data",  but clarity is missing as to whether it can rely on consents already obtained by its client - if not, this could have a significant impact on outsourced operations.  
 
The Indian data privacy rules bear strong resemblance to European rules in terms of data access, data retention and purpose limitation.  They also provide clarity as to the security standards expected of service providers.  In effect, they impose certain mandatory data privacy standards that outsourcers would normally impose contractually.  By doing so, they give outsourcers greater confidence that, when sending data to India, they will fulfil European data export rules to ensure "adquate" protection for their data.
 
However, there are key differences between Indian and European standards.  Outsourcers should not assume that their service provider's compliance with Indian data privacy rules will meet European requirements - it won't.  The outsourcer will still need to perform an appropriate level of due diligence and impose suitable contractual terms on its service provider in order to protect data."

If you have any thoughts please put them in the comments section.

Hope for Mckinnon, but has anything changed?

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This is a bit off my beaten track as it has nothing to do with outsourcing, but as Computer Weekly has followed the case of Pentagon hacker Gary Mckinnon so closely I thought it worth writing about the latest developments to try and get some feedback.

Yesterday following Barack Obama's address to UK journalists with David Cameron (see video below) there was a bit of excitement because Obama said the decision to extradite Mckinnon or not is in the hands of the UK legal system. That sounds positive to campaigners because the US has been pushing hard for him to stand trial in the US.

Gary Mckinnon hacked the Pentagon in 1999. The US government says he caused lots of damage. Mckinnon says he was looking for evidence of UFOs.

 

But despite the renewed hope in the campaign to stop the extradition does what Obama said actually change anything?

Mark Ballard is a journalist who has followed the case closely. He said: "Obama said, it's in the hands of the British, we trust they'll do it within the law. Cameron said it's in the hands of the Home Secretary, we trust she'll do it within the law. The law says there's no reason to stop an extradition on grounds given. It's not as hopeful as McKinnon's Mum hopes."

See these articles about Gary Mckinnon by Mark Ballard.

Mckinnon charges exaggerated by government

McKinnon the scapegoat

UFO Hacker suicidal over health

Expert challenges UFO hacker's $700k bill

Court throws out hacker McKinnon's appeal to Supreme Court

Former Computer weekly journalist Ian Grant has also reported in depth on Mckinnon's plight. Read an interview with Mckinnon by Ian here.

 

 


 

Could India's data protection law be remedy to lingering corporate doubts?

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The growth of India as a destination for offshore IT services has been astonishing.

When the millennium bug approached in 1999 western businesses wanted low cost software companies to help the services of Indian software firms as low cost remedy to the problem that computers were not programmed to cope with the date change.

Before then Indian companies were just seen as mainframe maintenance firms. But once in the Indian companies have spread into all sectors and moved into every Enterprise technology imaginable.

Read this blog post about how Western IT firms allowed the Indians to take hold.

But despite the success of Indian IT services firms there has always been one fear that has, believe it or not, held the Indian companies back. This is the lack of data protection law in India.

"Although not having such a law until now has not of course stopped a lot of offshoring to India, the lack of it has been a major source of concern, both for European customers and for the Indian IT and outsourcing industries," says Mark Lewis, head of outsourcing at law firm Berwin Leighton Paisner.

But India has now enacted such a law.

Here is an article about it. It appears to be getting mixed reactions. I am hoping to get some expert legal comment on this so watch this space.

Views of IT outsourcing and broken TV connections from the house warming party

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IT outsourcing is big business but if you talk to IT workers you are left wondering how?

The IT outsourcing sector in the UK was worth £41.7bn in 2009, according to research from Oxford Economics. This was about 20% of the total UK business outsourcing sector which was worth £207bn. In total outsourcing accounted for 8% of UK GDP that year.

But if IT workers had anything to do with it the sector would not be that big. I was at a housewarming party yesterday (22nd May) and I met three IT professionals. They wern't drunk by the way and neither was I.

One of the IT professionals, who actually works for a service provider, said he doesn't understand why businesses outsource so much. He said he doesn't think an outsourced worker will ever give you the commitment of an insourced worker.

He said workers from suppliers will not go the extra mile for the client. He used an analogy of a broken TV to get his point across.

"OK, see that TV. The client asks me to put a new plug on it. So I do just that. Although I notice that the wire is faulty I just do what is requested. It is not in my interest to do it at the same time because that will be another job later. But if I was an in-house worker I would do both jobs in one go," he told me.

A survey recently carried out at the recent Infosecurity Europe event, by automation software maker Lieberman Software, found that not only were IT outsourcing contracts costing more than expected but  three quarters of those interviewed think that outsourced service providers were creating work unnecessarily.

Then there were two IT professionals from a major corporate at the party. They said they would not outsource any core business IT work. This also made me think of a meeting I recently had with Cognizant's global head of business consultancy. He said as a result of technology advances a lot of processes are no longer core and having a unique system is not necessarily a real advantage.

So outsourcing suppliers have to be able to demonstrate to their potential customers why certain elements of their business are not core. This is potentially where business consultancy arms within IT service providers could add value.

But back to the point of this post. How has IT outsourcing become so big despite clear doubts about its effectiveness.

Letting IT service providers get close can only benefit a business

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I have recently wrote an articles that have looked at the trend of businesses sharing information with IT service providers.

If you do this both parties can plan better.

Today I was with Tony Weeresinghe, who heads up the trading software company, MillenniumIT which the London Stock Exchange acquired a couple of years ago. Basically MillenniumIT is a supplier of trading systems and support and the LSE acquired it for £18m to replace its ailing .Net based trading system, known as Tradelect, that was supported by Accenture for £20m a year. Good business it would appear.

My first ever post on this blog was about the deal. See it here.

Amongst other things we talked about how the LSE, through MillenniumIT, now has the fastest core trading system in the world. One of its platforms can complete a trade from start to finish in 103 microseconds, while the main LSE platform can do it in 115 microseconds.

The LSE's old trading system took 3 milliseconds to do it. Pretty quick but a long time if you are trading via computers and algorithmic trading software. A millisecond could cost you a lot of money.

But the moral to this blog post is that Weeresinghe says that being close to the business has helped MillenniumIT shave microseconds off trading times. This is because it now understands how the LSEs clients trade and can fine tune the software.

You could say this is an argument against outsourcing in that an outsourcer can never understand the business as well as internal teams. But it could also be an argument for large companies to not just buy best of breed technology but the actual companies that make it.

But it could also be an argument to open up to service providers and let them see what makes you and your customers tick.

This deep understanding of the business will also help MillenniumIT create systems that enable different types of trading. Weeresinghe says that speed is becoming less of a differentiator as everyone gets faster. But because MillenniumIT is so close to the business it can provide the technology required if the LSE wants to introduce new trading services to differentaite.

 

IT head at Aurora talks pick and mix sourcing

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I recently met Aurora IT head John Bovill. I asked him to do a guest blog post about his thoughts on IT outsourcing.

Here it is.

PICK AND MIX OUTSOURCING.

By John Bovill

john bovill.jpg"All functions within a business are "outsource-able" to a greater or lesser extent.  The challenge is to choose which specific factors a business sees as being central to the way it competes, such as, not being easy for competitors to imitate and that improve the customer experience.

Working within an upper mid-market multi-fascia retailer, where each brand has a strong personality and is differentiated by its product range, store ("bricks and mortar" and mobile and e-commerce), environment and customers service experience.  The shared service infrastructure (I.T., Distribution etc), underpinning the brands ability to compete, can be seen as a commodity that retailers should not attempt to do themselves?

Aligned to this strategic question of business competence, the reasons for outsourcing can be various and are listed below in priority order:

• cost savings
• improved quality of service
• access to specialist expertise
• increased flexibility
• strategic business decision
• free management time
• lack of resources
• improved financial control

Like many industry sectors the UK retail industry is mature, highly competitive and success is increasingly based on a market-share game. 

Within this competitive environment, the need for retailers to develop additional channels to market (e.g. e-commerce) and deliver a consistent customer experience across the multiple band touch points, is a critical success factor to avoid cannibalisation.   Retailers also need to recognise and provide an appropriate response to I.T consumerisation where customers are increasingly shaping their own buying experiences through their use of technology.

This paradigm shift from a "push" to a "pull" model will impact multiple stakeholders groups across the business and the role of I.T. will change from a traditional "back of house" to "front of house" function.  This shift is best exemplified by the move to mobile tills and contactless payment, away from the traditional static till and cash desk store environment.

The need to recognise these strategic changes and develop appropriate business models (e.g. multi-sourcing) that allow a "pick and mix" approach, as the ecosystem matures, will result in ever more subtle gradations in which elements of the value chain can be outsourced."

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Latest report on immigration system abuse. Waste of paper or step in the right direction?

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Yet another report has been published that points to companies abusing the UK immigration system to bring in cheap IT workers.

There seems to be a report into this every other month. All point to the same thing, that UK IT professionals are being undercut by low cost IT workers in countries like India.

But when will this problem actually be addressed?

See the PAC report conclusions and recommendations here

Here is an article I wrote about the latest report:The Public Accounts Committee (PAC) has expressed its concern over the lack of control of tens of thousands of overseas IT workers that enter the UK on Intra Company Transfers (ICTs).

In its report on the UK Border Agency's points based system it singled out the ICT immigration route, and particularly its use by IT firms, for criticism. ICTs are workers transferred to the UK by an employer that has multinational operations, which sponsors them. These workers fall outside the immigration cap. Many thousands of IT workers from countries such as India come to the UK using this route. "Two thirds of the migrants using this route work in IT, and are potentially displacing resident workers with IT skills," said the PAC.

Public Accounts Committee chair Margaret Hodge says the points based system, is better than the visa system it replaced. "But there is still a good deal of room for improvement."

"We are concerned at the lack of control of workers entering Britain through the intra-company transfer system. This allows multinationals to transfer their workers to the UK and is not covered by the immigration cap. Most workers enter through this route and, for instance, tens of thousands of IT workers have been brought in through intra-company transfers at a time when UK residents with IT skills are struggling to find work."

Alp Mehmet, vice chairman at Migration Watch which advises government on immigration issues, said the organisation is particularly concerned with the use of ICTs in the IT sector given high IT graduate unemployment. "We are concerned in the IT sector because there are a high number of IT graduates still looking for work from last year because businesses bring people in from overseas because they are cheaper." He says Migration Watch will continue to push the government to change this practice.

Hodge said not only does the UKBA fail to check if workers leave when their visas run out but only checks one in five of the companies that are sponsoring them . There are an estimated 181,000 migrants still in the UK whose permission to remain has expired since December 2008.

"The fundamental point is that the Agency lacks the management information needed to manage migrant numbers and ensure that the rules are complied with." She said the UKBA's planned new immigration casework system is expected to provide the management information required to better manage immigrant workers.

The PAC also cast doubt on the effectiveness of the introduction of a minimum salary for workers in the UK on ICTs. The Home Office has now set a minimum salary requirement for ICTs of £40,000 and £24,000 for those in the UK for less than a year.

"However, this minimum salary includes living allowances and therefore does not accurately reflect salary levels. In these circumstances, some companies may use cheaper workers from outside the EEA rather than UK resident workers, said the PAC.

See this link for the number of ICTs entering the UK between 1997 and 2008 by occupation.

See a video explaining how the use of ICTs to bring IT workers to the UK is destroying the UK IT profession.

Sourcing department sophistication could reduce outsourcing

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Quite a few people I have spoken to recently have talked about the increased sophistication of the departments within businesses that are responsible for sourcing decisions.

This better understanding of outsourcing has developed after years of contract activity. This includes notable successes and failures.

Sophistication could lead to more outsourcing suppliers on the books of UK businesses but with smaller slices of business. Meanwhile existing in-house resources might offer up more resistance to outsourcing as CIOs weigh up the best means of supporting business projects on a case by case basis, with a better understanding of the pros and cons. After all it is the sourcing department rather than the outsourcing department.

I was talking to John Higgins, director general at IT supplier industry body Intellect. He was talking about the sophistication of today's internal sourcing departments. He said businesses don't want to outsource if they can avoid it, but will look at each project or job on a case by case basis and analyse the options. Sourcing departments need to be sophisticated to do this.

This will probably result in more outsourcers being used but all with very specific roles and there might be a reduction in massive single supplier contracts. It could also see a resurgence of in-house IT.

Sayings like "you don't lose your job for buying IBM" no longer ring true.

One of my colleagues wrote an interesting article. It was all about how broadcaster Sky is currently recruiting IT graduates to develop mobile applications. These graduates could become long term members of staff. It explains the importance of in-house resources for activities that make a company competitive.

Sky's director of software engineering Paul Cutter told Computer Weekly reporter Jenny Williams that Sky will train graduates as an alternative to recruiting skilled IT professionals. "As the company is growing, we acknowledge that we're unlikely to find a better fit for our roles. We want the right enthusiasm and aptitude for us to train. We also want to make sure we've got a pipeline of new talent," he said.

Mobile and web applications are critical to Sky's sales as a result of the explosion in the use of mobile devices to view content, so the company will future proof its business by having the staff in-house. Web user demands change fast so if a new application is required the in-house team will be in the best position to develop it. It would be quite painful to recruit new people or put out a tender a project.

I recently met up with the man heading up a team that is developing a pilot of a website that could be the single URL for all government online services and departmental websites. Tom Loosemre said with the government doing more and more online there should be more web developers working in government. In the pilot Tom said he had to bring contract developers in.  

Peter Brudenall, an outsourcing Lawyer law firm Lawrence Graham, says sourcing departments today are better equipped to weigh up all the options. "Internal departments have greater confidence because they have been through a few generations of outsourcing contracts."

He says as a result they better understand what works best, including the comparison between outsourcing and doing something in-house.

More experience of outsourcing means CIOs can compare in-house with outsourced as well as different types of outsourcing.

Should government rely less on outsourcing and have more web developers in-house?

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In-House human IT resources are considered too expensive for many organisations. Even the UK government, which is a heavy user of web technology, lacks the web development resources it needs.

And the government's digital strategy could only benefit if web development skills were brought in-house.

I was at a preview last week of a government pilot of a website that could eventually bring all government department and service websites under one URL. The project is being run by a team of developers using techniques such as agile software development, crowdsourcing and the Amazon cloud.

The project, which could save the government 50% of its £130m publishing costs, is being done in-house without a supplier in site. Usually government websites are run and created by service providers. What stood out about this project was its flexibility and the fact that everybody was in one place in a huddle.

Pic: Inside the development room.

176.JPGPerhaps the worrying thing is the fact that the team managing the project had to bring contractors in for some of the software development. Why does the government not have enough internally to carry out this kind of activity, given the importance of software development to its digital strategy?

Tom Loosemore, who heads up the team, has only been a civil servant for a short team but has recognised the need for more in-house web developers in government. He said there is an argument, in the government environment, for more in-house developers for the web because the only constant is that the expectations of customers will change. Being agile is therfore vital and organisations need to keep abreast of what is needed.

Loosemore is a web development expert with six years' experience at the BBC.

Here is a link to the pilot if you want to try it and give your comments.

The Indian IT suppliers are still on steroids

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I recently did an article about the recovery in the IT services sector in 2010.

This was based on analysis from Gartner.  It revealed that businesses spent 3.1% more on IT services globally in 2010 than in 2009, signalling a recovery from the latest recession.

The report also mentioned that Indian IT service providers continue to grow much faster than their Western counterparts, at almost 19% as a group.

This is significant when you consider of the top five global suppliers, in terms of revenue, which were IBM, HP, Fujitsu, Accenture and CSC. Accenture grew sales the most with a 6.1% increase over 2009.

Gartner has now released the sales figures for the Indian companies. Take a look at the top five Indian suppliers, in terms of revenues, and their growth rates in 2010.
 
TCS 18%, Infosys 19.9%, Wipro 16.4, Cognizant 40.1% and HCL 26.7%.
 
How long can this go on for? According to Arup Roy, principal research analyst at Gartner, it will level off.

He said: "It is evident that since these top five providers have grown considerably (the top five are above $2bn in revenue). Coupled with factors, such as multinational companies (MNCs) levelling their cost advantage with robust global delivery resulting in stiff competition and changing competition landscape and buying behaviour with alternative delivery models, it will now be difficult for the current models that are focused on cost advantages, to sustain continued growth rates of more than 25% as they did a few years back."

Click on the links for blog posts I wrote about the two fastest growing suppliers, Cognizant and HCL, last year. They are both interesting companies.

BT. The unknown quantity in mid-market IT?

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When I was approached about having a meeting with BT Engage IT I thought "who are they?"

It turns out they serve UK companies that sit between the high end BT Business operation and the low end BT Global Services brand with end to end IT services.

The company is just about to embark upon a major customer recruitment drive.

According to managing director Martin Balaam the target customer will have between 500 and 5000 IT users. It has quite a long list of customers including esure, Grampian Fire and Rescue.

The company had a turnover of about £200m last year and employs 800 people.

The reason I met up with Martin is that the company is about to embark on a big push for more customers.

BT Engage IT acquired two companies in recent years to increase its capability. It bought Basilica which was a big HP reseller to give it an IT hardware capability and acquired Xpert, which was a networking equipment supplier.

Although the company sells to over 2000 customers it has about 100 close full service relationships. Balaam says, now that the company has integrated acquisitions and decided on its strategy, the target is increase this latter figure to 600.

"We have been keeping ourselves under wraps until we were ready and now that we are we are pushing on," says Balaam.

Let's hope it avoids some of the over excersions of its big brother BT Global Services.

Is In-house and crowdsourced software development answer to government's success?

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I was at a preview of the work that has been done by the government to create a pilot of a website that will introduce a single domain for all government departments and services.

The pilot, Alpaha.gov.uk, is an attempt to take away the pain of looking for information or accessing government services. From what I saw it looks good. See the article I wrote here for the full details.

The government want you to test it out. See it here for yourself and be part of the testing.

I think there are a couple of interesting elements to the development that has been done.
Most .gov websites are outsourced, some fully and others the software development. But this one is different.

Following a report from Martha Lane Fox about government digital services, a team was put together to build a pilot of a single URL for all digital government services and websites. The team is made up using existing public sector workers with some UK contractors also brought in to work on the development. But it is being managed by teh government.

In the past IT service providers would build different websites and use resources scattered all over the place. But this team has been holed up together for months using agile development techniques.

And to test out the pilot they are asking people to have a go. Here is the website. You must remember it is only an early pilot to get feedback.

Banks creating the roadmaps for the next phase of IT outsourcing

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The recession hit the banks the hardest but it is the banks that are leading the way in the IT recovery and creating roadmaps for the next phase of IT outsourcing.

According to BG Srinivas, European head at Indian outsourcing giant Infosys, the company's banking clients are leading a new wave of outsourcing contracts.

I met up with BG yesterday. He says now that banks have sorted out their leadership changes, decisions are now being taken.

Banks are always pioneers when it comes to IT and outsourcing so it is interesting to see what the banks are actually doing.

The banks are currently spending money on large changes that have resulted from mergers and break-ups. This involves a lot of process and system integration. The IT service providers are working closely with the banks on this.

But there are interesting trends that are likely to be emulated in other sectors.

Perhaps the most interesting is a trend for banks and their IT service providers to share their strategic plans to enable them to plan together.

This will help end user businesses because the service provider can pass on advice about how the customer can reach its goals, because it probably already has the experience with other clients. It will mean suppliers can respond better.

BG also told me the banks are currently reducing the number of service providers they work with. He says typically banks want 2 or 3 strategic partners. The UK and US banks are leading this as a result of them being "open to managed outsourcing."

Both the strategies are attractive to CIOs and there service providers.

Sharing strategies means the client is able to plan better in the knowledge of what partners can do and will get a faster response to a call for action. Meanwhile the partner will be better prepared and attracted by a strong and probably long relationship.

The benefits of a consolidated IT supplier base has obvious benefits for the customer and suppliers. There will be no need for the large tendering process and the customer will already have an in-depth knowledge of the suppliers. So the procurement process is streamlined.

But this could be a dream to far. It relies on a high level of trust and according to some research I wrote yesterday this is in short supply between IT professionals and IT outsourcing suppliers.

The research from Lieberman Software revealed that 62% of IT professionals found that IT outsourcing contracts end up costing more than expected. Even more shocking is that 77% believe that their outsourcing partners are inventing work to increase their revenues. 

 

 

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About this Archive

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

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