August 2013 Archives

Is Capgemini's flagship contract with Met Police set to be canned after scathing report?

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As I blogged in March, the Met Police's IT contract with Capgemini was being reviewed, along with other IT investments, by the London Assembly's Budget and Performance Committee.

The damning report was published today and doesn't make reassuring reading for Capgemini.  Its contract with the Met takes up about a third of the Met's IT budget at £115m a year. The contract is up for renewal in 2015 and the report published yesterday strongly suggests major changes.

This is what the report says: "The force hopes to make savings and improve performance as contracts are renewed. Many of the Met's contracts are due to expire by 2015 and the Met hopes to replace them with cheaper alternatives. The Committee heard that police forces can reduce the cost of ICT and improve the effectiveness of police officers by changing the types of ICT contracts they draw up with suppliers."

So change is certainly on the cards and if Capgemini continues to work with the Met contracts will look much different.

"The Met needs to review its contractual arrangements for ICT. In the past, the Met, like other police forces, locked itself into long-term contracts with single suppliers, in the hope of achieving economies of scale. These contracts have not always delivered value for money. The pace of technological change means that police forces should be drawing up short-term contracts in order to benefit from cheaper solutions that emerge from the marketplace."

And technology developments will shake up police IT contracts according to the report.

"New developments in ICT will also alter the types of contracts that the Met needs. In the future, custom-made applications - or apps - will play an important role in police work: the Met believes that app-based technology will be around for the next five or ten years.

"And 'cloud' based technology - where servers are contracted on 'pay-as-you-use' basis - can help police forces organize their ICT more cheaply. Cloud technology is commonly used in the private sector and in some public sector organisations such as the Ministry of Defence. An industry representative told the Committee that 'cloud technology is the future'. If it adopted this approach, the Met would pay an external IT contractor to host its data, removing the need to buy, operate and maintain its own servers."

"New ICT contracts should have three key features. They should be flexible: the cost of technology will decrease year-on-year. Good contracts also have break points; these would enable the Met to re-assess what technology is available on the market to ensure it gets the best deal. And by 'future-proofing' contracts, the Met - and not just its ICT suppliers - could also benefit from new developments in technology."

How will the telecom industry adapt to digital mobile consumers?

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This guest blog post comes from Satya Ramaswamy, who is global head of digital enterprise at Tata Consultancy Services. It looks at how the telecoms industry is being impacted by the fact that mobile activity is becoming the norm in the digital age.

The new digital mobile consumer is on the rise, but what does this mean for the telecoms industry?

By Satya Ramaswamy

"For many consumers around the world, mobile devices have become one of life's basic necessities, and this passion shows no signs of abating. Over the last decade, consumers have purchased smartphones and tablet computers at an astonishing rate. The iPhone took only eight quarters to ship more than 20 million units following its launch in 2007. In 2010, that adoption rate was eclipsed by the iPad. Two years after it began shipping, Apple's tablet passed the 65 million unit mark - an adoption rate three times that of the iPhone.

Digital disruption

Consumers' love affair with mobile devices is not likely to fade away soon. As devices become ever more powerful and as wireless transmission grows in bandwidth and coverage, the adoption rate is likely to only climb further.

The telecommunications industry recognises the importance of digital and mobile consumers, and is taking a leading stance across consumer-facing industries. In The New Digital Mobile Consumer report, commissioned by Tata Consultancy Services, telecoms companies have identified that 48% of consumer purchases are currently being made through mobile devices, and they predicted this will rise to 60% by 2015.

Indicating the scale of this commitment, last year the telecommunications industry was the sector which most significantly adapted its products and services to meet the needs of digital mobile consumers. The sector is expected to maintain its mobile leadership through 2015. During the period 2012 to 2015, telecoms firms will be the second highest spending of all industries, with the $28.6 million spent per company in 2012 rising to $35 million in 2015. However, other industries expect to close the gap over the next three years. 

Changing the culture of telecoms

Recognising that the digital mobile consumer is a critical audience segment, there are significant decisions to be made within the telecoms sector. The industry clearly knows this and its understanding of these customers will have a significant effect on which firms become leaders and which laggards.

One way that telecoms providers can increase their customer 'stickiness' is by providing analytics on the consumer's telecom usage by leveraging Big Data technologies. This large-scale number crunching can now be boiled down to the individual customer level. We call this trend the enterprisation of the consumer. It is in the early stages, but we see it as a way in which companies can build their relationship with the most valuable consumers.

It seems certain that this trend will evolve rapidly - the data and technology certainly exists. Cultural change within these organisations is more likely to lag behind, but it will follow. Attitudes to customer insight and associated product and service development are going to have to shift. In fact, telecoms providers will need to make big decisions about the technology and process they implement now. As we have seen previously, waiting for a technology to become mainstream before investing in it isn't an option in such a hugely competitive market.

Harnessing smart technology

With significant levels of consumer purchases made through mobile devices, firms should plan to continue to drive greater functionality to mobile devices. Despite the needs of the digital mobile consumer changing rapidly, telecoms providers can plan ahead.

Trends are clearly emerging. Today's smartphones and tablets endowed with context sensors such as cameras, GPS technology, compasses, and accelerometers are helping companies transform their connection with consumers into anytime-anywhere contextual interactions. Having the flexibility to create new products and services which reflect these in-demand technologies will be a determining factor in success within the industry.

The most obvious outcome for successful telecoms firms will be a stickier relationship with their customers. In real terms, this means utilising the increased data that digital mobile consumers share to produce services which create brand lock-in. We expect to see firms better understanding their customers' needs, and so giving greater functionality on mobile devices alongside more targeted products and services. This type of informed and adaptable relationship will make firms highly appealing to existing and prospective customers alike - and ultimately will turn the digital mobile consumer into an exciting revenue stream."

Government IT Oligopoly to end. Cabinet Office will not renew most big outsourcing deals in 2015

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The Cabinet Office said it will not renew most of the large IT outsourcing deals coming up to the end of their terms in 2015.

In its latest report on spending with SMEs the Cabinet Office also said, instead the government will break these deals up and appoint more SMEs as suppliers.

"Central government spends £7bn a year on IT, with the majority of the largest contracts that make up this spend coming to an end in 2014-15. We have made sure that the barriers to entry that government put in the way of small businesses have been lifted," said a Cabinet Office report.

"Competition in procurements will be encouraged, with no like-for-like extensions to existing contracts. Programmes will be disaggregated for commercial purposes - broken down into components supported by the market to enable many suppliers to bid. This will open the door to new vendors to bid for government business."

This could really shake up the IT services sector in the UK. I wonder if this will be a major door opener for the offshore IT service providers, in particular the Indian players.

Is it better for UK engineering students being trained by Wipro to stay in India?

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The first round of UK engineering students have arrived in India to begin their training with Indian IT services firm Wipro. The programme, a three-month technology induction course followed by six months of on-the-job training with Wipro teams, is supported and jointly funded by the UK India Education and Research Initiative.

But the problem for the graduates will begin when they get back to the UK. Entry level jobs for these graduates to begin their careers are in short supply. This is because most of these roles are outsourced. Many of these are actually offshored, to companies like Wipro.

John Harris, chair of The Corporate IT Forum example told Computer Weekly last year that years of outsourcing commodity IT skills means young people are not being given a chance to come into the industry.

So it might be better for the careers of these graduates to stay in India for a few years because that is where a lot of the entry level jobs are being done.

But I don't think we should be critical of the India heritage suppliers because pretty much all IT services suppliers deliver services from offshore.

The UK graduates could stay in India an extra couple of years, get skilled-up working offshore for UK businesses, and then return and take on more senior roles. The thing is I wonder how many would come back? India is a country that is developing fast so there will be lots of opportunities.

One reader gave this depressing view of the impact of offshoring on the UK IT industry. "As long as I T companies can find Indian I T workers with basic level skills, who are willing to work in the UK for very low wages and a visa, there will be no skills shortage as such. Maybe very poor skills, but as these visa chasers get skilled up at the expense of the initial clients, they will then look for other jobs and companies that will renew their visas. They will of course look for other Indian friendly companies to work for. The I T industry has imported its own cancer that will eat it from within. Having worked in the industry for many years, I suspect it will be many years before the country wakes up to having sold out UK jobs and an industry, just like it did manufacturing."

IT workers being made redundant expected to train offshore replacements

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Back in 2009 I wrote a few articles about a practice in the IT outsourcing industry that sees workers made redundant in favour of cheaper staff offshore being expected to train their offshore replacements.

CSC is offshoring about 200 jobs to India and the Czech Republic. This is part of the IT service firm's ongoing restructure. The Unite union this week slammed CSC over this and it has a point. If a worker is deemed redundant doesn't that mean their skills are no longer needed? But CSC is asking them to transfer the knowledge to replacements so their skills are clearly needed.

CSC said these people will be additionally compensated. But that is another kick in the teeth for workers."Agree to transfer knowledge and we will give you a bit more." Where is the choice there, I think most people being made redundant would take the extra, not knowing what the future holds.

CSC is not the only company doing it. Big businesses such as government owned RBS and BT have done it, as I wrote in this article, which included interviews with affected workers. In fact I think in many offshoring projects there is a need for the workers being cut to pass on knowledge to replacements.

Let know what you think or tell your story if you have been affected.

IT outsourcing in banks driven by customer focus

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In this guest blog, Stuart Drew,  vice president financial services at Indian IT services firm at HCL Technologies, explains why an increased focus on the customer is leading to greater investment in IT outsourcing for financial services companies.

Why the customer is king

By Stuart Drew

"Ten years ago, the financial services (FS) industry was a very different place to operate in for IT outsourcing vendors. With a conservative, traditionalist approach to hiring external suppliers, outsourcing in any form was placed low down on the list of priorities for FS decision makers. Today, however, it's a different story entirely, with the financial services sector now commonly perceived as the biggest consumers of IT outsourcing in industry today.

So what's behind this increased appetite for IT services amongst banks and other financial institutions? Put simply, it's an increased willingness to see the customer as king. Traditionally, banks in particular, would rarely engage with customers beyond promotional activity for specific products. In an industry that has never been so competitive and tough, the banking sector has been forced to wake up to the importance of building a relationship with its customers if they are to thrive.

They've also begun to understand and appreciate the importance of connecting with a new, technologically savvy generation of customer. Today's new breed of customer is totally different proposition from anything the financial services industry has witnessed before. Whereas in years gone by, customers would happily stand in line in branch to cash in a cheque, today's customer demand instant action on mobile devices, in the cloud and online. They demand the ability to have information at their fingertips, and feel that speaking to their bank how and when they want to do so is a fundamental expectation.

With increased pressure placed on financial services companies to build bridges with Generation Y, banks realised that the infrastructure was not in place to offer mobile solutions and more innovative solutions such as cloud computing need to be considered. Crucially, they also understood that they did not have the requisite skills in-house to implement this change. As a result, it wasn't long before the industry discarded its traditional conservatism and turned to external specialists to provide the foundation of technology and infrastructure required to make this dream a reality.

There have, of course, been other considerations that explain the increased number of opportunities for IT services vendors in this sector. For example, there's no doubt that, even today, cost is still a significant driver for banks, which continue to come under pressure to lower their cost/income ratios from historical highs. As a result, it's becoming more and more common to see IT outsourcing specialists brought in to try and extract greater value and efficiency from existing legacy systems that are inflexible and not adaptable to new technology. Equally, an increase in industry regulation which, paradoxically, used to restrict opportunities for IT services vendors, now means that these same suppliers are now ideally placed to provide systems that can process regulatory reports with the level of consistency that has been mandated.

However, although both of these are examples of how IT outsourcing has been used within financial institutions to create value, it's true to say that the increased willingness to engage with customers across multiple platforms is what will continue to drive this trend. As mobile, digital and cloud technologies continue to evolve, FS companies will continue to react with more offerings designed to enable them to connect even further with customers. For both vendors and end-users, there seems very little doubt that when it comes to IT outsourcing in the financial services industry, the customer is, and will continue to be, king!"

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About this Archive

This page is an archive of entries from August 2013 listed from newest to oldest.

July 2013 is the previous archive.

September 2013 is the next archive.

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