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Tesco today announced it had signed a five year, GBP100million outsourcing deal to consolidate and modernise its IT network infrastructure.The deal will streamline existing telecommunications systems of the retail groups UK and international operations into a more costeffective and efficient, single internet protocol IP network, delivering 40 times its current capacity.Nick Folkes, Tesco UK infrastructure and operations IT director, says that the deal would allow it to consolidate communications over multiple, legacy voice and data networks onto one.
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The global healthcare industry is under pressure to reduce research and administrative costs and meet tighter compliance and security mandates in Europe and in the US. The market has thus begun to represent an outsourcing opportunity for IT players. The global healthcare IT outsourcing market is estimated at around USD80 billion and is growing by 12 percent every year. Automation in the industry is equally low. As pressure from consumers increases, players will need to outsource an increasing share of their IT budget. With costs six to seven times lower than in the US, Indian IT companies stand to benefit from this opportunity, he said.
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The acquisition of Electronics Data Systems Corp EDS by Hewlett Packard HP for USD 12.6 billion is likely to benefit MphasiS, in which EDS has a 60.9 per cent stake, as HP may outsource more work to the Bangalorebased company. Apprehensions, however, remain about the processes to be adopted in integrating MphasiS operations and employees with HP.HP employs 30,000 in India while the MphasiS group has around 27,000 employees.
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Tata Consultancy Services TCS has bagged a five year contract worth USD100 million from the Netherlands based NXP Semiconductors BV. TCS will provide consulting services as well as application management, development and support services across NXPs supply chain operations.The revenues from the deal will get reflected from the second quarter of this financial year and the upgrades will happen between the second and third quarters.
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Infrastructure Management Services IMS market could be the next big wave in IT outsourcing. Up to almost 40 per cent of the global IMS market is outsourced, which is around USD150 billion, and while traditionally a big chunk of IMS was kept inhouse or outsourced to nearshore locations, this trend is changing with increasing number of processes being offshored to lowcost locations. Also, while small and data sensitive companies e.g. government bodies, defence and others are not so much into outsourcing it, mid to large companies are increasingly outsourcing their IMS activities to reduce cost and focus on their core areas. The banking financial services insurance vertical is the biggest contributor to the IMS industry followed by telecom in India.
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Indias software and services exports is estimated to be about Rs 187,478 crore in 2007 08, maintaining the countrys lead over neighbouring China, which is trying to catch up with the Indian IT sector. A Department of Information Technology in its provisional figures quoted Software Technology Park of India figures, which stated that exports from the parks is expected to grow at 32 per cent to touch Rs 1.87 lakh crore.
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Ireland is one of the top 30 locations in the world for outsourcing. Research conducted by US based Gartner group has placed Ireland and Northern Ireland among countries such as India and Singapore as the most suitable locations for offshore activities. The aim of the survey, according to Gartner was not to rank countries, as it said every organisation will have a different view of which factors are most important for their needs.
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Tata Consultancy Services, the countrys top software export firm, is shifting focus to emerging markets and on sectors besides financial services to help offset a softness in the US economy that could hurt outsourcing deals, its chief executive S Ramadorai said. TCS, Indias largest IT group, has also offered to give services for free in an effort to lure large clients such as beleaguered US investment and mortgage lenders to sign off big contracts.
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China will be a key part of Indian outsourcing giant Satyams plans to create 15,000 new jobs worldwide and grow revenue to USD2.69bn this year.China will take centre stage for this growth, with Satyam planning to boost its 1,000strong employee base there to 10,000 and to increase the number of development centres in the country from the five it currently owns.Satyam currently runs 95 per cent of its lowcost operations from India, employing 51,000 people, with 46 per cent revenue growth to USD2.1bn over the last financial year.
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Tech Mahindra, the sixth largest IT exporter, has bagged a USDv700million contract from British Telecom BT for transforming and improving BTb s IT estate or infrastructure. This is one of the largest contracts that any IT company has won in recent months. It also gives boost to Indian IT at a time when the US subprime crisis and talks of slowdown had dogged IT services companies.
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Like many parts of the developing world, Africa wants a piece of the IT outsourcing market, and while problems in India have opened the way for that to happen, challenges stand in the way of a big breakthrough.Egypt, Ghana, Nigeria, Senegal and South Africa are all becoming increasingly aggressive in their push to compete with India in outsourcing, as well as with other parts of the world.
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British airline Virgin Atlantic has extended its technology outsourcing contract with Indias Tata Consultancy Services. Under the deal, TCS will continue to manage Virgins network and computing infrastructure and application development needs through 2011. TCS will also provide 24hour help desk services for the airline and manage its relationships with third party IT vendors.
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Satyam Computer Services has reported a growth of more than 100 per cent in revenues to USD28 million from the Middle East in fiscal year ending March 2008.In the last fiscal year, we experienced about 100 per cent growth in the Middle East, with growth doubling in countries such as Kuwait and Bahrain. Qatar and the UAE also saw extensive growth, Satyam Computer Services Director and Senior Vice President for AsiaPacific, Middle East, India and Africa, Virender Aggarwal said.
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HP has confirmed that it is in talks to acquire IT services company Electronic Data Systems in a deal that would give it more competitive muscle against worldwide services market leader IBM.The pricetag for EDS could be around US USD 13 billion, according to a report. The deal would strengthen HPs competitive position against IBM, whose Global Technology Services division has long been a strong profit generator for the company.
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Outsourcing has a new twist. Rather than U.S. jobs going to India, the latest wave of outsourcing is moving in reverse, with Indias leading information technology service providers opening U.S. offices in Chicago, Detroit and Cincinnati.Satyam Computer Services Ltd, Tata Consultancy Services Ltd and Wipro Technologies Ltd are among the leaders of Indias new trend of socalled reverse outsourcing of consulting and other services to the U.S. Leading Indian information technology and outsourcing giant Satyam Computer Services is expanding in the U.S. mainly through acquisitions, with two in the Midwest so far in 2008.
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Economic pressures in the UK and US are increasing the rate at which companies are offshoring their IT services, most notably to India.Research firm Gartner reports that organisations are refocusing on IT cost reduction and taking steps to accelerate the use of offshore labour. Buyers of IT services will shift from cost containment goals to a greater focus on cost reduction and productivity increases in their sourcing decisions. India will continue to be the mostsophisticated country option to source offshore IT services in the near term.
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India and China are the top destinations for outsourcing activities, but other countries from the region, like Malaysia and Philippines, are fast establishing themselves as solid alternatives.An annual ranking study, Global Outsourcing 100, by the International Association of Outsourcing Professionals IAOP, puts India, China and countries from the Asia Pacific rim, as top locations. The report shows that more than 60 per cent of companies, recognized in its Rising Star category of companies with fast annual growth of more than 33 per cent, are mainly from the Asian Pacific region.
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Indian IT service providers are poised to eke out a larger share of the global USD 28 billion addressable remote infrastructure management RIM services in the next five years, on account of cheaper labour and deeper skillsets, according to a recent report jointly prepared by Nasscom and advisory firm Mckinsey.Indian IT service providers already account for about 60 percent of the global RIM services. RIM, a general term used for the management of various IT services such as applications, network, IT helpdesk, software deployment and support, forms a part of the broader IT BPO outsourcing industry. And industry watchers believe its growing.
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Facing a troublesome economic slowdown, service providers in the US are expected to accelerate the rate of offshoring IT services, according to Gartners latest report.The information technology research and advisory group asserts that lowercost locations such as Mumbai, India will remain the location of choice for IT offshore services for North American and European buyers causing trouble for UK firms.
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