• IBM Launches Services Delivery Center in Egypt

  Sep 18, 2008 | New Partnerships by John Willmott
  

  IBM has launched a Global Service Delivery Center in Egypt and signed several agreements with the Egyptian government.

  The delivery center currently employs 100 personnel and is expected to grow to up to 1,000 personnel within the next few years. It offers business consulting, cross-industry expertise, application development and maintenance, software testing and embedded software development services.

  In addition to clients in the region, the delivery center is servicing clients in France, Germany, Spain, Sweden and the U.S.

  The agreements with the Egyptian government include:

  • Establishing a center in Cairo for research and development in nanotechnology
  • Co-operation to introduce Services Science, Management and Engineering (SSME) into the Egyptian National Curriculum.

  Analyst comments:

  The delivery of IT and BPO services from Egypt is currently limited, and centered on call center services. However, the Egyptian government has recently been strongly targeting the development of capability in both IT services and BPO within the country.

  Teleperformance, with the opening of a 600-seat customer management services center in Cairo in October 2007, and EDS, with established application developed capability, were among the first vendors to develop capability in Egypt. They have now been joined by IBM.

  IBM's entry approach in Egypt as employed in other developing markets such as Singapore and Vietnam includes working to introduce its own services curriculum into local educational establishments as a means of creating capability and also providing a favorable recruitment environment for IBM.

• Logica Inaugurates Center in Chennai

  Sep 18, 2008 | New Offerings by Rachael Stormonth
  

  Logica has inaugurated its new facility in Chennai, in the DLF IT Park.

  The new facility, which has capacity for 1,500 employees, will initially offer services in BPO, remote infrastructure management (RIM) and application services.

  This is Logica's second center in India, the first being a campus in Bangalore. The Bangalore facility houses c. 3,000 employees and supports Logica's offerings in system design, applications and product development, applications management, RIM and BPO services. It also supports Logica's initiatives around innovation.

  Analyst comments:

  One of the strands of Logica's "revilization plan", unveiled by its new CEO in April, is the expansion of its blended global delivery capabilities. Logica is targeting c. 8,000 employees in near/offshore centers by the end of 2009, up from c. 3,450 in April 2008.

  The targeted 8,000 figure will account for c. 20% of the global workforce, assuming total headcount remains constant. In ramping up its near /offshore headcount, Logica is behind Capgemini (targeting 40% by end of 2010) and at a similar stage to Atos Origin.

  Logica is constrained financially: it originally announced an investment of £10m over 2 years in the Chennai center and to support industrialization and utility services for RIM; today's announcement refers to an investment of £8m. Either sum is less than ideal for these major strategic initiatives.

• Open Announces H1 2008 Revenues Up 5% to €95.2m and 4.9% Operating Margin

  Sep 18, 2008 | Financial Results by Dominique Raviart
  

  French IT services vendor Groupe Open has announced H1 2008 revenues up 5.0%. Organic growth was 4%.

  H1 2008 operating margin was €4.6m, represnting a 4.9% operating margin, compared with 6.6% in H1 2007.

  Open has stated it is moving away from staff augmentation and investing into industrializing its delivery. The transition has impacted its utilization rate and led to a higher usage of subcontractors. Attrition was at 25%.

  Open has signaled its operating margin and revenue growth will improve in H2. It has had several fixed priced/service centers wins and its utilization is improving.

  The company has announced it owns c. 67% of the capital of Sylis. Open will be spending more than €40m in cash for Sylis. The company has currently a positive next debt of €40m.

  Analyst comments:

  Groupe Open is the last of the mid-tier French vendors (with revenues in the €150-250m range) to announce its results. Those vendors have typically access to clients (e.g. they are not subcontractors) and they usually have one main service offering. They therefore reflect several of the major trends in the market.

  Groupe Open and Sylis illustrate the changes occurring in staff augmentation. They are moving into fixed price contracts and creating software factories in the lower cost regions of France. Their revenue growth is below 5% in H1 2008 and operating margin under 5%.

  In the same category of application services, Aubay, which is more industrialized than Open and Sylis, has a 9% organic growth in H1 2008. However its operating margin (7.6%) is impacted by lack of recruitment and higher level of subcontracting.

  Meanwhile, Business & Decisions, which is more active in services around packaged applications such as CRM, BI and ebusiness, still grows revenues by 13% domestically but its operating margin in France is c. 5% impacted by a contract over-run.

  In IT infrastructure management, two vendors, Neurones, (mainly active in help desk services) and Osiatis (which has a more diversified offering, from maintenance to server and desktop management) have a very different performance. Neurones is up by 14% and has an operating margin of 8%. Osiatis suffers from its lack of commercial wins and an oversized network of agencies and grows IT IM revenues by 3% for an operating margin of 5.2%.

  Overall, this suggests that growth is there for vendors with the right offerings (industrialized offerings) under normal circumstances (no project over run) can achieve 8%+ growth and 7%+ operating margin in France. This signals good economic conditions in the French market.

  However, financial performance is very much dependent on recruitment levels and management of subcontracting.

• Unisys Awarded Check Processing Application Deployment Contract by Rabobank

  Sep 18, 2008 | Contracts by Rachael Stormonth
  industry: Retail Banks

  Unisys has been awarded a contract by Rabobank to implement a foreign check processing solution. The new solution will allow the bank to process up to 200 foreign-based checks per minute.

  Services to be provided by Unisys include:

  • Assistance in migrating Rabobank's check processing operations from a centralized cross-border check processing system to a Microsoft .NET framework, enabling integration into a standard server environment
  • Implementation of the Unisys Quantum NDP200, a high-speed document scanner, for processing Rabobank's foreign-based checks, with subsequent support and maintenance services.

  Analyst comments:

  Unisys has extensive experience in check processing services and in related underlying technologies.

  The use of checks has declined dramatically in the Western Europe, with foreign checks becoming an increasing proportion of overall numbers. This kind of engagement supports Unisys' efforts to expand its check processing BPO business within Continental Europe

• IBM Partners with iEnterprises to Offer Combined CRM and Social Networking Software

  Sep 17, 2008 | New Partnerships by John Willmott
  

  IBM has partnered with iEnterprises to integrate iEnterprises' customer relationship management software, iExtensions CRM, with IBM's social networking platform, Lotus Connections.

  The partnership is intended to provide software to assist businesses to build communities and relationships around contacts helping increase sales, improve response rates and customer service.

  Analyst comments:

  IBM has recently been particularly active in offering innovative services in both social networking and CRM and is at the forefront of assisting organizations in their attempts to commercialize social networking by combining it with the necessary CRM tools.

  In addition to this partnership, IBM has launched the IBM Center for Social Software in Cambridge, Massachusetts, a center of competence aiming at identification of best practices in commercializing social networking.

  In a related move IBM has launched a Center of Excellence for software as a service (SaaS) for customer relationship management, having identified CRM as the major current opportunity for deployment of SaaS.

• TCS Awarded 5-Year Application Management Contract by Ericsson

  Sep 17, 2008 | Contracts by Rachael Stormonth
  industry: Hi-Tech & Electronics

  TCS has been awarded a 5-year global contract for application maintenance and development services by Ericsson.

  TCS has been selected as one of two strategic partners by Ericsson for application maintenance services and a preferred supplier for application development services.

  Analyst comments:

  Offshoring in the Nordics has been led by telecoms OEMs such as Ericsson. In addition to outsourcing, Ericsson has

  • Set up a number of offshore captives, including some R&D capabilities in India which were divested to Wipro in 2002
  • Been developing global and local service and delivery capabilities through Global Service Delivery Centers (GSDCs) in Lebanon, Romania, and Pakistan, established to serve both the global market and the high growth emerging markets.

  This contract further expands TCS' relationship with Ericsson, who has been a major telecoms OEM client for some time: TCS has a dedicated delivery center for Ericsson in Hyderabad.

  TCS' strategy to increase its presence within Continental Europe has included recruiting key personnnel with local knowledge and relationships in various regions, including the Nordics.

• CSC Awarded 6-Year P&C BPO Contract by American Keystone Insurance Company of Florida

  Sep 16, 2008 | Contracts by Rachael Stormonth
  industry: Property & Casualty

  CSC has been awarded a 6-year property and casualty (P&C) insurance BPO contract by American Keystone Insurance Company of Florida.

  Services to be provided by CSC include:

  • Policy administration services using CSC's POINT IN solution suite
  • Supply of CSC's Agency Link software.

  Analyst comments:

  This contract is an example of how small regional insuers in the fragemented U.S. P&C market are increasingly using policy administration and claims management BPO services provided over shared processing infrastructure to reduce operational cost, expand regionally or launch new products. CSC is the largest provider serving the U.S. small & medium insurer sector, although IBM, Perot and Fiserv have similiar offerings.

  CSC has existing relationships with many of these small insurers who utilize CSC's range of insurance focused software platforms. CSC is the largest provider of insurance applications in the U.S. having acquired a number of specialist software providers in the 1990's. CSC is increasing;y consolidating its portfolio around key products such as Point In (small P&C insurers), Exceed (large P&C insurers), Vantage-One (large L&P insuers) and CyberLife (small/mid L&P insurers).

  and United Insurance Management of St. Petersburg.

• ACS Announces Relaunch of Federal Sector Offerings in November

  Sep 15, 2008 | New Offerings by Rachael Stormonth
  industry: Federal/Central Government

  ACS has announces that it will launch a set of offerings for the U.S. federal sector on November 24th.

  ACS' BPO offerings for the federal market encompasses:

  • Mailroom and administrative services
  • Customer care services
  • Finance and accounting
  • Claims administration

  ACS is targeting DoD, civilian and intelligence agencies.

  Analyst comments:

  ACS' re-entry into the federal market marks the end of the noncompete agreement following its disposal of the majority of its defense-oriented federal government business to Lockheed Martin.

  ACS is well established in the state and local segments of the U.S. government sector and federal government is becoming an increasingly important BPO market with significant recent contract activity in areas such as customer management services, supply chain services, and HR outsourcing.

  Looking at each of the offerings:

  • ACS is well positioned for straightforward mailroom and administrative BPO services, demand for which will continue to be strong
  • With CMS, ACS has experience in the DoL, the ED and the Treasury and is likely to win contracts centered on call center services
  • In the middle office area of claims administration, ACS' experience in the federal sector has been for Office of Workers' Compensation at the DoL and there will be some other niche opportunities
  • There has been little demand as yet for F&A services in the federal sector.

  It is noticeable that ACS has not announced HR outsourcing offerings for the federal sector. HR outsourcing is a major emerging opportunity in the federal sector, but one where Lockheed Martin is already well-positioned and winning deals.

• Capgemini Launches SOX-Compliancy Offering for F&A BPO

  Sep 15, 2008 | New Offerings by Dominique Raviart
  

  Capgemini has launched a new offering, Management Assurance Services (MAS), that complements its F&A BPO Offering. The offering is based on a delivery that it is reliant on India.

  Analyst comments:

  Capgemini acquired India-based SOX compliance expertise with the takeover of a majority stake in the Indigo captive operations of Unilever. The current offering expands the SOX consulting offering into India-based execution.

• Getronics Partners With Wipro to Provide Multi-lingual Field Support for Desktop Services

  Sep 15, 2008 | New Offerings by Dominique Raviart
  

  Getronics has signed a partnership with Wipro Technologies to provide onsite field support and complement the desktop services offering from Wipro Technologies.

  Analyst comments:

  Wipro previously announced a similar partnership with Unisys in December 2006. Getronics and Unisys as well as Fujitsu are major players in IT hardware field services in EMEA and often act as contractors to infrastructure management vendors and hardware vendors such as Dell.

  The partnership with Getronics complements the remote infrastructure management offering of Wipro and brings language capabilities the Indian vendor does not have.

  Wipro is no stranger to partnerships in IT infrastructure management. It has signed several similar contracts in network and telecom infrastructure mangement with Motorola and Cisco.

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