Outsourcing in France growing but cultural barriers remain, says expert

Businesses and public sector bodies in France have been slower than counterparts based in some other parts of the world, notably the US and UK, to embrace outsourcing with cultural differences a major reason for the French approach, a technology law expert has said.

Diane Mullenex of Pinsent Masons, the law firm behind Out-Law.com, said: “Organisations in France have tended to do things in-house. However, slowly but sure French organisations are realising that there is often a business case for outsourcing certain processes and functions so as to benefit from external expertise or new digital technologies, for example, to cut costs and improve efficiency and competitiveness.”

Mullenex said that the defence sector is one area in which outsourcing is becoming more prevalent in France, but said issues such as the “protection of strategic assets” and concerns about foreign interception and surveillance are a barrier to IT outsourcing deals in the sector in particular.

“French customers must balance the benefits of outsourcing with their desire to ensure tight control over access to information and the difficulties that can arise if contractual relationships turn sour,” Mullenex said.

Mullenex was commenting after a report by the Information Services Group (ISG) revealed that there were 65 major outsourcing contracts agreed in France in 2014, up from 37 in 2013. The total annual contract value for those deals was €1.25 billion, up from €550 million the year before. The ISG figures only account for outsourcing contracts worth at least €4m a year.

The ISG Outsourcing Index (21-page / 1.66MB PDF) revealed that the 588 major outsourcing deals struck across Europe, the Middle East and Asia (EMEA) in 2014 have a total annual worth of €9.5bn, up 7% on 2013 figures. The EMEA market accounts for more than half of the total annual value of the worldwide outsourcing market. The 1,218 outsourcing deals struck globally last year have a total annual worth of €18.5bn, according to the ISG report.

The annual value of outsourcing contracts struck in the UK and Ireland in 2014 was €3.4bn, up from €3bn in 2013.

The global outsourcing market is dominated by IT outsourcing deals, with 880 contracts with IT suppliers worth a total annual value of €13.8bn being signed in 2014, ISG said. The 452 IT outsourcing deals struck in EMEA last year was “the highest ever recorded in the region”, it said.

John Keppel, president of ISG, said: “Looking ahead, we expect healthy numbers in 2015, though growth during the first half of the year will look flat at best. The first two quarters of 2014 were particularly strong and so the first half of 2015 may look tepid by comparison.”

Source:  Outlaw.com- Outsourcing in France growing but cultural barriers remain, says expert 

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HP reports big fall as services revenue dips – is cloud starting to take its toll?

HP has reported a five per cent dip in revenues in its first quarter of fiscal 2015 – led by a worrying double-digit fall in sales in its services division.

Total revenues weighed in at $26.84bn, a decline of five per cent in dollars, or two per cent on a constant currency basis, but the company’s services business saw revenues fall by 11 per cent to $4.99bn.

HP saw revenues fall across the board, with only one major division avoiding the pinch.

It’s Printing and Personal System Group, which accounts for more than half of HP by revenue and incorporates its most profitable line – printers – was also squeezed by two per cent. Only the Enterprise Group, which sells servers, storage systems and other high-end hardware escaped the revenue squeeze, with sales that were flat at $6.98bn.

Services account for 18 per cent of the company’s revenues, but just five per cent – $148m – of its $2.4bn operating profit. “This follows an almost seven per cent decline in full-year 2014, with the same reasons being cited: key account run off and weakness in EMEA. The two component parts of Enterprise Services (Application and Business Services, and IT outsourcing) each saw deep declines,” said TechMarketView analyst Kate Hannaghan.

Hannaghan believes that while HP is managing to win a fair number of the major outsourcing and services deals going, it is losing out to IBM.

“Whitman’s turnaround programme is helping profits edge forward. However, the colossal challenge HP faces in growing the Enterprise Services top line is apparent. Furthermore, progress made selling SMAC [social, mobile, analytics and cloud] services just seems to get wiped out by the steep declines in its traditional business.

“In this regard it faces a similar challenge to IBM, its largest competitor in infrastructure outsourcing. However, while legacy revenue is the source of top-line shrinkage, it remains crucial to these firms, and they must continue to ink these types of deals. Credit to HP for its recent Deutsche Bank win [other recent wins include Department for Work & Pensions, and Sheffield NHS Trust, but it lost out to Computacenter on the large Post Office deal] – but our analysis would suggest IBM is currently winning a greater share of the megadeals,” said Hannaghan.

The dip in revenues at HP’s services division is especially worrying. The main concern is that organisations’ attitudes to implementing packaged applications has changed, with CIOs more willing to consider cloud platforms and services, on the one hand, while bringing development in-house, which is increasingly regarded as pivotal to organisational success.

HP’s struggles are mirrored at major packaged application software vendors, such as Oracle and SAP, who are moving towards cloud applications, on the one hand, but will take a big revenue hit if customers move in large numbers from big implementations to subscriptions to cloud services, which can be cancelled.

HP CEO Meg Whitman, though, claimed that the company’s turnaround “remains on track”. She said: “We grew operating profit margins across all of our major business segments, increased investment in innovation, and executed well across key areas of our portfolio and in our separation activities.”

HP is currently in the process of splitting in two, with the PC and printer business being spun-off, and the rest of the business focused on enterprise. Shareholders will receive shares in both parts of the company.

However, HP remains squeezed in all its main markets, and the long-term trend is declining revenues – down by 10 per cent between 2012 and 2015. Even in printing, which remains highly profitable, the outlook has become more difficult as much cheaper generic alternatives and re-fills gain ground against expensive “official” ink and laser cartridges.

Unit sales of printer hardware fell by four per cent, while printer supplies were down by five per cent. In response to the increasingly challenging environment in printing, HP has launched subscription schemes to convert consumers to monthly payments in exchange for a regular stream of official, discounted refills, but these have not caught on.

Source – Computing.co.uk-HP reports big fall as services revenue dips – is cloud starting to take its toll? By Graeme Burton

Mastercard offshores payment technology development

Finance firm Mastercard has committed to growing its India-based workforce with its latest technology hub in Pune.

The centre is Mastercard’s largest outside the US and will focus on developing payment technologies.

Mastercard hopes to dip into the IT skills in India and the current trends seeing successful startups coming out of the country.

“India is renowned for its technology leadership, focus on innovation and entrepreneurial spirit,” said Rob Reeg, president for operations and technology at Mastercard. “The tech hub gives Mastercard the opportunity to bring in talented technologists and a wealth of creative new ideas that will help shape the future of payments.”

Read more at: Mastercard offshores payment technology development by Karl Flinders

The Outsourcing Yearbook

The Outsourcing Yearbook is made available at the beginning of each year in hard copy format to all NOA members free of charge, and made available throughout the year to the entire industry as an e-book.

The Outsourcing Yearbook 2015 will take a more statistical view of the state of the outsourcing industry than in previous years. Showcasing the outsourcing industry’s continued and growing contribution to the UK economy, The Outsourcing Yearbook will publish in one place the most comprehensive view of the UK outsourcing industry. The book will feature statistics on industry size, market trends, benchmarked performance results, as well as overviews of the key players within it. The Outsourcing Yearbook 2015 will be the go-to Bible for outsourcing practitioners on both the buy and supply-side.

It will include in-depth case studies, opinion pieces and thought leadership from some of the most influential people in outsourcing, enabling readers to learn from the people that make outsourcing work.

Plus, The NOA’s Supplier Directory will once again be available in the Outsourcing Yearbook as part of the hard copy and e-book, providing buyers with a must have reference tool when creating their long-lists for supplier and advisory engagement.

How can I take part?

There are three main ways to get involved:

1) Take an integrated content and advertising package

2) Take a listing in the NOA’s Supplier Directory (online and hard copy)

3) Advertise – take a full or half page advert

Why be included?

Increase your visibility amongst 18,000+ outsourcing professionals
Get your thought leadership across
Plant yourself firmly into the minds of key decision makers
Be associated with industry best practice and excellence
Become an influencer of the industry and showcase your outsourcing insight

View the Information Pack to find out more

To confirm your participation, please email Natalie Milsom, Project Director at nataliem@noa.co.uk and state your chosen package.

Alternative Offshore Outsourcing Structures – February 2015

Offshore outsourcing retains an allure that the growth of hybrid cloud services and service integrator delivery models cannot entirely dispel. Even with the advent of varying alternative outsourcing models, organizations can still achieve significant savings from leveraging the benefits of doing business in a country with a lower cost of living and wage scale. But offshoring comes with strings attached, and neither of the two main approaches – full outsourcing to a local provider or wholly owned captive entity – is a universal solution to negating risk. Thus, organizations continue to seek smarter ways to include offshore services delivery as part of their sourcing strategies, all the while attempting to mitigate risks.

Risk mitigation comes in many forms, but it can start with the earliest, most basic decisions in a sourcing process: What to outsource? What is the optimal structure? Where is the best location? All of these issues must be factored in when making the sourcing decision. This Alert looks at some of the main alternative offshore outsourcing structures – from virtual captive, to joint venture, to “build-operate-transfer” models – and assesses how they compare in terms of benefits, flexibility, regulatory compliance and long-term operational suitability.

In recent years, organizations have tended to see offshore outsourcing as one of a menu of sourcing options, sitting alongside some degree of cloud-based or as-a-service delivery for certain services, or operating as part of an ecosystem of multiple providers managed in whole or in part under a service integrator and management (SIaM) regime. While one might have expected both cloud and SIaM methodologies to have eroded the use of offshore services, our experience is that the offshore market has adapted and evolved to fit within whatever structure is most prevalent, and we currently see an increasing trend to re-consider offshore models that, 5 years ago, seemed potentially to be moving into a backwater.
Read more at: Alternative Offshore Outsourcing Structures – February 2015 by Alistair Maughan and Christopher D. Ford

Deutsche Bank and HP ink multi-billion dollar IT outsourcing pact

Deutsche Bank has signed a ten-year, multi-billion dollar deal to outsource a large chunk of its wholesale IT infrastructure to HP.

Under the terms of the agreement, HP will provide dedicated data centre services on demand including storage, platform and hosting.

Deutsche Bank will retain activities such as IT architecture, application development and information security.

As part of a wider IT transformation programme, Deutsche Bank says it will upgrade and reduce the number of its IT applications, move them on to the HP platform and enhance its own processes for providing technology support to its operations.

Henry Ritchotte, chief operating officer of Deutsche Bank, says: “This agreement enables Deutsche Bank to secure standardised, world-class IT infrastructure while lowering costs. Having a more modern and agile technology platform will further improve the Bank’s ability to launch new products and services and lay the foundation for the next phase of its digital strategy.”

Allied Irish Banks strikes outsourcing deal with Wipro

Allied Irish Banks has confirmed that it will outsource some of its IT operations to Indian service provider Wipro.

It was reported earlier this month that the state-owned Irish lender would outsource a total of 170 IT roles to three of its suppliers – Eircom, Integrity and Wipro – following a three-month review of its operations.

Wipro has now been awarded a contract to provide infrastructure management services to the bank in order to drive efficiencies.

According to some reports, the deal will be worth in the region of £100 million, with 130 staff joining the service provider.

“We are pleased to be working with Wipro in our journey to transform into a Digital Bank,” said AIB CIO Mike Brakes.

“With Wipro supporting our technology and application infrastructure, we look forward to strengthening efficiencies and being better able to serve and support our customers across the bank.

“We were very pleased with the commitment Wipro demonstrated to the Bank as well as to creating opportunities for our people in Ireland.”

The partnership will also see the service provider setting up a Dublin-based Service NXT operations centre and the mainframe ‘centre of excellence’.

“The deal reinforces our commitment to grow and create local employment opportunities in Ireland,” said G.K. Prasanna, chief executive, Global Infrastructure Services, Wipro Limited.

Source: ComputerworldUK-Allied Irish Banks strikes outsourcing deal with Wipro By Matthew Finnegan