Accenture has signed a 10-year, US$100 million business processing outsourcing (BPO) agreement with AIG Europe S.A. to provide an IT platform and insurance support services to AIG Entrepreneur, an AIG unit specializing in Property and Casualty insurance for small and medium enterprises. The agreement which aims to maximize operational efficiencies and enhance services will be implemented in several European countries starting initially with France.
Services will be provided to AIG Europe by Accenture Insurance Services – an Accenture business that offers insurance BPO services to life, annuity, pensions and P&C insurers globally – through Accenture’s service centre in Bucharest, Romania. The underwriting, policy and claims services will be supported by an IT platform using Accenture’s proprietary insurance solution software. The implementation is expected to be completed in less than six months.
More Contracts, Increased Outsourcing Adoption across Europe and Asia-Pacific, yet a Moderate Decline in Market Contract Values from 2005 to 2006
TPI, the world’s leading advisor to global corporations on all facets of their service-delivery strategies for business support operations, today announced the developments of 2006 in the global outsourcing industry through the TPI Index report. The contracts awarded in 2006 represented the single-greatest number of such agreements in any year, up 3 percent from 2005’s previous high. After an exceptional first quarter, the year concluded with a total contract value (TCV) of $78 billion, amounting to an 8 percent decline from the prior year. Annualized contract value (ACV) — an estimate of the average yearly revenue potential that may be derived from the 2006 contract awards — reflects roughly a 7 percent year-over-year decline in ACV.
”The 2006 numbers were down due in part to shorter contracts as well as those with smaller dollar values,” said Peter Allen, partner and managing director for Market Development at TPI. “However, the market is growing. The ACV signed for 2006 was the second strongest year ever for annual value coming online, and the industry also had a record year in contracts with annual average spend of $100 million. The year-over-year comparisons are down due to an exceptionally strong 2005, rather than a weak 2006.”
The number of “mega deals” — those with contract values above $1 billion – was unchanged from 2005 but off $5 billion in TCV from the prior year. Elsewhere, the total number of transactions completed as the result of a restructuring of a prior contract was a record at 72, but the TCV of just over $20 billion was not a record.
Leading Australian banks, including ANZ and St. George, are planning to send their back office jobs to India. A media report said an analysis of the latest statements by the so-called “four plus one” leading Australian banks suggests there was a slow but growing movement to transfer processing work done here to lower-cost countries like India.
While ANZ, St George, National Australia Bank and Westpac have been sensitive to campaigns being waged by the Finance Sector Union against offshoring by committing to keep their call centres in the country, several hundred other jobs across the industry are now, or will shortly be, based outside Australia, “The Age” reported.
HCL, one of India’s leading global IT services companies, today announced a $200 million, multiservice, five-year contract with Skandia UK, a leading independent provider of long-term savings solutions. As part of the deal, Skandia UK will outsource application optimization, including development, maintenance and support (across all platforms) and remote infrastructure management to HCL. Skandia UK will retain all customer-facing activities.
HCL will enable and accelerate Skandia UK’s move to a Service Orientated Architecture (SOA) as part of an initiative to make Skandia UK’s IT landscape a world class, agile infrastructure that will make the savings provider more competitive. The new
architecture will deliver productivity improvements and gains guided by an extensive service level agreement (SLA) and periodic external benchmarking.
Tech Mahindra today announced the signing of a five year deal to provide BT with strategic sourcing services. This contract is expected to create new revenue for Tech Mahindra in excess of US$1 Billion over this period.
Tech Mahindra will support BT’s planned growth of managed services to business customers around the globe and continue to provide ongoing services related to BT’s internal systems, processes and re-usable platforms.
Tech Mahindra and BT Group have worked together for 20 years on a range of projects which have proved very successful for both parties. This deal builds upon and strengthens the productive working relationships developed during that time.
In an interview with Nayan Chanda of YaleGlobal Online, N.R. Narayana Murthy, founder of Infosys, discusses the challenges and opportunities for firms operating in India, and also identifies the factors required for success in a global market [24 min 27 sec - April 28, 2006]. For transcripts of the interview, please visit: YaleGlobal Online.
Listen to Mr. Murthy’s opening words to the first question:
How do you account for this meteoric rise of Infosys in the context of India?
Murthy: Well, you’re right. We celebrate our 25th year this year. On 2 July of 2006, we will have completed 25 years. First of all, I must say that God has been very kind to us because, as Louis Pasteur once said, that when God decides to announce his presence, he comes in the form of chance. Having accepted that, let me say this, right from day one, when we founded the company, when we sat for four hours to discuss what we should seek in this journey, we were all unanimous that we would seek respect. We would seek respect from customers, from our employees, from our investors, from our lender departments, from the government and from the society. And we said, if we seek respect from each of these stakeholders, we will do the right thing for them. And if we do the right thing for them, then everything will fall into place. So I’m happy that the company has not swerved from that part of taking respect right from day one to now. And that is perhaps the reason we have had what little success we have had so far.
Respect. Humble and impressive. Now listen to the complete interview:
I have restructured the sidebar. The former link list “The Industry” is now split into two new lists: “The Providers” and “The Advisors” according to their role play in the industry and on the market.
However, the border line between these two groups are fluent and blurred. Notice a company like Accenture, which was originally an accounting firm long ago and later on an advisor but now turns out to be one of the most successful and largest providers of outsourcing and even offshoring services. On the other side of the border, some advisors like EquaTerra, Morgan Chambers, neoIT or Navisco are highly specialized in sourcing advisory and they are strict neutral in their working ethics.
In return most of the providers try also to give their customers advice on how to organize their IT sourcing - but of course this advice is for obvious reasons never neutral.
The trend in both categories “The Providers” and “The Advisors” is clear, too: More players and high market dynamics through mergers, aquisitions, spin-offs and splits. At the moment I’m listing 52 global providers and 16 internationally operating dedicated advisors.
The outsourcing and offshoring industry still remains very thrilling. It’s a huge global sandbox for the professional and wannabe strategists, analysts and other specialists …
Further, I have added an automatic Current Most Read (in the last 48 hours) section to the sidebar for your convenience and to satisfy your curiosity. Please watch the Top 5 of what people have most read here currently and enjoy!
A former Gartner and PwC (now IBM) analyst and outsourcing exec, Vinnie Mirchandani, lets some speculations live up again:
The rumors have been floating for a few weeks now. IBM plans to acquire Satyam (or at least a major stake in), the 4th largest Indian offshore player.
Satyam is strong in several manufacturing markets and has one of the better packaged application practices of the Indian firms. It has also done a poor job marketing itself compared to the other Indian firms and IBM would clearly turn that around. But IBM inconsistently positions its own growing India operations, so I suspect integration will be a challenge. And IBM will have to quit the double speak to customers about not being in India for lowered costs and reluctantly passing those along. It will also pressure Indian firms to step up their own western acquisitions to accelerate market share growth.
Indian software services and business process outsourcing companies have been acquisition targets for the last couple of years, as multinational technology companies, particularly services companies, try to build low-cost services capability in India.
In 2004, IBM acquired Daksh eServices, a business process outsourcing (BPO) company in Gurgaon near Delhi. Last year, IBM acquired Network Solutions, an infrastructure services company in Bangalore, India, but the acquisition was focused on strengthening IBM’s networking and managed services for the Indian market.
In 2003, Perot Systems bought out its Indian partner, HCL Technologies, in their joint venture HCL Perot Systems in Noida near Delhi. In the same year, it also acquired Vision Healthsource India, a Chennai-based provider of billing and claims solutions for healthcare service providers in the U.S.
Oracle also last year acquired a 41% stake in i-flex solutions, a publicly held banking software company.
There had been a lot of speculations about this since the beginning of 2006. But what indicates now in December that this could be still a deal? Or it is just hot air again … We’ll watch the stocks and crosscheck these rumors again and again.
Satyam announced on Wednesday that SAP application development, enterprise application integration and testing services for the European wing of the Japanese electronics giant will be carried out at the Indian outsourcer’s new offshore-development center (ODC) in Bangalore.
According to Satyam, the move will “enable the Sony Infrastructure Services team to focus on core activities such as platform enhancement, optimization and innovation” while Satyam handles IT development for Sony sales and distribution, warehouse management, finance and business intelligence systems.
Sudin Apte, country head and senior analyst at India operations of Forrester Research, has made a quick take on the strategies of the top Indian outsourcing firms:
Infosys, Tata Consultancy Services (TCS), and Wipro — are at a strategy crossroad. Formerly undifferentiated low-cost body shops, these firms have built their own separate strategies. Wipro is continuing to focus on new ways to cut costs via efficiency boosters and low-cost labor. Infosys has placed the bet to continue leveraging the Indian cost model, while going head-to-head with the likes of Accenture. TCS will continue to leverage its size and global-delivery foot print. Evolving differentiation and concerted efforts on quality and cost reduction by the top three Indian firms will mean further marginalization of midsized and small Indian vendors, and the multinational IT providers will face continued pricing and process upgrade pressure.
TCS’s deal with Lilly is the latest indication that India’s top outsourcers are poised to move well beyond the basic tech and business services for which they are mostly known. Other countries are also stepping up to attract high-level life sciences work. Last week, drug giant Novartis disclosed plans to build a $100 million research and development facility in China.
TCS to establish Medical Information Sciences Center in India to support the relationship with Lilly
Tata Consultancy Services (TCS) announced today that it has established a relationship with Eli Lilly and Company (Lilly) to advance Lilly’s clinical research and development. Lilly is a leading, innovation-driven U.S. corporation committed to developing a growing portfolio of best-in-class and first-in-class pharmaceutical products.
For this multi-year engagement, Tata Consultancy Services has established a new facility, the ‘Lilly-TCS Medical Information Sciences Center’, at its Noida site near New Delhi, to house the staff working on Lilly projects. Through this new center, TCS will work with Lilly’s Medical Information Sciences disciplines to provide a wide range of services in clinical data management, statistical analysis and medical writing.
It is true that Indian IT workers are skilled and have good command over English language but clients feel more comfortable to deal with people who understand them even better than the Indians.
In order to fill this gap, the Indian IT companies have devised two new strategies. First, they have started to hire foreign workers. S Padmanabhan, Human Resources Manager, Tata Consultancy Services (TCS) has admitted that eight of every hundred of Tata’s workers are foreigners. The big names in Indian IT sectors have started to shift their attention to the foreign workers to meet up the demands of their clients and make them feel more comfortable in dealing with the company.
The Financial Express, the only English financial daily in Bangladesh, writes in its editorial:
Tata Consultancy Services (TCS), India’s biggest IT outsourcing company, expects to nearly double the percentage of non-Indians on its payroll over the next three years, in the strongest sign yet that the thriving Indian sector is becoming truly multinational. TCS said foreign staff should comprise 15 per cent of its workforce within three years, compared with 8.3 per cent now, and less than half a percentage point four years ago.
“As the company becomes bigger and very diversified in terms of location, it is very important to have a workforce that is not just of one nationality,” S Padmanabhan, TCS’s head of global human resources, said in an interview. India’s outsourcing companies have traditionally relied on the country’s huge supply of low-cost skilled labour.
As Basman earlier reported the Qantas opportunity has now came to a decision and became a deal for TCS. A seven-year deal which is the largest ever for a Indian IT company in Australia:
Tata Consultancy Services, the leading global IT services and consulting organisation announced it had signed a seven-year engagement with an expected value of around AUD $ 120 Million (USD $90 million) with Qantas to provide a range of IT application, transformation and maintenance services.
The contract for the Applications Services & Transformation (AST) outsourcing program launched by Qantas is the largest single contract awarded to an Indian outsourcing company in Australia to date.
Under this contract, TCS will assume full responsibility for more than 75 per cent of the total scope of Qantas’ (AST) program. TCS will provide support and maintenance to all of Qantas’ key IT applications for airport operations and commercial systems TCS will be the lead partner for the transition phase of the entire Qantas AST program, overseeing activities of many of Qantas’ internal and external groups involved in IT systems support and maintenance.
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