outsourcing - News, Features, and Slideshows

News

• Company saves millions by ending outsourcing deal with EDS

  In the realm of IT outsourcing, disengaging from a multi-year, multi-million dollar agreement can be so difficult and costly for customers that it makes a Trump divorce seem like a tea party. But that's exactly what US apparel maker Kellwood did last year, despite the upheaval the company anticipated from ending its 13-year IT outsourcing arrangement with EDS (now part of HP).
  The Chesterfield, Missouri-based company had originally signed a soup-to-nuts IT outsourcing agreement with EDS in 1996, which it renegotiated in 2002 and 2008. The most recent iteration of the deal, in which EDS would continue to manage the company's infrastructure and provide some services offshore, had an approximate value of US$105 million and was supposed to save the company $2 million dollars in the first year and another $9 million over the remaining years.

• Landmark ruling Against HP's EDS gives customers new power

  In what could be an important decision for the IT outsourcing industry and its customers, a London court recently ruled that EDS ( now part of Hewlett-Packard) must pay damages to a former outsourcing customer for failing to live up to its sales pitch.
  British Sky Broadcasting (BskyB) had signed a £48 million outsourcing contract with EDS to build a customer service system in 2000, but terminated the deal early in 2002 after what it said was "woeful" performance by the IT service provider. BSkyB alleged deceit, negligent misrepresentation and breach of contract by EDS.

• Why it pays to appraise your outsourcing contract

  Everyone knows a good outsourcing relationship needs to be actively managed. So does a good IT outsourcing contract.
  Most contain what Marc Tanowitz, principal of outsourcing consultancy Pace Harmon, calls "active obligations" - provisions to be completed post contract-execution that require periodic review or that may vary over time. Many of them can have a significant impact on performance and cost if neglected.

• Crippling mistakes IT departments make in outsourcing

  Researchers at the University of Tennessee have studied a variety of outsourcing deals - from IT and back-office work to manufacturing and logistics - and identified the most common mistakes organisations make when partnering with an external provider.
  The research reveals that outsourcing customers commit a variety of sins, and the most pervasive missteps can be traced to one simple fact: You get what you pay for, says UT lead researcher and supply chain consultant Kate Vitasek. Or more accurately, in the context of outsourcing, you get what you contract for.

• The best time to negotiate an outsourcing contract

  The final months of an IT services contract are an ideal time for outsourcing customers to negotiate with their vendors for improvements in price and service quality. As the deal end-date approaches, the customer wields more power than at any other point in the relationship since the client can seriously consider alternatives without the threat of termination fees or other penalties.

• Pirates to worry you

  Somali pirates who brazenly attacked container ships in the Indian Ocean have garnered a lot of recent attention. But for companies that source products from Chinese manufacturing partners, there are even greater and longer-term business risks due to pirating attacks on companies' intellectual property and supply chains.

• Reduced risk exposure with multiple outsourcing

  Working with multiple partners is a reality for a number of networked enterprises, but this also exposes them to some risks.
  “If you don’t work together [with] who is doing what, then you can either have the gap or the double up,” says Terry Shubkin, head of operations, Unisys New Zealand. “Something goes wrong and everyone says and points their fingers in a different direction and say, ‘but it was their [the other party’s or parties’] responsibility to do that’.

• ASB keeps jobs at home

  ASB has stated it will not be joining the movement to offshore any of its banking operations or roles, including its call centres.

• Four tips for better outsourcing deals

  Nothing says "cost cutting" like a big outsourcing deal. Some firms will either panic or simply be forced to pull the trigger on outsourcing deals without laying the foundation for success with effective internal preparation. Some of these deals will work based on brute force and luck, but luck is not a good business strategy, and many deals will not meet expectations. For firms that must execute or renegotiate an outsourcing deal, there are some steps that improve the chances of success.

• Outsourcing gaining popularity in the Asia Pacific

  A survey commissioned by technology giant Hewlett-Packard has revealed that the current financial crisis has brought about an increased tendency for IT heads in the Asia Pacific to move away from the mainframe and outsource aspects of their enterprise IT operations.
  The survey covered 490 business and technology executives across the globe, between December 2008 and January 2009. More than 100 (128) respondents were from countries in the Asia Pacific, such as Australia, China, India, Japan and the Philippines.

• EDS offers new option for mid-market firms

  David Caspari, vice president of EDS in Australia and New Zealand, foresees a strong 2009, citing the outsourcing company's third consecutive year of strong profit and cash flow.
  “The current environment is good for EDS. In a difficult economy, CEOs are asking CIOs to reduce costs and take a look at the balance sheet," says Caspari.

• Telecom exports 250 jobs to the Philippines

  Telecom is shifting 250 contact centre jobs from New Zealand to the Philippines.
  Telecom will restructure six of its contact centres, with the loss of 250 positions to Manila over the next 18-months.

• Outsourcing deals that can withstand crisis

  Globalisation is suffering from economic, financial and political challenges. IT organisations can improve results and mitigate risks by revamping offshore strategies. Implementing globalisation no longer creates automatic competitive cost advantage. While nearly all companies have globalization programs, most were created randomly and reactively without strategic consideration. To gain competitive advantage, companies must strategically engineer the integration and synergy from service providers.
  Every company with globalization contracts should evaluate its diversity and develop contingency plans to ensure continuity. In today's uncertain world, IT organisations must have contingency plans to transfer services back in house or to another service provider. Without transition plans, IT organisations are left to devise solutions during crisis circumstances or face the unwelcome scrutiny of corporate boards that question the judgment and decisions of IT programs.

• Offshoring and outsourcing in 2009

  All things considered, 2008 was a relatively stable year for the IT services industry. Deals got smaller and shorter, but they grew in number. The second tier providers and Indian vendors did well, along with Accenture and IBM Global Services. The outlier was EDS, where weakness led to its acquisition by Hewlett Packard.
  IT outsourcing providers were largely unscathed by the economic downturn throughout much of the year. "It took almost two quarters for the effects of the slowdown to manifest in providers' financial statements," says Eugene Kublanov, CEO of San Ramon, Calif.-based outsourcing advisory NeoIT. By the end of this year, however, CIOs became too distracted by the economic destruction surround them to do any outsourcing deals. "As the markets crumbled and CIOs were confronted with the prospects of their personal employment, naturally, decision-making around strategic cost cutting and efficiency took a back seat," says Kublanov.

• ANZ Bank CIO is now innovation guru

  Australia and New Zealand Banking Group chief information officer Peter Dalton has moved into a newly created innovation role as the bank puts more emphasis on its Indian operations to run day-to-day technology following an executive restructure.
  On Friday, the bank announced that Mr Dalton would become group general manager, innovation, reporting to the group managing director of strategy, marketing and customer segmentation, Margaret Payn. The scope of his role is yet to be properly defined. In the statement, the bank said Mr Dalton would define and shape the future directions for innovation, and use his technical expertise to look at the potential of integrating emerging technologies to deliver better business results across the bank.