From:	Baroni Limited [baroni-limited@tiscali.it]
Sent:	18 May 2007 09:19
Subject:	Baroni Limited - Offshoring Newsletter' - 16/07

Importance:	High
Sensitivity:	Confidential

Company-owned offshoring operations in India growing at 30%, says Everest Research Institute
Company-owned offshoring operations in India -- also known as 'captives' -- continue to grow at a rapid pace contrary to popular perception, according to a study from the Everest Research Institute.  The study finds the captive market in India growing at 30%, putting it directly in pace with the overall Indian offshore services market.
Two drivers of the growth include; Fortune 2000 companies continue to set up new operations with over 50 operations added in the last three years, and existing captive operations continue to expand with many of them planning to double their capacities in the next two years.
The Indian captives market comprises about US $9bn, accounts for 30% of the Indian offshore services market, and employs about 200,000 full-time employees, according to the Institute.  According to the study, IT, engineering and business processes continue to dominate company-owned offshore operations in India.
'The growth of Indian captives continues to spread across industry verticals, functions, size of the parent companies and geographies,' said Nikhil Rajpal, Vice President, Global Sourcing, Everest Research Institute.  “Existing captive operations are evolving from being lost-cost providers into strategic entities by aligning themselves with their parent companies, managing more end-to-end strategic processes and driving innovation and profit impact.'
The study also pointed to additional implications:
* Organizations considering offshoring should evaluate the captive-centre option given their potential to drive business value.
* Existing company-owned operations in India can deliver strategic value beyond labour arbitrage, but the captives must operate differently and integrate better with their parent companies.
* To help the captives along this journey to add value, parent companies with existing captive operations in India must:
* Clearly create alignment on the definition of value between parent and captive stakeholders;
* Help cultural change within their global organizations to facilitate the evolution of the captive beyond an arbitrage player; and
* Design and implement governance mechanisms to integrate the captive better.
* Indian suppliers should recognize the continued rapid growth of captives and, although they compete with captives, must learn how to co-exist as most large organizations utilize both operations.	

 	
 Top Stories	
 	
Public sector not yet maximising outsourcing benefits, says PwC survey
Two-thirds of respondents said they believed that outsourcing helps the public sector achieve its anticipated benefits.  Respondents reported a number of important outcomes from outsourcing contracts, for example reduced costs, higher service levels, improved customer satisfaction, and better management of the risks of the existing service.  Two-thirds of respondents felt they had the right relationship with their service provider and there was overall satisfaction (87%) with the financial robustness brought by the private sector.  However, the survey revealed that there is more to be done to improve both the working relationships and the outcome of the contracts.  It also indicates there is a gap between expectation and reality when looking at important but less tangible areas.  For example, when selecting a service provider, the most important single factor for the public sector was value for money (VfM), as cited by over half of respondents, but levels of satisfaction with this were significantly lower.
Confederation of British Industry urges offshore civil service jobs
The government should think about shifting some of the functions performed by the civil service offshore, says the Confederation of British Industry.  'There is no reason for back office functions to be replicated by many civil servants sitting in expensive office blocks or sitting in the UK at all,' the CBI said in its report.
PricewaterhouseCoopers reveals faults in Swansea Council's £83M outsourcing deal
Swansea City Council failed to apply key principles of IT management properly when it agreed an £83M outsourcing deal that is struggling to deliver anticipated benefits, a report by auditor PricewaterhouseCoopers has concluded.  The council's original outsourcing contract with Capgemini, to replace back-office systems and create online public services, promised to deliver £70M savings over its 10-year life when it was signed in 2006.The council scaled back the contract to a £40M project a year later, predicting savings of £26M over 10 years.  To date, it has achieved savings of £6M, PwC revealed.
TRUenergy inks 10 year outsourcing deal with IBM
TRUenergy has signed a 10-year outsourcing deal with IBM Australia under which the latter will transform and manage TRUenergy's IT services and back-office functions. The company will also provide TRUenergy with various services including support, development, and maintenance for its IT applications and outsourced customer registration systems, billing, and credit and collections services.  The deal, however, will not affect the call centres of TRUenergy.
Tesco in £18M contract renewal with Xansa
Britain's biggest supermarket chain Tesco PLC said it has extended its IT contract with Xansa, the outsourcing and technology company, for a further three years. Xansa will continue to manage Tesco's business critical applications, leveraging a combination of Xansa's onshore and offshore capability.
Tennessee taps Maximus for $70M in ERP software
Tennessee Finance and Administration Department has awarded Maximus Inc. a two-year contract worth nearly $70M, where the company will implement enterprise resource planning software throughout the state government.  Under the contract, Maximus of Reston, Va., will establish a state-wide ERP and enterprise asset management system to meet Tennessee’s business needs.
Coca-Cola FEMSA Extends Relationship with EDS
Coca-Cola FEMSA, S.A. de C.V., the largest Coca-Cola bottler in Latin America and second largest in the world, has signed a three-and-a-half year contract extension for information technology (IT) services with EDS that will help the company manage its growth.
Erie Family Life Insurance Company Awards Outsourcing Deal to Perot
Erie Family Life Insurance Company has awarded a policy administration deal to TAG, a subsidiary of Perot Systems, under which Perot will provide various policy administration services including policy issue and management services for active as well as closed policies.  In addition, the deal entails Perot to consolidate all the four platforms of Erie Family Life into Perot's single system (LifeSys policy administration system).  Perot will also assist Erie Family Life in launching its new products (scheduled for 2007).	
 	
 Service Provider News	
 	
Verizon Business, AT&T and Qwest Communications International win US GSA Contract
The Networx Universal program will provide voice, internet protocol (IP), wireless, satellite and IP-centric services to 135 federal agencies in 191 countries.  Networx is the successor to the FTS2001 contract, awarded in 1999, that provided telecommunications services to the federal government.  The Networx program will modernize federal government communications and includes the adoption of the next generation of internet protocol, known as IPv6.  Verizon Business is one of the three prime contractors for GSA's Networx.  CSC will assist Verizon Business in designing a customer-centric network.  The company will offer support for engineering services, managed tiered security services, and anti-virus managed services.
PWC CHINA BECOMES BEIJING 2008 ACCOUNTING SERVICES SUPPLIER
PricewaterhouseCoopers China has won finance and accounting services deal from the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) to provide financial advisory services pertaining to budgeting, financial planning, and internal control.  These services will be provided for the Beijing 2008 Olympic Games and Paralympics of China at five Olympic venues.
Atos Origin renews Premier Travel Inn contract agreement
Atos Origin renews Premier Travel Inn contract agreement.  The scope of the new agreement includes Premier Travel Inn's Key Premier Accounts which Atos Worldline will account manage in relation to the production and delivery of all services.
Cognizant signs outsourcing pact with Rabobank
Cognizant Technology and Ordina, an IT services provider in Belgium and the Netherlands, said they have entered into a seven-year outsourcing pact with Dutch financial services major Rabobank.
Fidelity to set up back office in China
Fidelity International has expanded its offshore operations in China by setting up a back-office centre in the North-Eastern port of Dalian.  The facility is expected to cater to the company's mutual funds and pension business operations in Japan.  The centre is likely to prove competitive to the company's Indian operations (employing about 9,000 professionals).
Fiserv India to increase headcount to 5000 by 2009
Fiserv unveiled its plans to expand its Indian operations by increasing the company's headcount to 5,000 by 2009. Fiserv's Indian subsidiary Fiserv India, has recruited about 1,000 employees since its establishment in 2005.  Fiserv India has been offering information management systems and services for the financial and insurance service industries.  It specializes in offering various services, such as transaction processing, outsourcing, BPO, software, and systems solutions, to its parent company. Recently, the company has opened a Centre of Excellence in India.
Oracle cashes in on financial services
Oracle has created a new business unit that will bundle all its existing applications in the areas of banking, capital markets and asset management, and hold any future acquisitions.  The group is built around iFlex, an Indian software developer of financial applications in which Oracle owns a majority stake.
Citigroup acquiring Bisys Group
Citigroup is ramping up a push to serve hedge fund and private equity customers, announcing yesterday that it would pay $1.45bn for the Bisys Group, which handles mundane back-office tasks for such firms.	

 :: To subscribe, unsubscribe write to Baroni-limited@tiscali.it ::
: Glad to have your comments Baroni-limited@tiscali.it ::
Copyright © 2005; Baroni Limited. All rights reserved 

Office: +44 (0)20 8660 6457
Fax: +44 (0)20 8645 9297
Email: baroni-limited@tiscali.it
  Website: Baroni-Limited.com

Baroni Limited
68 Penwortham Road
Sanderstead, Surrey CR2 0QS

 

VAT Number:          814 6408                                 Company Registration Number                    4741496
              Registered Office: 10 – 14 Accommodation Road, Golders Green, London, NW11 8ED
**********************************************************************
This document and any attachments may contain information that is confidential and is intended only for use of the recipient(s) to whom it has been addressed.
No person, without written confirmation of their contents, should rely on the contents of this eMail. This eMail and the information it contains are supplied in good faith but the Company shall not be under any liability in damages or otherwise for any reliance the recipient may place upon them.

Furthermore, this document is sent for information and/or negotiating purposes only and shall not have the effect of creating a contract between the parties.

If you have received this eMail in error, please notify the sender(s) immediately by telephone. Please destroy and delete the message from your computer. Any form of reproduction, dissemination, copying, disclosure, modification, distribution and/or publication of this eMail is strictly prohibited save unless expressly authorised by  the sender(s).  Thank you for your co-operation.
**********************************************************************