Sprint Nextel Corp. is losing an outsourcing contract with Time Warner Cable Inc. that may be worth as much as $250 million in profits a year.

Bernstein Research analyst Craig Moffett pointed out the loss in a research note Wednesday, saying he expects Time Warner’s payments to Sprint to begin shrinking in the third quarter and virtually disappear by the beginning of 2014.

Justin Venech, a spokesman for New York-based Time Warner Cable (NYSE: TWC), confirmed that the company is phasing out the agreement with Sprint (NYSE: S) to handle all phone traffic from Time Warner Cable’s digital phone service. It’s bringing those operations in-house. He declined, however, to say when the swap would take place or how much the company pays Sprint now.

“It improves our economics, but it will take several years to complete,” he said.

Sprint spokeswoman Stephanie Greenwood would not comment beyond saying that the phase-out isn’t expected to begin until next year and will have no financial effect on the company in 2010.

Moffett said the contract’s end will only exacerbate revenue problems for Sprint as it continues to lose thousands of wireless and traditional wireline customers.

He predicted that Sprint will lose an additional 775,000 contract customers in the first fiscal quarter of 2010 and will see sales among customers who pay for wireless service on a month-to-month basis decline because of price pressure from other carriers.

His report appeared on some level to be aimed at dampening investor excitement for Sprint, which has seen its shares rise almost 9 percent in the past week, closing at $3.62 on Tuesday, buoyed in part by CFO Bob Brust saying during an investor conference Monday that the company might return to revenue growth later this year.

“Sprint’s fundamentals continue to worsen,” wrote Moffett, who reduced his target price for Sprint shares from $3 to $2.50 and reiterated his “underperform” rating. “Absent a serendipitous takeover, the company’s shares ought to reflect this deteriorating performance over time.”

Moffett said he based his analysis of the outsourcing contract on securities filings from Time Warner and Comcast Corp., which already supports similar Internet phone services on its own. Comparing the companies’ gross profit margins, Moffett said he estimated that Sprint receives $5 per subscriber per month in unadjusted earnings, or about $249 million a year.

Sprint spun off the majority of its consumer and business wireline phone service in 2007 to Overland Park-based Embarq Corp., which was acquired last year by CenturyTel Inc. (NYSE: CTL). But Sprint kept a portion of its long-distance business, as well as lines used for high-speed Internet and Internet phone services.

Like most providers of traditional wireline phone service, Sprint has seen its customer numbers decline as people switch to wireless or Internet calling, with wireline revenue declining 11 percent last year to $5.6 billion.

Moffett wrote that the company had been able to keep the division’s costs in line with revenue declines but that “we expect this to become far more challenging once the effect of losing the Time Warner Cable contract sets in.”

Looking to Sprint’s wireless business, Moffett said the odds are stacked against the company to rebound from years of financial losses and losing millions of subscribers. He said the company is trying to gain customers in an era when most people who want a cell phone already have one and deep subsidies on handsets and price cuts have made the company less able to react to further price competition from industry leaders Verizon Wireless and AT&T Inc. (NYSE: T) and from regional prepaid players, such as MetroPCS and Leap Wireless.

He also said that although Sprint’s prepaid brands, Boost Mobile and Virgin Mobile, did well last year, the momentum appears to be slowing because competitors have matched or exceeded Sprint’s value proposition.

“It would be hard to concoct a less hospitable backdrop for Sprint’s attempts to right the ship,” he wrote.

Overland Park-based Sprint ranks No. 1 on the Kansas City Business Journal’s list of top area public companies, ranked by revenue.

davidtwiddy@bizjournals.com – 8167772204

Source: kansascity.bizjournals.com

As many as 2,000 workers may be hit in latest round of cuts

After shrinking its U.S. workforce by as many as 10,000 employees last year, IBM this week may be on its way to cutting another 2,000 workers.

IBM isn’t commenting on its latest round of cuts and information about it comes from the Alliance@IBM/CWA Local 1701, which gathers its data directly from IBM employees. The Alliance, which has blamed offshoring for many of the layoffs, has been trying to win bargaining rights for employees.

“IBM is clearly offshoring things where they can,” said one IBM employee who received his notice yesterday and spoke on the condition of anonymity because he didn’t want to jeopardize his severance. A 10-year veteran and UNIX administrator, this employee said his customer support team once had 15 U.S.-based workers. That staff was reduced over time to just three workers in the U.S., with other members of the customer support team now in Brazil, Argentina and India.

The employee said he was not given a good reason for his layoff. “Higher ups made a decision that a certain percentage had to be cut – it was not performance-based at all,” he said. Although the employee said he’s uncertain about the job market, “my sense is that it is not horrendous [but] I’ll have to assume that I’ll have to take a cut in pay.”

As of last October, IBM employed 105,000 workers in the U.S., compared to 115,000 in 2008. In 2007, IBM had 121,000 U.S. employees. It employs about 400,000 globally.

IBM doesn’t discuss its jobs actions other than to explain that they are in response to shifting customer needs.

IBM’s workforce is scattered around the country and it continues to hire in U.S. locations. Michigan State University, for instance, has posted a notice about an IBM recruitment fair March 8 for IBM’s Michigan Delivery Center. It says the company has nearly 60 “upcoming openings” for application support specialists. A university official deferred questions to IBM.

IBM jobs are high paying and the company is a major employer in number communities, such as Burlington, Vt.

In a review last year of a bond issue for Burlington, Moody’s Investors Service looked at major employers and hiring trends to assess the economic health of the community. It wrote that IBM was Burlington’s single largest employer, with 5,400 workers at that point, or 5% of the area’s workforce.

“IBM recently announced job reductions, with the Burlington area reportedly experiencing between 300 and 500 IBM related job losses,” Moody’s wrote. “These recent cuts bring the total number of workers that IBM has laid off since 2001 to about 3,000, or 15% of manufacturing employment. Additional workforce reductions at IBM present considerable downside risk”

It was not immediately clear whether the Burlington workforce was affected directly by the latest round of cuts.

Source: http://www.computerworld.com

By Sonya Hubbard

Today’s the deadline for the many companies that are on a calendar year to get their 10Ks in to the SEC, and the folks here at footnoted couldn’t be happier. We won’t bore you with how we spent our respective weekends combing through over 900 alerts to assemble a hefty spreadsheet of all the different things that companies tried to dump in these filings, some of which topped over 1,600 pages! We’ll be sharing our best finds with subscribers to FootnotedPro.

But we thought the 10-K filed by Xerox (XRX) late Friday was a good one to talk about here for several reasons. For one, we’ve been pretty skeptical about the recently approved acquisition of Affiliated Computer Services (old ticker: ACS), which Xerox promises will expand its reach in the business process and document management markets. Yet, there is some positive news. For example, Xerox obtained 16% more patents in 2009 than in 2008. And this article points out that Xerox reported a 4Q 2009 profit of $180 million (although it adds that “the improvement was driven entirely by [its] success in paring its costs”). . .

Read More.

Image source: Xerox

Source: Footnoted.org

HP today stamped its authority on day-to-day operations at the former EDS by replacing the services unit’s boss Joe Eazor with its own man, Tom Iannotti. Iannotti, previously managing director of HP

Americas and Technology Solutions Group, will now run the group’s global outsourcing operation, HP Enterprise Services.

The unit was formed when HP bought EDS for $13.9bn in 2008. Deep cuts to staff and benefits have followed. Iannotti will report to Ann Livermore, executive vice president of Enterprise Business, one of HP’s three massive divisions. Enterprise Business also incorporates software, servers and storage.

Eazor, who joined HP through its acquisition of EDS, will meanwhile become “senior vice president of corporate growth initiatives”, a strategy role with a focus on China and India. The changes are effective immediately.

Source: www.channelregister.co.uk

A start-up IT services firm — headed by veteran offshoring executives — has opened up an offshoring alternative in Michigan, a state with a 17.5% unemployment rate and a well-educated labor pool.

Fremont, Calif.-based Systems In Motion Inc. (SIM) has 35 IT workers in Ann Arbor and hopes to employ about 1,100 in Michigan within five years.

SIM’s plans for the state were cited by Michigan Gov. Jennifer Granholm in her State of the State address earlier this month.

SIM’s business approach, which it calls “inshoring,” emphasizes streamlined processes and an intensive worker training program to keep costs 30% below those of in-house IT departments.

The executive team includes CEO Neeraj Gupta, previously an executive at Patni Computer System Ltd. in Mumbai, India; and Chief Marketing Officer Debashish Sinha, who held a similar post at HCL America Inc., a division of HCL Technologies in Noida, India.

Michael Parks, the chief delivery officer, is a former IT executive from Virgin Mobile USA and Wells Fargo & Co.

The team could easily have created an outsourcing company based offshore with offices in the U.S. While such a strategy has proved successful for many IT services firms, “I don’t think the world needs another offshore company,” Sinha said.

SIM, formed last summer, is still running on start-up funding. In September, the state government awarded it a $7.4 million credit to build in Michigan.

Salaries range from the $30,000 for recent college graduates to $80,000 for more experienced engineers, Sinha said.He wouldn’t identify the five customers that have signed on with SIM so far.

Low real estate prices resulting from the downturn in Michigan’s economy are helping SIM get started there. The cost of infrastructure, overall, is now lower in the U.S. than in Bangalore, Sinha noted.

This version of this story was originally published in Computerworld ’s print edition. It’s an edited version of an article that first appeared on Computerworld.com.

Source: http://www.thestandard.com

Video: New PEER 1 Hosting Toronto Data Center (www.peer1.com)

By Kathleen Lau, ComputerWorld Canada

Vancouver-based infrastructure services provider Peer 1 is launching its flagship data centre in Toronto later this spring and will be the first of the company’s global facilities to offer co-location, managed hosting and dedicated hosting. ”

Fabio Banducci, president and CEO of Peer 1, said the new facility, just 30 minutes outside of downtown Toronto, will be Peer 1’s most energy-efficient and green data centre. “We’re excited to be able to bring all of our core hosting services … under the same roof for the very first time and to be able to bring our core hosting solutions into Canada for the very first time.”

Peer 1 already maintains two data centres in Vancouver, one in Montreal, and two in Toronto, none of which offer all three services.

Still under construction, the US$40 million flagship data centre is 41,000 square feet and designed for scalability with room for potentially four PODs (Performance Optimized Data Centres) to be built out as customer demand grows, said Ryan Murphey, Peer 1’s vice-president of data centre operations & facilities.

The phased approach to building out the PODs will allow for greater efficiency the closer the facility is to capacity, said Murphey. “So if you build out in smaller pieces, you can reach that peak efficiency when your data centre is only a quarter of the way full.”

Having each POD operate independently will also allow for redundancy, he said. Each POD will be outfit with “cool roof technology” to deflect a greater amount of ultraviolet rays, high-efficiency chillers, and ambient air 50 to 60 per cent of the year, said Murphey.

Besides PODs, 4,000 square feet is allocated to office space, and 4,000 square feet to support infrastructure like networks and loading and receiving docks.

Banducci said Peer 1 originally offered co-location and network services but then through several acquisitions began offering managed hosting and dedicated hosting services.

Peer’s 1 focus is small-to-medium sized businesses where, Banducci said, the needs are dynamic and evolving. Customer YouTube, for instance, grew from using dedicated services on two servers to managed services and networking to co-location with Peer 1, he said.

“For that reason, we’ve positioned Peer 1 strategically to be a full solutions provider catering to their needs and requirements,” said Banducci.

The complexity for these businesses to maintain Web apps continues to increase as well as is the difficulty to their scale infrastructure, said Banducci.

According to Darin Stahl, lead analyst with London, Ont.-based Info-Tech Research Group Ltd., infrastructure services vendors are not really actively marketing co-location anymore, instead focusing on the managed hosting where the margins are now higher.

Stahl said the move to managed and dedicated hosting services also reflects changes among customers who may have started with co-location services but have since become comfortable with the idea of not owning infrastructure equipment at all. “So there’s a continuum that has to take place,” said Stahl.

Besides Peer 1, other infrastructure service providers operating in Canada include Fusepoint, Q9, Bell Business Solutions, Rogers, and Telus.

Stahl pointed out that while these vendors may say they target different markets, the reality is that in Canada the line is easily blurred between small-to-medium sized business and enterprise. A medium-sized business based in Canada, for instance, could toil in a global market and run large enterprise resource planning systems out of multiple locations, he said.

The new flagship data centre is Peer 1’s template for future facilities whether its 10,000 or 100,000 square foot, said Murphey.

Source: www.thestandard.com

Dallas-based ACS will expand Xerox’s service offerings into payrolls, accounts payable, information technology outsourcing and other business and accounting functions. More than 90% of shareholders of both companies voted to approve the deal on Friday.

Source: WSJ.com

By Patrick Thibodeau

WASHINGTON — President Barack Obama’s 2011 budget proposal, released Monday, flattens federal IT spending and orders federal departments to consolidate and centralize IT operations.

This budget is unsparing in its criticisms and says federal IT departments have a history of not delivering productivity and performance gains “that are found when IT is deployed effectively in the private sector.”

This budget outlines Obama’s goal of creating an IT operation infused with private sector best practices, as well as enabling citizens to easily access government data and interact with federal agencies in new ways. The White House also wants social networking tools widely deployed to help make government, through continuous collaboration, smarter.

“The rise in social media and web 2.0 technologies has proven that no single organization has a monopoly on good ideas,” said the budget narrative.

And the Obama administration wants to head in this direction without spending new money on IT.

The 2011 proposed federal budget proposal by the White House increases federal IT spending to $79.4 billion, just over 1.2% and slightly above the White House’s inflation forecast for this year. In 2001, the U.S. spent $45 billion on IT. The federal fiscal year begins Oct. 1.

To cut costs, the White House will seek a reduction in the number of data centers , now at 1,100. It does not set a goal but points out that in 1998 there were only 432 data centers serving federal agencies.

It also wants to centralize the delivery of some IT services across agencies through the use of cloud technologies and other platforms. The trick for federal CIOs will be to consolidate, centralize and increase their use of technologies such as virtualization, without spending new money.

“There won’t be a lot of wiggle room for new technologies,” said Deniece Peterson, manager of industry analysis at government market research firm Input Inc., who said that 70% of the money spent on IT now is just “to keep the lights on,” meaning, running operations.

Peterson said IT managers will likely start small but may also face more pressure from this White House for results than from previous administrations.

The Obama administration appointed the first federal CIO and one who is “aggressive in pushing the agenda,” Peterson said. Last year, Obama appointed Vivek Kundra , former CTO of the District of Columbia, as the federal CIO.

Even before this budget, the White House has come up with a means to shine a spotlight on the performance of federal IT department. It created an “IT dashboard” that rates IT projects and their performance at various agencies.

The reason for this Scarlett Letter-like attention, Peterson said, is that an IT failure at a private company could put a firm out of business, but “the ramifications of failure are not as pronounced in government,” hence the approach is “is kind of embarrassing agencies to perform.”

If agencies can’t increase spending easily, some IT vendors may be under pressure to cut their costs as well. Other vendors may see new opportunity to sell product.

Ken Powell, president of North American Operations at Micro Focus Ltd., said he is hopeful that the government’s direction will expand interest in his products that enable users to migrate mainframe applications to other platforms to reduce costs. “In our economic climate and there is one thing that you have to focus on it’s not saving costs, its’ avoiding cost,” he said.

Source: http://www.thestandard.com

The firm is “entering a partnership with a company in India that specializes in a wide range of IT services and outsourcing,” said a company statement Friday. “Our goal over the next few years is to transition certain non-client-facing processing activities offshore.”

The company’s goal “is to effect this transition through normal attrition,” the statement added.

KUSA-Channel 9 reported Saturday that the move could affect about 70 Denver jobs.

Spokeswoman Jennifer Compton said Friday that TIAA-CREF has a “strong” commitment to its Denver office, one of its largest, and that no layoffs are currently planned here.

New York-based TIAA-CREF (Teachers Insurance and Annuity Association – College Retirement Equities Fund) was founded in 1918. Today it mostly serves employees in higher education and nonprofits. It has $400 billion in assets.

Source: http://denver.bizjournals.com

According to sources in the company, the expansion into South America is taking advantage of the maturing of India’s software IT market and diversifying the talent pool to cover other geographies. The location is of importance as well, as the new centre will cover one more time zone to provide 24 hour service to UST’s global customers.

This is not the only instance of IT’s shifting focus to South America. Recent forecasts from IDC indicate that the continent is expected to generate 690,000 new jobs and create 6,000 more companies in the next five years. The strategy from the point of view of the global IT companies makes sense. Latin America has been one of the first places to recover from the recession, and a number of factors such as growing levels of education and economic stability favor companies setting up shop there. Coupled with the fact that China is yet to develop into a sizeable IT market due to language barriers and the growing saturation of the IT employment market in India, where salary levels are growing at levels that reduce if not negate the advantages of outsourcing, it is the best place for companies to target much needed manpower.

However, many are ambivalent about the opportunity size. South America has not been known for extended stability or a highly educated workforce. In fact, apart from tourism, the continent makes more money from the export of raw materials and minerals than any sophisticated technology or services. The key, experts say, lies in using each country’s strengths in the right way to leverage the overall advantage. For example, Panama could be ideal for IT services, given the relatively high level of education and low costs, while Uruguay could contribute to project development because of the presence of a critical mass of professionals. And Brazil, by far the largest and most stable of the Latin American nations, represents the largest opportunity.

What implications does this have for the Indian IT industry? Already the country’s voice-based call centers are seeing business move to places like the Philippines, which are cheaper and have a closer cultural affinity to the US. Now with technical support also moving to South America, whose work timings are similar to those of the US, the country’s large players in ITES will have to reconsider their strategy for the coming years. No doubt India offers better trained professionals, but the cost structure is no longer at levels that it used to be ten years ago, due to the increasing numbers of companies off-shoring their operations there. Companies here will have to move further up the value chain into knowledge process outsourcing and specialized areas such as legal, financial and engineering to continue generating business. These areas are niche and offer a better value proposition overall for the companies willing to deal in these services though the salary will also have to be correspondingly high. The coming decade will show how the ITES sector in India changes, hopefully for the better.

Source: testfunda.com

The prank underlined the deterioration of relations between Niklas Zennstrom, Skype’s co-founder and chief executive, and the online auction giant, which had acquired Skype two years earlier. In September 2007, Mr. Zennstrom quit.

Two years later, Mr. Zennstrom and Janus Friis, the other Skype founder, have elbowed their way back into the company. In September, they began a legal fight against eBay and a buyout group led by Silver Lake, a private equity firm, which had acquired control of Skype for $2 billion.

The lawsuits alleged that the consortium and eBay had unlawfully used the founders’ copyrighted software, which they had licensed to Skype.

In November, Skype’s new owners cut Mr. Zennstrom and Mr. Friis in for a 14 percent stake and two board seats, and the two dropped their lawsuits.

“They were not going to let Skype get away from them,” said Yvette J. Alberdingk Thijm, a former senior content executive at Joost, an online video company that was also co-founded by Mr. Zennstrom and Mr. Friis. “That’s their baby.”

Now, Skype, which lets users call each other free over the Internet, could be headed for the largest initial public offering of a technology company since Google’s share sale in 2004, said Paul Bard, director of research at Renaissance Capital in Greenwich, Connecticut.

Skype has soared in popularity since it started in 2003 and has about 548 million users worldwide — more than Facebook, MySpace and Twitter combined. Thomas Weisel Partners, an investment consulting company, estimated that Skype had earned $165 million in operating income in 2009, a 42 percent jump from 2008.

If Skype increases its profit to $400 million by 2013, it could go public at a valuation of $4 billion, said Mr. Bard, who specializes in initial public offerings.

“Investors would have a big appetite for a profitable Internet I.P.O. with its growth and scale,” he said.

Mr. Zennstrom and Mr. Friis will have to get along with some of the most powerful personalities in technology to deliver a hot initial public offering. A Skype board member, Marc Andreessen, the computer scientist who helped create the Web browser and usher in the Internet boom in the late 1990s, is working on the company’s growth strategy.

Mr. Andreessen is a director at Hewlett-Packard, eBay and Facebook and owns a stake in Skype of about 5 percent through Andreessen Horowitz, a venture capital firm based in Menlo Park, California.

Egon Durban, head of European investments at Silver Lake, is also playing a lead role at the Internet company. And the chief executive of eBay, John J. Donahoe, will have a say in Skype’s direction; his company retained a 30 percent stake.

Phillip Phan, a business professor at Johns Hopkins Carey Business School in Baltimore, foresees difficulties in the boardroom between Mr. Zennstrom and Mr. Friis and their fellow stakeholders.

“It’s obvious that the founders have an emotional interest in the company,” said Mr. Phan, who teaches corporate governance. “I suspect you will see an ongoing battle in the executive suite between the founders and the rest of the partners.”

The co-founders dispute this assertion. “That skepticism is entirely misplaced,” their spokesman, Tom Rayner, wrote in an e-mail message. “Niklas and Janus have a huge and genuine respect for their new partners, with whom they are very much looking forward to working.”

Mr. Andreessen, 38, said he expected the founders to bring zeal and innovation to the company they created, not acrimony. He said all of Skype’s owners shared the goal of making it a Google-caliber business.

“What’s great about the alignment of interests is that it doesn’t require everyone to love each other; it’s not grade school,” Mr. Andreessen said. “If Niklas and Janus have six ideas on how the company can increase exponentially from where it’s at, I want to hear those.”

The new owners’ big idea is to expand Skype into the $203 billion market for corporate telecommunications. The company, which has about 700 employees, will form a new division with a sales force, product development managers and customer-support teams to offer businesses a range of services and software.

“We’re chasing a big opportunity,” said Josh Silverman, chief executive of Skype and a former head of eBay’s Shopping.com unit.

The company will have to gain the trust of companies, which largely rely on dedicated fiber optic networks for their communications. Vanessa Alvarez, an analyst at Frost & Sullivan in Boston, said she thought businesses might be unwilling to switch to a phone service built on the Internet because it was less secure.

“Enterprises aren’t completely comfortable bringing in a consumer Internet company that’s mostly used for chitchat,” Ms. Alvarez said.

Skype has also lobbied the U.S. Federal Communications Commission as part of its strategy to become available on more mobile telephones. In September, the commission’s chairman, Julius Genachowski, proposed rules to ban telecommunications carriers from blocking Internet traffic on their wireless networks, a problem that has hindered Skype. The commission may vote on the initiative this year.

A share offer from Skype would be a coming of age for Web-based social and professional networking companies like Facebook and LinkedIn. These so-called Web 2.0 start-ups are enlarging their online communities each month with millions of new members, who then recruit their friends, family members and colleagues to join.

“What’s valuable about Skype is having half a billion connected users,” said Bill Gossman, an executive in residence at Mohr Davidow Ventures in Menlo Park. “It has a platform for delivering all these other services, and that’s a massive threat to traditional phone companies.”

Skype makes money by charging about 2 cents a minute for calls to people that do not use the service. Today, Skype is the No.1 provider of cross-border calls, with 12 percent of the market, according to the TeleGeography Research Group in Washington. The company also collects fees for voice mail, text messaging and other services.

Mr. Zennstrom and Mr. Friis set out to shake up traditional industries soon after they met in 1997. Mr. Zennstrom, then a manager at Tele2, a Swedish phone company, hired Mr. Friis to work on the customer service desk.

Mr. Zennstrom, a Swede with degrees in engineering physics and business administration from Uppsala University, outside Stockholm, is analytical and disciplined and shuns small talk in meetings, former colleagues say. One former colleague likens Mr. Zennstrom to Mr. Spock, the cerebral “Star Trek” character who prizes logic above all else.

Mr. Friis, a Danish high school dropout, is a restless man who constantly taps out text messages on his smartphone during business meetings, even when addressing others, the former colleagues say.

In 1999, the two collaborated with engineers in Tallinn, Estonia, to write the software for Kazaa, a technology that helped upend the music industry. The peer-to-peer music file-sharing program, akin to Napster, allowed users to copy and distribute songs without paying for them.

The music industry and other entertainment groups sued Kazaa for copyright infringement; Mr. Zennstrom and Mr. Friis denied wrongdoing. In 2006, the two, no longer owners of Kazaa, took part in a settlement of the litigation.

By then, they had created Skype using the same peer-to-peer technology that powered Kazaa. In September 2005, Skype had 54 million users, and Google and Yahoo were negotiating to buy it.

Meg Whitman, a Harvard Business School graduate who had been chief executive of eBay from its infancy in 1998, joined the chase. Ms. Whitman wagered that Skype could increase sales by letting buyers and sellers on its auction site talk free with a click of a mouse.

Ms. Whitman outbid Google and Yahoo and agreed in September 2005 to pay $2.6 billion for the unprofitable startup.

Last year, when eBay sold most of the company in a deal that valued Skype at $2.7 billion, Joltid, a company that Mr. Zennstrom and Mr. Friis used to keep ownership of the underlying peer-to-peer software in Skype, sued in two courts. The suits claimed that eBay and the consortium had misused the peer-to-peer software in making their deal and asked the courts to block them from proceeding. Eager to eliminate the legal distraction, the buyout group offered to bring Mr. Zennstrom and Mr. Friis into the deal.

On Nov. 5, the two agreed to invest $83 million, transfer ownership of their software from Joltid to Skype and drop their suits in exchange for a stake in the company worth $378 million. EBay reduced its equity position to 30 percent, and the buyout group decreased its stake to 56 percent from 65 percent.

“They created a big legal kerfuffle to edge themselves into the deal,” said Mr. Gossman, of Mohr Davidow.

Source: http://www.nytimes.com

Source: http://www.cxotoday.com

By Ray Fisman

Is America no longer the land of innovation? Everyone from tech billionaires to Times columnists is sounding the alarm, and everyone has his own diagnosis of the problem: innovators kept out of the country by H1-B visa quotas and bureaucracy. Poor science education in public schools. Even U.S.-style health care has been implicated. Would-be entrepreneurs, the thinking goes, can’t act on their breakthrough ideas because they feel tethered to middle-management jobs and the health benefits that come with them.

In one way or another, these diagnoses all focus on the inspired innovator as the source of new ideas. Perhaps this isn’t surprising, given the stories of innovation that seed our imagination—Newton discovering gravity when an apple bonked him on the head, Archimedes having his eureka moment while soaking in the tub. If the problem is indeed a shortage of innovators, then policy prescriptions that expand the genius pipeline through imports or home-grown development make a lot of sense. But as the saying goes, genius is 99 percent perspiration—Newton and Archimedes also logged countless days and nights producing the theories and inventions that followed from their moments of inspiration.

What made them work so hard? Passion and curiosity, no doubt. But that may not always be enough—a new study argues that it’s also important to get incentives right to induce would-be innovators to put in the hours of toil required to transform flashes of insight into breakthrough discoveries. By comparing the research output of scientists sponsored by funding streams with different incentives, the authors argue that a long time horizon combined with freedom to choose how to direct their efforts encourages researchers to take the kinds of risks that lead to more big ideas.

If economists ran research labs, how would they motivate scientists? Great ideas take time, effort, and perseverance. There are countless dead ends and failures along the way. If scientists need to produce short-term results to remain funded and employed, they’ll take on projects where there’s a good chance of success, often by looking to make incremental improvements on established results. So we end up with inventions like osteoporosis medication that’s taken monthly rather than daily, not a cure for cancer. (This isn’t to belittle the value of these lesser discoveries, but if game-changing inventions are what we’re hoping for, short-term thinking may not deliver.)

If we want scientists to take the risks required to make groundbreaking discoveries, we have to recognize that we’ll see a lot more failures as well—it’s part of exploring what does and doesn’t work—and give researchers some years before we judge whether they’ve been successful. (When an associate of Thomas Edison suggested that he might feel disappointment in having done so much work without any results to show for it, he famously replied, “Results! Why, man, I have gotten a lot of results. I know several thousand things that won’t work.”).

Source: http://www.slate.com

Under the 10-year agreement, Genpact will assume several accounting processes currently managed by Walgreens, as the retailer implements a new structure for its accounting division. The agreement will impact accounting staff at its offices in Deerfield, Ill. and surrounding areas, including Danville, Ill. and nine smaller accounting locations across the U.S.

Genpact has agreed to acquire the Danville facility and maintain or potentially grow employment levels over the duration of the agreement. Approximately 500 Walgreens accounting employees in Danville will become Genpact employees within the next four months, while the remainder will stay with Walgreens. Over the next six to 18 months, another 300 jobs at various sites may be impacted as part of the transition of accounting work.

With this strategic decision, Danville will become the largest of three delivery centers for Genpact in the U.S. and positions the company to provide greater onshore access to its clients. Genpact will continue to make investments in building domain expertise and enhancing the skills of employees in Danville.

“Genpact’s proven ability to bring efficiency to finance and accounting processes and its commitment to our Danville employees were key factors in our decision to forge this agreement,” said Walgreens executive vice president and CFO Wade Miquelon. “This move will help us improve cost productivity and facilitate our growth strategies, while maintaining an agile and service-focused organization.”

“We are delighted to announce this strategic relationship with Walgreens,” said Genpact President and CEO Pramod Bhasin. “This agreement strengthens our ability to deliver end-to-end solutions for the retail and healthcare industries. As leaders in our industry, we are redefining the market by moving beyond just process efficiencies and focusing more on accelerating positive business outcomes for our clients. We believe our domain expertise in finance and accounting, health care, back-office processes, re-engineering and analytics coupled with our heritage of Lean Six Sigma uniquely positions us to support Walgreens growth initiatives.”

About Walgreens

Walgreens (www.walgreens.com) is the nation’s largest drugstore chain with fiscal 2009 sales of $63 billion. The company operates 7,149 drugstores in all 50 states, the District of Columbia and Puerto Rico. Walgreens provides the most convenient access to consumer goods and services and cost-effective pharmacy, health and wellness services in America through its retail drugstores, Walgreens Health Services division and Walgreens Health and Wellness division. Walgreens Health Services assists pharmacy patients and prescription drug and medical plans through Walgreens Health Initiatives Inc. (a pharmacy benefit manager), Walgreens Mail Service Inc., Walgreens Home Care Inc., Walgreens Specialty Pharmacy LLC and SeniorMed LLC (a pharmacy provider to long-term care facilities). Walgreens Health and Wellness Division includes Take Care Health Systems, the largest and most comprehensive manager of worksite health and wellness centers and in-store convenient care clinics, with more than 700 locations throughout the country.

About Genpact

Genpact is a leader in managing business processes, offering a broad portfolio of enterprise and industry-specific services. The company manages over 3000 processes for more than 175 clients worldwide. Putting process in the forefront, Genpact couples its deep process knowledge and insights with focused IT capabilities, targeted analytics and pragmatic reengineering to deliver comprehensive solutions for clients. Lean and Six Sigma are ingrained in the company’s culture, which views the management of business processes as a science. Genpact has developed Smart Enterprise Processes (SEPSM), a groundbreaking, rigorously scientific methodology for managing business processes, which focuses on optimizing process effectiveness in addition to efficiency to deliver superior business outcomes. Services are seamlessly delivered from a global network of centers to meet a client’s business objectives, cultural and language needs and cost reduction goals. Learn more at www.genpact.com.

For more information:
Walgreens:
Tiffani Washington
847-914-2925
tiffani.washington@walgreens.com
or
Genpact:
Anita Trehan (Genpact Media Relations)
anita.trehan@genpact.com
+91 981110 0223
Melyn McKay Heckelman (For Genpact)
Melyn.McKayHeckelman@ogilvypr.com
+1 (415) 677 2740

Source: http://www.businesswire.com

It already has contact centers in Argentina, Brazil, and Chile, plus in the Dominican Republic, El Salvador and Mexico.

Teledatos, with expected 2009 revenues of approximately $75 million, has operations in Bogota and Medellin, utilizing more than 6,000 agents. It services major clients in various industry sectors, including telecommunications, transportation, tourism, utilities, retail and health.

Teleperformance said Teledatos focus on quality, its natural empathy and its culture is a fit with the company. It plans to grow the firm first in Colombia and then beyond Colombia’s borders. Teledatos has had plans to expand into Guatemala and Peru.

“We are delighted and proud to welcome the Teledatos team into the Teleperformance family,” said Teleperformance senior executives Daniel Julien and Jacques Berrebi, in a press statement. “Throughout our discovery process, we consistently found outstanding values, culture and expertise in Teledatos.”

“Our goal was to partner with a global leader that we like and recognize as a market trendsetter,” said Juan Rodrigo Hurtado, CEO of Teledatos. “With the Teleperformance senior executives, and in the best possible interest of our clients, employees and partners, we have accomplished this goal. We all share the same philosophy about customer service, quality process, and reliable IT solutions. Together, we are committed to delivering an outstanding customer experience and to continue to lead the market with added value solutions.”

The move comes on the heels of client-related downsizings in the United States. The Columbus (Ohio) Dispatch reported Dec. 4 that Teleperformance will eliminate 151 jobs at its contact center there “after a major client decided to consolidate operations.”

At the same time Teleperformance has been improving its clients’ services that will if successful drive more business into its contact centers in the Americas and worldwide. Earlier this month it launched Teleperformance Platinum, a new program that builds on clients’ in-house contact centers by combining leading-edge technology with highly trained and passionate agents who are immersed in the culture of the companies they represent.

With Teleperformance Platinum, the clients’ environment is reproduced at agents’ workstations to accommodate a broad range of complex customer demands, such as a sophisticated tech support issue. The agents leverage a unique set of tools to drive better first call resolution and, therefore, higher customer satisfaction, all at fees that are favorable when compared to similar in-house provided services.

“Teleperformance is raising the bar in terms of quality contact center service provision,” said Datamonitor’s Peter Ryan. “By formalizing a superior standard service, Teleperformance will have once again proven themselves to be ahead of the curve in the outsourced contact center marketplace.”

By Brendan B. Read, Senior Contributing Editor. Brendan B. Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.

Edited by Marisa Torrieri

Source: callcenterinfo.tmcnet.com

The Reston, Va.-based market research firm estimates that cloud computing spending by state and local governments will increase 22% from 2009 through 2014, or from $230 million to $620 million. State and local governments now spend about $56.6 billion on IT.

The cloud spending is on both internal and external cloud deployments, but one model that may gain with state governments is providing services to local governments via their own clouds. Utah and Michigan are developing services that may be available to other governments. Los Angeles, for its part, may see local governments piggyback on its agreement with Google, said Alexander Rossino, an Input analyst.

The move by Los Angeles to replace its internally hosted e-mail system with Google Apps, “could have a ripple effect across the market,” Rossino said. But the states are also waiting for the federal government to produce standards, as well as watching to see who will be providing cloud services to the federal government, he said.

Input said it interviewed 56 state, local and IT industry professionals for the survey.

In October, Utah’s Department of Technology Services outlined a “hybrid cloud” approach for state government that uses both internally hosted services, with specialized access and security requirements, as well as public services. The intent is to provide “on-demand self-service and provision-computing capabilities, such as hosting and network storage, as needed, without requiring human interaction with each service’s provider.”

Source: http://www.thestandard.com

Los Angeles is going Google. After a rigorous evaluation process to select the best email solution for the city, Los Angeles recently decided to move all 30,000 city employees to Google Apps from our existing GroupWise email system.

City employees fulfill a range of important functions – from policing our streets to supplying water and power to city residents and businesses, and from operating our libraries to designing and building wastewater treatment plants and other public facilities. We want to provide all these employees with modern tools that help them do their jobs. Some of the benefits our employees will see from the suite of Google applications include:

Improved collaboration. Much of the city’s work requires multiple people – even multiple departments – to work together. With instant messaging, video conferencing, and simultaneous review and editing of documents by multiple people, employees will have better tools to work together on projects.

Easier remote access. In a fast-paced city government, people often need access to work information when they’re not at work. With Google, employees will be able to access their information from any computer with an internet connection, as well as from their mobile phones.

Expanded storage. With Google, we can provide employees 25x the email storage they have today, saving them from having to make difficult decisions about which emails to keep or delete.

In addition to empowering employees across the city, everyone will benefit from Google’s security controls, which will provide a higher level of security for City data than exists with our current system.

Google Apps will also help conserve resources in the city’s Information & Technology Agency (ITA), which is responsible for researching, testing & implementing new technologies in ways that make Los Angeles a better place to live, work and play. Because the email and other applications are hosted and maintained by Google, ITA employees who previously were responsible for maintaining our email system can be freed up to work on projects that are central to making the city run.

By ITA estimates, Google Apps will save the city of Los Angeles millions of dollars by allowing us to shift resources currently dedicated to email to other purposes. For example, moving to Google will free up nearly 100 servers that were used for our existing email system, which will lower our electricity bills by almost $750,000 over five years. In short, this decision helps us to get the most out of the city’s IT budget.

The decision to move to Google Apps was not taken lightly. The city issued a request for proposals and received 15 proposals, which were evaluated by city officials. The top four proposals were invited to give oral presentations, with CSC’s proposal for Google Apps receiving the highest marks. This decision was reviewed and discussed by the Los Angeles City Council which, after a healthy debate, voted unanimously to move forward with Google Apps.

Learn more about this installation here:

Source: http://googleenterprise.blogspot.com

Global consulting and outsourcing firm Accenture is ending its sponsorship of Tiger Woods, saying the golfer is “no longer the right representative” after the “circumstances of the last two weeks.”

Accenture’s announcement Sunday marks the company’s first statement since allegations of Woods’ infidelity surfaced in recent weeks.

The company is the second key sponsor of Woods to pull away. Gillette said Saturday that it won’t feature Woods in its ads for an unspecified period of time.

Woods is taking an indefinite leave from golf to work on his marriage after allegations that Woods had trysts with multiple women.

Copyright © 2009 The Associated Press. All rights reserved.

Source: Associated Press (Google HostedNews)

NEW YORK — A Kaufman Bros. analyst downgraded consulting and outsourcing firm Accenture Ltd. on Wednesday, saying that although the company has characterized a pick-up in consulting activity as “remarkable,” he thinks the recovery in client bookings and revenue has been only “modest.”

Analyst Karl Keirstead cut his rating on the Ireland-based company to “Hold” from “Buy” and trimmed his earnings and sales estimates through fiscal 2011.

Keirstead said that in September, Accenture  ( ACN -  news  -  people ) had cited a “remarkable pick-up” in consulting deal activity and plans to start hiring again. Consulting firms suffered big revenue drops due to the recession as corporate customers scaled back their spending.

When talking to his industry sources over the last few weeks, however, Keirstead said he found they were unsure of whether the recent industry-wide growth in demand from clients would continue into the first half of 2010. The bookings pick-up in the consulting sector has only been modest so far, he said he learned.

Keirstead said he spoke to executives at smaller consulting rivals, former Accenture partners, consulting company employees and outsourcing advisory firms.

“Accenture itself has been clear that the November and February quarters would be ‘challenging’ and that the firm has limited visibility into how quickly the recent deal activity uptick would convert to bookings and revenues,” he wrote in a note to clients. Keirstead added that he is less confident in the revenue recovery Accenture would need to fulfill its 2010 guidance.

Source: http://www.forbes.com

NARS is a leading ARM/BPO provider in the “nearshore” markets of Central America and the Caribbean with flagship operations in Panama City, Panama and Montego Bay, Jamaica, as well as domestic sites in St. Louis and Cape Girardeau, Missouri. NARS services some of the leading Fortune 500 companies across a variety of industries including telecommunications, financial services, automotive credit and consumer products. NARS employs over 3,000 service professionals, and last year was named by Inc. magazine as one of the fastest growing companies in St. Louis.

H.I.G. Capital and Tim Bauer formed Reprise Management Group (”Reprise”) in April 2009 for the specific purpose of making strategic investments in premier ARM companies. NARS is Reprise’s first acquisition and will be a platform on which its first-party ARM services growth will occur. H.I.G. Capital Managing Director Jeff Zanarini commented, “We are excited to invest in NARS, an organization that has a proven ability to provide the highest level of service to its clients’ most demanding requirements. We are also pleased to be joining forces with Tim Bauer, a 25-year veteran and one of the most respected executives in the ARM industry. Tim was instrumental in identifying the strength of the NARS operations and management team, and we are enthusiastic about the company’s prospects.”

Tim Bauer commented, “NARS is the first piece of the Reprise puzzle. NARS CEO Chris Buehrle and his team have built an exceptional business. Its on-shore / near-shore strategy is timely and efficient, and NARS is uniquely poised for additional growth.”

Zanarini commented on H.I.G.’s previous industry experience. “H.I.G. has had great success with its portfolio companies specializing in the ARM/BPO space. We view NARS as an excellent platform, and are looking to augment NARS’ impressive organic growth through strategic add-on acquisitions, having already commenced discussions regarding several key opportunities.”

Christopher H. Buehrle, President and CEO of NARS commented, “We’re looking forward to working with H.I.G. and Reprise. This team offers NARS a unique combination of financial strength and sector expertise. This investment allows NARS to continue to provide our client partners with exceptional service, deepen our service offerings, and continue fueling our strong year-over-year growth.” All of NARS’ existing management will remain with the company. Buehrle added, “This is a great milestone in the history of NARS and our customers, suppliers and employees should look forward to continued growth and excellence from our organization.”

Greenberg Advisors represented H.I.G. Capital and Reprise in this transaction.

About H.I.G. Capital

H.I.G. Capital is a leading global private equity investment firm with more than $7.5 billion of equity capital under management. Based in Miami, and with offices in San Francisco, Atlanta, Boston, and New York in the U.S., as well as affiliate offices in London, Hamburg and Paris in Europe, H.I.G. specializes in providing capital to small- and medium-sized companies with attractive growth potential. H.I.G. invests in management-led buyouts and recapitalizations of profitable and well managed service or manufacturing businesses. H.I.G. also has extensive experience with financial restructurings and operational turnarounds. Since its founding, H.I.G. has invested in and managed more than 200 companies worldwide. The firm’s current portfolio includes companies with combined revenues in excess of $7 billion. For more information, please refer to the H.I.G. website at www.higcapital.com.

About Reprise Management Group

Reprise Management Group was formed in April 2009 through a partnership with H.I.G. Capital and Tim Bauer, a 25-year veteran in the ARM sector. Reprise was formed for the specific purpose of acquiring premier ARM service providers and then growing the businesses through a combination of acquisitions and organic growth.

About National Asset Recovery Services

NARS is a leading ARM / BPO firm founded in 1993 by Christopher H. Buehrle and is one of the largest private ARM / BPO companies in the U.S. Headquartered in St. Louis, NARS employs more than 3,000 people at call centers in St. Louis and Cape Girardeau, Missouri; Panama City, Panama and Montego Bay, Jamaica. The company’s on-shore / near-shore business model provides BPO services, first-party, early stage collection services and third-party recovery collections to some of the largest and most recognizable companies in the U.S.

A video regarding this announcement can be found at http://www.narsnet.com/reprise

For more information, please refer to the NARS website at www.narsnet.com

Contact: Christine Cervellere
National Asset Recovery Services, Inc. (NARS)
+1-636-530-7985

Source: PRNewswire.com / National Asset Recovery Services, Inc. (NARS)

IBM does get the job done, in the defined time, at the agreed cost, but if you’re looking for flexibility and creativity from your outsourcing partner its questionable if IBM’s approach is what you’re after. Or even if you can achieve the level of savings that are possible.

The army quote was given after IBM had revealed the revamp of its procurement outsourcing services in the summer. Revamp or not, certain things were business as usual.

The strategy tweak was, in part, to start dividing up the company’s procurement outsourcing offerings and allow potential customers to try small pieces of the process, rather than full-on commit to a full-blown outsourcing project.

Bill Schaefer, IBM’s vice president of procurement services, said he was hoping the company could change market perceptions that it was end-to-end business only. He says IBM will come in on a focused basis, but the expectation is that it will make sure it charges for this flexibility.

And Jones, a principal analyst covering sourcing and vendor management, doubts there will be a mindset of trying different approaches to achieve savings. He anticipates just the effective delivery of the IBM processes.

Jones says he doesn’t think IBM is innovative in the procurement outsourcing space, and is damning of all players in general. “The providers aren’t good at using technology effectively. There isn’t the same incentive and drive as if you’re running the department yourself.”

Using technology to reduce the disconnect between procurement, finance, and operations is where Jones sees the real opportunities in procurement savings. But for IBM, the story is of economies of scale, leveraging purchasing volume, labour arbitrage, and a team that manages $48 billion of spend annually. IBM’s deals are typically 5 to 7 year contracts, contractually tied to business outcomes.

However, beyond that, it’s new capabilities include “providing spend-category experts who can analyse business’ spend, develop new sourcing strategies and negotiate improved contracts with suppliers.”

And with its new procure-to-pay (P2P) services, it sees them as for companies that prefer to retain sourcing responsibilities in-house, but using IBM to manage transactional activities. This may also involve taking over the management of existing in-house procurement technology, or bringing in an IBM partner for a hosted eProcurement solution.

Schaefer describes P2P as being about driving efficiency and control over the process, and that IBM has built a global infrastructure to support it.

But if your procurement processes are dysfunctional, you can’t throw some, or all, of them over the wall in an outsourcing deal and expect it to work. “You’ll achieve a fraction of the savings you could do if you sorted out the problems,” says Jones. “The focus should be on getting closer to suppliers through EDI, portals, and handling invoice status, not moving people several thousand miles away.”

Source: Procurementleaders.com

Brace yourselves, I have some bad news. The reports are in, and well, it doesn’t look good for you, AT&T. Seems while consumers are flocking to your service, they’re not exactly thrilled about it.

By reports, of course, I mean Consumer Reports. The venerable publication has released its 2009 ranking of cell phone service providers, which appear to run the gamut from “meh” to “no, seriously, you’re kidding, right?” For overall numbers, try these on for size: out of the 50,000 readers in 26 cities surveyed, only 54 percent declared themselves very or completely satisfied with their cell phone service. Two-thirds of them—that’s about 33,000, for those keeping score at home—said that they had at least one major complaint.

The cartography-loving Verizon squeezed its way to the head of the pack, registering above average on most metrics surveyed, with the biggest complaint from its customers being high prices. They were followed by T-Mobile, which was dinged on voice, messaging, Web, and e-mail services. Sprint held onto its place from last year at the bottom of the barrel, though it had some company in the form of none other than AT&T and its mascot, Luke Wilson.

What don’t people like about AT&T? Try pretty much everything. The company got below average marks on everything except Web access and texting, and scored particularly poorly on voice connectivity—I SAID VOICE CONNECTIVITY. Still, the company continues to pick up subscribers, driven by—shock!—customers looking for *ahem* particular handsets. The iPhone, which nabbed the top-rated cell phone spot, boasted immensely satisified owners, with 98 percent saying they would buy the phone again, despite AT&T’s poor service.

For iPhone users, these numbers aren’t exactly a jumping-out-of-a-cake surprise party. Complaints about AT&T have been seemingly non-stop, from delays in the addition of MMS and the still-MIA tethering to poor service and dropped calls. Our colleagues at PC World engaged in a little bit of 3G-testing themselves earlier this year, and they too found AT&T’s service unreliable in a great many places.

If nothing else, Consumer Reports adds fuel to the fire for those complaining about AT&T and reassures them that they aren’t alone, wandering in the wilderness—even if that’s what their cell phone reception sometimes feels like. AT&T, meanwhile, attempted to refute the findings to All Things Digital, dismissing the survey as anecdotal feedback and pointing to its low subscriber churn as evidence of its popularity. Still, it sure is a heck of a lot of anecdotes.

Apple’s been content to take a grin-and-bear-it stance with AT&T to date, but you can bet that’s only going to last as long as the exclusivity contract is valid. While nobody knows exactly when the agreement between the companies expires, rumors have it as early as next year, prompting some to suggest that T-Mobile, which uses a largely compatible network, might become an additional carrier at that point.

It’s also been theorized that the iPhone’s rapid adoption might be the root cause for much of AT&T’s poor service, taxing the company’s networks like a Mini Cooper hauling a tractor trailer. A second carrier might help distribute the weight of usage more evenly—or it might just result in two overloaded carriers. Either way, it would be wise for AT&T to remember that those that live by subscriber churn often die by subscriber churn.

Source: Macworld.com

The 8,500-employee company (NYSE: CBR) evolved beyond staffing in the past 10 years. Now, it can handle virtually any outsourced information technology work for companies and government, and has expanded into 17 countries. Its annual revenue grew 40 percent to more than $1 billion during that time.

“All our changes are intentional, to get away from this [older] business model, and we’re doing better than a lot of our competitors,” Slingerlend said.

Ciber’s next big transformation will be to try to triple the size of its India operations, going from about 625 employees to 2,000. A lot of that growth will start next year, Slingerlend said.

Source: http://denver.bizjournals.com

ARMONK, N.Y. IBM (NYSE: IBM) is being recognized as the No. 1 Global Company for Leaders, in a study released this month by Fortune magazine and to be featured in its December issue.

A panel of independent judges select and rank winning companies based on numerous criteria, including strength of leadership practices and culture, examples of leader development on a global scale, impact of leadership in communities in which they operate, and overall business performance and company reputation. The study is generally regarded one of the most comprehensive analyses of organizational leadership in the world. IBM was one of 537 organizations under consideration in the study.

In the report, the survey partners noted that an important distinguishing characteristic set the global top companies like IBM apart from their peers was that even during the economic downturn, top companies remained committed to building leadership capability within their organizations.

“All global companies today are facing a number of complex business and economic challenges” said Bob Gandossy, global practice leader of the Leadership Consulting practice at Hewitt Associates, a global consulting and outsourcing company that partners with Fortune and others to conduct the leadership analysis. “Through our research, it’s clear that global top companies such as IBM do not abandon key leadership and talent efforts in favor of short-term goals… . This mindset is not only what sets global top companies apart from the rest, it’s what differentiates successful businesses from unsuccessful ones”

Source: http://www.webwire.com/ViewPressRel.asp?aId=108629

The Nobel Prize in economics seldom has practical applications for workforce management. Yet this year’s prize, awarded in October to Oliver Williamson and Elinor Ostrom, recognizes research that provides insights into such workforce issues as employee contracts, bonuses and outsourcing.

Williamson, a professor at the Haas School of Business at the University of California, Berkeley, and Ostrom, an economist at Indiana University, were praised for studying the way economic decisions are made outside markets.

Ostrom, the first woman to win the prize, focused on how natural resources are shared, and ultimately better managed, among various groups rather than by a central government or through complete privatization.

Williamson’s research shows that companies, not markets, are sometimes better equipped to handle business transactions that are tailored to a company’s needs.

While that may appear obvious, Williamson’s research showed how, why and when that is so, particularly when employers look to contract for services outside the firm.

“A very important part of Oliver Williamson’s contributions [was] precisely about how to think about the cost and benefits of outsourcing and contracting decisions,” says Steven Tadelis, a professor at the Haas School of Business.

Williamson illustrated that a special economic and legal relationship exists between employers and employees, and it can be lost when a company outsources its work.

While many management professionals intuitively understand that employees can’t be easily replaced by contract workers, most economists viewed work as a financial transaction, not as a “system embedded in law and authority,” says Witold Henisz, a professor of management at the University of Pennsylvania’s Wharton School.

“There is a range of discretion you have as a manager that you don’t have over an external consultant,” says Henisz, who was a student of Williamson’s.

It’s particularly important with highly specialized tasks that require a dedicated investment of skill and money, which often can be more effectively completed internally than by buying those services in the market, says David R. Henderson, a research fellow at the Hoover Institution and an economics professor at the Naval Postgraduate School in Monterey, California.

Williamson’s research helps explain why companies that have outsourced complex, unique business processes have run into cost overruns that lead them to bring the functions back in-house.

Firms have little bargaining power to get outsourcing partners to make changes without having to pay more.

A recent example is Boeing’s costly, overdue production of its 787 Dreamliner, much of which had been outsourced.

Boeing recently decided it needed more control over the complex production process. It canceled contracts and acquired some of the companies that were making the jet’s parts.

“I need to be very sure I can specify what I need in advance and wouldn’t have to ask for changes later” to make outsourcing contracts cost-effective, Tadelis says.

A contract employee is like an outsourcing company, and the same thinking can be applied to how companies use bonuses and other incentives, Tadelis adds.

Like contracts, firms should negotiate bonuses based on the complexity of the work.

For example, a company could pay a worker a bonus for simply completing a complex project. For projects that are much simpler, firms could pay bonuses based on getting the job done within a certain amount of time and under a certain cost.

“The type of incentive depends on the complexity of the work,” Tadelis says.

Williamson’s work has many applications beyond economics, Tadelis says.

“Fortunately this Nobel Prize will spur a lot more interest in it.”

Source: http://www.workforce.com

By Steven M. Davidoff

A stipulation of settlement in a shareholder lawsuit over Affiliated Computer Services’s deal with Xerox was filed Friday evening in Dallas County court in Texas.

The lawsuit, brought by A.C.S. shareholders, is as unusual as the deal itself and may signal more bumps in the road for investors of both companies.

In the settlement (available after the jump), Xerox agreed to two things:

• It agreed not to enforce the voting agreement it entered with A.C.S.’s chairman, Darwin Deason. Mr. Deason controls a 43.6 percent voting interest in A.C.S. and previously agreed to vote in favor of the Xerox deal. Even if A.C.S.’s board recommended a competing transaction as a superior proposal, Mr. Deason was still locked in to vote half of his shares, or 21.8 percent of A.C.S.’s outstanding stock, in favor of the Xerox deal. (I discussed the terms of the merger here.) The result of this part of the settlement is to remove any obstacles to Mr. Deason’s endorsing a higher bid if A.C.S.’s board deems it superior.

• It also agreed not to enforce the force-the-vote provision in the merger agreement. Before, not only did Xerox have 21.8 percent of A.C.S. votes locked up, but it could force the target to hold the meeting for the shareholder vote. Commonly called a force-the-vote provision, this feature is allowed under the laws of Delaware, where A.C.S. is incorporated. Xerox now has agreed to end the merger agreement if A.C.S.’s board recommends another bid as a superior proposal.

The key to accepting a higher third-party bid is now defining what is a “superior proposal.” The A.C.S. board can recommend such a bid only if it deems that offer to meet those terms. Such a proposal is defined as any that the board determines to be:

(i) more favorable to the stockholders of [A.C.S.] from a financial point of view than the transactions contemplated by this agreement (after giving effect to any changes to the financial terms of this agreement proposed by [Xerox] in response to such offer or otherwise) and (ii) reasonably capable of being completed on the terms set forth in the proposal.

This settlement follows an earlier agreement in the Texas lawsuit to effectively amend the merger agreement to permit A.C.S. to provide confidential information to a third-party bidder. A.C.S. can do so for any offer that its board “determines in good faith to be reasonably likely to lead to a proposal that provides greater consideration to the A.C.S. Class A stockholders than provided in the merger agreement, which offer may be made expressly contingent on due diligence and obtaining financing commitments and may be subsequently modified or withdrawn.”

The end result of these two agreements is that the door is now open for a third-party bidder to step in – provided it is willing to pay the $194 million termination fee and tolerate Xerox’s matching rights. The latter affords Xerox three business days to match any new superior proposal and requires that A.C.S. negotiate with all parties in good faith during that time.

Why did Xerox agree to this far-reaching settlement, which to my knowledge is unprecedented? The first explanation is that the lawyers representing the shareholder plaintiffs have done a good job of convincing the judge that the lock-ups are inappropriate. Xerox saw the writing on the wall and agreed to waive them.

(Even though A.C.S. is a Delaware company, it is headquartered in Texas, letting its shareholders sue in the latter state. I doubt that a Delaware judge would have ruled on the lock-ups the same way, even post-Omnicare. For those who don’t understand that reference, see my prior post here.)

The second possible explanation is realpolitik. Xerox is still struggling to convince its shareholders to approve the deal. A competing bid may kill two birds with one stone by giving the company an easier exit with a $194 million payment, instead of Xerox owing A.C.S. $65 million. The latter is the fee Xerox must pay if its shareholders vote down the merger. This may help explain why Xerox did not fight this issue through to trial.

I suspect the true answer is a mix of both.

In any event, the litigation isn’t over. As part of the settlement, the Texas plaintiffs are joining a separate, pending shareholder lawsuit in Delaware’s Court of Chancery. That suit’s focus will turn to Mr. Deason’s $300 million premium and the propriety of the actions of A.C.S.’s special committee in approving a deal with this special, unusual premium.

I hope that the depositions of the special committee are made public, because I suspect they will show a carefully scripted process with Cravath, Swaine & Moore (sometime counsel to Mr. Deason, sometime counsel to A.C.S.) as the author. The question is how independent the committee was in this scripted process, given that it was selected and signed off on only a few years ago by Mr. Deason himself, likely advised by Cravath.

This lawsuit likely won’t stop the deal, but the Texas settlement once again shows there is nothing ordinary about this transaction. I suspect that we may continue to see collateral effects from this litigation — and that Friday’s settlement won’t be the last interesting event in this merger’s lifespan.

Source: http://dealbook.blogs.nytimes.com

While the establishment of the Costa Rica center marks WNS’s entry into Latin America, it will also serve as a nearshore center for global clients with North American operations. The center is able to provide multi-lingual services in English and Spanish and will provide the complete suite of WNS services including finance and accounting (F&A), customer service and research and analytics.

“Our expansion into Costa Rica is a key step in expanding our global footprint and providing comprehensive, integrated solutions to our clients,” said Anup Gupta, Group Chief Operating Officer, WNS Global Services. “Our global delivery model enables us to improve our clients’ business by combining the right combination of geographic location with process transformation.”

Steve Reynolds, Managing Director – North America, WNS added, “As a location, Costa Rica provides a strong combination of language skills and talent, while still providing a competitive advantage for clients operating in the Americas. Language capability is a key delivery component for those who are increasingly looking to benefit from global delivery models.”

About WNS

WNS is a leading global business process outsourcing company. Deep industry and business process knowledge, a partnership approach, comprehensive service offering and a proven track record enable WNS to deliver business value to some of the leading companies in the world. WNS is passionate about building a market-leading company valued by our clients, employees, business partners, investors and communities. For more information, visit www.wns.com

WNS Safe Harbor Statement under the provisions of the United States Private Securities Litigation Reform Act of 1995

This news release contains forward-looking statements, as defined in the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be projected by these forward-looking statements. These risks and uncertainties include but are not limited to technological innovation; telecommunications or technology disruptions; future regulatory actions and conditions in our operating areas; our dependence on a limited number of clients in a limited number of industries; our ability to attract and retain clients; our ability to expand our business or effectively manage growth; our ability to hire and retain enough sufficiently trained employees to support our operations; negative public reaction in the US or the UK to offshore outsourcing; regulatory, legislative and judicial developments; increasing competition in the business process outsourcing industry; political or economic instability in India, Sri Lanka and Jersey; worldwide economic and business conditions, including a slowdown in the US and Indian economies and in the sectors in which our clients are based and a slowdown in the BPO and IT sectors world-wide; our ability to successfully grow our revenues, expand our service offerings and market share and achieve accretive benefits from our acquisition of Aviva Global Services Singapore Private Limited and our master services agreement with Aviva Global Services (Management Services) Private Limited; our ability to successfully consummate strategic acquisitions, as well as other risks detailed in our reports filed with the US Securities and Exchange Commission. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. You are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s current analysis of future events. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Source: IStockAnalyst

Low-income kids can get experience and a degree in six years, with no debt and a job at the end, thanks to Workforce Outsource Services.

Many within techdom complain about U.S. companies that use cheap, offshore labor or guest foreign workers in place of domestic employees. Few are doing much about it. A noteworthy exception is Arthur Langer. His New York nonprofit organization, Workforce Outsource Services, is trying to provide alternatives to foreign tech workers, including those on H-1B visas, by granting scholarships to low-income students and placing them in multiyear work-study programs in companies while they work toward undergraduate degrees. “We have an incredible source of talent in this country that can work for competitive prices,” says Langer, a technology consultant and adjunct professor at Columbia University. “You don’t have to go to India for labor.”

The organization began as an academic project nine years ago, became a company in 2005, and is now expanding in New York, New Jersey, and Ohio. So far, 120 students have graduated, and a further 65 are enrolled. Langer ultimately hopes to put thousands of youngsters through the program. He believes it’s at a turning point. “We have proved it can work, and we’re scaling up now,” he says.

Langer, an expert in technology management, began the project after seeing many young people from poor communities go to college but fail to complete degree programs. The reason: They are under intense pressure to get into the workforce and earn money, or they are averse to piling up loan debt without the certainty that they will get good jobs after graduation. So he founded Workforce Outsource Services to help students earn degrees without financial strain.
Motivated and Disciplined

Here’s how the service works: Young people are invited to a six-week orientation program where they meet in a group with Workforce Outsourcing Services trainers once a week. From that group the most motivated and disciplined candidates are selected. They participate in an intensive IT training program at a university and then begin working part time for corporations while they go to school part time and finish their undergraduate degrees. “The goal is for people to graduate in six years with a degree, technology certification, no debt, and a job,” Langer says.

Valeria Rodriguez, an 18-year-old from Somerset, N.J., learned about the program a year ago when she was in high school. “It was too perfect,” she says. She is now participating in a certification program at Rutgers University and working at Galaxy Systems, a provider of IT consulting and other services in Somerset. “It’s hard today for college graduates to get a job,” she says. “I won’t have debt when I finish college, and I’ll have plenty of work experience.”

Participating companies make donations to help cover operating costs and tuition payments, plus pay salaries to the students. They include Johnson & Johnson (JNJ), MedcoHealth Solutions (MHS), and Prudential Financial (PRU). Nonprofit organizations, such as New York’s Museum of Modern Art, are allowed to participate without making donations.

The program works well for employers, says Steve Peltzman, MOMA’s chief information officer. He initially hired one of Langer’s students for the museum’s tech help desk. That went so well that he now uses other students to monitor the data center, which houses computing for the museum. One person with higher-level skills managed a software programming project. “You get all of the monetary benefits of offshoring and none of the negatives,” Peltzman says. “And you’re doing social good.”

Langer’s program is still relatively small, but if it grows as rapidly as he hopes, it could begin to do a whole lot of social good. He’s working on that—right now negotiating with people at the University of Missouri in an effort to get the program going in St. Louis. Says Langer: “We have to show the country this can work.”

Source: http://www.businessweek.com

IBM announced at the EDUCAUSE Annual Conference that 17 educational institutions worldwide are the first to participate in the Cloud Academy. United States-based institutions include George Mason University; Georgia State University; Gwinnett County Public Schools; Marist College; New York University; North Carolina State University; Pike County Schools; The Executive Leadership Foundation’s Technology Transfer Project – a collaborative effort for Historically Black Colleges and Universities; and the University of Maryland, Baltimore County. International institutions include Beijing University of Technology in China; Carnegie Mellon University in Qatar (CMU-Q), Qatar University (QU) and Texas A&M University at Qatar (TAMUQ) in Qatar; Ecole normale superieure de Lyon in France; Ozyegin University in Turkey; Nanyang Technical University in Singapore; and Victoria University in Australia.

“Cloud computing makes it easier for those in the education industry, including students, faculty and administrators, to gain immediate access to a wide range of new educational resources and research applications and tools,” said Michael King, vice president, IBM Global Education Industry. “The IBM Cloud Academy will advance awareness and adoption of cloud computing, including best practices for education and research institutions.”

IBM Cloud Academy Advocates Collaboration and Innovation The IBM Cloud Academy will enable these institutions and other participants to collaborate using an IBM-managed cloud, available via the Internet, lowering barriers to entry for the development and contribution of subject matter expertise. Through the Academy, members can create working groups on areas of interest to the education industry, “jam” on new innovations for clouds in education-related areas with IBM developers, work jointly on technical projects across institutions, share research findings, and exchange new ideas
for research. Participants are also encouraged to innovate to further advance cloud computing by preparing education-focused open source software for clouds, integrating cloud provisioning and de-provisioning services, validating content for compliance with accessibility standard, and leveraging IBM cloud offerings for teaching, learning, research and administration.

A vital aspect of the IBM Cloud Academy will be the development of new technologies and research methods. The IBM Cloud Academy gives participants the ability to work with elite researchers in IBM labs throughout the world, many of whom are working on cloud initiatives in education, to extend the boundaries of cloud computing in education.

IBM will also collaborate with participants of the IBM Cloud Academy on integrating cloud technologies into their campus and district infrastructures, including IBM’s virtualized server and storage hardware, Tivoli Provisioning and Automation software for management of cloud environments, campus and student computer lab management with the Virtual Computing Laboratory project, and cloud integration services from IBM’s global services organizations.

IBM’s Cloud Academy leverages IBM’s Academy of Technology, whose membership consists of IBM top technical leaders from around the world who are working in research, hardware and software development, manufacturing, and services. Participants will have access to IBM’s public cloud services, including LotusLive for administration collaboration, IBM Desktop Cloud Services, delivery services for Virtual Computing Labs, and Corporate Citizenship Education Projects, such as PowerUp, Forbidden City and TryScience.

One of the tools hosted by LotusLive is the online version of Innov8 2.0, IBM’s flagship ’serious game,’ which is integrated with BPM BlueWorks. Shown at EDUCAUSE, Innov8 2.0 is being used by more than 100 universities worldwide and features real-world business scenarios where the goals are to maximize profitability and customer satisfaction while minimizing carbon emissions. Challenges in the game include managing a supply chain, reducing congestion in a city, and optimizing call center queues.

IBM’s Cloud Computing and Education Initiatives

The IBM Cloud Academy represents a continuation of the cloud computing projects that IBM has initiated over the past two years. These programs provide a forum for collaboration, research and innovation, as well as a showcase for the work and projects IBM has completed with the education industry. Some highlights include:

– In October of 2007, IBM and Google teamed up to help university students gain the skills needed to program cloud applications.

– The two companies have since joined forces with the National Science Foundation (NSF) to enable more students to participate in the IBM/Google Cloud Computing University Initiative through grants
provided from NSF through its Cluster Exploratory (CLuE) program.

– IBM continues to work with universities and educational institutions worldwide, giving students access to cloud computing technologies to help them complete research projects that aid in the development of remote regions and socio-economic conditions all over the globe.

The charter members of the IBM Cloud Academy will work with IBM to define the final structure of the academy, which will open for general membership early in 2010.

For more information on IBM’s cloud computing university initiatives, please visit www.ibm.com/university/cloud.

For more information on IBM cloud computing, please visit www.ibm.com/cloud.

Source: http://www.oncloudcomputing.com

CPM Braxis divides its operations in two main areas: application services, which account for 60% of business, and infrastructure services, which account for the remaining 40%.

Rossi said that the latter area, which includes help desk and network outsourcing, has grown faster this year due to effects from the global economic slowdown.

“Those services provide a high return,” he said. “Outsourcing something like networking to a third party can increase productivity.”

LONG-TERM CONTRACTS

CPM Braxis has shifted its overall business strategy towards increasing the number of multi-year contracts, rather than focusing solely on capturing short-term business opportunities, Rossi said.

“We are looking to increase three, five or seven-year contracts,” he said. “We think they are good for the client and also good for us because we can develop a long-term relationship… these contracts generally take more time to close, but they provide more benefits.”

Key vertical markets for the company include the financial, telecommunications, government, retail and manufacturing sectors, Rossi said.

“We are moving away from our previous focus on just the financial and telecommunications sectors, and opening up to other parts of the economy.”

Brazil currently accounts for 95% of revenues, but Rossi noted that the export market has larger growth possibilities.

The executive said CPM Braxis expects sales and net income to increase 40% and 18% this year, respectively, noting that the company has seen an upswing in business after a drop-off in 4Q08 and 1Q09.

POTENTIAL ACQUISITIONS

Growth through acquisitions represents another top priority in CPM’s strategy. Rossi said the company is currently eyeing purchases that could complement its product offering or provide an entrance into an untapped geographical market.

“There are areas such as BPO and BI where we would really like to be stronger,” he said. “We are looking to complement our offering.”

However, CPM Braxis is not focusing its search on any country in particular, Rossi added.

CPM Braxis has operations in Latin America, the US, Europe and Asia. The company has more than 200 clients, as well as 10 development centers and 85 technical assistance facilities worldwide.

Global revenues reached nearly 1bn reais (currently US$569mn) in 2008.

Source: http://www.bnamericas.com