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Source: http://online.wsj.com

Sunny Gupta thinks he has discovered an entirely new business category, and he’s apparently having little trouble making his case to customers — or investors.

Today, his Bellevue, Wash.-based SaaS startup, Apptio, announced that it has raised a $16.5 million round of funding — its third in just three years — bringing the company’s total funding to $37.5 million. Shasta Ventures led the round, joined by Andreessen Horowitz, Greylock Partners and Madrona Venture Group. All are previous investors.

Ignition Partners, which had participated in Apptio’s Series A round, was not included in what Gupta characterized as an “oversubscribed” round that attracted term sheets from numerous outside investors, all of which he says were turned down.

“In all honesty, I screwed up in [the] B round, as I thought [the] deal was too expensive, given the opportunity,” says Ignition Managing Director John Connors. He adds, “Sunny is doing a great job of building this company, and I missed [an] opportunity … that we should have participated in.”

Apptio offers software as a service that CIOs use to monitor, analyze and improve their IT spending. Gupta calls it the first company to focus on “technology business management,” replacing the Excel spreadsheets and homegrown intelligence tools that companies have historically relied on.

Gupta acknowledges that big companies such as Hewlett-Packard and BMC are chasing the category, too, but he argues that “they’re starting to talk about what we do, but they don’t have the same technology. They’re trying to sell their existing products, and when customers look at us vs. them, they realize it’s apples and oranges.”

Apptio sells five modules as part of its service that address service quality, benchmarking and budget forecasting. Each module has a price associated with it, one that scales based on number of users and the features being used. Customers pay between hundreds of thousands of dollars yearly to several million dollars.

They must like what they’re paying for. The company says it has doubled its stable of Fortune 1000 companies to 50 over the last 12 months — customers include Blue Cross Blue Shield, JPMorgan Chase, and Hallmark — and that it’s enjoying 300 percent year-over-year bookings growth.

Gupta says that Apptio is still sitting on capital from its previous round and that investor interest drove the company’s latest round. He will use the new funding to grow the business and add another 30 employees to Apptio’s 85-person staff by year end. Half of Apptio’s employees are engineers, while about 20 percent are in sales and marketing and the other 30 percent do administrative or work in customer service.

Gupta is an enterprise software veteran with deep ties to his current investors. Before founding Apptio, he co-founded Bellevue-based iConclude, whose software helped companies troubleshoot and resolve any IT infrastructure problems.

That startup, which raised $12 million from Madrona, Greylock, and Shasta, was sold two years after its 2005 founding for $30 million in cash and stock. The acquirer? Opsware (formerly LoudCloud), which was founded by Marc Andreessen and Ben Horowitz and sold to Hewlett Packard four months later, turning iConclude’s $30 million into a $70 million outcome for investors, according to Gupta.

Source: http://www.pehub.com

Cisco has reportedly made an offer to acquire internet phone firm Skype before it completes its planned initial public offering, according to Techcrunch.

Techcrunch said the rumor came from one of its more reliable sources but it has not been able to confirm anything. If it’s true, the deal could be a big one as Skype is gunning for a valuation of $5 billion. Techcrunch said that Google was also rumored to be considering an offer for Skype, but antitrust concerns may have derailed that bid. We’ll offer more details as they come in. Josh Silverman, chief executive of Skype, is pictured.

One of my own sources confirmed that Cisco has made the offer and it is serious about combining Skype’s internet communications service with its own WebEx collaboration tools.

Cisco is the world’s biggest internet networking equipment firm with plenty of presence in internet applications. So there is some reason for Cisco and Skype to be married. But after the surprise acquisition of security firm McAfee by Intel, I suppose that just about any combination of tech companies is possible.

On August 9, Skype filed for an IPO. That filing came after eBay finalized the sale of 70 percent of the company in November 2009 to an investment consortium led by Silver Lake Partners. It included participation from Canada Pension Plan Investment Board, venture firm Andreessen Horowitz, and Joltid — the peer-to-peer technology company founded by Skype’s founders Niklas Zennström and Janus Friis. The sale left eBay with 30 percent of Skype, Joltid with 14 percent, and the rest of the investment group with the remaining 56 percent. The deal valued Skype at $2.75 billion, and eBay was paid $1.9 billion in cash, and received a note from buyer worth $125 million.

To make the deal happen, eBay first had to settle some longstanding lawsuits with Skype’s founders – drama that mostly centered around the Joltid-owned peer-to-peer technology underneath Skype. Joltid was transferred to Skype as part of the deal, and it was partially what led to the founders receiving 14 percent of the company.

In addition to the IPO announcement, Skype’s filing revealed some interesting details about the company and its user base. For one thing, it’s profitable. Skype snagged $13 million on $406 million in revenues for the first six months of 2010. Looking at it with non-GAAP metrics, Skype generated $115.8 million in profits in that time.

The company says it has 560 million registered users, with 124 million using it every month. 8.1 million of those users pay an average of $96 a year for the service.

Source: mobile.venturebeat.com

By Phil Fersht, Horses For Sources

If you happened to be listening to National Public Radio yesterday afternoon, you would have heard an interesting discussion on the rise of homeshoring on their All Things Considered afternoon show.

“So what’s new, then”, I hear you mutter over your espresso and boiled kippers…

In a bid to sound a bit clever, my good friend Philip Peters over at Zagada (which does some excellent analytics on the global sourcing space), pulled some data to discover that at least 110,000 home-based call center jobs have been created in the US in the last three years by companies such as Alpine Access, Working Solutions,LiveOps, Arise NA and West!@home.   Now that’s more onshore jobs than the entire size of Cognizant’s global workforce!

Now while it’s clear that homeshoring is not primed to replace offshore work anytime soon, it clearly is a viable option for front-line customer-facing services at competitive prices.  The removal of the bricks and mortar, telecom costs and use of Cloud-based applications to record/monitor calls is enabling the homeworking environment on a serious scale.  Other areas, such as medical coding, already rely heavily on homeshoring staff to work on administrative tasks with contextual needs.

Running a business myself, which is entirely “in the Cloud” with folks working largely from their homes, you do start to wonder how quickly the homeshoring model with proliferate, especially with the amount of workers available to switch on their PCs from their houses and start work.  This is one dynamic emerging from the Recession that you can see gaining traction, as more and more people opt to work remotely (or have little choice but to).  Procurement/sourcing, accounting, medical writing, financial research… the number of possibilities for using homeshoring as adjunct delivery options in other BPO areas is clearly apparent.

Source: http://www.horsesforsources.com/

Marcelo Marzola, the 33-year-old co-founder of Predicta.net, is a perfect example of how hot Brazil’s $1.6 trillion economy has become — and why its entrepreneurs are now getting their phone calls returned by venture capitalists after a decade of “You’re from where?”

Marzola was invited to present his company’s free online behavioral-targeting tool, BTBuckets, at the Google I/O Web-developer conference in San Francisco in May. To get ogled at the Google conference is the goal of any Web developer. Marzola earned rave reviews for creating what has become a de facto standard, used on more than 2,000 websites in 90 countries by such corporate titans as Pfizer, Motorola and Unilever. The product fills an overlooked niche in the industry by allowing websites to segment their users according to their online habits and then direct targeted content and advertising to them in real time. “It has turned the industry on its head, and it’s gaining mass recognition,” says Daniel Waisberg, an industry consultant and a former chair of marketing of the Web Analytics Association.

The spotlight has attracted about 10 VC firms to Marzola over the past six months. His track record will impress them: the company has been growing at a compound rate of 40% annually since 2005 and has a profit margin of more than 20% on $12 million in revenue. Now he is in the midst of closing a deal with DFJ FIR Capital, a local venture firm with $160 million under management, to raise $15 million to $20 million in exchange for a 35% equity stake to fund his company’s expansion efforts. BTBuckets plans to open offices in major markets in Latin America and the U.S.

To Marzola, who had to hustle $80,000 in start-up capital from family and friends, the newfound interest is indicative of a VC power shift from Silicon Valley to developing economies like Brazil’s. “Ten years ago, when I launched my business, getting start-up capital was impossible,” he says. “At the time, I called on 20 banks, venture-capital and private-equity firms, and everyone turned me down. No one wanted the risk of investing in a fledgling. Finally, there are signs that the equity-capital market for entrepreneurs is igniting.”

This is a breakout that thousands of Brazil’s newbies have been waiting for. Today there are only about nine players — including Antera, Confrapar, DFJ FIR Capital, Monashees Capital and Status Capital — with an estimated $1.9 billion in assets under management, according to the Latin American Venture Capital Association (LAVCA). These firms are run by trailblazers who have been promoting the merits of entrepreneurship to a Brazilian business community that has been risk-averse and to the government of President Luiz Inácio Lula da Silva, which has been leery of California capitalism.

Preaching the gospel of Silicon Valley has been missionary work. “Venture capital is a concept just beginning to filter into the public’s consciousness,” explains Robert Binder, CEO of Antera Gestão de Recursos, an asset-management company established in 2004 that runs the $50 million Criatec Fund, an early-stage equity fund capitalized by BDNES, the Brazilian development bank. For a country with a huge state investment in technology, it’s been a surprisingly tough sell. The 123 national institutes of science and 400 incubators scattered across the country are wellsprings of ideas. But only recently have CEOs from private midsize Brazilian corporations been willing to lend a hand to promising upstarts by offering mentoring support and angel finance.

Their timing is understandable. The IMF projects that Brazil’s economy — now the eighth largest in the world — will grow by 7.1% this year and soar throughout the decade. A confluence of factors will contribute to growth: abundant natural resources, stable government policies, a sophisticated banking sector, a rapidly growing middle class that now comprises about half the population of 190 million and a surge in real estate and infrastructure development to prepare for Brazil’s hosting the 2014 FIFA World Cup and the 2016 Summer Olympics.

The Tech Transformation

Another catalyst has been the focus on developing world-class high-tech industries in a variety of sectors — from aerospace, agribusiness and energy to information technology, business-process outsourcing, semiconductors and telecommunications. “The goal is to push the country’s exports up the value chain,” explains Antonio Gil, president of Brasscom, an association of Brazilian IT and communications companies. He notes that today Brazil can claim 1.7 million IT professionals. This brainpower has helped the country attract top-tier multinationals like IBM, which in June announced it is opening its ninth research center in Brazil and its first in Latin America.

As part of its grand plan, the government is investing heavily in programs that spark homegrown innovation around these key industries. These initiatives — from venture forums to R&D grants — are led by the Financing Agency for Projects and Studies (FINEP), the innovation arm of the Ministry of Science and Technology. “Our country invests 1% of GDP in R&D and leads the region in entrepreneurship,” explains FINEP’s Eduardo Sette Camara. “Now 15 out of 100 residents are involved in a start-up.”

Tiago Lins, business-development director and co-founder of SiliconReef, a company that has developed a microchip that harvests energy from the environment to power mobile devices and wireless networks, has been a prime beneficiary of government support. He and his partner, CEO Marília Lima, incubated their breakthrough technology at CESAR, the country’s well-known R&D center and incubator in Recife. Since incorporating two years ago, the duo have raised grants from FINEP to design and test their product, known as EHO1. They are looking to raise an additional $1 million to fund a product launch. “Right now our biggest hurdle is gaining credibility in the international business community,” Lins says.

Lins’ quest for entrepreneurial success is an aspiration now shared by many young Brazilian mavericks. “Over the last five years, more college graduates have become enamored with the idea of starting their own business,” says Michael Nicklas, an angel investor who runs SocialSmart Ventures, based in New York City, and focuses on early-stage Internet ventures in Brazil. “There is a raw-talent pool in the technology sector. The country has one of the strongest Java, open-source and Ruby communities in the world. The fact that the Internet, cloud computing and open-source databases have lowered the capital requirements of launching a tech business has created the opportunity for these webmasters to strike out on their own.”

Nicklas has been scouring the countryside — from Belo Horizonte to Curitiba to São Paulo — for three years looking to put his money to work. A serial entrepreneur, he has been impressed with the country’s early adoption of social media. That has led him to invest in three upstarts, including Compra3, a company that has developed a unique buying platform for social-media networks that gives users discounts and cash back on purchases and allows them to comment on items. After sinking $150,000 into a 2.5% stake in the business, Nicklas helped founders Bruno Medeiros and Andre Monteiro refine their business plan and prepare for their August road show in the States. The hope is that VCs will dole out $12.5 million in equity finance so the company can consolidate its model in Brazil and break into the North American market. Compra3 already has a partnership with Walmart and 18 Latin American retailers, including Americanas.com. “Nicklas is our bridge to foreign investors, and we need his connections to get to the next level,” explains the 29-year-old Medeiros, who has been spawning new businesses with his own money since he was 19.

Those connections are key, since there is a huge funding gap in Brazil between seed-financing rounds and the second and third rounds of venture capital critical to growth. Instead, most of the investment capital flows into private-equity funds. There are now more than 30 PE funds, with some $12.3 billion in assets under management, according to LAVCA. These funds — for example, Advent International’s $1.65 billion Latin America Private Equity Fund V that closed in May — specialize in large buyouts, M&A and infrastructure projects. But even that capital pool is tiny when you consider that India, a BRIC rival, boasts a private-equity market five times as big.

Against the Odds

According to marcus regueira, a former investment banker in the U.S. and founding partner of DFJ FIR Capital, Brazil still suffers from inefficiencies with capital flow and an IPO market that has barriers to entry for small- or medium-size companies. To find liquidity, VCs have to be attuned to the domestic market and know how to figure out strategic partnerships or exit strategies for their portfolio companies.

Another inhibiting factor has been the lack of local expertise on how to operate a private-equity or venture-capital limited partnership. That’s why FINEP is taking an active role in training local businesspeople on the ins and outs of being a general partner. Some foreign transplants, like private-equity firm Advent International, do this on their own. They hire top collegiate engineers, send them to U.S. business schools for their MBAs and then groom them to become partners in the firm. Many are even placed as interim CEOs.

And vestiges of the past remain. Brazil’s taxation and regulations are among the most onerous in the world for business. The corporate income tax rate is 34%, and Social Security taxes and other compulsory employee benefits add up to a whopping 80% to 90% of an employee’s salary. That’s not to mention taxes on bank loans and Brazil’s somewhat archaic labor laws.

Considering the challenges, any entrepreneur able to launch a business and survive is part of an elite class. “It takes a superstar who is an astute cash manager from the get-go to win in this market,” stresses DFJ FIR Capital’s Regueira. “This is economic Darwinism at its best.” Gustavo Caetano, the founder and CEO of Samba Tech, a three-year-old company that has created a platform to help third-party developers migrate and distribute video over the Internet, is another survivor. In just three years he built his business with a $100,000 loan from his father into a profitable $7 million-a-year concern with 50 employees. It has been growing at an annual rate of 300%. “In Brazil you need to have a strong payback model right at the beginning. VCs won’t wait to see if one day there is an exit for your company since they don’t want the risk. In the U.S., a start-up is cut some slack. It can operate for two years without any revenue. We don’t have that luxury.”

There are signs that times are changing. More overseas venture capitalists interested in diversifying their assets are looking at Brazil. They are being prodded by institutional investors, who for a second consecutive year ranked the country as the second most attractive emerging market (after China) for private-equity investment, according to the 2010 EMPEA/Coller Capital Emerging Markets Private Equity Survey. “A lot of investors feel they are overweighted in Asia and are turning to Brazil,” says Alberto Camões, founder and managing partner of Stratus Venture Capital, which is raising a $300 million private-equity fund.

What Brazil needs to turn the trickle of outside funding into a river is a dazzling IPO that generates global buzz and demonstrates the breakthrough thinking and true grit of the Brazilian entrepreneur. The hope among local VCs is that this will happen within the next two years — perhaps to a company like Predicta.net that has so much potential.

The possibilities are legion. Just ask Great Hill Partners in Boston. It took the firm four years to make an 860% return on its investment in BuscaPé, an e-commerce services provider; it sold a 91% stake for $340 million to Naspers, the South African media giant, last September. Nicklas sums it up nicely: “Venture investors run in herds, and when they see fertile ground, they swarm in to stake a claim. Now they have Brazil in their sights.”

Source: http://www.time.com

Accenture Awarded Contract to Support University of North Texas’ Shared Services Strategy for Information Technology and Human Resources

2010 AUG 24 – (VerticalNews.com) — The University of North Texas System (UNTS) has selected Accenture (NYSE: ACN) to assist in developing a plan for implementing IT and HR/payroll shared services for its component institutions.

The project is focused on developing a multi-year strategic plan to implement shared services. It will include prioritized campus-level and system-wide strategies for improvement, with a goal to increase efficiency and improve the services provided by IT and the HR/payroll functions across all UNTS campuses and offices. Working with the UNT System Vice Chancellor of Finance and the UNTS Shared Services Council, Accenture will develop a shared services implementation roadmap and five-year plan for IT investment covering capital, operating and personnel expenditures. The plan will draw from best practices in higher education and business and Accenture’s deep background in shared services implementations.

“Just as businesses and government agencies have been using shared services to optimize cost-effective delivery of high quality customer-centric services, leading higher education institutions are increasingly following this path to transform their operations and make better use of scarce resources,” said David Wilson, managing director of Accenture’s Canada and U.S. State & Local Government client service group.

The University of North Texas System includes the UNT flagship campus in Denton, UNT Health Science Center at Fort Worth (UNTHSC), UNT Dallas, UNT System administrative offices, and the future UNT Dallas School of Law. Accenture will be collaborating with a multi-disciplinary UNTS team with participation from all campuses. About Accenture Accenture is a global management consulting, technology services and outsourcing company, with more than 190,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$21.58 billion for the fiscal year ended Aug. 31, 2009. Its home page is www.accenture.com.

Keywords: Accenture, Data Management, Information Technologies, Information Technology, Public Education.

This article was prepared by VerticalNews Technology editors from staff and other reports. Copyright 2010, VerticalNews Technology via VerticalNews.com.

Source: http://technology.verticalnews.com

Colombia, Nicaragua DR Cities Top Nearshore Operating and Demographic Cost Ranking Released – Zagada Institute

MIAMI, FL and CORAL GABLES, FL–(Marketwire – August 19, 2010) – A new Nearshore operating and demographic cost ranking on the 13 key Central American, Colombian and Caribbean cities released by the Zagada Institute (ZI) today reveals that Cali, Santo Domingo and Medellin secured first, second and third places respectively from a best – cost perspective for BPO companies.

Zagada’s city datasets principally focuses on accessing and simulating the costs associated with launching and running a contact center or BPO firm across all 13 cities.

The complete cost rankings are as follows:

* #1 Cali, Colombia
* #2 Medellin, Colombia
* #3 Bogota, Colombia
* #4 Managua, Nicaragua
* #5 Santo Domingo, Dominican Republic
* #6 Montego Bay, Kingston, Jamaica
* #7 Guatemala City, Guatemala
* #8 San Salvador, El Salvador
* #9 Georgetown, Guyana
* #10 Bridgetown, Barbados
* #11 Greater Port of Spain, Trinidad
* #12 Panama City, Panama
* #13 San Jose, Costa Rica

While Colombian and some Central American markets have attractive cost structures they are significantly constrained by limited English-speaking (bilingual) talent density, different attrition rates and U.S cultural acuity levels. Consequently cost ought to be weighted in tandem with labor in any expansion decision. The top five rated markets in terms of sector ready talent are cities in: Jamaica, Dominican Republic, Trinidad, Guatemala and Costa Rica. Locations with the lowest attrition rates are Managua, Nicaragua; Georgetown, Guyana; Medellin, Colombia. Zagada’s Cultural Domain Acuity Model (CDAM™) score -which measures a market’s cultural alignment with the U.S. gave its top rating to Jamaica, with Panama, Barbados and El Salvador tying for second place, while Trinidad, Dominican Republic, Guatemala and Costa Rican cities jointly secured the third highest CDAM score.

The datasets are available on a real-time ongoing subscription basis for one or multiple cities. Single city datasets are immediately available for purchase at ZagadaCaptive.com at August 30th deadline discount pricing.

Key metadata delivered include costs on: hourly wages, base payroll, fringe benefits, electrical, rents, equipment, management travel, and telecommunication. Also included are, micro economic – city data, teledensities, talent density data specific to BPO sector, education graduate stock, incentives summaries, attrition rates, union presence score, and each city’s U.S cultural acuity scores.

Non-exempt labor cost analysis datasets:
-Total Workers
-Weighted Average Hourly Earnings
-Total Annual Base Payroll Costs
-Fringe Benefits
-Total Annual Nonexempt Labor Costs
-Ranking

Operating simulation cost datasets:
-Weighted Average Hourly Earnings
-Annual Base Payroll Costs
-Fringe Benefits
-Total Annual Labor Costs
-Electric Power Costs
-Annual Office Rent Costa
-Equipment Amortization Costs
-Management Travel Costs
-Telecommunications Costs

Commenting on Zagada’s push to provide these dynamic city – specific datasets to both corporate buyers, large consulting and advisory as well as economic development agencies, Zagada’s CEO Philip Peters said,

“The new financial and economic climate demands a more efficient, fair and flexible pricing approach in delivering city-specific captive data to corporate buyers,” says Peters. “Zagada wants to continue leading with decisioning tools.”

Zagada datasets model for the complete 50 key Nearshore cities of Mexico, Argentina, Brazil, Peru, Chile and Uruguay are schedule to come online during the month of September. Complete global subscription will be available in the last quarter 2010.

Corporate buyers, service provider companies and economic development agencies are invited to contact us on our special wholesale discount pricing offer, which runs until August 30th. Single city reports are immediately available for purchase at ZagadaCaptive.com. The complete dataset sample outline PDF can be downloaded at this link.

For more information please download our complete dataset sample outline in PDF, or reach us at 305 322 8156 or 305 529 9028. Please send subscription email enquiries to datasets@zagada.com. To purchase datasets on your city of choice please visit our estore at www.zagadacaptive.com.

Download Press Release

About Zagada Institute

The Zagada Institute (ZI) is the research publishing arm of Zagada Markets.

Zagada Markets

Zagada is a business development analytics firm. The company provides research, indexes, rating and tailor-made advisory services on countries, cities and service suppliers to corporations. The company principally serves the corporate buy-side and is totally focused on delivering sourcing analytics on the global outsourcing sector. The company has a deep design and development partnership with Moodstudio (moodstudio.net). The company is the developer and publisher with its partner Waagstein Research of the only equity benchmark on the global outsourcing sector – The Zagada Waagstein Global Outsourcing 100 Index – www.zagadawaagstein.com. Zagada publishes the leading NearshoreJournal.com sourcing blog. Please visit Zagada online at www.zagada.com

Source: Marketwire.com

By Jacob Goldstein

A big outsourcing company that does lots of work in India is looking to staff up in the U.S., where call center workers can now be hired on the cheap, the FT reports this morning.

People in the U.S. “are open to working at home and working at lower salaries than they were used to,” Pramod Bhasin, chief exec of Genpact, tells the FT.

The firm plans to triple its U.S. workforce in the next two years — a plan rendered somewhat less impressive by the fact that it only has 1,500 employees in the U.S. right now.

Despite the relatively low number, there is something broader going on here: India is moving up the global pay-scale ladder, pushing outsourcing firms to look elsewhere for labor.

Wipro, an outsourcing company based in Bangalore, has been staffing up in Europe, the Middle East and Africa; roughly half of the firm’s employees will be non-Indians in two years, up from 39 percent now, an exec tells the FT.

Source: http://www.npr.org

HP has signed a $200 million federal contract to provide application support and maintenance services for Medicare Part B claims processing, which covers outpatient expenses.

Hewlett-Packard is expanding its federal government and health care IT services portfolio after signing a new, $200 million contract with the U.S. Centers for Medicare & Medicaid Services to provide application support and other services.

On Aug. 16, HP announced it signed the $200 million contract with the CMS. Under the multiyear contract, HP will provide application support and maintenance services for Medicare Part B claims processing.

In a statement, HP noted that Medicare Part B processes about 750 million claims each year, most of which are typically outpatient expenses, including doctor services, home health care and preventative care. To aid in processing the large volume of claims, HP will supply full development life cycle support for system maintenance and updates. HP will also deliver production and user assistance.

In addition to supporting Medicare’s claims processing, HP will deliver services to Healthcare Integrated General Ledger Accounting System. This system exchanges information with Medicare’s MCS (Multi-Carrier System) about claim billing, provider and beneficiary profiles, check settlement, payment and other claim-related data.

HP aims to support the 2003 Medicare Modernization Act and the Affordable Care Act, which was passed earlier this year. The company plans to apply large-scale governmental mandates such as HIPAA (Health Insurance Portability and Accountability Act) 5010 transactions. HP also intends to combine processing cycles within CMS data centers and to develop new system interfaces in support of the CMS National Level Repository. These efforts should help determine provider incentives for implementing electronic health records.

“As the Medicare population grows, CMS continues to modernize to be able to manage and deliver transformative technology that will improve Medicare services for beneficiaries and health care providers alike,” Dennis Stolkey, senior vice president, U.S. Public Sector, HP Enterprise Services, wrote in a statement. “HP is proud to support CMS in their Medicare modernization initiatives.”

HP, which will team up with four small businesses to provide valuable IT solutions, has historically provided support services to Medicare and Medicaid clients. Since the commencement of the programs, the company, becoming the largest processes management provider, has handled 35 percent of all Medicare and Medicaid claims—more than 2.4 billion health care transactions annually.

When it comes to IT services, HP is competing in a field with many other high-profile players, including IBM and its Global Services Division. In addition, Dell, with its Perot Systems purchase, is also expanding into government and health care IT services.

In a recent report, IDC finds that global IT services spending is slated to grow from $573.4 billion this year to $685 billion by 2014.

Source: eWeek.com

As Google and Amazon.com become preeminent sellers of tech services, companies from Accenture to Microsoft and Xerox must adapt to cloud computing.

In the next five years outsourcing as we know it will disappear. The legion of Indian service providers will be sidelined or absorbed. U.S. and European companies that pioneered this corner of the high tech industry will suffer similar fates if they don’t wake up. Who will emerge as the new leaders? Google (GOOG) and Amazon.com (AMZN), brands that we associate with search and retail, will become better known for outsourcing.

Ludicrous? Not if you follow this industry. Desktop computers yielded to laptops. Web portals AOL (AOL), MSN (MSFT), and Yahoo! (YHOO) are giving way to social media sites Facebook, Twitter, and LinkedIn. Software once distributed by disk is now available as apps over the Web—often for less than the cost of a slice of pizza. And so it goes. The same Darwinian process is creating a fresh ecosystem in outsourcing, one that will usher in an era of consolidation and a new way of working with clients.

Traditionally, outsourcing companies sell customers deals that can span a decade and easily run to tens of millions of dollars. The service provider takes on the expensive, time-consuming task of building and operating the digital tools that the customer requires to vanquish the competition, often involving development of custom software to get the job done. To do that, service providers need aisles of powerful computers, armies of programmers, and lots of applications, which are housed either at the client’s site or located at a third-party data center that’s usually owned and paid for by the client but managed and maintained by the outsourcer. Accenture (ACN) is a good example of the old model of outsourcing, which involves long-term contracts; customized software, legacy software, or both; and on-site systems integration work.

Ruthlessly seeking economies of scale

In the new model, outsourcers provide standard, off-the-shelf software on a “pay-per-drink” basis. For that, they will leverage so-called cloud technology, which lets users tap into computing power available via the Internet, rather than on a desktop or computer server housed locally. The appeal is scale, flexibility, and efficiency: Thousands of server computers can attack a task more quickly—and cheaply—or handle a patchwork quilt of different technologies that companies use to run their businesses. This approach will let businesses outsource entire tasks such as the tracking of inventory, paying only for the information accessed or used.

Why is this happening now? Let’s start with the relentless pressure to cut costs. Outsourcing is about saving money. Sure the pitch usually revolves around improving business processes, but no client is going to pay more for the service than what it already costs to maintain their systems. Unfortunately, outsourcing vendors have maxed-out efficiencies, both from automation and from moving the work to lower cost-of-labor destinations, also known as “labor arbitrage.” To get to the next level of savings, a ruthless search for greater economies of scale is necessary.

That’s where the cloud comes in. It shifts the center of gravity in outsourcing from physical ownership of assets and process expertise. It focuses on the skills necessary to efficiently manage computing operations that can scale and at the same time are flexible enough to handle scores of different tasks.

These factors will set off a wave of global consolidation in tech services. There are too many companies in this space. Consolidation will be about protecting or building market share or adding technical skills, from connectivity and networking to deep expertise in the delivery of services-on-demand. This is why most Indian outsourcing companies are investing to get up to speed on the cloud. How quickly can they build sufficient scale?

It’s not merely Indian companies wrestling with these changes. Let’s handicap the winners and losers in the race to become players in the evolving outsourcing business.

The Losers: Mid-tier Indian outsourcers will be acquired by larger, more aggressive companies. Indian outsourcers are attractive because of their current client list, operations in low-cost countries, and process expertise. Most of them are too small to build enough scale and expertise in the backbone capabilities required in the cloud.

Leading Indian players like MphasiS (MPHL:IN) and eServe (ESV:AU) have already fallen prey to Hewlett-Packard (HPQ) and TCS, respectively. Some larger players such as Infosys (INFY) and Wipro (WIT) are at risk of losing their competitive advantage. Even the largest Indian companies are still several orders of magnitude smaller than their U.S. competitors—HP, Xerox (XRX) Microsoft, and Google. These include companies such as Patni (PTI), L&T Infotech, and Satyam (recently acquired by Tech Mahindra. Therefore we expect Indian vendors to try to gain scale via acquisitions or alliances among themselves.

The Winners: Amazon and Google are the future leaders in outsourcing. They are already providing services to such enterprises as Eli Lilly (LLY) and Pfizer (PFE). They own data centers on an enormous scale and know how to operate them efficiently. They will gain capabilities they don’t yet have—such as industry-specific know-how and low-cost workforces—by acquiring Indian or other global outsourcers. Meanwhile, Google announced a partnership with Computer Sciences (CSC) and Amazon announced a similar one with Capgemini. Indeed, Amazon has made so much headway in cloud technology that this area of their business will generate, according to an estimate recently published by UBS (UBS), something in the order of $750 million in 2011.

Then there’s the generational issue to consider. Amazon and Google are household brands for the generation of managers and leaders that is now rising in U.S. management ranks. In their youth, these leaders entrusted personal e-mails, music files, pictures, and social interactions to these companies. We believe it will be a logical extension for this generation to hire these companies as trusted managers and hosts of their corporate services.

The Possible Winners: Software giants such as Microsoft, Oracle (ORCL), and SAP (SAP) have knowledge around enterprise platforms and applications that can unlock further efficiencies for clients. They also have robust and captive client portfolios. Their success will depend on the speed at which they build up capabilities they are currently missing in connectivity, infrastructure, and experience in the cloud itself. It will also depend on their appetite for risk. We are talking here about nothing less than reengineering their DNA. For example, even Microsoft has begun to forsake its license-based software to introduce new, cloud-based, office software. At the same time, Salesforce.com (CRM) has aggressively grown by shifting its CRM applications around this cloud-based model.

Those on the Fence: Xerox, HP, and Accenture have the technical and financial resources to expand their capabilities. Recent acquisitions—HP/EDS, Dell/Perot Systems (DELL), and Xerox/Affiliated Computer Services—show that they see the writing on the wall. Nevertheless, it’s uncertain that these behemoths will shift seamlessly from large integration projects to cloud-based solutions. Unless companies such as HP, Xerox, and Dell continue to increase their momentum into the cloud, they may find their multibillion-dollar acquisitions go to waste.

The outsourcing market is on the verge of experiencing its most massive transformation since the concept arose more than 20 years ago. For outsourcers, cloud computing creates an unprecedented opportunity to reshape how services get delivered. For clients, it opens up a new era characterized by the arrival of new players that are eager to build relationships and showcase their capabilities. That means more choice and a new model that will sustain the price advantage that outsourcing has hitherto provided.

Source: Businessweek.com

By Bruce Einhorn

How unpopular are Indian outsourcing companies from India in the U.S.? They can manage to unite squabbling Democrats and Republicans in the Senate. With the GOP filibustering most of the time, it’s news when Senate Majority Leader Harry Reid and his Democratic colleagues manage to get 60 votes to pass anything at all. Getting all 100 Senators to vote unanimously on a bill is near miraculous. On Thursday, though, the Senate unanimously passed a bill sponsored by New York’s Chuck Schumer to increase visa fees on companies that send workers to the U.S. if more than half of their America-based employees use work visas. In other words, Indian IT outsourcing companies. (Companies like Microsoft and Google that bring people to the U.S. on these work visas, too, don’t have to worry since those employees are just a tiny percentage of their U.S. workforce.) The extra money will pay for additional security measures on the U.S.-Mexico border.

In case the message wasn’t clear enough, senators made a point of singling out Indian IT outsourcers. Missouri Democrat Claire McCaskill said the bill would hit “a handful of foreign-controlled companies that operate in the United States such as Wipro, Tata, Infosys and Satyam,” Indian wire service PTI reported. PTI also quoted Schumer turning up the heat on the Indians. “The emergency border funds will be paid for by assessing fees on foreign companies known as chop shops that outsource good, high-paying American technology jobs to lower wage, temporary immigrant workers from other countries,” Schumer said during debate on the Senate floor. “These are companies such as Infosys.”

Chop shops! I’ve followed the debate about outsourcing for a while, and this is the first time I’ve heard of a top lawmaker likening India’s blue-chip IT services companies to crooks who specialize in taking apart stolen cars. Nasscom, the Indian IT industry’s lobbying group, came out with a statement after the Senate vote pointing out that less that 12 percent of H-1B visas. “But U.S. compnanies, which use the bulk of these visas, would remain unaffected by the legislation,” Nasscom President Som Mittal said in the statement. “This is simply unfair to foreign companies.” For now, the new tax won’t hurt Infosys and other Indian companies too much; Bloomberg News quotes Kaufman Bros. analyst Karl Keirstead saying the new fees will be “relatively innocuous” for a company like Infosys, which earned $1.3 billion in the most recent fiscal year. With the U.S. unemployment rate hovering near 10 percent, though, Infosys and other Indian IT companies should expect more over-the-top attacks from American politicians from both sides of the aisle. They can’t agree on much, but they all know that there’s little downside to beating up on Bangalore.

Source: http://www.businessweek.com

Capgemini (Paris:CAP.PA), a provider of consulting, technology and outsourcing services, announced today that Capgemini Brazil has acquired the Gaspar facility of Sonda Procwork, the Brazilian unit of IT systems integrator Sonda.

Capgemini Brazil will now deliver BPO services to global clients in the region, who were previously serviced by Sonda Procwork.

The acquisition of this facility, financial details of which were not disclosed, is reportedly in line with Capgemini’s Latin America expansion strategy and supports the Finance & Accounting (F&A) needs of its global clients.

Over 200 employees will transfer to Capgemini upon completion of the acquisition, and will continue to support the F&A and Human Resources Outsourcing (HRO) needs of Capgemini clients globally and in the Latin America region.

Source: http://www.m2.com

By Paul McDougall

Source: http://www.informationweek.com

Aditya Birla Minacs, the business process outsourcing (BPO) arm of the $28 billion Aditya Birla Group, today said it was keen on establishing a facility in Latin America with an eye on servicing its clients in the United States, which contributes about 65 per cent of the company’s total revenues.

“We have already shortlisted three locations in the region, and our 26-member team is undertaking locational studies. It (the facility) will primarily cater to our US clients and most of it will be voice (solutions),” Aditya Birla Minacs President – Asia Pacific Milind Godbole said.

Godbole explained that the firm was looking for countries which had a strong cultural connect with the United States, so that voice solutions could be better altered to suit client requirements. However, he was reluctant to divulge details of the countries or investment.

Indian IT and ITes firms already have a presence in the region. While both Wipro and Infosys have facilities in Brazil, the latter has another in Mexico. TCS has headquarters in Mexico, Ecuador, Colombia, Peru, Chile, Argentina, Brazil and Uruguay.

“We would like to begin operations on our own or through an acquisition. A JV (joint venture) is our last priority. Operating in South America is at least 10 per cheaper than Indian BPO functions,” Godbole said.

Meanwhile, the company also expects to expand operations in the Philippines this fiscal by increasing its headcount at Manila to 1000 employees and opening its second facility in the country, he added.

Source: http://business-standard.com

Leading Economics Bloggers Pessimistic,
According to Kauffman Foundation Survey

Contact:
Rossana Weitekamp, 516-792-1462, rossana@weitekamp.com
Barbara Pruitt, 816-932-1288, bpruitt@kauffman.org, Kauffman Foundation

Kauffman releases findings in its third ‘Economic Outlook: A Quarterly Survey of Leading Economics Bloggers’

(KANSAS CITY, Mo.), Aug. 4, 2010 – Top economics bloggers are feeling a renewed sense of pessimism about the U.S. economy, according to a new Ewing Marion Kauffman Foundation survey released today. Sixty-eight percent of economics bloggers who responded to the mid-July survey described the economy’s overall condition as “mixed,” with the rest split three to one toward an assessment of “weak” rather than “strong.” Worse, only 5 percent of respondents believe the economy is “better than official government statistics show,” while 47 percent think it is worse.

For this third Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers, the Kauffman Foundation sent invitations to more than 200 leading economics bloggers as identified in the Palgrave’s econolog.net December 2009 rankings. The Foundation surveys the bloggers each quarter about their views of the economy, entrepreneurship and innovation.

“Uncertainty is casting a shadow over the economy as well as the debate about the economy,” said Tim Kane, senior fellow at the Kauffman Foundation and author of the study. “There is good news in the forecast, but it seems to have left the country. Expectations of global growth are more than double the projection for U.S. incomes. And bloggers’ frustration with Congress seems to have hit a boiling point as well, yielding a grade point average of 0.8 on a four-point scale, which is roughly half the grade point given to Wall Street firms.”

Research highlights include:

None of the respondents assessed the U.S. economy’s overall condition as “strong and growing.” Overall opinion has shifted sharply negative since the previous quarter. Many bloggers acknowledged the possibility of a double-dip recession in response to a question from Econbrowser.com’s James Hamilton: the average probability among respondents was 44 percent.

• The bloggers expect the U.S. budget deficit to grow stronger than any other variable over the next three years. They also see higher poverty (doubled from second-quarter expectations) and inequality levels in the United States, meager stock market growth, and a slight decline in U.S. competitiveness. On a brighter note, three-year projections also include a relatively strong increase in global output.
• Respondents rate overall business conditions as “mostly fair, partly bad,” but a majority (57 percent) believe conditions for small business in particular are “bad” or “very bad.”
• A large majority—70 percent—of the surveyed bloggers say the federal government is too involved in economic matters, despite the largely non-partisan identification of the respondents.
• Only one of the 68 respondents supports a “tax on the product of foreign labor,” a policy proposed by Andy Grove in a recent Bloomberg Businessweek commentary.

The third Quarterly Outlook also features questions from individual economics bloggers. Allison Schrager (Economist.com’s Free Exchange) asked about the equity premium and found that bloggers believe it to be worse than most pension models are prepared for. Virginia Postrel (Dynamist.com) asked about the viability of green energy and electric cars, and 58 percent of bloggers expect that “neither” will be viable without government subsidies ten years from now. Jeff Miller (A Dash of Insight) asked which elements of the “Bush era” tax cuts are likely to be extended, and the outlook was grim for dividends, capital gains and estate tax repeal.

“Most believe that a tax increase would choke off growth,” said Miller. “The politics will be interesting, since a coalition to extend some or all of the cuts will be completely different from the party-line votes we have seen from the current Congress. My blogging colleagues surprised me a little with a small majority seeing the extension of some cuts. I expect more of the package to survive.”

Eight core questions and four topical questions were designed in coordination with a distinguished board of advisors, which includes:

Robert X. Cringely – I, Cringely
Brad DeLong – Grasping Reality
Laurie Harting – Palgrave’s EconoLog
Scott Jagow – Marketplace Scratch Pad
Paul Kedrosky – Infectious Greed
Lynne Kiesling – Knowledge Problem
Donald Marron – DMarron.com
Mark Perry – Carpe Diem
Wade Roush – Xconomy.com
Allison Schrager – Free Exchange
Nick Schulz – The Enterprise Blog
Yves Smith – Naked Capitalism
Alex Tabarrok – Marginal Revolution
Mark Thoma – Economist’s View

Read More: Read the third Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers (PDF)

Source: www.kauffman.org

Peru is an important market for TCS with the growth forecasts for the IT-BPO sector in Peru remaining high despite the global economic crisis, a press release issued here on Sunday stated.

This launch marks a milestone in the region for the expansion of the company as it adds to the offices present in Mexico, Uruguay, Argentina, Chile, Brazil, Ecuador and Colombia.

“Our economy has seen one of the most outstanding growths of the region and it demands BPO and IT services rendered by TCS, like any other parts of Latin America” country head of Peru, Chile and Ecuador, Alejandro Valenzuela, said in the release.

According to him, “TCS style of doing business is recognised in the world. The prestige of India as a country which offers solutions in technology, efficiency and quality is supported by Tata’s trademark and should be one of the pillars of the commercial success we will achieve in Peru. We are sure that our businesses will grow by leaps and bounds just like the economy of this developing country.”

In this way, the Indian company seeks to show its main differential factors–a global network, innovation laboratories, constant generation of new talents, industry leadership and financial soundness, the release said.

Source: http://timesofindia.indiatimes.com/

General Motors today said it has renewed its multi-year agreement to acquire a wide range of IT services, including support for manufacturing software, from Hewlett-Packard Co.

HP valued the five-year deal at $2 billion.

The renewal, which comes a year ahead of schedule, covers a scope of work that is “similar” to the IT services that HP currently provides to GM, said Mark Collins, HP Enterprise Services’ vice president of the General Motors account, in an interview with Managing Automation. Collins declined to specify how the new deal differs from services HP has traditionally supplied to GM. He did, however, say that the contract calls for HP to deliver some applications and other services faster “to help GM support its business.”

The impetus to renegotiate the contract early came from both GM and HP, Collins said.

The contract renewal represents an extension of an intricate 25-year relationship between the organizations. During the mid-1980s, the automaker outsourced much of its technology operations to IT consultant EDS. GM later acquired most of EDS, and then sold it off in 1996. After more than a decade of independence, EDS was acquired by HP two years ago for $13.9 billion.

HP said it will provide GM with applications and systems integration services, as well as network, workplace, and mainframe management services globally. Services include support for GM’s OnStar in-vehicle communications service, which was also part of the earlier contract, Collins said.

GM manufacturing software and infrastructure that HP will support include plant control and automation systems and manufacturing execution systems (MES), Collins said.

HP will also provide GM with global service desk and site support services in more than 50 countries and languages, HP said. And the deal covers remote network management for data, network security, and videoconferencing services.

Source: http://www.managingautomation.com

Aon will pay $50 a Hewitt share. That is a 41 percent premium from Hewitt’s closing price Friday of $35.40.

Aon, based in Chicago, plans to integrate Hewitt with its existing consulting and outsourcing operations and create a new unit, Aon Hewitt, after the deal closes.

Russell P. Fradin, chairman and chief executive of Hewitt, will take on the same roles at Aon Hewitt.

Aon said it will create an “integration team” lead by Greg Besio, chief administrative officer of Aon. The team will include Kristi Savacool, senior vice president of Hewitt Large Markets Benefits Outsourcing; Jim Konieczny, president of Hewitt HR Business Process Outsourcing; Yvan Legris, president of Hewitt Consulting; and Kathryn Hayley, co-chief executive of Aon Consulting.

Hewitt, based in Lincolnshire, Ill., is a human resources consulting and outsourcing company.

Aon said it expected the dealwould save $355 million a year beginning in 2013, primarily from reducing back-office areas, management overlap and public company costs and getting more from technology platforms. It said the deal will help earnings in 2011 and 2012.

Hewitt stockholders will receive $25.61 in cash and about 0.64 percent of a share in Aon stock for each Hewitt share. The total payment will be $2.45 billion in cash and 64 million shares.

The deal is expected to close by mid-November.

Source: www.nytimes.com

Firms decide best to stay separate (Updates to show statement is from both companies)

July 6 (Reuters) – Management consulting firms Booz & Co and A.T. Kearney have ended discussions for a possible merger, the companies said on Tuesday.

In a joint statement, the firms said “their future aspirations will be best realized as separate partnerships.”

Booz was founded by Edwin Booz, when he established the first management consulting firm in 1914. It now has more than 3,300 people in 61 offices around the world.

In 2008, private equity firm Carlyle Group [CYL.UL] bought the firm’s U.S. government consulting business, which retained the name Booz Allen Hamilton. Last month, that firm filed for an initial public offering. [ID:nSGE65K0JG]

A.T. Kearney, which traces its roots back to 1926, has offices in major business centers in 36 countries. (Reporting by Paritosh Bansal; Editing by Bernard Orr and Carol Bishopric) (For more M&A news and our DealZone blog, go to www.reuters.com/deals)

Source: http://www.reuters.com

The win could be a game changer for Patni helping it qualify to bid for bigger outsourcing contracts and compete with larger`rivals, such as TCS, Infosys and Wipro. This is also the first major deal for an Indian services provider in the healthcare segment after the Obama administration passed the healthcare reform bill.

This represents the largest win in the companys history. This move takes on dual significance for Patni in terms of growing our global life and healthcare insurance business as well as establishing us as a third party administrator, Patni CEO Jeya Kumar said.

The acquisition of CHCS Services establishes it as a TPA in most states in the US and also gives it a 200-person facility in Pensacola, Florida.

This is the second onshore facility Patni has acquired in the past few months. Recently, it had announced the acquisition of another such facility in El Paso, Texas. Over the past few years, scale has become more critical because of the kind of contracts that have been coming up. The reason being if you are a large service provider of around 100,000 people, you can scale up quickly by another 15,000 people as compared to when you are smaller and its a significant percentage of your existing employee strength,says Siddharth A Pai, partner and managing director, TPI India.

Source: www.offshoringtimes.com

With newer rivals like Philippines snaring 70% of new contact centre businesses and onshore BPOs in Brazil and other Latin American locations picking up steam, local vendors are being forced to set up global delivery centres, or look at near-shore options.

Wipro BPO’s senior vice-president Ashutosh Vaidya says they have set up 15 overseas delivery centres and parked 3,000 people there to neutralise near-shoring by global outsourcing firms like Accenture and CapGemini. The latter, in fact, has a major hub in Guatemala City, which also houses delivery centres by Indian BPO firm 24X7 Customer.

To boot, TCS Iberoamerica employs over 6,000 people in Latin America across eight centres spanning Colombia, Ecuador, Brazil, Argentina, Uruguay and Chile. “If you are going to be a significant player, you will have to have near-shore as well as offshore solutions”, says Deepak Patel, CEO, Aditya Birla Minacs.

“A notable development in 2010 has been the increasing focus on Indian IT majors strengthening their onshore footprint by setting up delivery centres in the US.

Demand arises as a lot of work may not be completely offshorable, so it is good to have a delivery centre in the United States. The other factor is the proposed US legislation around work permits and H1-B visas that may impact suppliers’ offshore delivery mix,” says Salil Dani, senior research analyst, Everest Research Institute.

The move to onshore or near-shore locations is gaining momentum because BPOs have graduated beyond the low-cost model, say industry honchos.

“The next-generation business models are no more about cost, but value. Just because something is cheaper does not mean it has value,” says Deepak Patel. Ashutosh Vaidya says the firm is convincing clients to go for outcome-based business savings, not merely man-hour cost reductions.

“A savings proposition goes beyond labour arbitrage and helps the service provider bring in a level of confidence in customer relationship, which means that work can be done onshore and that can take care of proximity and cultural issues,” says a senior executive of strategic consulting firm IonIdea, which works with clients in the telecom space.

“Two years back, 98% of our workforce was in India but the matrix has changed to 90:10. Going forward, we expect our international centres to grow at a faster rate,” he said.

Wipro BPO has centres in Philippines, Eastern Europe and Australia among others, and plans to tap newer geographies like Japan.

Vendor relationships are evolving into an ecosystem of partners and thus, offshore and onshore operations are getting transformed into global outcome delivery model, an industry watcher said. “The focus should not be on the client but of the client,” said Robert Janssen, director, Outsource Brazil.

A February PricewaterhouseCoopers survey of 514 firms across 50 countries reveal that outsourcing companies in North America and India are being challenged by competition from Latin America, Eastern Europe, and Asia. The research further says within outsourcing, near-shoring — setting up a cheaper offshore base close to the client’s home region — has gained momentum.

HCL recently announced setting up its first Latin American centre to service clients in Portuguese. The company has hired about 150 local citizens and will provide help desk support for HCL customers across Latin America and Europe.

Near-shoring also takes care of regulatory risks and data protection issues. On the other hand, the geographical proximity through near-shoring mitigates cultural problems to a great extent and allows businesses flexibility of management.

Indian BPO sector doesn’t view its near-shore markets as rivals yet, since the opportunity is still huge. “The pie is so big that we do not view anyone as competition. India is not able to fulfil what it already has. Besides, we do higher-end research intensive work for our clients as opposed to other markets like Philippines that focuses on voice delivery,” said Minacs’ Deepak Patel.

“India’s success, as the world’s back-office, has motivated other developing countries with well-educated and under-employed populations to duplicate their experience,” said John Chang, partner and national leader of the Global Sourcing Advisory group.

Source: http://economictimes.indiatimes.com

IBM, which is focusing more and more on delivering IT services, is opening a new research facility in Brazil. This new lab is IBM’s first in South America and the first IBM Research Lab it has built in the last 12 years. The choice of country shows Brazil’s importance to the world economy.

IBM Research is headed to Rio.

On June 8, IBM and the Brazilian government are planning to announce that IBM will build a new research lab in Brazil. While the final location of the new facility is still being determined, IBM staff are already beginning work at campuses in the large Brazilian cities of Rio de Janeiro and Sao Paulo.

This new lab is the first IBM research facility ever built in South America and the first new IBM Research Lab the company has built in the last 12 years.

The new facility, which will initially employ about 100 researchers and scientists, is part of IBM’s Smarter Planet initiative. Right now, IBM has about 3,000 people working in eight different labs in five countries.

For now, IBM Research – Brazil will focus on several different areas of research that include health care, transportation and agriculture. In addition, researchers are working on developing the IT infrastructure needed to bring these technologies into the everyday lives of Brazilians.

The fact that IBM is investing in Brazil and its burgeoning IT infrastructure shows the continuing importance of Brazil to the world economy, especially when it comes to high tech.

For years, Brazil has been lumped in with Russia, India and China as BRIC, the four developing economies that will drive IT spending in the next several years, if not for decades. For IT vendors eager to sell products and services outside the United States and Western Europe, these developing economies are critical to both future success and the bottom line.

“The choice of Brazil for the newest IBM Research Lab is the reflection of the big growth opportunity we have seen here,” Ricardo Pelegrini, general manager of IBM Brazil, said in a statement.

For 25 things you didn’t know about IBM, click here.

“IBM believes technology is an important tool to help the growth of the country and the development of our society,” Pelegrini added. “We are proud [to see] our company—in the year it will celebrate 93 years in Brazil—investing even more, creating opportunities and developing new technologies for the benefit of Brazil and of the world.”

As part of its research, IBM plans to help the Brazil government use IT to help with large-scale events that will take place in the next few years. In addition to hosting the World Cup tournament in 2014, Brazil is also the host country for the 2016 Summer Olympics.

In addition to doing its own research, IBM is now looking to package its scientific know-how, along with its hardware and software offerings, as a complete IT services package. While this started in 2002, when IBM bought PricewaterhouseCoopers’ consulting arm, the company has emphasized the concept more and more through its Global Services division.

Source: http://www.eweek.com

How Buenos Aires’s IT district Parque Patricios aims to copy best practices from global technology districts.

BY CARLOS PIROVANO

As technology pervades nearly every facet of our lives, it is of no surprise to witness the rise of technology districts and science cities being constructed around the world. The respective governments of countries with such cities tout their myriad economic benefits as well as the enhancement of human capital.

These cities seek to transform what are often depressed industrial parks into centers of information technology (IT), bioengineering, software development and telecommunications. Included in and around these areas are more efficient public transportation systems, residential areas, hospitals, schools and modernized public facilities.

Shangai’s Caohejing Hi-Tech Park in China and the International Tech Park Bangalore in India were two of the first major technology districts to be built in the last few decades and are two of the few built before 2000. They are two of the most successful ones today. The former sits on 400 acres and hosts 1,200 companies, while the latter is four times smaller and has 145 companies yet employs 24,000 people, a large amount for a small concentrated area. Both districts are main reasons why both China and India are currently considered global leaders in exporting technological innovation.

Similar projects are being developed or constructed in Dublin, Barcelona, Singapore and Abu Dhabi. In the United States, California’s Silicon Valley and North Carolina’s Research Triangle serve as examples for the country’s next proposed science city in Maryland, right outside of Washington, DC. Each one has created or will create thousands of jobs. Barcelona’s technology district alone will create 150,000 jobs.

PARQUE DE LOS PATRICIOS

One of the more interesting places where plans for a technology district have been formed is Buenos Aires, as it seeks to become Latin America’s hub for information technology. The proposed project, located in a dilapidated area in the southern part of the city called Parque de los Patricios, has the advantage of observing what has worked and what has not in the above cities.

Like previous examples, Buenos Aires, a port city that employs almost 50,000 people in the IT sector, hopes to create a green and modern space that brings together the private sector, entrepreneurs, academia and the community at large. Unlike some others, its advantage lies in its location in the center of the public sphere—the country’s capital city—and its relative lack of competition over becoming the regional IT hub.

More than 75 percent of all Argentine IT-related business activities occur in Buenos Aires, which already counts Google, Microsoft, Verizon, IBM and Sun among its 900 large IT companies working there. Almost 1,000 small IT companies work in the capital as well, demonstrating the city’s ability to cater to companies with varying portfolios.

TAX INCENTIVES

A full third of the country’s population lives in the Buenos Aires metropolitan area, which is already a regional hub for transnational transportation and shipments. Additionally, the city will offer generous tax incentives, preferential credit lines and subsidies, many of which are geared toward small and mid-sized companies.

Citizens of Parque de los Patricios, like their counterparts in other cities, will be incentivized by being employed during construction, seeing their communities modernized and having the value of their property rise.

Shangai’s Caohejing Hi-Tech Park serves as the model for Parque de los Patricios and other IT districts with regard to the national economic impact. The total value of exports generated by companies in Caohejing exceeds US$11 billion. Since 40 of the Fortune Global 500 companies have operations in the park, foreign investment from them and other companies reaches the hundreds of millions of dollars, fueling further growth.

Beyond the economic impact, there is a social one as well. Ultimately, those living in and around technology districts will profit the most, as they become integrated in a fast-growing sector that serves the entire world by leading the way on some of the most complex global issues through research and innovation. Although the technology districts’ economic benefits are what initially bring them to large cities, the human element—employment and entrepreneurship— will be the force that maintains and advances them.

Source: http://www.latinbusinesschronicle.com

The center will cost $150 million and house as many as 300 engineers, making it the company’s second-largest outside the United States, said Alexandre Alfredo, head of communications for GE in Latin America.

In addition to its U.S. R&D center, GE has centers housing 450 engineers in India, 250 in China and 100 in Germany.

Initially, the company will use the center in Brazil to focus on research and platforms for new products in the oil and gas, transportation and renewable energy areas, Alfredo said in a telephone interview.

“If Brazil grows at the same pace or at a pace similar to China’s, let’s say a 10 percent pace of expansion a year, it needs knowledge to invest in infrastructure,” he said. “Research initiatives like this should give the country an edge.”

The move comes as GE and other industrial manufacturers look to emerging market economies as drivers for growth, seeking to diversify their revenue streams and build a cushion against sluggish economic activity in the richest nations.

Brazil has put in place a $344 billion four-year investment plan aimed at expanding the country’s aging infrastructure and preparing it to become a global economic power. For decades, Brazil has failed to sustain growth rates because of poor spending on roads, ports and airports and a weak education and research platform.

In recent weeks, companies and analysts have warned that Brazil, one of the fastest-growing major economies and a commodity powerhouse, risks running out of qualified workers in a few years unless its education system is expanded and overhauled.

Alfredo said the shortage of skilled workers may not pose a significant problem for GE’s R&D efforts in Brazil. “We will work with the universities so this is a coordinated plan,” he said.

One element that helped bring GE’s research unit to Brazil is the expected surge in government contracts for the next few years as the country revamps its infrastructure and hosts the 2014 soccer World Cup and the 2016 Olympics, Alfredo said.

The Brazilian states of Sao Paulo and Rio de Janeiro, the two wealthiest in the country, are in competition for the R&D center, the newspaper Folha de S. Paulo reported on Friday.

The deciding factors will include potential for drawing a qualified work force, proximity to clients and government incentives, Folha said, quoting Mark Little, a vice president for GE Global Research.

The location for the center should be decided by June. (Reporting by Guillermo Parra-Bernal; Additional reporting by Luciana Lopez; editing by John Wallace)

Source:  www.reuters.com

IBM will manage back office processes for the company’s Life and Pension Insurance unit.

SAO PAULO, May 27 /PRNewswire-FirstCall/ — SulAmerica has signed a new agreement with IBM Brazil to manage its business processes for the company’s Life and Pension Insurance unit. IBM (NYSE: IBM) will be responsible for the back office activities of both areas, including issuing policies, registration updates, document transfers and claim management. The 12-year agreement signed in April 2010 is valued at more than $200 million.

The agreement also covers information technology (IT) infrastructure services, maintenance of legacy applications, construction of a dedicated service center in the city of Barueri and the hiring of professionals currently allocated to the insurance company’s Life and Pension operations. In order to maintain service continuity, IBM Brazil will also support the management of current applications.

As a result of this deal, IBM and Control Consultoria, an IBM Business Partner, will develop a new system to process insurance operations for Life and Pension for the Brazilian market. According to Renato Russo, SulAmerica Life and Pension Vice President, “This tool will strengthen the insurance company’s goals to reach excellence levels in providing services to its customers and higher flexibility in product development. Through this contract, SulAmerica expects to achieve significant cost savings within the first year of the contract.”

“This is a pioneer project in Latin America. For the first time, an insurance company is outsourcing activities directly related to business of this scope. Under the initiative, many benefits are expected, such as cost reduction, greater efficiency and agility due to the processes automation, expanding the company’s competitive advantage,” said Eduardo Bandeira de Mello Joia, IBM Brazil Vice President, responsible for Strategic Business. “In addition, the company’s employees will be able to dedicate themselves to more strategic initiatives, such as innovative projects improving customers relationship, bringing additional intelligence, expertise and insight into the business.”

The business relationship between SulAmerica and IBM goes back many years, and in 2005, SulAmerica strengthened it by choosing IBM Brazil to manage its information technology infrastructure. The company was the first insurance company in Latin America to sign a contract with this kind of coverage and complexity.

IBM Managed Business Process Outsourcing (BPO) offers innovative options to combine process, people and technology in outsourced delivery models that create real business value. The unsurpassed global delivery expertise and infrastructure provides solutions for industries across major business process areas (Customer Relationship Management, Finance and Administration, Human Resources Procurement and Supply Chain Management), and also for specific segments like Insurance Processes. The IBM Insurance Outsourcing Services (IIOS) is a leading third-party administrator in Life, Health and Annuities, operating in the US, Canada and India, administering over $5 billion in annuity assets.

Read More: www.prnewswire.com

Source: www.prnewswire.com

By  Anne Morris

Ericsson AB (Nasdaq: ERIC) has further cemented its position as the world’s leading network managed services provider by landing a three-year deal with Telefónica Brazil (also known as Telesp), part of Telefónica SA (NYSE: TEF)’s Latin American empire.

The value of the deal is undisclosed, although around 100 staff will be moving over from Telefónica Brazil, a fixed-line service provider with about 2.8 million DSL customers, to Ericsson.

Under the terms of the deal, Ericsson is to operate Telefónica Brazil’s network operations center in São Paulo and manage the core, transmission, and ADSL networks. It follows a deal signed between Ericsson and the operator in 2008 to maintain the carrier’s new fiber network in São Paulo.

The deal is worth noting, not only because it’s another victory for the Swedish giant ahead of its main managed services rivals, Alcatel-Lucent (NYSE: ALU) and Nokia Siemens Networks , but because it’s a fixed-network engagement, which is far less common than outsourced mobile network deals.

“To date, outsourcing is still mostly about the mobile business,” noted Elizabeth Bramson-Boudreau, analyst at large, in a recent Pyramid Research report, “Telecom Managed Services.” “Of the [191] deals analyzed [in the report], 70 percent involved a mobile player, and mobile challengers outnumbered mobile market leaders by a factor of nearly 4 to 1.”

Ericsson’s Elin Ahldén says fixed-line managed services deal aren’t so uncommon, however. “It’s true that the wireless operators have been quicker to turn to managed services, but Ericsson has several references with mobile-plus-fixed networks — for example, Sprint Nextel Corp. (NYSE: S) — as well as standalone fixed networks such as Netia Holdings SA [Poland], Romtelecom S.A. [Romania], TeliaSonera AB (Nasdaq: TLSN) [Sweden], TeliaSonera International Carrier (TIC) , and many more.”

Adds Ahldén: “Ericsson’s managed services offering is technology and vendor agnostic, and our skills and capabilities can be applied across the board… Wireline networks will certainly continue to be very important to us.”

The Ericsson win also represents another managed services contract in Latin America, which hasn’t adopted the managed services model as quickly as other regions. “In Latin America, outsourcing has made relatively few inroads, aside from in Brazil,” observed Bramson-Boudreau in the Pyramid report.

According to the Pyramid report, of the 23 publicly announced deals in Latin America by the end of 2009, Ericsson accounted for eight, NSN for 10, and AlcaLu for five.

Bramson-Boudreau pointed out, however, that although NSN has the largest number of publicly announced deals globally (81), some of them are fairly limited in scope. Ericsson, meanwhile, manages networks with a combined subscriber base of more than 400 million, while NSN manages 300 million, and Alcatel-Lucent 180 million.

“On a competitive basis, trends generally favor Ericsson to maintain its market lead as third-phase outsourcing draws on the Swedish company’s credibility in network sharing deals,” said Bramson-Boudreau. “Moreover, the fact that Ericsson was able to sign the Sprint deal — which calls for it to manage multiple networks, including the operator’s wireline network — suggests that Ericsson may be successful at branching into wireline outsourcing, a key area going forward.”

Ericsson has signed 16 new managed services deals in the first quarter of 2010, and has made it clear that network managed services is a core focus area for the company. Indeed, the Swedish equipment manufacturer was able to increase sales in the managed services division during the first quarter of 2010 by 17 percent to SEK4.9 billion (US$629 million) year-on-year, while sales in the overall global services division increased by 3 percent to SEK18.1 billion ($2.3 billion). This contrasted with a 14 percent decline in network sales to SEK24.7 billion ($3.1 billion) in the same period.

But the company is facing increasingly strong competition from Nokia Siemens Networks and Alcatel-Lucent, while other vendors are starting to land managed services deals.

NSN, for example, recently signed a large outsourcing contract with NII Holdings Inc. (Nasdaq: NIHD) in Latin America, which is outsourcing all of its network operations in the region (Argentina, Brazil, Mexico, Peru, and Chile). “Although contract values were not made public, NSN will take on 1,000 NII employees and open a regional network operations center (NOC), suggesting that the deal is a large one,” noted Bramson-Boudreau. (See NSN Shrinks Again, But Q2 Looks Rosier.)

Of the other players, Motorola Inc. (NYSE: MOT) has signed outsourcing contracts with Zain Group in Iraq and Kuwait, and with Warid Telecom Pvt. Ltd. in Bangladesh. Huawei Technologies Co. Ltd. , meanwhile, recently signed a five-year network operations and maintenance contract with Jazztel plc in Spain, the Chinese supplier’s first major managed services deal with a European operator. (See Huawei Wins Jazztel Deal.)

Source: http://www.lightreading.com

Apax Partners has highlighted private equity’s growing appetite for emerging markets by acquiring a majority stake in Tivit, a Brazilian IT services and business process outsourcing provider, in a deal valuing the company at R$1.7bn ($950m).

The buy-out of Tivit would be Brazil’s biggest private equity deal, according to Dealogic, as the country’s strong economic growth and wealth of natural resources continues to attract the world’s biggest buy-out groups.

São Paulo-based Tivit only completed an initial public offering in September. But London-based Apax said yesterday it had agreed to buy a 54.25 per cent stake from Votorantim Novos Negócios and Pátria Investimentos, the Brazilian investors, and to make an offer for all outstanding shares.

The deal would be the first in Latin America for Apax, which does not have an office in the region. Instead it has relied on Alex Pellegrini, a Portuguese-speaking partner in its New York office, to scout the region for deals in recent years.

Tivit describes itself as Latin America’s biggest provider of IT and BPO services. Its revenues rose 6.2 per cent to R$920.1m last year , as its earnings before interest, tax, depreciation and amortisation increased 20 per cent to R$186.6m.

The company won R$594m of new outsourcing contracts to take over back office and IT systems of credit card issuers, insurers and retailers last year. Its customers include 300 out of Brazil’s 500 biggest companies.

“In IT and BPO services Brazil is underpenetrated compared with what we see in the US and Europe,” said Jason Wright of Apax Partners.

The IT services market in Brazil is expected to grow by 8-9 per cent this year, while BPO spending is set for growth of 8.4 per cent in Latin America, according to IDC, the research group.

Several of the world’s biggest private equity groups, such as Carlyle, Blackstone and KKR, are stepping up their search for investment opportunities in Brazil, as the country’s economy continues to grow rapidly.

This month, First Reserve, a US private equity group, committed $500m for investment in Barra Energia Petróleo e Gás, a Brazilian start-up that will seek exploration and production opportunities in the country’s oil and gas industry.

Brazil is the dominant private equity market in Latin America, accounting for 79 venture capital and buy-out deals worth $2bn last year, according to the Latin American Venture Capital Association.

Mexico was the second-largest with 25 deals worth $423m.

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Source: www.ft.com

By Don Todrin

IBM has been “discussing” the possibility of “crowd sourcing” more than two-thirds of their workforce—over 200,000 jobs—in the next few years. While they refuse to acknowledge this, higher-ups in management have
leaked this “discussion” so it appears to be very real.

The intent is to fire most of their engineers, developers—anyone they can—and then hire them back on a project-by-project basis. They will even encourage entire departments to spin-off into their own small business and contract for the same work they were paid to do as employees. This, of course, allows them to acquire other gainful work from other businesses—even competitors—but it appears this is OK with IBM. This is called “crowd sourcing”.

The cost savings would be very significant as IBM will have eliminated the cost of their benefit package, including insurance, vacations, sick days, office space, overhead, etc. and IBM will not be paying for in-between days like, downtime between projects, and will have fixed costs for certain applications, knowing exactly what the contract will cost. The savings will be huge. IBM wins while employees probably lose. Time will tell. Actually, the theory is that both sides win as the contractors can charge higher fees, although they must pick up their administrative and overhead costs, and of course, IBM will save in a huge way.

Here is the point: Small business owners can learn from the big guys what to do in this changing economy.

Outsourcing is a factor that all small business owners should be considering. Reducing payroll and controlling your overhead are great ideas. Unfortunately, small business owners tend to fall in love with their employees and feel loyal to them, thus, they carry them on their backs, really working for them instead of the other way around.

Perhaps you should be looking at what the most successful businesses in the world are doing and take a lesson from it. Outsourcing is a factor. Buy the expertise when you need
it. Subcontract your sporadic requirements, or even your major daily requirements. Have others manufacture, make sales calls, provide leads for you, service your clients, etc. Become a virtual company, hiring others to do the work on a contractual basis. Know exactly what your costs are and save the huge expense of doing everything yourself in-house. Consider doing what IBM plans to do.

It works; it is part of reinventing yourself in today’s complex and changing economy. It is the opposite of what small business like to do, but maybe it is time to change horses and regain control of your finances. Maybe IBM is correct and is leading the way with a clear demonstration of how to do business now. Some will say this is beating up the employee force, taking advantage of them and getting more while paying less. IBM would say this is a practical way of doing business and that it makes financial sense.

Think about it and try it. Become more virtual, subcontract, outsource… maybe even “crowd source” as IBM is doing. This is a new age; it requires new thinking. IBM may be amongst the best run businesses in the world and it is not a bad idea to follow their lead. They are willing to outsource 200,000 jobs, most to the same employees they have now. Maybe you can do the same.

Source: http://www.associatedcontent.com