Daily ITES Breaking News - Tuesday, May 23 2006

[BPO Business Intelligence]

 

NEW CONTRACTS NEWS FLASH

Xansa Wins 3-Yr Software Maintenance Contract Renewal with Lawson 
Xansa, the UK-based IT and BPO services company, has won a three-year contract renewal for software product maintenance with Lawson Software, a US-headquartered ERP software provider. The financial terms of the contract renewal were not disclosed. Xansa provides product maintenance services to Lawson through a dedicated offshore development center (ODC) in Chennai, India. The ODC, which started with an employee strength of 70, has about 100 employees at present. The ODC provides resources and infrastructure to provide product support, maintenance, and enhancement services for Lawson. In addition, Xansa provides business process consulting services to help Lawson align its product development unit with capability maturity model integration (CMMI) standards.

COMPANY NEWS FLASH

T-Systems Sells IT Services Division in Denmark and Sweden 
T-Systems, a division of Deutsche Telekom, has announced the take over of its IT services activities in Denmark and Sweden by ST Denmark (STDK). STDK is a new company controlled by Thomas Streimelweger, an Austrian entrepreneur and investor in the IT and Internet industry. The financial terms of the take over were not disclosed. As part of the take over, about 150 T-Systems employees in Denmark and Sweden will be transferred to STDK. T-Systems focuses on the manufacturing, service, and travel and transport sectors in Denmark and Sweden. It provides wireless communication solutions, SAP, infrastructure services, system integration, and solutions in various segments, including CRM, IT operations, and outsourcing to its clients. 

NEW INDUSTRY NEWS FLASH

Chinese Software Outsourcing Market Up 43.9% to RMB 2.6Bn – Study 
According to a study by Analysys International, a China-headquartered business research firm, China's market for software outsourcing services recorded a 43.9 percent year-on-year increase in 1Q 2006 to reach RMB 2.592 billion. This is a 2.1 percent increase over 4Q 2005. The top ten players accounted for a 19.2 percent share in the market, with Neusoft cornering the highest at 3.1 percent, followed by Hisoft and SinoCom at 2.8 percent and 2.6 percent, respectively. Orders from Japan provided 59.2 percent of the total business of the market. The orders from Europe and the US contributed 22.5 percent to the market’s business while the orders from Hong Kong contributed 10.9 percent to the market’s business. 

BPO firms enter 3G
After saving costs and improving processes, Business Process Outsourcing (BPO) vendors are now extracting value from client processes. The vendors call it the third-generation of BPO (BPO 3.0). The net impact is that processes, which were becoming commodity businesses now fetch higher returns for vendors as they deliver better value. Since most clients — at least the Fortune 500 companies — now offshore work to India and other low-cost destinations, the playing field has levelled out. Everyone is getting similar cost savings. That’s where ‘value extraction’ or BPO 3.0 is an attractive option for clients. First-generation BPO was based on labour arbitrage and straight cost savings for clients. The second generation scaled up to extract better productivity gains by using Six Sigma. In BPO 3.0, the billing rate per FTE may be static, but now companies are entering into revenue share agreements with their clients. In fact, some vendors no longer call them clients, but business partners. Take for instance Bangalore-based 24/7 Customer. It undertakes 8m client transactions per month. It analyses these transaction to observe buying patterns, customer behaviour, impact of campaigns on the market and so on. These are fed back to the client to make changes in the product or evolve a new market strategy. The additional revenue for the customer is to the tune of $7-8m a year.