Daily BPO News Alert 12/05/2006

[BPO Business Intelligence]

 

NEW CONTRACTS NEWS FLASH

Mellon Wins $578Mn Mandate with Leicestershire County Council 
Mellon, a Pennsylvania-headquartered financial services outsourcing company, has won a USD 578 million active currency overlay mandate with Leicestershire County Council pension fund. The duration of the mandate was not disclosed. In a separate development, Newton, a UK-headquartered subsidiary of Mellon, has won a GBP 150 million global unconstrained equity mandate from Falkirk Council pension fund. The duration of the mandate was not disclosed. 

NEW INDUSTRY NEWS FLASH

Indian ITeS Sector to Reach $26Bn by 2009 – ICRA 
According to ICRA, an Indian credit rating agency, the Indian information technology enabled services (ITeS) sector is expected to reach USD 10 billion by 2006 and USD 26 billion by 2009. The ITeS sector growth is expected to be driven by exports. The domestic ITeS industry is also expected to grow in a healthy manner at a growth rate above 50 percent. The Indian ITeS sector is facing challenges in terms of lack of infrastructure, rising labor costs, high attrition rates, and security concerns. In medium term, companies abroad are expected to outsource part of their labor-intensive business process service tasks to developing countries, such as India, to leverage on cost savings and quality advantages.

W European IT Svcs Market to Sustain Moderate Growth – IDC 
The Western European IT services market is expected to sustain its near 5 percent growth over the next four years till 2010. As per IDC, the region registered a growth of 4.6 percent in 2005 which is expected to further improve in 2006. Although, the momentum comes after a relatively slow growth in the preceding years, the rate is still much lower than the late 1990’s. The study titled ‘Western European IT Services Market Forecast and Analysis, 2005–2010’, predicts the growth to be based on major structural changes in the existing IT services market as the trend of utilizing external service providers gains further acceptance. Demand from the UK and the Nordic countries for similar services are expected to grow further as compared to Central and Southern Europe. The research firm also expects the low growth rate coupled with increased competition from low cost offshore service providers to result in further consolidation of the market. The region is also not expected to see double digit growth with only specific segments like consulting and systems integration likely to maintain a 6 percent to 7 percent growth over the next four years. 

European Financial Firms to Offshore 450,000 Jobs by ’10 – Celent 
According to a study by Celent, a US-headquartered research and consultancy firm, European banks will offshore about 450,000 continental European financial services jobs to low-cost locations by 2010. The research firm expects many banks, who are not offshoring their work at present, will start offshoring in the next couple of years to reduce costs. At present, banking prices in markets such as France and Germany are high which allow banks to make profits but these are expected to fall. Offshoring is expected to become a standard practice in business activities. Europe will continue to be the fastest growing region for majority of the Indian outsourcing firms. With offshoring playing a bigger role in banks' business activities, banks are expected to develop a pool of strategic partners and internal resources across the globe that will help them to maximize cost effectiveness, improve performance and minimize overall risks. 

Indian IT, BPOs gain US cos support
The good news first: over 83per cent of software companies in the US see the benefits of offshoring and are satisfied with the results. These companies are pushing their offshore vendors (read Indian software companies) to specialise, develop domain expertise and go beyond just the cost advantage. The bad news is that an increased number of US-based software companies are not happy with the quality of work being done by their off shore entities. These, broadly speaking, are some of the findings of a survey of over 50 respondents, comprising CEOs, CTOs and vice-presidents of engineering and product development, in the Sand Hill Group’s most recent report, ‘Software’s Offshoring Leaders: A study of product development trends, strategies and best practices 2006’, co-commissioned by the Pune-based Persistent Systems Pvt Ltd (PSPL). The survey notes the rise in numbers of people citing product-quality problems, from 20per cent in its 2003 study to 37per cent in 2006. Communication issues also became more common, rising from 44per cent to 535. Of the over 50 companies surveyed, 49per cent had revenues in excess of $10 million, which also means that 51per cent of companies had revenues of less than $10 million, qualifying as small and medium-sized. Nearly three-fourths of the respondents in the survey-run companies are backed by venture capital funds.

Nasscom plans regulatory body
To deal with the growth in the IT industry and potential problems of data security and privacy, likely to arise in the future, Nasscom is setting up an independent self regulating organisation (SRO) to monitor the industry. None of the developed countries have an SRO to monitor the functioning of IT BPO companies. Inspite of the lack of any regulatory structure, there are a number of regulations governing the functioning of IT and BPO companies. For instance, in the US, there are both Federal level and state level regulations governing the working of BPOs.  The name of the SRO has not been decided but Nasscom is referring to it as the Public Data and Privacy Standards Board (PDPSB). The SRO will also conduct independent audits to determine whether the code of conduct is being followed by its members. For minor breaches, members will be given time to correct, but for major breaches, the members could be suspended from membership. The objective is to create a benchmark, which, once adopted by the top IT and BPO companies, will help small and medium sized companies adhere to standards.

IT, BPO co workers find new ally in UK trade union
Indian trade unions fighting for uniting workers of IT and BPO companies have found a new supporter. The apex British trade union, Trade Union Congress (TUC), has come out in support of its Indian counterparts. In fact, TUC plans to pressurise British IT and ITeS companies working in India to allow their workforce to form unions. With offshoring and outsourcing threatening the influence of unions in the developed world, TUC also wants their Indian counterparts to become part of a global network.
So, whether it’s a college grad answering phone calls at a call centre in Gurgaon or an unskilled worker welding metal in a factory at Pune, Indian workers are now being courted to join their international brethen for a common cause. The move is part of a international move to unite the global workforce under a single worldwide umbrella trade union. Globally, two of the world’s biggest unions —International Confederation of Free Trade Unions (ICFTU) and World Confederation of Labour (WCL) — have initiated a discussion to unify trade unions at the international level.