Archive for September, 2010
Posted on September 28, 2010 by Atul
Colombia: Understanding the Nation’s Passion for Outsourcing | Nearshore Americas | Latin America Outsourcing Analysis and Expert Commentary.
“Colombia is Passion” is the brand the Colombian government at the helm at pro-export chose to brand the nation. What one soon discovers in this beautiful country of beautiful people is a passion for business, music and family. One also soon realizes that a passion for outsourcing already exists here too!
Colombia is a rising star in Latin America. Once perceived to be unsafe, the country has, over the last decade, transformed itself as one of the best locations to do business in Latin America, ranking higher by the World Bank in 2010, than countries such as Peru, Panama, Brazil, Chile and Mexico.
Citi, Henkel, Wyatt, Abbott and HP have captive centers here that serve as regional centers. International firms such as Telefonica, Telmex, Avianca, Greyhound and Tracfone leverage outsourcers such as Telemark, Teleperformance, Assenda, Avanza, Unisys, ACS and IQ Outsourcing. Domestic firms such as Carvajal, Bancolombia, Suramericana, Banco Agrario and even the Colombian government are not much behind in leveraging outsourcing. Interestingly, Bancolombia leverages not just local suppliers like Assenda but also leverages global suppliers such as ACS, TCS andInfosys.
ROOM FOR IMPROVEMENT: While the country has a large population, the level of maturity of ITO and BPO operations is limited. No CMM 5 providers or six-sigma black belts are found easily. Call center operations are advanced but process discipline in other business process needs scale. So, if you are going to setup or outsource here, suggest that you invest in ongoing training and process discipline.
What makes Colombia such a passionate adopter and attractive destination for outsourcing?
A country with a population of 46 million with outsourcing friendly labor pools in multiple cities such as Bogota, Medellin, Cali, Baranquilla and even Periera, presents multiple options for buyers and suppliers. Thirty cities have a population of 100,000 or more. Bogota produces 67,000 graduates every year, of which, 17,000 are technical graduates. At present, the combined workforce of IT and BPO industry in Bogota exceeds 50,000.
Labor costs in Colombia are very attractive with Bogota being one of the least expensive cities in the region. Labor cost for bi-lingual while higher than Spanish speaking employees, is 15-25% lower than comparable employees in Monterrey or Buenos Aires. Real estate costs are lower too than Mexico City and Sao Paulo.
More …. at Nearshore Americas
Posted on September 24, 2010 by Atul
Outsourced. Full disclosure first!
I am not an advisor to the TV show. The producers of the movie, Outsourced, who are now Executive Producers to the TV show, asked me about two years ago to advise them. We had fun thinking about how to leverage the movie for corporate training etc.
The movie is fantastic and think the TV show is warming up and could be a great series. Will a US audience see this as too close to the downturn/personally or see the exaggerated humor?
I loved the first episode. While most call centers in India would not see a cow outside the window or have the social drama we saw, it reflected life in parts of India.
Let’s break it down.
US firm moves jobs to India. Check!
Asks a manager from here to help establish it in India. Check!
Eclectic group of employees. Check! There are many races, languages, foods etc. in India. It is probably the most diverse country in the world.
The talker. Check!
The beauty. Check!
The American who is living in India and not immersing himself. Check!
Spicy food. Revenge of Monte…. Check!
Lack of American context. Check! This is the reason why firms have to provide not just language but also provide cultural training.
All in all, this is going to be a fun show! Loved the first episode!
Atul Vashistha
Posted on September 12, 2010 by Atul
Global coverage matters in BPO and few have the coverage that Genpact does. More below!
Genpact Celebrates Ten Years in China – MarketWatch.
First Business Process Outsourcing Company in Dalian Continues to Grow and Invest in Chinese Market
NEW YORK & DALIAN, China, Sep 10, 2010 (BUSINESS WIRE) — Genpact Limited (G 15.65, +0.14, +0.90%), a global leader in business process and technology management, celebrated the 10th anniversary of its entry into the Chinese market in Dalian today. Genpact’s global President and CEO Pramod Bhasin and newly-appointed CEO of Genpact Asia Charles Hunting met with the company’s employees to look back on Genpact’s achievements over the past decade and outline Genpact’s vision for the future, including the implementation of the company’s China strategy.
Pramod Bhasin, President and CEO of Genpact, said of Genpact’s accomplishments thus far, “China is a strategically important market for Genpact. It is a fact recognized around the world that if you want to succeed, you have to be in China. China’s service outsourcing industry has grown rapidly over the last ten years, as has the nation’s abundance of capable talent. This makes me even more confident of the future as Genpact continues to invest in the Chinese market and strengthen our China strategy and operations here.”
A pioneer of the outsourcing industry in China, Genpact introduced the new business model of outsourcing to China by opening the country’s first business process outsourcing (BPO) center in Dalian in June 2000. Since then, Genpact has proven its willingness to invest in its China operations and its commitment to the Chinese market by growing its business in China to include five operations centers in Dalian, Changchun, Shanghai, and Beijing, with more than 3,000 employees.
“Genpact China’s progress and growth over the last ten years, as well as the support the Chinese government has given to developing the country’s outsourcing industry, has been extremely impressive,” said Charles Hunting, CEO of Genpact Asia. “We expect this to continue as a result of a very strong strategy and growth plan looking forward. You really will see Genpact in China drive the next wave of innovation in outsourcing and through continuing to work with the Chinese government we expect to achieve significant local, regional and global growth. One area where we are seeing significant opportunity is through our Smart Enterprise Processes (SEP(SM)) methodology where we are helping Chinese enterprises become globally competitive as a result of implementation.”
Vice-Mayor, Cao Aihua said, “Dalian is one of China’s leading outsourcing cities, and has also been recognized as a pilot city for guiding China on its path towards becoming a strong service outsourcing nation. As Genpact’s investment and development in Dalian has grown over the last few years, so has the economy of this city. We invite other multinational companies like Genpact to invest in Dalian and help further drive the region’s economic development.”
In addition to government recognition, Genpact’s investment in the Chinese market and dedication to local customers has also been commended by its Chinese clients.
“Genpact’s process reengineering services have been very helpful to us in meeting current challenges,” commented Mr. He Ping, General Manager of Zhejiang Shenli Textile Goods Co., Ltd., “The changes brought by Genpact have led to a fundamental ideological shift within our company. By improving our management concept, we can now focus more on our core business of providing customers with products of higher added value, which will in turn strengthen the company’s commercial performance.”
“As a leader in our industry, we face many challenges. Genpact’s global experience and customized solutions have helped us better optimize and standardize our business processes, providing greater support for our financial leasing business,” commented Sun Dongguang, Executive General Manager of ICBC Leasing.
As an organization geared to effective process delivery, with a culture of operational excellence and Six Sigma, Genpact China has received numerous accolades over the last ten years. In 2008 at China’s 30th anniversary celebration of the country’s opening of its economy to the external world, Genpact China was recognized as one of the top 60 foreign companies that contributed to the growth of the economy. Moreover, the company was recently named one of the “Top 10 Global Service Providers in China” at the 3rd China International Service Outsourcing Cooperation Conference held in Nanjing on June 12th.
For more information on Genpact’s 10th Anniversary, please visit:http://www.genpact.com/china/
About Genpact
Genpact is a global leader in business process and technology management, offering a broad portfolio of enterprise and industry-specific services. The company manages over 3,000 processes for more than 400 clients worldwide. Putting process in the forefront, Genpact couples its deep process knowledge and insights with focused IT capabilities, targeted analytics and pragmatic reengineering to deliver comprehensive solutions for clients. Lean and Six Sigma are an integral part of Genpact’s culture and Genpact views the management of business processes as a science. Genpact has developed Smart Enterprise Processes (SEP(SM)), a groundbreaking, rigorously scientific methodology for managing business processes, which focuses on optimizing process effectiveness in addition to efficiency to deliver superior business outcomes. Services are seamlessly delivered from a global network of centers to meet a client’s business objectives, cultural and language needs and cost reduction goals. Learn more at www.genpact.com.
SOURCE: Genpact Limited
Posted on September 9, 2010 by Atul
I am posting this as I believe that thus is overdue!
Oracle to Acquire Major IT Services Firm, In Our Opinion.
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Last month, we hosted a survey on which company Oracle might acquire next. If you missed it, be sure to check out the results in our post, “Oracle Mergers & Acquisitions: Who’s Next?” We had a great turnout with over 1,250 industry experts sharing their predictions. Among the more substantiated claims was the prediction that a global systems integrator like Capgemini could be a logical fit for Oracle. Now that Mark Hurd has joined their executive team, we think it’s all the more likely that Oracle will make a major acquisition in the IT services market.
By acquiring the consulting arm of PricewaterhouseCoopers in 2002, IBM solidified its dominance over the global technology services industry. Hurd’s acquisition of EDS in 2008 was seen as a direct assault on IBM Global Services, making HP the strongest contender for IBM’s throne. Now, Hurd is essentially competing against himself, facing not only IBM but also the very beast that he created, HP Enterprise Services. Can he achieve for Oracle what he has already achieved for HP?
If so, Hurd will have more than one option to choose from. Capgemini has a relatively low P/E, and its recent acquisition of a majority stake in CPM Braxis, a leader in Brazilian IT services, makes it an even tastier morsel. However, there are many other fish in the services sea, so we’ve decided to look at several other services providers as well. Which of these do you think Oracle should go after? Leave us a comment below.
Indian IT: Just to Name a Few
For the past two decades, India has been a major player in the global IT services market. A number of highly successful Indian companies emerged during the Y2K boom, and a few of them have grown to become multi-billion dollar businesses. Three particularly well-regarded companies are:
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A company that started out with $250 and grew to become a $5 billion global consulting and IT services provider. Last year, it became a member of the Global Dow, which suggests a strong global influence that might be appealing to Oracle.
Initially responsible for providing computer services to its more established sister company Tata Steel, Tata Consultancy Services is now the largest IT services provider in Asia. Throughout the last decade, Tata completed a series of well-placed global acquisitions that helped the company gain entry into major markets around the world.
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Emerging in the 1980s from what was once a vegetable products factory, Wipro is now a major competitors in IT services and consulting. In recent months, Wipro and Oracle have collaborated quite frequently, as Wipro has drawn upon its history in factory production to develop solutions with Oracle for the manufacturing industry.
However, forming a relationship with one of these companies may bring more problems for Oracle than solutions. Over the past several weeks, many of these Indian IT companies have been fighting against new U.S. government regulations that will add thousands of dollars in new fees. Now, any company with more than half their U.S. workforce on visas will be forced to pay these fees, and spokespeople from Infosys and Wipro have already announced that this legislation could have a significant impact on their operating margin. This is just one example of the many unique issues Oracle would face if they go after one of these overseas companies.
Some Homegrown Alternatives
There are also plenty of American options, some of which match the global influence of the aforementioned Indian companies while offering much smaller pills for Oracle to swallow. Whereas the previous three Indian companies have P/E ratios of 23x-30x, two of the following three American services providers come a little cheaper.
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This consultancy serves 96 of the Fortune Global 100 companies, making it the kind of global player Ellison and Hurd will need to compete with IBM and HP. However, Accenture is more than just IT services; its management consultancy arm is responsible for much of its success. Would Oracle want to acquire elements that it may not need? With a $27 billion market cap and a 16x P/E, Accenture is certainly well within reach.
This Pennsylvania company would be an even easier target for Oracle. The company’s revenue has declined in recent years alongside the proprietary mainframe systems market that once made it successful. When equipment sales took a hit, the company’s market cap fell precipitously, forcing them to shift their focus to services. With revenue under $5 billion and a meager 5x P/E, Unisys may be too small to frighten IBM and HP.
In contrast, Cognizant has been one of Fortune’s 100 Fastest Growing Companies for seven years. Their performance is frequently praised, and their revenue grew 16% in 2009. At this rate, Cognizant will strengthen its value and become an increasingly pricey acquisition. With a 32x P/E, time is running out for Oracle to bring this proven commodity into its fold and mount a serious campaign against its competitors.
Read more: http://www.softwareadvice.com/articles/enterprise/oracle-to-acquire-major-it-services-firm-in-our-opinion-1090910/#ixzz0z4RrLbS4
Posted on September 9, 2010 by Atul
Outsourcing: Brazil Blossoms as IT Services Hub – CIO.com.
CIO — CapGemini’s announcement last week that it would invest $298 million in Brazilian IT service provider CPM Braxis attracted a lot of attention in outsourcing circles. The move will give the Paris-based company a 55 percent stake in CPM Braxis, the option to buy the company outright within three to five years of the close of the deal, and the chance to leapfrog its global competitors already entrenched in the country.
“CapGemini is visionary, getting into the market ahead of its global competitors,” says Atul Vashistha, president of offshore outsourcing consultancy Neo Advisory. “This is a very promising strategic move.”
Meanwhile, CPM Braxis—a major South American outsourcer with 5,500 employees—is predicting 20 percent growth and $450 million in revenue in 2010.
The Brazilian company’s financial outlook is emblematic of the Latin American market for outsourced services, which is expected to grow 12 percent in 2010 to $8 billion, according to Forrester Research. That’s on top of the $19 billion that local companies will spend on IT consulting services.
Brazil—with its 250,000 IT professionals, 23,000 annual IT graduates, and infrastructure capable of supporting double-digit growth—is at the heart of the IT services supply chain in the Southern Hemisphere.
In fact, most major U.S. players including HP, Accenture and Unisys (UIS) have an escalating presence in Brazil, which has been largely unaffected by the recent global economic slump. In June, IBM (IBM) announced plans for its first South American research center, located in Brazil, as part of its strategy to sell technology and services to large, fast-growing emerging nations.
Indian outsourcers such as Satyam, Infosys and Wipro have been aggressively expanding in Latin America. Tata Consultancy Services (TCS), for example, has three global delivery centers, including an Oracle (ORCL) center of excellence and more than 1,500 employees working in Brazil. Home-grown providers, like Politec, Ci&T and Stefanini, have been expanding rapidly.
“They are looking to grow regionally and also tap the U.S. market, hiring resources in the U.S. and other South American [countries],” says Vashistha.
According to the Brazilian Association of Information Technology and Communication Companies (commonly known as BRASSCOM, an allusion to NASSCOM, which worked to fuel India’s IT industry), Brazil’s offshore outsourcing market hit $1.4 billion in 2008, rising 75 percent in a single year. An October, 2009 report from Gartner states that “Brazil’s economic footprint combined with having the largest domestic IT consumption in all of Latin America, as well as international recognition as one of the most promising and rapidly emerging economies, makes it a natural destination to evaluate for IT services.”
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Posted on September 2, 2010 by Atul
The Brazil market is growing and vibrant. This acquisition shows the importance and potential of the Brazil market. CPM Braxis is a leading player in Brazil. This will change the competitive outlook in Brazil.
Capgemini acquires a 55% stake in CPM Braxis, the leading Brazilian IT services player | News | Capgemini Worldwide.
With a client base of major Brazilian and international companies, particularly in the financial sector, CPM Braxis expects to record 2010 revenues of around BRL 1 billion (€450 million). The deal will enable Capgemini to considerably boost its presence in Brazil an IT services market amongst those with the highest potential. The agreement will see the Group widen its client base and contributes to Capgemini’s ability to better support its international clients in their developments in Brazil. CPM Braxis will benefit from Capgemini’s assets – notably its global reach, methodologies and network of alliances – to serve its own clients, both in Brazil and around the world.
Brazil represents 47% of the Latin American IT services market, valued at $23 billion[1]. Driven by a booming economy, the Brazilian IT services market has enjoyed the highest growth rate in the region for the past five years, and yearly growth should exceed 10% until 2014.
With over 5,500 employees, CPM Braxis boasts a diversified business portfolio focused on Application Outsourcing and Enterprise Application Services, and Infrastructure Integration and Infrastructure Services, the majority of which is delivered through multi-year contracts. CPM Braxis serves over 200 clients, and is especially strong in the financial sector. Its biggest client, major Brazilian bank Bradesco, was also its biggest shareholder prior to the transaction. Capgemini will be able to draw on its expertise and knowledge of the local market. CPM Braxis is also present in the telecoms sector, as well as in manufacturing and utilities.
The company saw growth of 12% in 2009 and should grow by nearly 20% in 2010. CPM Braxis should post above-market growth over the coming years, and is also currently expected to register an Ebit margin of around 6% in 2010, which looks set to rise over the years to come.
Under the terms of the transaction, Capgemini will acquire 55% of the share of CPM Braxis, representing a total amount of BRL 517million (€233 million). The enterprise value of CPM Braxis is estimated at BRL 970 million (€437 million). The operation will be funded using the Group’s net cash position. It will comprise of a CPM Braxis share capital increase of BRL 287 million (€129 million), and a share buy-back from CPM Braxis’ existing shareholders for BRL 230 million (€104 million), all of which have decided to remain in CPM Braxis and to proportionally reduce their stake in the company.
Capgemini has an option to buy the remainder of CPM Braxis’ capital (45%), and the existing shareholders have an option to sell their remaining shares. These options can only be exercised between the 3rd and the 5th anniversary of the closing date (on the basis of an estimated price based on fair market value at the time of the exercise of these options). Capgemini will consolidate CPM Braxis in its accounts as of the transaction’s expected closing in early October 2010 and will recognize a balance sheet liability, representing the estimated value of the 45% stake in the company at the time of the exercise of the options.
For Paul Hermelin, Chief Executive Officer of Capgemini: “The acquisition of CPM Braxis – a step in line with the Group’s growth strategy – allows us to fulfill three objectives: to extend our presence in a fast-growing country; to support our global clients in the regions where they focus their investment, and to strengthen our Group with the addition of a experienced management team, and more than 5,500 dynamic employees”.
Luiz Carlos Trabuco, Chief Executive Officer of Bradesco, states: “Bradesco congratulates CPM Braxis on becoming part of one of the ten largest worldwide groups in the segment; and also Capgemini, for expanding its global activities in Brazil. We believe that this union will further broaden the competitiveness of CPM Braxis, as well as the company’s growth capacity in the vigorous Brazilian market and strengthen its capability in assisting global clients.”
José Luiz Rossi, Chief Executive Officer of CPM Braxis,explains that “Joining a group with the worldwide reach of Capgemini is a great opportunity, in the high-growth IT services market in Brazil. We will expand our client base by making our services available to Capgemini’s international clients present in Brazil, and will also be able to offer Capgemini’s global expertise to support our major Brazilian clients in their international development projects. Finally, joining Capgemini is a chance to give our employees more attractive career opportunities.”
With this deal, Capgemini reinforces its global dimension and resolutely multicultural nature. Brazil will become the Group’s sixth largest country in terms of headcount, with more than 6,200 employees.
About Capgemini
Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working, the Collaborative Business ExperienceTM. The Group relies on its global delivery model called Rightshore®, which aims to get the right balance of the best talent from multiple locations, working as one team to create and deliver the optimum solution for clients. Present in more than 30 countries, Capgemini reported 2009 global revenues of EUR 8.4 billion and employs 95,000 people worldwide.
More information is available at www.capgemini.com.
Rightshore® is a trademark belonging to Capgemini
About CPM Braxis
CPM Braxis is the biggest Brazilian IT services company and one of the biggest in Latin America. It offers Application Services, Infrastructure Technology Services as well as Business Process Outsourcing (BPO) to companies located in Brazil and all over the world. With a history of more than 28 years of success, 8 development centers and 5,5 thousand professionals, CPM Braxis has specialized development plants, testing and command centers for infrastructure remote management, as well as shared maintenance and support service cores for SAP solutions.
The value proposal from CPM Braxis includes mastery in specific knowledge per industry, capacity to execute parallel operations simultaneously, competitive structure of prices and scalability, as well as flexible delivery models, sturdy processes and first line methodologies. The excellence of its work is based on creativity and innovation, in the capacity of both attracting and maintaining the best talents. CPM Braxis is the only Brazilian company which is mentioned on the Black Book of Outsourcing as one of the 50 best global outsourcing companies, taking the 22nd position. It is also the first IT service company in Brazil to get the CMMI Dev 1.2 Level 5 certification. www.cpmbraxis.com
[1] Gartner, IT Services Market Metrics Worldwide Forecast, Q2 2010, 9 June 2010
