Stephanie Overby
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Stephanie Overby
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Why IT service providers are investing in North America
IT service providers set up more new IT delivery centers in North America than anywhere else in the world last year, according to new research.North American locations accounted for more the one-third of new delivery sites (29 out of a total of 76) established by service providers in 2016, according to a report from IT and business sourcing consultancy and research firm Everest Group.The need to be close to U.S. customers coupled with the increased use of automation to control costs is making North America a more attractive option for service delivery, says Everest Group.[ Related: IT service providers increase investment in onshore locations ] The demand for digital transformation related technologies specifically is driving interest in certain metropolitan areas. The share of digital services being delivered in new service provider set-ups has been steadily increasing from approximately 25 percent in 2012 to 63 percent in 2016. “This percentage is expected to continue to remain high as service providers focus on expanding and broadening their digital capabilities,” says Everest Group Vice President Salil Dani.To read this article in full or to leave a comment, please click here
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IT leaders say current H-1B program works
The majority of IT leaders are happy with the H-1B visa program as is and say that proposed changes will make it harder to fill skilled IT roles, according to survey released by IT recruiting firm Harvey Nash this week.Following the Trump administration’s executive order earlier this month calling for restructuring the temporary skilled labor program relied on most heavily by IT service providers and technology giants, Harvey Nash polled 174 U.S. IT leaders across 20 industries. Nearly two-thirds (63 percent) of respondents in companies with fifty or more developers said that the current H-1B visa program has helped them meeting their needs for highly skilled IT talent. Six out of 10 IT leaders with large development teams said the proposed H-1B changes would make skilled IT talent less available, and 68 percent of them predicted that proposed reforms would increase the cost for certain IT roles.To read this article in full or to leave a comment, please click here
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Trump’s H-1B reform resolves few questions
U.S. President Donald Trump signed his so-called “Buy American, Hire American" executive order on Tuesday, aimed in part reforming the H-1B visa process for temporary foreign workers. The order clarifies that the new administration does indeed intend to address the visa program -- heavily used by IT outsourcers both foreign and domestic — this year. However, the details of the proposed reforms — and the powers of the executive branch to compel changes to the system — remain murky.[ Related: Trump to order wholesale H-1B reform ]To read this article in full or to leave a comment, please click here
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How Brexit will impact IT services
The countdown to the United Kingdom’s separation from the European Union began in late March when U.K. prime minister Theresa May officially triggered the “Brexit.” With just less than two years until the U.K. is officially out of the EU, the date of departure is one of the few certainties regarding the situation. “No country has ever travelled this path, and there is no turning back,” says Craig Wright, managing director for business transformation and outsourcing advisory firm Pace Harmon.[ Related: Brexit: a project doomed to fail ]To read this article in full or to leave a comment, please click here
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How Brexit will impact IT services
The countdown to the United Kingdom’s separation from the European Union began in late March when U.K. prime minister Theresa May officially triggered the “Brexit.” With just less than two years until the U.K. is officially out of the EU, the date of departure is one of the few certainties regarding the situation. “No country has ever travelled this path, and there is no turning back,” says Craig Wright, managing director for business transformation and outsourcing advisory firm Pace Harmon.[ Related: Brexit: a project doomed to fail ]To read this article in full or to leave a comment, please click here
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How to evaluate domestic IT service provider locations
It remains unclear what – if anything – President Donald Trump's administration will do to change the U.S. H-1B program. But uncertainty and fears of bad press are causing some IT service providers and customers to rethink their approach to offshoring and the associated use of foreign-born temporary visa holders to fill U.S. roles. With some proposed legislation calling for more than doubling the minimum salary of H-1B visa holders, both enterprises and IT outsourcers may be evaluating U.S. locations for IT service delivery.To read this article in full or to leave a comment, please click here
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Slow growth ahead for IT outsourcing
While the IT and business process services industry continued to grow through 2016, that growth slowed over the course of the year and could fall to less than 2 percent by 2019, according to a recent report from IT and business sourcing consultancy and research firm Everest Group.[ Related: Outsourcing trends to watch in 2017 ]The pace of year-on-year revenue growth fell from 4.5 percent in the first quarter of last year to below three percent by year-end. And Everest Group predicts a continued decline over the next one to three years, falling to as low as 1.9 percent by late 2019 as a result of as a result of macro uncertainties, technology disruption and intense competition.To read this article in full or to leave a comment, please click here
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7 tips for managing an IT outsourcing contract
IT organizations put great focus into drawing up their outsourcing contracts, but those agreements alone do not guarantee satisfactory outcomes. Attorney Brad Peterson has seen it time and time again. “Time and money are spent on drafting the contract—often a substantial amount of money. And a tremendous amount of potential value is created in that contract,” says Peterson, partner in Mayer Brown’s Chicago office and leader of its technology transactions practice.But then the engagement is handed over to a well-intentioned supplier management team that wasn’t involved in the contract and often can’t make heads or tails of what’s in it. “It’s understandable. Contracts are complex and confusing, and relationship managers are selected based on their knowledge of technology or their skill in building relationships, not on their knowledge of how to run a contract,” Peterson says.To read this article in full or to leave a comment, please click here
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How to institute an agile IT outsourcing process
Traditionally, IT organizations have spent six months to a year or more on the IT outsourcing transaction process, finding the right providers and negotiating a suitable contract. But as IT services — and, increasingly, as-a-service— deals have gotten shorter, that lengthy process may no longer make sense.Industry advisors and consultants have debated the potential benefits of speedier sourcing for several years. In today’s rapidly changing business and technology landscape, it may become an imperative. But an effective outsourcing engagement demands more than just an accelerated version of the traditional IT services transaction process.To read this article in full or to leave a comment, please click here
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Attorneys predict a demanding year for IT outsourcing customers
In a year that’s already been marked by uncertainty, one thing is clear: IT outsourcing customers will need to reexamine their approaches to IT services in 2017. “We see a big year ahead for technology transactions,” says Brad Peterson, partner in the Chicago office of Mayer Brown, in a recent webinar on the law firm’s 2017 predictions for the IT and business services space.[ Related: Outsourcing trends to watch in 2017 ]There are big changes afoot in a number of areas — from a political climate that threatens to reshape the already shifting global IT services industry to new data protection and privacy regulations and the drive to extract more value from data to the widespread adoption of new digital technologies to a revolution that’s begun in the more rapid delivery of software and other systems.To read this article in full or to leave a comment, please click here
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IT service providers prepare for potential H-1B visa changes
While new U.S. President Donald Trump’s recent proclamations related to immigration have centered on his plans for a Mexican border wall and bans on Syrian refugees, the IT outsourcing industry is anticipating details on his strategy for reforming the H-1B visa program.Trump railed against the shifting of U.S. jobs overseas during his campaign and called for raising the minimum salary for H-1B holders to $100,000 per year, from the current threshold of $60,000 per year.ALSO ON NETWORK WORLD: 8 ways to jumpstart your career A purported draft of an executive order recently published called for an investigation into the impact of such nonimmigrant visa programs on American workers and directed the Department of Homeland Security to "consider ways to make the process for allocating H-1B visas more efficient and ensure that beneficiaries of the program are the best and the brightest.To read this article in full or to leave a comment, please click here
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Digital disrupts traditional outsourcing market in 2016
The traditional IT and business process outsourcing market declined 25 percent in the fourth quarter of 2016 compared to the same period last year, producing a total of $9.6 billion in total contract value, according to data from Information Services Group (ISG). The value of traditional infrastructure, applications, and business process deals in the fourth quarter was down eight percent over the previous quarter, according to ISG.[ Related: Outsourcing trends to watch in 2017 ]“These results, we believe, reflect uneven global demand,” says John Keppel, partner and president of North EMEA and Asia for ISG. “The traditional sourcing sector is in the midst of a structural change, as more and more services move to the cloud and many service providers try to adapt their business and sales models to meet these changing market conditions.”To read this article in full or to leave a comment, please click here
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IT service providers increase investment in onshore locations
The global sourcing industry has seen a surge in setup activity in onshore location in recent years, according to outsourcing consultancy and research firm Everest Group.[ Related: Grading our 2016 IT outsourcing predictions ]After seeing significant declines in onshore location expansion in 2013 and 2014 due to a global slowdown, the percentage of new onshore versus offshore delivery locations among the top 20 service providers rose from 45 percent in 2014 to 52 percent during 2015 and the first half of 2016, according to Everest Group. That brings the proportion of onshore locations to an unprecedented high in the industry.To read this article in full or to leave a comment, please click here
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Outsourcing trends to watch in 2017
This year, we saw outsourcing integration challenges multiply, production workloads and enterprise systems hit the cloud, and security hit the top of the agenda.So what’s ahead for 2017? Uncertainty for one thing. Industry watchers expect a number of shifts in the IT and business process services space — not least of which will be the initiation of more flexible outsourcing terms as the world watches and waits to see what happens once president elect Donald Trump takes office and Brexit takes hold.[ Related: Trump presidency could sound death knell for offshore outsourcing ]To read this article in full or to leave a comment, please click here
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New accounting standards change the rules of IT leasing
The Financial Accounting Standards Board’s new lease accounting standards announced earlier this year will require public companies to recognize assets and liabilities from operating leases on their balance sheets for fiscal years beginning after December 15, 2018.The changes — a response to a growing need to provide more transparency to off-balance sheet leasing obligations, estimated at some $1.2 trillion dollars — will impact not just accounting policies but lease vs. buy decisions within IT organizations whose companies will have to comply with the new standard.[ Back in 2002: Budget Strategies: A Lesson on Leasing ]To read this article in full or to leave a comment, please click here
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Major IT outsourcing acquisition will have mixed impact
The announcement that outsourcing consultancy Information Services Group (ISG) will acquire competitor Alsbridge marked the biggest M&A announcement in the IT services advisory industry since KPMG bought EquaTerra in 2011. The two large independent outsourcing advisors are joining forces to create a 1,300-person firm with offices in 20 countries revenues targeted at between $285 and $300 million in 2017.[ Related: Cloud services now account for a third of IT outsourcing market ]The combined firm, with its expanded services, data and market intelligence, could put pressure on the big consultancies who offer IT outsourcing advisory services. “ISG's principle competitors — KPMG. Deloitte, EY and PwC — now have a bigger, badder ISG to contend with that can not only undercut them on fees but also can boast competencies in the emerging area of RPA, where the Big Four are currently winning out,” HfS Research CEO Phil Fersht recently wrote in a blog.To read this article in full or to leave a comment, please click here
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How to integrate disruptive technologies with IT outsourcing contracts
In the era of digital disruption, the ability to successfully implement new technologies such as mobility, big data and analytics systems, cloud computing options, or robotics for competitive advantage is critical. In some cases, going to an existing IT service provider may not be the best way to do so. However, in many cases, there are advantages to working with incumbent supplier. Doing so may enable IT outsourcing customers to leverage existing contractual commitments and terms to accelerate the contracting process.Business and IT leaders may want a trusted partner to manage their entire technology environment. By expanding the scope of an existing deal, the customer can retain integrated performance standards and service levels for the entire environment and maintain streamlined governance processes. It also may be a way to minimize any transition or termination costs.To read this article in full or to leave a comment, please click here
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6 ways to add cybersecurity protections to outsourcing deals
As cybersecurity has become one of the most important strategic imperatives for the enterprise, concerns about how third-party IT services providers are protecting corporate data have grown. As a result, negotiation of cybersecurity and data privacy issues has become one of the most challenging areas in IT outsourcing contract negotiations, says Rebecca Eisner, partner in the Chicago office of law firm Mayer Brown.“Suppliers are understandably concerned about not paying damages that are disproportionate to the revenue received, and therefore seek to limit or disclaim their liability,” says Eisner. “Customers are equally concerned, particularly where suppliers do not have the same incentives to protect customer data as the customer, and because the negative impacts of a security incident are generally far more significant to the customer than to the supplier.” What’s more, the cybersecurity regulatory environment is rapidly evolving, making it difficult for both sides to access the risks. To read this article in full or to leave a comment, please click here
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How blockchain can benefit IT outsourcing providers
Earlier this month IBM and its customer Bank of Tokyo announced that they would begin piloting blockchain technology to automate business transactions between the two companies. The joint experiment is one of the first projects built on the open-source Hyperledger Project (the Linux Foundation-led blockchain platform) to explore contract management, the companies said. It’s also an early example of the benefits of using an existing IT outsourcing engagement to experiment with blockchain technology.[ Related: How blockchain will disrupt your business ]To read this article in full or to leave a comment, please click here
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4 ways Cognizant customers can protect themselves amid corruption probe
Following Cognizant’s announcement late last week that it had launched an internal investigation into possible anti-corruption violations, there have been more questions than answers about what may have occurred at the Teaneck, N.J.-headquartered provider of offshore IT services. Particularly perplexing to some was the attendant news that the company’s long-time president Gordon Coburn was stepping down.Cognizant gave no reason for the departure of Coburn, who has been replaced by head of IT services Rajeev Mehta. However, the company did say in a regulatory filing that it was looking into whether it had violated the U.S. Foreign Corrupt Practices Act (FCPA) within a small number of company-owned facilities. Cognizant owns 12 of the 45 delivery centers it operates in India, where 75 percent of its employees work.To read this article in full or to leave a comment, please click here