Outsourcing Age

Bilfinger Berger signs €50 million outsourcing contract

Wednesday, August 4th, 2010

Germany’s second biggest construction group Bilfinger Berger AG (ETR:GBF) said its industrial services unit is expanding its activities for the Swiss pharmaceutical industry. Within the scope of an outsourcing project, the company will take over a comprehensive range of services for Siegfried AG in the Swiss Canton of Aargau. Included in the agreement is the transfer of about 50 employees. The contracts have a volume of €50 million over a period of five years.

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Unilever Signs Outsourcing Contract with BT

Tuesday, July 20th, 2010

An outsourcing contract has been signed between the retail giant Unilever and BT with an estimated worth of £144m. The technologies that are to be implemented within the next four years are messaging, supply chain and wireless technology over the 100 countries that lie within Unilever’s three operating regions. The services included are design, management and the operation of a secure, fully integrated end-to-end IT networking infrastructure, delivering data, voice, video and mobility services to all Unilever sites.

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HCL signs outsourcing deal with Al Majdouie Group

Thursday, July 15th, 2010

HCL Technologies has recently signed an outsourcing agreement with the Al Majdouie group hailing from Saudi Arabia.

The contract, whose terms are for seven years, allows HCL to provide IT services to Al Majdouie, for a sum which has not been revealed yet.

The agreement needs the IT services to aid in making a progress in the infrastructure, running and managing the Oracle’s business suite, and also provides with disaster recovery services.

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Hydro selects Fujitsu as global IT infrastructure services outsourcing provider

Friday, July 2nd, 2010

OSLO, NORWAY, Jun 30, 2010 (MARKETWIRE via COMTEX) — Fujitsu will be delivering an integrated infrastructure services portfolio to Hydro in Norway and globally.

Oslo, June 30, 2010 – Fujitsu, one of the world’s leading IT service providers, has today entered into a six-year global delivery agreement with Norsk Hydro ASA, one of the world’s leading integrated aluminium companies. The agreement covers full outsourcing and development of Hydro’s IT infrastructure services systems in Norway and abroad.

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Nokia to resume some assembly outsourcing in 2010

Thursday, May 20th, 2010

Top mobile phone maker Nokia (NOK1V.HE) will restart the use of subcontractors in assembly this year as phone market recovers, after ending all outsourcing of assembly work last year, the firm said on Tuesday.

“Last year, the situation was completely different, meaning to some extent … we can (this year) outsource work to external parties,” Nokia spokeswoman Eija-Riitta Huovinen told Reuters.

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Monarch outsources catering to Alpha

Monday, April 19th, 2010

Monarch Airlines has announced it is to outsource its catering and in-flight retail services to onboard retail supplier Alpha.

Under the terms of the three-year contract, Alpha will manage an annual spend of more than £80 million on behalf of Monarch.

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US food giant outsources indirect spend

Monday, April 19th, 2010

Kraft Foods has outsourced its indirect procurement operations in North America to Capgemini in a long-term agreement.

The French-based consultancy revealed this week that it will handle all strategic sourcing and spend management of a wide range of purchasing categories in the region, using its new on-demand e-procurement system.

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GXS: B2Boost, Leading Games and Entertainment Supply Chain Vendor, Outsources B2B E-Commerce Platform to GXS

Friday, April 16th, 2010

GXS, a leading provider of business-to-business (B2B) e-commerce solutions, today announced that B2Boost, which specialises in providing supply chain services to the video games and entertainment industry, has signed a five-year agreement to adopt GXS Managed Services. GXS Managed Services is a comprehensive portfolio of outsourced B2B e-commerce services that includes mapping, trading partner on-boarding, community management and technical support.

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Lublin as a new player in the Polish BPO market

Friday, April 16th, 2010

The phenomenon of offshoring, namely transferring business processes abroad, is highly valued by economists who estimate that the greatest world’s economy, the USA will have transferred 1.5 million jobs in the services sector by 2015, Germany will have transferred 0.5 million jobs and Great Britain 2500 jobs. The data may increase sharply as they mainly refer to great international companies and this instrument is becoming increasigly popular among medium-sized as well as small-sized companies. Accordingly, we can observe a market mechanism which will force the implementation of offshoring services among other players in the market who want to maintain their competitive policy. So far Wroclaw, Warsaw and Cracow have competed for investments in the services sector. Nevertheless, high concentration of BPO companies in these cities resulted in investors seeking new locations such as academic centres offering lower labour costs and offering alike living conditions.

Lublin is one of the new locations for the BPO sector which holds the promise of success. It has been pointed out by the KPMG analysts in the report Poland as the destination for Shared Services Centres who perceive Lublin as a key location for offshoring in the Polish sector of services among such cities as Warsaw, Cracow, Wroclaw or Tricity.

The first major international player in the BPO sector, namely Indian company Genpact, located its investment in Lublin in 2008 which confirmed its friendly atmosphere for the BPO sector investments.

The development of the potential of Lublin for the financial services sector dates back to the 90’s when Company Żagiel wa set up in 1990 which was soon taken over by KBC group which is a financial services broker. Bank Cukrownictwa Wschodniego SA and Bank Depozytowo-Kredytowy were established in Lublin and the latter was the first Polish bank to obtain Moody’s rating and was put on the world’s list of trustworthy companies.

The most renowned Lublin companies which operate in the BPO sector include: Inteligo, Orange, PCM which located their call centers in Lublin, Asseco offering IT services, and Polish Telecommunications Accounting Services Centre.

The prize for the best european shared services centre confirms the level and quality of services offered by Lublin companies. TP SA Accounting Centre in Lublin was awarded “Best New Captive Shared Services Organization – Winner 2009” in Budapest in 2008 during the contest Shared Services Excellence Awards which is held annually.

Potential of Lublin in specialized services sector was also noticed by governmenal institutions because the first e-court of laws was created in Lublin.

Lublin is not only 352 thousand inhabitants but also 715 thousand people who inhabit the metropolitan region in the vicinity of Lublin. An outstanding characteristic of Lublin is one of the highest rate of students in Poland, whereas the total number of students is more than 100 000, which places Lublin fifth. Lublin is a relatively young city of strong development potential. Over 67% of Lublin Inhabitants are at working age and nearly 40% of the population is younger than 35 years old.

A significant criteria taken into consideration in the process of outsourcing business services to other locations is the labour costs, which are about 20% lower in Lublin compared to other parts of Poland. It is crucial that due to the powerful academic base, education and the quality of work offered by the Lublin inhabitants is equally good in comparison to other cities which still remain good locations for the BPO sector.

The labour market in Lublin is characterized by substantial proportion of the unemployed which creates an opportunity of employment without the pay pressure occuring in other cities.

Office spaces are indispensable in the process of creating the BPO centers. Although in recent years we have witnessed an obvious and dynamic development of commercial properties market in Lublin, the supply of high standard office spaces is insufficient. Currently it is estimated that Lublin offers 50 000 m² of modern office spaces, whereas 30 000 m² are under construction and 40 000 m² are in the initial phase of designing. Most of the investment projects are carried out by the local developers including Centrum Zana S A, Batory Sp. z o. o. This fact guarantees that an increase in the demand for modern office spaces will be balanced by the rapid increase in the supply.

A significant drawback of Lublin in terms of infrastructure is the lack of international airport which is pointed out by potential investors in the BPO sector. The nearest and at the same time the biggest airport in Poland is situated in Warsaw, 160 km away from Lublin. To meet the expectations of both investors and the inhabitants, the city has made an effort to build an international airport in the immediate vicinity of Lublin, in Świdnik 10 km away from Lublin. This project is supported by Regional Operation Programme of the Lublin Province. The contract to build the runway and other infrastructure was put out to tender in 2009. The openning of the airport is planned for 2012. According to the company strategy, the airport is going to provide the connection with Warsaw, some specific destinations in Asia as well as a permanent connection with one of the hubs in Europe.

Lublin offers high standard of living and it is perceived as an eco-friendly city with the unique atmosphere of the Old Town, which attracts with its magical backstreets, antique houses, pubs and restaurants. Thanks to the organization of film, theatre and music festivals of international renown, which offer a rich mosaic of cultural events, Lublin has become the most significant cultural centre of eastern Poland. Lublin is aspiring to the title of The European Capital of Culture 2016.

Observing the development of the BPO sector in Poland it seems apparent that the stage of advancement of the projects implemented in new locations is sequential. The first projects concerned with services offshoring in new places are usually concerned with not complicated processes, such as call centres. In the next stage services in IT and other specialised sectors are implemented, followed by research and development (R+D) and competence centres.

Due to the substantial number of students, Lublin is likely to become an attractive location for the sector concerned with such services as call centres, accounting and IT centres as well as specialized services including medicine and law. Whereas in the future along with the development of the BPO sector, Lublin may become a location for research and development centres (R+D) making use of its academic potential.

Lublin has the opportunity to become the location of middle-sized companie in the BPO sector mainly from the European Union (Germany, the Benelux, Great Britain) as a part of nearshoring. The companies from these countries tend not to outsource their services into distant geographical areas such as India due to high risks involved.

In many cases international companies which have decided to to enter the Polish market choose not one but two locations for their business activities, therefore Lublin is likely to become a complementary location for the already existing shared services centres.

Taking into consideration all the above mentioned factors new investments in Lublin are just a matter of time.

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