Category: News

IT outsourcing is popular among companies in the Nordic region, but the market is changing

 

Companies across the Nordic region continue to invest in IT outsourcing and the level of satisfaction with their IT providers is high – but there are changes in the market.  

According to the latest Nordic IT outsourcing study by Whitelane Research, which covered 322 Nordic companies and 1,000 outsourcing contracts in Denmark, Finland, Norway and Sweden, more than three-quarters of the respondents said they would continue to outsource at the same rate or more in the coming year, and 44% said they were planning to increase outsourcing. 

Finland saw the biggest rise in companies planning to outsource more, up from 27% in 2016 to 45% this year. By contrast, Norway and Sweden saw a drop from 54% and 45% in 2016 to 45% and 35% in 2017, respectively.  

Meanwhile, Sweden saw the highest rate of companies planning to outsource less (12%). “It is too early to say if this is a larger trend,” said Mikael Dahlstedt, sourcing expert at PA Consulting Group, which collaborated in the study. “If we get the same result next year, then we can see a real change, but based on a single year, it is difficult to conclude that the market has matured.”  

The main outsourcing drivers for Nordic companies were to focus on their core business (cited by 60% of respondents), cost reduction (59%) and access to resources (53%).  

Service providers had different views on their clients’ motivation. They cited business transformation (71%), cost reduction (65%) and innovation (47%).  

In general, Nordic respondents were content with their IT providers, with 90% saying they were at least “somewhat satisfied” with contracts.  

 

Indian IT giant Tata Consultancy Services (TCS) retained its number one spot with an overall satisfaction score of 82%, followed by Accenture and newcomer to the list Salesforce (both 78%), Cognizant and Tech Mahindra (both 76%), then L&T Infotech and Telenor (both 75%).  

Although Indian providers remain prominent on the list, their success in the Nordic market showed signs of wavering, with several falling in the rankings. Wipro took the hardest hit, dropping from a 73% satisfaction rate in 2016 to third bottom at 61%.  

This change is particularly visible in Sweden, where only TCS made it into the country’s top five, compared with three Indian players (TCS, HCL and Wipro) in previous years. However, Dahlstedt does not see this as a broader trend, but as a reflection on individual cases.  

For example, HCL (whose satisfaction fell from 80% to 68% in Sweden) was undergoing a major transition and finished integrating 2,560 new employees in November, a year after it bought Volvo Group’s IT arm in late 2015.  

Pankaj Tagra, HCL’s head of Nordic business, told Computer Sweden that the company was not satisfied with its ranking and referenced the challenges of integrating a large acquisition. Tagra said the company had started work to improve its results.

Infosys has committed to create 10,000 new jobs in the US as president Trump ratchets up pressure on businesses to hire Americans

 

The Indian IT service provider said it would increase its US workforce by 10,000 over the next two years and would open four technology hubs.  

The company’s new US hubs will focus on emerging technologies, such as artificial intelligence (AI), cloud and big data. The first hub will open in August in Indiana in and is expected to have 2,000 employees by 2021.

 

“Infosys is committed to hiring 10,000 American technology workers over the next two years to help invent and deliver the digital futures for our clients in the US,” said Infosys CEO Vishal Sikka. “Learning and education, along with cultivating top local and global talent, have always been at the core of what Infosys brings to clients – it is what makes us a leader in times of great change.”  

In 2013, Infosys agreed to pay $35m to settle a visa dispute with US authorities, involving alleged abuse of visa requirements when offshore staff are brought to the US.  

And Infosys is not alone. Earlier this year, Accenture said it would create 15,000 highly skilled jobs in the US. Although it is a US company, about 130,000 of Accenture’s 400,000-strong global workforce are in India, and many of them serve US clients.  

The company’s new investment and job creation will reduce its reliance on this overseas workforce. The new jobs will increase its US workforce to more than 65,000 by the end of 2020 – a 30% increase on today’s staff numbers.  

 

Although Accenture and Infosys did not cite political pressure as a reason for their plans, there is pressure on these companies to toe the line drawn by Trump because a large proportion of their customers are US-based.  

A recent executive order from Trump will see US government agencies look at ways to reduce the number of immigrant workers in the country, including reducing the use of H-1B visas. This is part of Trump’s election campaign promise to encourage US employers to hire more US citizens.

Enterprise tech giant HPE will invest $140m over five years in its new regional headquarters and a startup incubator programme

 

Hewlett Packard Enterprise (HPE) is investing $140m over the next five years in Singapore as part of its efforts to cement its position in the fast-growing market for enterprise IT products and services in the Asia-Pacific (APAC) region.  

Speaking at the launch of its APAC headquarters in Singapore, HPE’s president and CEO Meg Whitman said the facility will bring together different aspects of HPE’s businesses such as research and development at a single location to better serve businesses.  

“When I meet with customers in diverse industries around the world, it’s very clear that we’re living in what we call the idea economy,” she said, noting that the ability to turn a new idea into a new product or business has never been easier.  

To help startups turn their ideas into reality, part of HPE’s new investments in Singapore will go into a $16m incubator programme dubbed InnovateNext that will partner local companies to develop and commercialise new technologies.  

“Singapore is an innovation hotspot and the best place for us to base our operations in this important fast-growing region,” Whitman said.  

To be co-funded by HPE and Singapore’s Economic Development Board, InnovateNext will support 12 startups over the next three years, with the goal of developing viable products and services.  

Specifically, startups will receive access to HPE resources, mentorship and consulting expertise to develop products that align with HPE’s key focus areas of hybrid IT, data analytics and internet of things (IoT) across industries such as financial services and manufacturing.