Resellers punting software and IT services (SITS) to the public sector have been warned to prepare for meagre times ahead with only business process outsourcing providing major pockets of growth.

This is according to research veterans at TechMarketView (TMV), who claim that compound annual growth rates (CAGR) across the government space will be 0.6 per cent over the next four years.

However, subtracting business process services (BPS) from the equation – the segment is expected to grow 6.4 per cent over the forecast period – and the total value of SITS sales in public sector will fall by a CAGR of 2.2 per cent, the analyst said.

The total SITS market was valued at £11.5bn in 2010, an “unprecedented” decline of 5.5 per cent and of this, central government accounted for 47 per cent of spend or £5.4bn, a fall of 11.2 per cent over the previous 12 months, said TMV.

“The UK central government market was worst hit by far … due to Cabinet Office project reviews and contract negotiations,” said research director Georgina O’Toole. “The same factors will impact 2011, resulting in a similarly steep decline in the market of 9 per cent.”

The health and defence segments (20 per cent of total market spend) also declined slightly – more than 4 per cent and 3 per cent respectively – but the local government edged up over 3 per cent, and education climbed 6 per cent. The police segment was flat.

O’Toole said sentiments in the market will gradually improve for suppliers, with the highest spend on “IT services to shift from internal IT departments to external service providers (eg, police) or where there is enormous potential for BPO [business process outsourcing]“.

“The most active subsections over our forecast period will be those where outsourcing of any description is nascent. Most notably, the UK police sector… In addition, within the education sector,” she said.

In contrast to BPO, infrastructure services is forecast to “remain subdued”, hit by contract cancellations and renegotiations of last year, though growth will “creep back” towards 2014.

CAGR for application services is set to decline 1.2 per cent over the forecast period, as offshore supplication development and maintenance services are offshored and projects shrink.

As for software vendors, pressure on pricing including efforts by the Cabinet Office to wring more out of licensing spend will ensure CAGR of 1.7 per cent.

Source:http://www.channelregister.co.uk/2011/09/09/public_sector_sits_forecast/

When Thanga Thambi, a pastry chef, was offered a job by India’s third biggest software exporter last year, a role at the company’s cafeteria appeared likely. “What can I do for an outsourcing company- what is the connection?” Thambi wondered.

Thambi’s role involved baking cookies, but not for Wipro’s cafeteria. Wipro was looking to hire an expert chef for designing a microwave oven for a durables manufacturer in the US. “I never thought there could be any connection between what I knew and what a company like Wipro does. But I realised that my experience with ovens was what they’re looking for,” says Thambi.

As India’s growing outsourcing firms look beyond traditional software development and maintenance business, specialised projects that range from tracking heart beats of patients, to designing the next generation of consumer products, and even developing marketing campaigns and collaterals for US automakers, mark the beginning of a shift.

Last year, NS Bala, the head of Wipro’s $750-million manufacturing business unit was looking to start a new project for a customer. The customer, a consumer products firm wanted to build a high end micro wave oven that would meet the twin objectives of maintaining taste and speed of cooking. Most products baked in a microwave lose some taste, a concern the company wanted to address in its newer products. “Thambi’s job for the next few months involved monitoring the colour, texture and taste of cookies and cakes and give feedback to the company to fine tune the product,” Bala says.

At Aditya Birla Minacs, a company traditionally known as a low-cost BPO service provider, a team of 400 advertising and marketing professionals is helping carmakers like Honda and Hyundai US sell more vehicles. Over a year ago, Minacs helped Honda sell 33,000 more vehicles and generate an incremental profit of $ 295 million in a year.

The team makes creatives, strategy and promotions for the automak-ers. They even generate sales leads, run marketing campaigns and manage incentive programmes.

“About 25 % of our revenue comes from IT enabled BPO services such as the marketing project we do for automakers. There is an 8-10% difference in margins over the traditional BPO services. But here, we have to invest on the platform and talent.” “In three years, we want IT enabled BPO services to contribute to 50% of our revenues,” said Deepak Patel, chief executive officer for Aditya Birla Minacs.

In another instance, a group of nurses have been monitoring the heart beats of hundreds of American patients. The customer, a medical equipment maker, is testing a cardiac monitoring device through which a patient’s heartbeat is monitored thousands of miles away in Bangalore. The patient or a healthcare provider is alerted if an aberration is noticed. As proof of the greater role technology plays in daily life Wipro’s head of the medical devices division, Jyotirmay Datta, cites the example of how one these nurses saved the life of an old patient whose heart beat she was monitoring a year back.

“The nurse noticed that that the patient had not been moving at all for a few hours and realized that something was amiss as it would be the middle to the day in the US, a time when the patient would normally be active. The nurse alerted the local paramedic who in turn alerted the patient’s family member. On arriving home, the family found that the patient, an old lady, had fallen in the house and fainted,” Datta recalls.

Source:http://economictimes.indiatimes.com/tech/it-firms-wipro-hcl-look-beyond-software-development-for-outsourcing/articleshow/9045828.cms