Source: www.thehindubusinessline.com

Mumbai, March 27 Concerned about a looming economic downturn, client organisations are pressing outsourcing firms for price reductions of up to 23 per cent as they negotiate extensions of long-term deals. A reduction of this quantum could result in the failure of many outsourcing contracts, suggests a study by UK-based Compass management consulting.

The research states that pricing pressure is increasingly driving renewal renegotiations. Companies are demanding rate cuts of 15 per cent to 23 per cent across-the-board, without consideration of whether existing services are being delivered at a fair market price, Compass said. These findings are the result of a 12-month analysis of 120 global deals worth over $60 million each by Compass.

Of significance

The findings assume significance as majority Indian IT vendors such as TCS, Infosys, Hexaware and BPO firms such as Firstsource, EXL, HTMT and others have been talking about their ability to increase billing rates in new engagements with clients, enabling them to counter the double whammy of the rupee appreciation and a recession in the US.

For their part, vendors are, in many cases, agreeing to price discounts upfront – in exchange for long-term agreements, according to Compass.

“Clients are plucking aggressive price targets from the air with no due diligence around the competitiveness of existing service and with no regard to what the business needs,” said Ms Geraldine Fox, Director of sourcing services at Compass.

losing proposition

Negotiating for short-term price reductions in exchange for long-term agreements – without a detailed understanding of existing costs, services, and requirements – is a losing proposition. The cuts will eventually become unsustainable, leading to a de-motivated supplier, a poor working relationship, and poor service quality, the study said.

By comparison, between 2005 and 2007, clients were significantly less inclined to focus solely on cost reduction when renegotiating contracts, said Ms Fox. With 8,000 engagements in 32 countries, Compass is a global management-consulting firm specialising in business and IT performance improvement for Fortune 1000 organisations.

Source: www.foxbusiness.com

LINCOLNSHIRE, Ill., — Demonstrating further progress in executing its focused growth agenda, Hewitt Associates, a global human resources services company, today announced it has signed an agreement to acquire CSi - The Remuneration Specialists, a specialist compensation consultancy that provides highly regarded data, analytics and compensation consulting solutions to organizations in Australia and New Zealand. CSi adds a strong compensation analytics capability to Hewitt’s broader-based HR consulting strengths in the region and makes Hewitt the only consulting company in Australia capable of delivering deep capabilities across compensation, engagement and other human capital applications to its clients.

Founded in 1985, CSi offers high-quality survey data on specific industries, occupations, and a wide range of job types, to companies of all sizes in Australia and New Zealand. CSi also provides compensation consulting services, compensation training and proprietary analytical tools.

“For the past two years, we’ve achieved double-digit growth in Asia Pacific, and we continue to look for opportunities that will further accelerate our growth and enhance our capabilities in key areas like talent, rewards and compensation consulting,” said Perry Brandorff, president of Hewitt’s consulting business. “CSi is a great addition to the Hewitt portfolio. The company is aligned with the strategic direction and growth plans of our Consulting business, and the acquisition further cements our position as one of the leading human resource consulting firms in the world.”

“Hewitt has been looking to strengthen its compensation analytics capabilities in Asia Pacific, and CSi was a natural fit,” said Matthew Levin, senior vice president of corporate strategy and development at Hewitt. “Our two companies have many complementary strengths and a shared client-service philosophy. Adding CSi’s market leading compensation analytics products and expertise to our current capabilities enables us to provide clients with comprehensive HR consulting services that are unmatched in the region.”