Pharma Outsourcing to Increase; Ing and Sandvik's Already Has

By John Moore  |  Posted 2005-09-13 Email Print this article Print
 
 
 
 
 
 
 

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Pharmaceutical companies may be planning to cut expenses the same way many companies in other market segments have done—by sending IT and other functions overseas. Ing Bank reportedly has a multi-billion-dollar outsourcing plan in the works; Accentur

Pharmaceutical companies may become more active in outsourcing as they look to trim expenses.

That's the view of outsourcing consultants who follow the field. Vicki Tauscher, a vice president with EquaTerra, said she has seen increasing interest in outsourcing from pharmaceutical companies that aim to increase returns to shareholders and drive costs down.

"For the companies with whom we are working it is almost an edict," Tauscher said. "It is understood that each organization needs to look at more cost-effective ways of service delivery." She said EquaTerra is working with four pharmaceutical companies that are examining outsourcing.

Gus Vlak, a partner with Katzenbach Partners, added that the cost-per-molecule of bringing new products to market continues to rise, which compels pharmaceutical companies to tighten their belts.

Affiliated Computer Services Inc.'s $100 million pact with GlaxoSmithKline (GSK) provides a recent example of big pharma outsourcing. GSK said the company's outsourcing goal is to improve service levels and lower costs.

Another trend: a greater willingness among pharmaceutical companies to pursue offshoring arrangements. Tauscher said her pharmaceutical clients are actively exploring the cost effectiveness of offshoring.

Pharmaceutical companies have already moved clinical trials offshore. The clinical trial process is a natural for outsourcing, consultants suggested.

The world of clinical trials has more of an "external emphasis," noted Niko Canner, founder and managing partner of Katzenbach Partners. He noted that clinical trials involve investigators in various medical centers rather than "people whose paychecks come from a pharmaceutical company."

Other candidates for offshoring among pharmaceutical companies include application maintenance and human resources, Tauscher said.

More Dutch Outsourcing?

Ing Bank, the retail banking arm of Amsterdam-based Ing Group, may be trying to follow the footsteps of ABN Amro, another Dutch financial services company.

India's Business Standard reports that Ing Bank plans to pursue an outsourcing pact similar in scale to ABN Amro's effort, which was announced earlier this month. Amro awarded $2.2 billion in contracts to five vendors: Accenture, IBM, Infosys Technologies, Patni Computer Systems Ltd. and Tata Consultancy Services.

A spokeswoman for Ing Bank, however, suggested the outsourcing project may be more modest in scale. She said the company is considering IT outsourcing in the Netherlands. Ing Bank offers retail banking services in the Netherlands, Belgium, Poland, Romania and India. Ing Bank does not operate in the U.S., but Ing Group's direct retail banking and insurance units operate in the market.

Wireless Vendor Cultivates Channel


Spotwave Cultivates Channel

Spotwave Wireless a company that focuses on indoor wireless coverage solutions, will cultivate relationships with a handful of master distributors.

The company on Monday disclosed its channel strategy and initial partners. In the U.S., Spotwave has inked a distribution pact with Somera,which specializes in telecom equipment and pursues the carrier market. Spotwave also works with distributor White Radio in Canada.

Somera's carrier orientation attracted Spotwave, which also targets carriers as key market.

"Somera was the first company we came across that had a very strong carrier presence," said Tim Moran, managing director of channel sales for Spotwave. Somera counts Cingular Wireless, Sprint PCS, T-Mobile and Verizon among its customers.

Somera will provide Spotwave's SpotCell product to carriers and systems integrators. SpotCell expands indoor wireless coverage in spaces of up to 50,000 square feet, according to Spotwave. The product covers both cellular and PCS bands.

Spotwave, however, seeks to push the company beyond the carrier market and believes the channel can help in that regard. "We are looking for master distributors who can fill a different niche than Somera does," Moran said. He said Spotwave will take on a limited number of distributors, adding that the company is interested in such niches as corporate IT departments and hospitals.

Moran said the channel strategy was necessary to sustain the company's growth. "We've been looking at ways to continue the accelerated growth," he said. The company has been doubling revenue in recent years and is on track to do so again, he noted.

Distributors such as Somera act as an extension of the company's sales force, Moran explained. But at present, Spotwave's direct sales force generates 80 percent of the company's revenue. Moran said Spotwave's objective is to have 80 percent of its sales flow through the channel by the middle of next year. The company will continue to work directly with some Fortune 500-class accounts, he noted.

Moran said Spotwave's pricing strategy allows both distributors and resellers to "have some reasonable product margin."

In addition, resellers will have "an installation play to bundle along with the margin points on hardware sales," according to Chris Elliott, director of new product supply at Somera. "There is an installation component to this product," he said. "When you have multiple nodes to cover a given area, I think that the end users are going to want to have the installation bundled with the actual product."

Accenture Lands Sandvik Pact

Sandvik will offload the management of its human resource applications to Accenture in a deal that underscores the active European BPO (business process outsourcing) market.

The contract marks Accenture's second BPO deal with the Sweden-based engineering company. In the new contract, Accenture will provide application maintenance and support services for Sandvik's PeopleSoft human resources management application.

A spokesman for Accenture acknowledged Europe as a BPO hotspot, citing Accenture's 10-year human resources pact signed earlier this year with BT. Globally, human resources outsourcing tops the BPO arena for customer activity, according to EquaTerra.

OpenMFG To Expand Channel Program

OpenMFG LLC plans to expand its channel program to include development-oriented partners.

The enterprise resource planning software vendor, which targets small and midsize businesses, already works with resellers. Ned Lilly, OpenMFG's president and chief executive officer, said the company has been weighing how best to work with developers who have contacted the company over the past couple of years. OpenMFG will unveil the developer program at an upcoming partner training session.

OpenMFG's ERP software incorporates some open source components but is not an open source application.

 
 
 
 
John writes the Contract Watch column and his own column for the Channel Insider.

John has covered the information-technology industry for 15 years, focusing on government issues, systems integrators, resellers and channel activities. Prior to working with Channel Insider, he was an editor at Smart Partner, and a department editor at Federal Computer Week, a newspaper covering federal information technology. At Federal Computer Week, John covered federal contractors and compiled the publication's annual ranking of the market's top 25 integrators. John also was a senior editor in the Washington, D.C., bureau of Computer Systems News.

 
 
 
 
 
























 
 
 
 
 
 

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