Straight after I had listened to PA Consulting telling me all about their new research – as featured in my last blog post – I caught a bus to Shoreditch. I wanted to go and have a chat to Charles Armstrong, the CEO of Trampoline Systems.

This was an interesting and quite random connection. I met a girl in a bar last year in Idaho in the US – we chatted and shared a few glasses of local Idaho beer. She worked in music promotion and introduced me to a venture capital guru, who introduced me to Charles – all through social networks and without any motive other than sharing contacts where it looked like we might add value or get along together.

Shoreditch remains a kind of forgotten wilderness within London. It’s just minutes away from the financial centre of the city and is not quite a part of the trendy art scene around Hoxton – though I noticed a few studios as I walked to Trampoline so perhaps that’s changing. Charles was also making more of an effort to fit into the local art scene than the world of corporate IT, with purple trousers and space invader graphics stencilled across the office.

Charles showed me some of the things he has been working on and for those of you still wondering how the concepts of social networks apply within a corporate context – here is your answer.

The tools created by Trampoline can plug into any standard corporate email system and monitor traffic, relationships, and context… A visual map can be displayed showing who is talking to who, when, how often, about what, and which companies link to your company – and where.

If this all sounds a bit ‘Big Brother’ then just consider some of the upsides. Rather than this being a tool for snooping, the idea is to shine a light on networks that exist, but are not usually visible.

Suppose you need to find someone in your own company with investment banking knowledge as well as a good understanding of some particular tool, let’s say SAP. The visual maps Trampoline offers let you easily find who might be the right person, and not just by skills alone, it becomes obvious who sits at the hub of several critical relationships when you can see expertise and influence being displayed graphically.

I mentioned that I had been talking about networks recently to someone at Capgemini. Charles plugged his name into the system and we could immediately see who, from his company, has the best relationship with that Capgemini person.

I loved it. But the reason I’m blogging about it here is not to plug what Charles is doing - he already has some very well known clients. It’s because of the serendipity in having a lunch at Gordon Ramsay’s restaurant and listening to PA Consulting talk about how multisourcing has become impossible because multi-company networks are too difficult to manage. Then, later in the afternoon, I see the solution staring me in the face.

A lot of people and companies still consider social networking tools such as Facebook to be a frivolous waste of time. Yet, work consists of more networking and communication than ever before. The tools are merely reflecting the way we work today, and are becoming an essential part of the working day.

I mention this because there was an interesting post on the discussion board of the Outsourcing Experts Group in Facebook yesterday. Preet Chandhoke, a director of software development firm 01Synergy, posted up his views on the five regions to watch for offshoring in 2009:

• Argentina
• Bulgaria
• China
• Egypt
• Philippines

Preet highlighted his thoughts on the pros and cons of each location and I tend to agree with his views. But one factor I expect to become more important in the coming year is political stability – something Preet mentions with regard to both Egypt and the Philippines.

International terrorism and civil disputes are going to be considered a greater risk than before in the present climate, leading to a greater willingness to explore different options, where before it might have been a straightforward decision to go offshore. Those options might even include getting the work done in your home country by using a smaller company, or just going for a nearshore option. There is a definite increase in unease at having critical components of the supply chain halfway across the world right now.

I received an email this week from a friend of mine that gives some eye-watering figures.

Just over a year ago Royal Bank of Scotland (RBS) paid $100bn for ABN Amro – 80 per cent in cash. For this amount, RBS could today buy:

• Citibank for $22.5bn;
• Morgan Stanley $10.5bn;
• Goldman Sachs $21.0bn;
• Merrill Lynch $12.3bn;
• Deutsche Bank $13.0bn;
• Barclays $12.7bn;
• And still have $8bn change

I haven’t checked these numbers, but the fact is that in the current climate it is entirely believable. It also reminds me of a recent message on the blog of US documentary-maker Michael Moore, hardly known as a friend to big business, but certainly an astute commentator.

The US auto-giants GM, Ford, and Chrysler are all haemorrhaging cash and now going cap-in-hand to the US government for a $34bn bailout. Moore pointed out that all common stock in GM could be purchased for around $3bn. So, we could save the government a load of money by just supporting earlier intervention and then supporting a massive wave of innovation in transport – a Marshall plan for the auto industry. Why bail them out with more cash when the current bosses will just deliver more of the same?

Joseph Schumpeter popularised the term “creative destruction” in which companies or industries would naturally die, to be replaced by the newer and stronger. It seems we are now witnessing Schumpeter’s vision on a daily basis.

I’ve been talking to a lot of people recently about the issues in the banking market. Regardless of the problems faced by individual companies, the entire banking sector appears to be in paralysis because of the unwillingness of one bank to loan money to another. Who knows where this will lead us, but the uncertainty could change company strategy regarding outsourcing in many other markets.

Stan Lepeak, managing director of research at Equaterra, talked to me about knowledge process outsourcing (KPO). In his opinion there are two sides to the story: “In the short term there will be a negative effect on KPO. There is so much disruption going on in this industry, but in the longer term it is likely that more work will be generated. We are now looking fundamentally at how business is done and so the banks will be exploring the use of more third parties, more use of captives, and the rationalisation of disparate IT systems,” he said.

So that sounds positive for the KPO market in general, but Stan warned that a lot of companies are also going through a supplier rationalisation process. That’s basically a clear out and simplification of the number of companies offering services, so the contracts get larger, but for fewer suppliers.

When I spoke to Cyrill Elschinger, chief executive of Softtek in China, he had a similar view to Stan: “The current economic downtown is going to slow down or reduce the usual forecasts for outsourcing as a whole, but it is a formidable opportunity for China. This crunch time where companies are under massive pressure to keep operating while becoming more efficient and effective is going to force them back to the drawing board to look at new ideas for how to still function and reduce expense.”

Cyrill was also scathing about India, which he believes cannot supply the people for the work being demanded there. “I expect and anticipate that a lot of work will be shuffled into the China market as a result of this economic downturn. Indian vendors are becoming increasingly costly and people are really complaining about their performance,” he said.

On another note away from the credit crunch, but still related to China, I spoke recently to Dr Kevin Fickenscher of Perot Systems. Kevin runs Perot’s healthcare practice and when we got on to the topic of China he had something really interesting to say.

“If you go to places like India and China for example, they are now leapfrogging a lot of the healthcare technology we have been used to in places like the US and Europe. It’s just like the mobile telephone industry that has found the strongest service penetration in places that never had a strong telephone infrastructure using copper wire. It’s likely that we are going to find a lot of new healthcare technologies being trialled and exported back to us from places like India and China because they are the most innovative environments,” he said.

It’s nice to capture some of these executive thoughts in this blog. At least we can all feel confident that if the banking market collapses in Europe, there is probably a job waiting in China.

I find myself commenting again on Tata Consultancy Services (TCS). It’s strange because I mentioned them in my own blog yesterday, and I noticed that the editor of Computing, Bryan Glick, also mentioned them. Yet I was shooting the breeze with someone who knows TCS well yesterday who confessed that things are “a bit quiet” over there.

It’s certainly true that most of the major suppliers seem to have reined in some of their more extravagant promotional techniques this summer – I never got a single invitation to any test cricket this summer for example!

Nevertheless, news just broke that TCS has signed a five-year deal with telecoms giant Ericsson, to supply applications development and maintenance (ADM) on a global basis.

Not only does this demonstrate that Ericsson is still thinking beyond the business meltdown engulfing us in London today, but also it shows a strong confidence in TCS and its ability to deliver solid, steady, and reliable internal IT. A lot of IT suppliers talk up their ability to innovate, but let’s face it, a lot of companies paying for ADM services just want it to work well – first time.

The other day I was giving a talk in Kolkata, India, to a group of people assembled at the CII ICT East conference. I was speaking on the second day of the conference. On the first, a few of the founders of Indian business process outsourcing – such as Raman Roy – were speaking.

When I started talking to the audience the next day, I was aware that a lot of them were owners of small or medium sized companies, and eager to try doing business with Europe. I asked the entire audience: “Who wrote a blog entry about the interesting day we had yesterday with industry leaders such as Raman?”

Not a single person in the room had blogged about the conference – or about anything else for that matter.

As I went on to talk about the virtues of podcasting and social networks, I think I ended up overstepping what the audience wanted to hear. However, I still think that for smaller organisations, these are great - and virtually free - tools for getting yourself noticed above the noise of every IT company jumping up and calling out “me, me, me…”

I also challenged the companies in the room, by reminding them that they are the cream of the IT talent in India - an industry now known for IT excellence - yet where is the innovative online marketing for their efforts? Companies known for hi-tech innovation should be able to do a better job than a chewing gum company has been doing with the YouTube star Matt Harding. Take a look at the recent update to his famous 2006 ‘Dancing’ video – this new version is just awesome!

It was therefore nice for me to land back in London, switch on the laptop, and to find an email from Moitrayee Basu, who works for MSR in Kolkata – the first thing she had done after the conference was to go and create a blog.

It’s early days for blogging by smaller companies in India, but it’s going to be exciting as more and more comment comes online. I’m looking forward to hearing that my CII talk may have actually influenced a second or third company soon.

Congratulations to the Indian IT services and training company NIIT for winning the coveted Digital Opportunity Award for its path-breaking work in spreading computer literacy and improving the quality of education at grass root levels, by the World Information Technology and Services Alliance (WITSA).

WITSA is a consortium of over 60 IT industry associations from economies around the world. Phil Bond,president and chief executive, Information Technology Association of America (ITAA) gave the award to NIIT chief executive Vijay K Thadani at the 16th World Congress on IT (WCIT) 2008 Awards’ Ceremony, the annual congregation of the world’s leading technology companies and associations held at Kuala Lumpur, last evening.

I was talking to the UK head of NIIT technologies, Ravi Pandey, on Monday, so he will be the next guest on my Talking Outsourcing podcast – which is very timely.

NIIT won the award for its ‘Hole in the wall’ scheme. This is an experiment devised for putting computers in very poor villages, where kids would never normally have access to IT systems. There is no training provided. Part of the experiment was designed to see how children could interact with user interfaces and learn about IT without being guided. It has been an amazing success and NIIT has contributed not only to the knowledge of how children learn, but also to the wealth of these villages – it gives the next generation a chance of education and hope.

I made a short visit to Kolkata (Calcutta) in India last week. UK Trade & Investment (UKTI) had arranged a mission to West Bengal to examine how more links could be established between that area of India and the UK. I was speaking at a conference for a group of local Indian technology firms.

I had prepared a talk the day before leaving and then polished it off waiting in the bar at Heathrow airport. Things like a limited battery life can really create a strong incentive to get things finished. I arrived at the hotel where I was staying – and where the talk was due to take place – with very little time to spare. I basically arrived in India on Thursday, got a shower, had a shirt pressed, and then went downstairs to do the talk. Talk about hectic.

On the agenda it said I had 45 minutes. Just before I was going to start they said to me I should aim for 1hr 15 minutes instead, as the agenda had changed! Fortunately the extra time made it possible to turn the presentation into more of a dialogue with the audience. I asked them to interrupt and throw comments into the talk so we could bounce ideas around, rather than waiting for a Q&A session at the end.

My session went on for about 90 minutes and it was great. I was talking about some of the present issues in outsourcing generally and then more specifically how Kolkata could/should promote itself. The audience was full of comment and we had a great debate.

In the afternoon, a number of local companies were presenting to each other with me there as well to offer some tips on what UK service buyers might think of their pitch.

On Friday I went around Kolkata in a car in blazing heat – and with failing air conditioning. Each office we called at offered some respite from the heat and the traffic noise. I visited some of the major companies that have invested in the area such as HSBC, Cognizant, Capgemini, and IBM.

It was interesting to see the facilities these major firms had created in Kolkata. Each of them has recruited thousands of people locally and they kept on repeating some of the same reasons for investing in this part of India – primarily attrition is much lower here, there is a stronger sense of loyalty to the company and people don’t job hop as easily as in some other locations. It’s also slightly cheaper than locations such as Gurgaon or Bangalore. However I don’t think the difference in cost outweighs the far greater benefit of being able to reduce the staff churn to someone more manageable.

I actually found some of the local home grown companies more interesting, perhaps because there were some stories and studies that I enjoyed hearing, from companies I have never heard of. Rebaca are working on better ways of pushing video around the Internet and creating streaming technologies that blend all sorts of existing technologies – I imagined it as something like a cross between Sky+, Joost, and Slingbox.

Brick and Click also impressed me with a number of product ideas, including a complete pharmacy management system that handles the entire prescription and dispensing process for pharmacy retailers. The NHS should really talk to these guys, given some of their difficulties in this area. The Brick and Click system has already been rolled out to a number of US states.

And let’s not forget the humble contact centre. The COO of BNKe Solutions, Suresh Menon, was so keen to meet me he dragged himself into the office after major spine surgery. It was literally his first trip outside since the surgery and then the people from the West Bengal government who were arranging all my appointments hustled me in and out in something like 15 minutes, because we were running hopelessly late on the schedule! Suresh explained how his major advantage in the market was that he has an attrition rate of below 5 per cent. It’s an incredibly low figure for a contact centre and does demonstrate that there are differences between different regions of India. That sort of figure would be almost impossible in Bangalore.

I hope to get back to Kolkata soon. Not just because I want to explore some more of the historic sites associated with Nobel laureate Rabindranath Tagore, but there is a lot taking place in India beyond the well-established metropolitan areas we are all familiar with. I’d like to see how fast this ancient city could develop a hi-tech future.
 

Oh dear. The opening of Heathrow Terminal 5 (T5) has been a disaster. British Airways chief executive Willie Walsh must be in the running for understatement of the year for describing the mess as “not really our finest hour.” In this situation it might have been better to search for a quote from the Queen Mother, rather than alluding to Churchill – the poor passengers must have a touch of the Blitz spirit in T5 right now.

I’ve been talking to a number of IT companies about the T5 migration and they were all holding their breath. Both NIIT and TCS count BA as a major customer and even though it looks like the technology is not to blame, no IT supplier wants to see a good customer and business partner flailing around like a fish out of water.

I was a passenger on the first Eurostar service from St Pancras International station to Paris. Eurostar managed to operate services from Waterloo one day and to switch everything overnight to St Pancras without a hitch – apart from the fact that on opening day there were still no shops at St Pancras so it was impossible to even get a coffee, but the train service ran smoothly.

I appreciate that T5 is on a far grander scale than a train station, but there is no denying that the Eurostar project was a huge overnight transition too – and it worked. BA and BAA need to come up with some answers about what went wrong soon and especially whether it was really just a lack of burly baggage handlers or some fundamental design problems in the new technology commissioned for the terminal.

I want to end this blog post by featuring a long quote, basically an entire email straight from the BlackBerry of friend of mine who is a very senior UK-based executive in a major IT services company - that shall remain nameless. I received this last night, so it’s an excellent view from the coalface of the T5 experience on opening day:

“Sadly the UK hasn't covered itself in glory today. I say the UK because that's how important the success of T5 is for the country.

“I’m currently on Eurostar to Paris, while my bag wanders round T5's state of the art baggage system lonely as a… well actually I expect it has quite a few disgruntled baggy friends this evening as it circumnavigates the underground rubber runways.

“T5 looks nice, nice artwork, high tech and you can see the concept the designers are aiming for, but today it had lots of teething problems, not just the kind of fundamental shortage of flying opportunities. Check-in luggage conveyers were working intermittently, security operations slow. Information provision via the IT systems slow - slower than BA's internet updates which at least confirmed my flight was cancelled, rather than the suggestion chez T5 to queue up and enquire (such a polite term – ‘I say, would you mind awfully telling me if my plane might leave today?’) Yes, please speak to a warm and fluffy human. Sadly the ratio of query-ers to query-ees was unmanageable.

“I guess they'll show the queues that BA staff had to cope with on the news. By now I'm expecting at least one murder to have occurred, mentally - not, one hopes, physically. Many were stoic - at least when I left. But it could get ugly. I predict a riot?

“Arrivals was fun. First you can't actually leave departures - by any means. So we had to queue again until security could escort us out. Then once you've managed to leave, so to speak, you have to arrive. ‘Do you have your landing card?’ ‘I haven’t taken off yet.’ ‘Oh!’

“I guess I’ll go through the ‘arrivals from the EU’’ channel at customs.

“As I looked through the glass back into check-in on my way out, the seething queues suggested even check-in was pushing up the daisies.

“Abandoning my bag after being told I could look for it online, rather than join the next one-hour queue at arrivals baggage claims customer services, I headed for St Pancras station.

“I did have a nice opportunity to share some views - and mine were very positive - with the very nice BAA customer service man I met on the Heathrow Express back. I know he's going to think about these.

“I hope Willie Walsh commends the fortitude of the BA staff for the sheer drain on their emotional skills today. They are the easiest to blame - because they are there - and I sometimes despair at the amount of vitriol fellow passengers are prepared to deploy. For BA and BAA this really is a nightmare, and I have to say that I sympathise. It’s all too easy now to be smug and suggest more testing or a phased approach. But it really will be a fantastic feat when it does come together (could I propose tomorrow night - when I return from Paris?). And I have to say even today; my T5 experience was a whole magnitude better than that received at Delhi airport last month – twice.

“The difference is that we don't expect this standard from the UK's flagship airport. And you're always leaving Delhi at about 3am.

“I feel a case study coming on.

“I missed the first Eurostar in favour of buying a toothbrush, hairbrush and a few other essentials at the station.  I ‘was’ a big fan of M&S's new railway station stores - until today when it dawned on me that ‘simply food’ really did sell what it says on the tin, to mix business straplines. So I couldn't rely on M&S in my time of greatest need. Thank you Accessorize.

“I now have a G&T in my hot and bothered hand, but sadly relaxation won't come. There's an unhappy child in the adjacent seat who'd like to share his frustration with us all. Carpets are stained and it’s looking jaded. I expected a sit-down buffet-car meal where some may have even dressed for dinner and with a sporting chance of a murder or a chase or a disappearance. The pasta forestiere eaten at my seat had no romance, but wasn't bad.  And it’s now turned peaceful across the aisle.

“Off to brush up on my business French. Hmmn, wonder if Nicolas Sarkozy and Carla Bruni are on board?

“Bonsoir et Bon Voyage. “

I had an interesting visit to the Czech Republic last week. I was speaking at a conference focused on the business of information technology in the country and it covered a multitude of areas, focusing a lot on legislative changes for most of the morning session.

What struck me, when the deputy prime minister (DPM) was speaking in the afternoon, was the directness of someone so senior in the political machine. He confessed that the IT industry should not expect too much from the forthcoming Czech presidency of the European Union. In fact he even confessed that he was not sure what anyone could expect from the presidency, but he did vouch to be working hard on ensuring the country would get as much as possible from the EU presidency.

The Lisbon Strategy is due to be reviewed soon and from what the DPM was saying, it looks like the UK and Czech Republic are the most progressive nations in the union, pushing for real measures to drag Europe into the information age – particularly in the area of IT-enabled services. Given the nature of the EU and the requirement for 27 nations to debate these matters it might be some time before we see much action.