Unisys brings outsourcing to New Zealand

Time zone advantage pays off in areas such as security, says local MD

When Mukul Agrawal was headhunted three years ago to establish an Indian off-shoring centre for Unisys, he had to pluck a number out of the air when asked how many staff he would need.

That number was 1,000 because no one in Bangalore would pay much attention to a smaller organisation when vendors such as IBM and Accenture already had facilities that employed several thousands of workers.

Today, the Unisys centre employs 1,100 people, with 500 more in a second centre in Bangalore, and a third centre is being established in Hydrabad.

Agrawal, managing director of Unisys India and its Global Services India operation, was in New Zealand this month to support the local subsidiary as it spelled out its roll in Unisys’ worldwide “sourcing” plans. Where appropriate, New Zealand will provide services to broader-based international outsourcing contracts.

Agrawal has been in the IT business for 25 years, starting at the old Burroughs company, and working in financial services with major banks until he joined Unisys.

“Unisys India’s domestic business was very small, so we started pretty much from scratch,” he says.

“We decided on day one to have a 1,000-person centre and went out and hired premises in a business centre. We set up a management team from day one to manage 1,000 people.”

Unisys was comparatively late to the Indian outsourcing market and so worked very closely with the media and analysts to announce its presence. Rather than take premises on the periphery of the city where most of the big hi-tech parks are located, it went for high-profile offices in the heart of Bangalore.

“People had to get to know us,” Agrawal says. “Branding was important.”

The budget for establishing the operation was US$180 million (NZ$270 million).

“The government was very supportive,” he says. “There are tax breaks for the IT industry — no corporate taxes and no customs duty. But the return in personal taxes is huge. The government is also very strongly behind educational programmes to support IT.”

That’s not surprising, given that IT now earns 20% of India’s total export income.

Agrawal had achieved his target of 1,000 hires within 18 months. “We’ve focused on infrastructure, and today 70-80% of the Unisys skills base is represented.

“Initially, we ate our own dog food, serving Unisys’ internal needs. But we are now very strong in the infrastructural space. Other companies started instead with application services.

“We are completely integrated. That end to end support is very fragmented at places like IBM and Accenture. We are much less siloed”.

Unisys likes to use the term “right shoring”. For example, the Indian company’s own payroll is handled out of Unisys in Sydney.

New Zealand managing director Brett Hodgson says the local subsidiary put up a proposal to corporate to become part of the “right shoring” operation.

“For example, we’re hiring here to build delivery for Australia. New Zealand is cheaper.”

But it’s not all about cost, he says. Unisys locally is building new models around business process management, using things like the time zone advantage. That pays off in areas such as security where viruses are discovered first in New Zealand and dealt with for Unisys corporately. There is a seven-hour window over the US and 12 hours over the UK.

Hodgson says that time advantage and other skills have led to two large UK opportunities, one of which he expects to create 170 jobs, some of which will accrue to New Zealand.

“We’re currently hiring skill sets in leadership, technical and commercial areas. We’re focused on participation in the corporate model, which will bring scale to New Zealand.”

The Indian operation is CMMI (capability maturity model integration) certified to level 3 and expects to advance to level 5 certification once it has provided 12 months of data to the certifiers. CMMI is a software quality model, widely used in India and elsewhere but relatively new to New Zealand. Unisys New Zealand is level 3 certified in its telco group, which last year generated 6%of total revenue, and partly in its application support team, specifically at the Accident Compensation Corporation.

One of the strong focuses for the local subsidiary is on the venerable LINC system, which was developed in New Zealand by what is now Jade Corporation. Many UK banks still have LINC-based systems, and Unisys has developed intermediary software, known as AB suite, to take them through to open systems. AB is a language that generates code to transform LINC to .NET or Java.

“We can offer the UK a relatively low cost, high quality service,” Hodgson says.

Interestingly, that’s something the Indian operation couldn’t provide because India does not have a history with mainframes.

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