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Hyperion Allies With India-based Consultancy

Asia-based outsourcing service providers are seeking to expand their global reach -- and that may present a golden opportunity for U.S. software vendors.

Business performance management (BPM) software provider Hyperion Solutions Corp. has formed a global partnership with Tata Consultancy Services (TCS), the Bombay, India-based IT services provider, in order to expand TCS's ability to address the business intelligence (BI) needs of its customer base. TCS plans to use Hyperion's technology to help its customers implement BPM solutions ranging from enterprise and financial reporting to management dashboards and compliance reporting. TCS will focus several new offerings on the financial services industry.

"Our partnership with Hyperion is a cornerstone in our aggressive growth strategy for the business intelligence practice," says Santosh Mohanty, global head of TCS's BI practice. "This relationship will enable TCS to further deepen our expertise and abilities to serve customers in the financial services industry and provide them with leading IT services for best-of-breed BI solutions."

Audit Firms Feel the Heat

Litigation-related expenditures are biting into audit firms' profits, according to Eugene D. O'Kelly, chairman and CEO of KPMG LLP. "Practice-protection costs (insurance, legal fees and litigation settlements) as a percentage of revenue across the U.S. accounting profession are running in the double-digits, second only to compensation costs -- a level that is unsustainable for our profession in the long run," he notes.

In a departure from recent practice among major U.S. accounting firms, KPMG disclosed revenue for its most recent fiscal year. At $4.1 billion, earnings were up 8 percent over the previous year. However, O'Kelly noted that total distributive income to partners decreased by 4 percent, in part because of higher litigation costs.

The tort reform legislation proposed by President Bush in January may reduce class action suits, relieving some of the pressure on the accounting industry. And that in turn might benefit audit firms' customers as well as investors in public companies. O'Kelly notes that investors benefit if organizations have a large number of audit firms to choose from, but proliferating litigation is reducing competition.

Adding to the pressure on audit firms, finance executives' confidence in the accounting profession is eroding, according to a study by J.D. Power and Associates based on interviews with more than 1,000 audit committee chairs and 944 CFOs. Only 44 percent of the CFOs expressed high levels of confidence in the accounting industry.

The study ranked audit firms' performance in two market segments. Among firms that manage clients with $1 billion or more in annual revenue, Deloitte achieved the highest ranking. Among those that manage clients with revenues below the $1 billion mark, Grant Thornton took first place, followed by another second-tier firm, BDO Seidman.

HR Outsourcing On the Rise

The HR outsourcing market has been hot for the last 12 months, and it's showing no signs of cooling off. In February Accenture HR Services signed a 10-year, $575 million business process outsourcing and transformation contract to provide human resource administration services for U.K.-based telecommunications giant BT Group plc.

The contract significantly expands the geographic reach of services that Accenture has been providing to BT Group under a previous five-year contract. Accenture currently provides HR services to BT Group's 87,000 employees and 180,000 pensioners in the United Kingdom. Under the new contract, it will continue to provide services to those groups as well as to another 10,000 BT Group employees in 37 countries around the world who were not covered under the earlier agreement.

Also in February, Hewitt Associates announced that it will provide human resources services to Marriott International Inc.'s 133,000 employees and to the 28,000 employees of The Thomson Corp., a global business information provider.