‘Buy local’, IT group urges Fonterra
Dairy giant asked not to choose another overseas tech supplier
Fonterra is attracting criticism for awarding a major IT contract to India’s HCL in February, snubbing the incumbent — New Zealand’s Datacom.
Now the dairy giant has another big IT tender in the works, and a lobby group says this time it should “buy local”.
A person close to the “Infrastructure as a Service” (IaaS) contract awarded in February told the Weekend Herald the multi-year contract was worth around $20 million a year.
The incumbents, NZ’s Datacom and multinational DXC, did not make the final cut, the Weekend Herald understands, with Fonterra making its final choice between two Indiabased companies, Tata Consulting Services and HCL (Hindustan Computers Limited).
This week Fonterra was due to move from the request-forinformation stage to a request for proposals (RFP) for a second big IT deal, this time involving application support — which the Weekend Herald understands is also a multimilliondollar, multi-year contract.
HCL, which does not begin its IaaS contract until August, already has some application support business with Fonterra. Datacom is also understood to be in the running.
“We were disappointed when Fonterra selected an offshore company for their Infrastructure-asa-Service provider when there are great New Zealand-owned options in this space,” said Victoria MacLennan, co-chair of local IT industry lobby group NZ Rise.
“The impacts of Covid-19 on the economy are going to be felt for years to come so now, more than ever, it is increasingly important for large organisations — such as Fonterra and the New Zealand Government — to ‘buy local’ and support New Zealandowned businesses who in turn employ Kiwis and keep our economy ticking over.
“We really hope Fonterra look at the bigger picture here and their role in the ecosystem when making future procurement decisions.”
A Fonterra spokeswoman said nothing should be read into the RFP for the application support contract failing to appear as scheduled this week. There had been minor procedural delays.
With revenue of more than $1.3 billion last year and 5500 staff, Datacom is neck-and-neck with Fisher & Paykel Healthcare as the largest homegrown technology company. It also operates in Australia, Asia and elsewhere. Its two major shareholders are the rich-list Holdsworth family and the NZ Super Fund.
Asked if any “buy-local” criteria would be factored into Fonterra’s new IT tender, the spokeswoman said, “We can’t pre-determine the outcome of the RFP, but in general we see merit in having a mix of both onshore and offshore service providers.”
HCL and its rivals typically use a mix of offshoring and “in-shoring” (working in a client’s home country) for major contracts.
The company emphasised the latter as it announced its IaaS win with Fonterra, saying “This partnership will also extend HCL’s New Zealand presence to three offices within the country and will bring around 60 new jobs to the Waikato region, as the local support services for Fonterra employees will be based at its Hamilton delivery centre.”
The new setup would “modernise and manage the entire technology infrastructure Fonterra employees around the world use every day.”
Fonterra chief information officer, Piers Shore, said when the IaaS contact was announced, “Fonterra is pleased to be able to draw on HCL’s global scale and efficiency.
“Our employees have said there is room for us to improve the tools and technologies we use on a daily basis at work and this partnership with HCL will allow us to make major improvements for our employees in terms of end-user experience and provide the digital foundation to our transformation initiatives.”
This week, the Fonterra spokeswoman added, “Fonterra is a global company and HCL will be supporting our teams across our global markets, not just in New Zealand.”
As part of a restructure last year, Vodafone NZ outsourced a number of roles to the Indian-based Infosys.
Many went to an Infosys-run operation in Christchurch, which offered employees the same terms and conditions, and no local call centres were closed.
But some service desk operations were outsourced to India under the deal, and were hit when a Government lockdown saw Infosys’ Indian staff sent home. Vodafone NZ warned about extended helpline times and encouraged people to seek online help first. Spark was put in the same position after an outsourcing partner in Manila sent staff home.
On this point, the Fonterra spokeswoman said, “HCL has a significant New Zealand presence and the service desk supporting Fonterra will be Hamilton-based.
“Also, HCL is already providing some services to us remotely, and have been doing this throughout the Covid outbreak without any disruption in service, which gives us confidence.”
HCL is also a known quantity to Fonterra chief information officer Shore, the US expat who was brought on board by Miles Hurrell after he became chief executive in 2018. In his former role as vice-president, IT, for Eli Lilly, Shore signed up the pharmaceutical giant with HCL.
Fonterra has been reorganising its operations since reporting a $605m loss in the past financial year.
On May 20, Hurrell said the pandemic had clouded the company’s outlook for at least 15 months.
Notwithstanding that, the chief executive said Fonterra would contribute around $11b to NZ’s economy this year.
We really hope Fonterra look at the bigger picture here and their role in the ecosystem when making future procurement decisions.
Victoria MacLennan, NZ Rise