Third-party ERP support provider Rimini Street has seen a spike in job applications from Oracle engineers over the past few weeks as speculation circulates that the software giant is offshoring its Australian support operation.
In November 2015, The Register published an article claiming that Oracle's Australian support centre would be closing by the end of February as part of a global rationalisation plan.
CIO Australia approached Oracle, but it declined to comment on the status of its support operations.
Andrew Powell, managing director, Asia-Pacific at Rimini Street, told CIO that there is an unusual number of former Oracle support engineers, who have worked in the vendor’s support centre, on the job market.
“We are seeing a real spike in applications from people who were working for Oracle in their [local] support centre,” Powell said. “That’s a key indicator and I can only assume that Oracle will update its Australian customer base if there’s been a change in its business model.
“The point that I’d like to make is that we operate an onshore model and we think that’s going to be a huge boost if these rumours [around Oracle rationalising support] prove to be correct,” he said.
Rimini Street sells maintenance services to Oracle and SAP customers at a 50 per cent discount to what customers pay for annual maintenance to the vendors.
Last year, Rimini Street signed contracts with nine ASX 50 organisations, said Powell. Some of its more notable customers include Asciano, Carlton United Breweries, Transgrid, and Toll Group. It now has 30 local contracts and is supporting at least 30 international companies that have a subsidiary in Australia.
Rimini Street claims Oracle and SAP customers are overpaying for software maintenance. For the three months ending November 30 in 2015, Oracle’s global revenue for software license updates and product support was US$4.6 billion with costs for these services totaling US$293 million – a 93.7 per cent profit margin.
“That really does support a huge piece of [Oracle’s] share price. If the market noise is correct, I think the driver is to support a very high profit margin. That same profit margin explains the reason why we can exist,” said Powell.
“If there’s a profit of that size being made, it’s pretty easy for everyone to understand that there is opportunity for someone to undercut them on price and offer a better service and that’s what we are doing.”
Meanwhile, Oracle last May said it would add 1000 new sales staff across the Asia Pacific region – including 125 in Australia – to sell its cloud offerings.
Powell said he wasn’t sure that what Oracle customers are asking for.
“I think there’s a bit of a disconnect there and again, that opens the opportunity for someone to come in and take market share and that’s what we are doing,” he said.
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