Siemens is to launch a new services division which will include a software development arm. The Siemens IT Solutions and Services (SIS) division, will include the loss-making Siemens Business Services (SBS) as well as program and system engineering and other services divisions.

By combining all IT services and software development across Siemens, the new unit will be in a stronger position to provide comprehensive and complex systems and services from a single source, according to Siemens spokesman Jörn Roggenbuck.

Outsourcing, a core business of SBS, accounts for nearly 60 percent of sales in the new group, followed by IT services, such as systems integration and SAP software implementation, at 35 percent, according to Roggenbuck. Software development generates the rest of the group's sales of around €5 billion (US$6.5 billion ), he said.

The Siemens group currently accounts for around 40 percent of SIS revenue. But that percentage is expected to drop as the group increases business with new and existing customers, according to Roggenbuck.

Christoph Kollatz will be group president of SIS, overseeing a workforce of around 43,000 people.

Since taking over as chief executive officer of Siemens, Klaus Kleinfeld has shifted the focus of the German engineering giant away from low-margin manufacturing areas, such as telecommunications equipment, computers and chips, to areas he views as potentially more profitable, including factory automation, power generation and automotive systems.

But since Kleinfeld has been on the job, Siemens has been shaken by a bribery scandal Six current or former executives, including Thomas Ganswindt, the ex-head of the group's telecommunications equipment unit, are suspected of setting up secret funds outside Germany.

Germany's Justice Ministry plans to propose tougher legislation to fight corruption in the wake of the Siemens scandal and others that have shaken leading German businesses.

Original story by IDG news service