Industry news

Heathrow Airport will create a new procurement hub if the UK government gives the go-ahead to build a new £16bn third runway.

The procurement director at the airport, Ian Ballentin, said the new supply chain would involve the creation of a procurement hub and an academy. The former includes a manufacturing hub and consolidation centre, whereas the latter aims to develop skilled workforce able to cope with the programme.

Despite not being committed with any specific supplier, the Airport is already probing the possible suppliers and working on the plan to develop the new supply chain.

“We are planning to use small suppliers to boost innovation and to act as a broker of opportunity between different tiers of suppliers”, Ian Ballentin adds.

“The trick with all of this, it’s not sort of standing still and waiting for the starting pistol, it’s to get everything in place ready to go”, he said.

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Realated: Heathrow employs single procurement system for T2 Contracts

Fortune has made the claim that India is the only BRIC (Brazil, Russia, India, China) country expected to see notable economic growth over the next few years. PwC has predicted that India will be a “star performer” in 2016, achieving 7.7 per cent economic growth and outshining in this area China for a second consecutive year.

As a result, India is expected to remain one of the fastest-growing major economies between now and 2020. Meanwhile, Fortune reports that scandal-ridden Brazil is sinking into its deepest recession in 25 years, Russia is “rusting like a Cold War-era Volga” due to sanctions and the drop in value of energy (its chief export), while China’s “once-unstoppable” economy is now failing spectacularly.

India benefits from some important trends that contribute to its economic success. Its economic growth isn’t reliant on exports and, as a major importer of energy and other commodities, it has benefitted more than most from the sharp drop in energy prices over the past few years.

On the other hand, the country is a long way from becoming an urbanised, industrial power. Almost half of all its jobs are agriculture-based and 170 million of its citizens currently live on less than $1.90 per day.

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Related: India, the world’s most attractive outsourcing destination of 2016

Sitel’s Newcastle-based customer experience centre has donated over £7,600 to the local Marie Curie hospice, following a highly successful fundraising initiative.

The donation was large enough to cover the hospice’s operations for a whole day, supporting patients with terminal illnesses through specialist nursing care and a growing outpatient programme.

Charlotte Campbell, community fundraiser for the North East and Cumbria for Marie Curie, said: “This is a fantastic donation from a leading employer in the Newcastle area. The response from Sitel was amazing and the donation will go a long way towards maintaining the care and support our patients rely on.”

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Related: Students assist charities through Capgemini’s community challenge

The Court of Session in Scotland has cancelled a public contract between Inverclyde Council and Amey Public Services (APS) after a second supplier presented a legal challenge against the local authority.

It is the first time a UK court orders the termination of a contract following legal action from a supplier.

APS and the council entered a deal for the provision of street light services last year, after a public bid under the Crown Commercial Services framework agreement, despite the fact that APS was not included in the framework agreement as a supplier. Amey OW (AOW), a company from the same group as APS, was.

One of the listed suppliers, Lightways, took the local council to court for illegally awarding the contract directly.

In spite of Intercycle’s claims that the offer to APS was a simple mistake and that the deal had always been intended for AOW, the Scottish court interpreted the error had not been a simple “mis-designation” and declared the contract as ineffective.

Intercycle is set to appeal the court’s decision.

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Related: High Court allows Cornwall Council to terminate £160m BT contract

AT Kearney, a London-based global management consulting firm, rated India as the world’s biggest financial and business attractive outsourcing destination of the planet.

The 2016 Global Service Location Index (GSLI) - AT Kearney's study - analysed 55 countries, making to the top ten: India, China, Malaysia, Brazil, Indonesia, Thailand, Philippines, Mexico, Chile and Poland.

India and Philippines “are still top of mind when it comes to offshoring”, said Nikolai Dobberstien, a partner with AT Kearney’s Communications.

“The hunt for new talent is now taking companies beyond these countries’ capitals and major cites to tier 3 locations such as Surat, Nagpur, and Lucknow in India and Bacolod and Iloilo City in the Philippines”, Nikolai adds.

Among the main reasons, are the affordable real estate facilities as well as the availability of qualified labour and its lower cost compared to other major cities, such as Delhi and Kolkata.

Despite the fact that the top seven countries are in the same position order this year as in 2014, Arjun Sethi – global leader of AT Kearney’s IT practice – admitted that “this could all change radically”.

The new business model associated with the new trend of automation, “could displace the leadership of the likes of India and China in outsourcing”, he said.

This trend is seen as a main driver of market expansion. However, it poses a threat to the established concepts of offshoring.

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Related: Understanding Indian Culture for Effective Business in 2015/16

The Ministry of Defence has opted not to renew its £36 million defence business services (DBS) contract with Serco, choosing instead to bring the management of the service back in-house.

The MoD’s DBS was created in July 2011, providing a comprehensive range of services including HP, finance, information and vetting to a wider department.

Serco has been contracted to provide these services through a shared services centre (one of the largest in Europe) since 2012. The public sector outsourcing giant was originally contracted to “drive down costs and deliver efficiencies” with savings of roughly £71 million expected. It is unclear whether these targets have been achieved.

The MoD told Spend Matters that the contract has reached its “natural end” and that the decision to bring the services back in-house was made so that management can “fully consider options for the next phase of DBS”.

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Related: Serco presses on with strategic realignment towards the public sector

Castle Street Investments, an Edinburgh-based company, announced at the AIM exchange the intention of acquiring the IT outsourcing organisation Selection Services Limited.

The Edinburgh-based company aims to raise £30m from investors to acquire the entire IT outsourcing company.

According to the Daily Record, Selection Services has been losing money during the last years.

“Most recent accounts, covering the 2014 year to June 30, show a pre-tax loss of £4.88 million on sales of £36.3 million”.

“The company had reported a £3.88 million pre-tax loss on sales of £33.4 million in restated 2013 accounts”.

“Castle Street Investments proposes to acquire this company the business for an aggregate consideration of £34.8 million on a cash-free, debt-free basis”, the Daily Record adds.

The first stage of this process will be completed by 21 January after the issuance of the new shares.

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Related: Digital strategy at heart of public savings in 2014

The Department for Communities and Local Government has announced that from April onwards councils will be able to sell capital assets in order raise money for ICT projects.

At the moment, councils are not authorised to use receipts from capital asset sales on services; however, in the Autumn Statement, George Osborne declared new guidelines should be instituted this year.

Accordingly, the DCLG has published new guidelines on capital assets’ spending for councils. These will affect a variety of services such as the back-office and administrative shared services centres with other public authorities, taking a digital approach to the delivery of more efficient public services and improving systems and processes against fraud and corruption.

Councils will need to list the projects they wish to qualify for capital sales receipts, as well as present a cost/benefit analysis to go alongside each project.

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Related: Shropshire reveals its new ICT infrastructure plan

A new project between 34 police and emergency entities is meant to save £7m through a collaboration on vehicle procurement.

The new collaboration project led by the West Midlands Police, includes a contract for over 3,000 police vehicles with several suppliers such as the General Motors UK, BMW, Volvo and Ford over the next two years.

This collaborative project is thought to be the biggest vehicle procurement collaboration ever. David Wilkin, West Midlands Police’s director of resources, said: “A vehicle purchasing collaboration between police forces and partners on this scale has never been seen before”.

“The most important aspect is that the vehicles are the most suitable and safest available”, he added.

The selection of the different suppliers took into account their capacity to work with local dealers in order to ensure that the maintenance and warranty repairs of the vehicles could be carried out locally.

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Related: G4S announces outsourcing could save UK police forces £1 billion a year

According the Ivalua’s Trending in Procurement survey, carried out shortly after the UN climate change conference, more than 70 per cent of procurement professionals believe the Paris agreement will push for a change in the sector.

Ivalua’s survey assessed the procurement profession’s perception of the climate change agreement and its impact among 120 European procurement professionals.

The survey revealed the procurement departments are expected to review their strategies by the time the new agreement is transposed into national laws. Therefore, promoting the adoption of more rigorous supplier evaluations based on environmental and climate change risks criteria.

New environmentally friendly procurement strategies are not new within the industry. The digitisation of many services has previously helped saving costs as well as reducing the amount of paper used.

The Paris climate change agreement not only traces a new route towards a low-emission global economy but also offers the procurement industry an opportunity to take the lead on the environment issue.

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Related: Digital strategy at heart of public savings in 2014