Industry news

Serco has landed an £85 million contract extension to provide services for Norfolk and Norwich University Hospital (NNUH) until August 2021, when the partnership will be up for renewal once again.

The services that Serco provide include portering, catering, laundry services, security, car parking and ground maintenance.

Nayab Haider, contract director at Serco, commented: “We are delighted to continue our long-standing partnership with Norfolk and Norwich University Hospital. Serco is in a unique position to deliver our stretching but realistic proposals, which will demonstrate value for money while safeguarding quality care and safety for patients.

“The team’s focus over the next six years will be to continue to improve patient satisfaction, as well as infection control and prevention, while supporting the improvement of patient flow initiatives and making guaranteed cost savings.”

In other news concerning Serco, the outsourcing service provider recently donated a total of £10,000 to a number of charities in Havering; Serco is currently responsible for waste collection and recycling on behalf of Havering Council.

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Related: Serco awarded place on $199 million contract to service American navy and Marine Corps

Burnley Council has announced that it will be awarding a 10-year contract worth a total of £34 million to Liberata, a business process outsourcing and innovation firm.

The decision has been made as part of the council’s major “change programme” which was put in place in April 2014. Functions including customer services, IT services, payroll systems, HR systems, and revenues, benefits and debt management will all be transferred to Liberata.

The benefits expected include 100 new jobs located in Burnley, savings of 19 per cent throughout the lifetime of the contract, and an investment of £4.9 million in a new Service Hub, IT services, service innovation and support for community projects.

Burnley Council leader Mark Townsend said: “We are delighted to be awarding this contract to Liberata, as they bring opportunities for growth into the borough at a time of government austerity measures.

“We are taking this step to respond positively to the challenges that we face. Burnley Council is acting in line with its responsibility to provide the best possible services to residents, in spite of major reductions to our funding.

“Since 2010, the council has taken a range of steps to protect key services as well as dealing with the financial situation. We have made significant job cuts. We have positively explored options to work with other organisations, for example through setting up Burnley Leisure as a charitable trust. Bringing in a strategic partner is a new approach, which will make the council look and feel radically different.”

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Related: BT seeks High Court injunction to prevent Cornwall Council contract termination

Last week Sky embarked on its “robotic revolution” series, resulting in an expansive variety of written and filmed content, all of which was underpinned by a robot-related survey of over 1,000 UK citizens from all parts of the country.

The poll revealed that roughly 30 per cent of the UK population is concerned that their jobs could be replaced by robots within the next 20 years. Almost twice as many did not share this fear, with Conservative voters unsurprisingly showing the lowest levels of concern.

53 per cent of those surveyed believed that the UK will rely on AI and robotics in order to function by 2035. The majority (62 per cent) also thought that the government should protect human workers from being replaced by robots; meanwhile artificially intelligent beings with intelligence equivalent to that of humans were not considered worthy of having their rights protected by the law, being trusted with child supervision, or capable of providing satisfactory long term emotional or sexual relationships.

Ultimately the survey unveiled mixed levels of suspicion and concern – despite the above, 43 per cent of respondents still agreed that intelligent computers could one day threaten the existence of the human race, while just 34 per cent disagreed.

Sky’s own research offered more mixed messages. Studies have shown that, so far, automation has served to boost worker wages and productivity rather than replace jobs. However, that is most likely because the robotic automation currently in place is, for the most part, unintelligent.

It is thought that more advanced technologies could eventually displace a whopping 35 per cent of UK jobs (including middle-skilled work as well as low-skilled). High risk roles include those in office and administrative support, sales and services, transportation, production and construction.

In the meantime, Britain’s knowledge workers are doing what they can to co-exist with their new automatic counterparts. A few companies have gone further than others when it comes to robotic integration – one example is Xchanging, where employees have been encouraged to name their robotic coworkers and even invite them along to office parties.

Despite this example of exceptional open-mindedness, the results to Sky’s survey strongly suggest that the rest of the UK’s citizens might not be quite as welcoming if and when intelligent robots start to join them at their workplaces.

Do you want to learn more about how robotics will shape the future of outsourcing?

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The impact of China’s economy woes are still being felt after ‘black Monday’, where stocks dropped 8.5 per cent on the day, and continued throughout last week. The impact of this has been seen across stock markets worldwide, with US markets down almost two per cent.

Certainly it’s very difficult to gaze into a crystal ball and see what it all means in the long term, but the International Monetary Fund’s (IMF) head, Christine Lagarde, warned that global growth will be weaker than expected in the coming months.

For the past 10-15 years, China’s economy has been growing well into double digits, something which is almost inconceivable in well developed economies such as the US and UK, where a two or three per cent growth is considered excellent. This year, however, China’s economic growth has slowed to mid-single digits and this is starting to cause a crisis of confidence in the investment community. It’s this uncertainty that’s caused the stock market troubles this past week.

However, Lagarde commented on Tuesday: “Asia as a region is still expected to lead global growth. But even here, the pace is turning out slower than expected – with the risk that it may slow even further given the recent spike in global risk aversion and financial market volatility.”

On 13th August, China devalued its own currency against the US dollar for the third time, in a bid to shore up investor confidence. Of course, the US has seen this devaluation as tantamount to a subsidy on Chinese exports. It’s nothing new; China has kept exchange rates with the US artificially low for a long time. For outsourcers in the UK, this could well be beneficial and bring about cost savings.

They can do this because Chinese currency is controlled, not floated, so it’s not affected by stock market fluctuations like GBP or USD. I’d certainly think that, if floated, Chinese currency may well strengthen, but that would mean products from China would become more expensive.

US investors would certainly like to see China’s currency move this way, but there is a vested interest in the American manufacturing industry, which is taking quite a hit from the increased competition in China – the Institute of Supply Management confirmed that the US manufacturing industry’s growth has slowed in July.

So what does this all mean for outsourcing here in the UK?

The devaluation of the Yuan quite simply means that Chinese originated products, products manufactured in China, and outsourced business to China are all going to be cheaper. Whilst many investors are concerned about the unstable markets, for outsourcers here in the UK, it’s actually quite beneficial. But it’s not just outsourcers who are going to see cost savings, the benefits will likely feed through to every sector.

Add to this the strong performance of GBP against the USD recently and we’re getting an even bigger kick back from that devaluation two weeks ago.

However, taking advantage of these favourable conditions can only happen if outsourcers, hardware suppliers, service providers etc. are doing business in China, or with Chinese-owned companies.

Whilst the current financial conditions are here to stay for a while, it’s not necessarily going to be permanent so now is the time to start considering looking to China for products and services. Better yet, those outsourcers that are already working with Chinese-owned businesses are already realising the cost benefits meaning bigger margins for them, and cheaper services and products to their customers, who can continue to pass on savings for a little while yet as China’s economy and its investment community get used to a new level of growth expectation.

Networks First is a leading managed IT services and network support provider based in the UK.

A dispute over a 10-year outsourcing contract, valued at £260 million, signed just two years ago between Cornwall Council and BT has been escalated to the High Court.

After issuing BT with an ultimatum back in May, Cornwall Council is looking to terminate the contract altogether. However, BT has sought a High Court injunction to prevent that outcome.

The original agreement stated that BT would takeover IT, HR and other back office services on behalf of the council. The costs involved in a contract of this nature are often front-end loaded, meaning that BT could wind up with big financial losses if Cornwall Council successfully terminates the deal.

It is thought that the council originally rushed to close the deal in the build-up to local elections in 2013, meaning that crucial negotiation stages were rushed.

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Related: Local councils embrace outsourcing as part of austerity-driven innovation push

A country-wide survey of the UK’s top CFOs has found that “skills shortages” are more of a concern for British businesses than Britain’s potential exit from the EU, economic issues in China or severe austerity measures imposed by the UK government, City AM has reported.

This concern is reflected by companies globally. Digital skills such as coding are in increasingly high demand and the world’s workforce is struggling to keep up. “Ask any board director in Asia or any recruitment consultant in Sydney,” said Anton Colella, CEO of the Institute of Chartered Accountants of Scotland (ICAS). “Whoever solves this fastest will gain a global competitive advantage.”

The potential for service providers located in countries that are first to address this skills crisis is also huge, as buyers of outsourcing will be likely to flock to suppliers with the best access to digitally skilled employees. Accordingly business leaders throughout the UK are calling for the government to stop being so restrictive with visas for foreign workers, as it is at risk of cutting off Britain’s access to a wider pool of digitally talented workers.

Only the “depressed oil price” was a higher concern for the financial chiefs surveyed. The poll was carried out by ICAS and DLA Piper. This news comes as the growth of the UK’s services sector slows to its lowest rate in over two years, raising concerns over the health of the UK economy.

Do you want to learn more about how technology is shaping the future of outsourcing?

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Sam Bowman, deputy director of the Adam Smith Institute, has made the bold claim that taking in a large number of refugees from war-torn countries such as Syria and Iraq could be beneficial to UK business and the country’s economic growth, in his column for City AM.

Bowman draws on previous case studies in order to explain why the UK should be enthusiastic about accepting more asylum seekers, asides from the pressing humanitarian reasons. In the 90s and early 2000s, Denmark welcomed an influx of Yugoslavian refugees; despite the vast majority lacking skills, their addition to the Danish workforce resulted in Denmark’s economy becoming more complex and productive, with many native Danes moving away from the low-skilled jobs filled by new immigrants and taking on better-paying, skilled jobs.

A similar phenomenon was seen in 1980 when 125,000 Cuban immigrants settled in Florida after fleeing Fidel Castro’s dictatorship.

Many citizens, and much of the media, in the UK is solely focused on the short term ramifications of immigration without considering the bigger picture. Bowman closes by pointing out that “the compassionate case for letting more refugees in is very strong. But we would be mistaken to think that, at least in the medium-to-long run, this would be at a cost to ourselves.”

Read the full article.

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Related: Recruiting Good People Still Top of Outsourcing Agenda: Live Polling Results from the NOA Symposium

Camden and Islington Council have set out a proposal to move to a share IT service model which could reap annual savings of £4m. The plans which are subject to approval would see the creation of a joint committee to manage the running of the £5m shared IT services initiative by April 2016. A review commissioned into the aligning of the two councils IT needs found a sufficient business case and an ample level of shared benefits for both councils. The proposed partnership would harness the digital technology of both councils to deliver improved services and significant cost savings.

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Related: Dorset Police Aligns with Devon and Cornwall

After extensive evaluation, Manchester United has selected HCL as a key global partner to bring the club, sponsors and fans – all 659 million of them - closer through technology.

Manchester United’s Group Managing Director, Richard Arnold and the CEO of HCL, have unveiled plans for the creation of a new digital co-innovation lab based at Manchester United’s ground Old Trafford, which alongside a new website and mobile app, will enable Manchester united to provide a better digital experience to its fans and players whilst increasing its digital revenues. They stated that the co-innovation lab will drive digital innovation and review future developments, such as whether wearable technology could improve the fan’s experience.

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Related: HCL win global IT infrastructure in outsourcing deal with De Beers

Business enterprises today are increasingly susceptible to vendor audits of their software portfolios – audits that can expose significant violations of licensing terms and result in millions of pounds in fines and penalties. Several factors are driving this trend and software vendors face declining sales of new products – and audits represent a potentially lucrative new revenue stream. In addition, implementation of new technologies such as cloud and virtualisation can wreak havoc with an enterprise’s licensing portfolio, as can a merger, acquisition or divestiture. Vendors, meanwhile, are becoming more and more attuned to signs of vulnerability from their customers.

In this environment, an effective sourcing strategy that leverages third-party expertise, in-house resources or a combination of both is imperative. Such a strategy can drive enterprise-wide asset management that maintains visibility into licenses, contract terms, utilisation and pricing. This insight enables customers to demonstrate compliance and – whether or not they are audited – improve their contractual terms and supplier relationships.

A number of factors can drive violations of software usage. Volume licensing agreements allow businesses to deploy assets directly to large numbers of users, leading many customers to over-deploy products. This results in the acquisition of software without adequate tracking or inventory management processes, thereby putting the enterprise at risk.

Vendors also offer customers licenses to “sandbox” new products in test environments. Under such agreements, customers often freely share access to the new products, without realising that in fact the license allows for only one user.

A wide range of “red flag” events signal to a vendor that a customer is likely to be out of compliance with contractual obligations for licenses. The most commonly cited is involvement in a merger, acquisition or divestiture. Enterprises dealing with organisational disruption, new geographical and legal jurisdictions and the release and acquisition of users and software licenses are highly vulnerable to compliance violations.

Organisational growth that’s not accompanied by additional purchases of software license is another common audit trigger. Vendors also scrutinise accounts for signs of attrition of licensing expertise – experts in the arcana of software agreements are rare and their departure leaves a significant gap that won’t go unnoticed.

In a broader sense, the implementation of any new and innovative technology also increases the risk of non-compliance. Virtualisation initiatives that move workloads around a heterogeneous server infrastructure and cloud-based IaaS, SaaS and PaaS deployments can all significantly impact licensing terms and contractual structures. Reconciling legacy agreements to the conditions of transformed environments presents a daunting challenge. In the context of today’s rapidly changing marketplace, any technology implementations should be viewed as a potential audit trigger as well as a sourcing event.