Industry news

Computer Economics’ “IT Outsourcing Statistics” study for 2015-16 has found that disaster recovery is the most practical and cost-effective IT service for organisations to outsource, more so than desktop support, help desk functions or e-commerce applications.

This result came as something of a surprise, seeing as disaster recovery only ranked as the seventh-best IT function to outsource in 2014. However, this time 92 per cent of enterprises surveyed claimed that, having outsourced this function, the cost remained the same or dropped lower than when it was provided in-house.

“IT organizations outsource disaster recovery primarily to reduce risk rather than save money, and this is what the study has generally shown in the past,” said John Longwell, VP research for Computer Economics.

“We think one reason for the change is the maturation of disaster-recovery-as-a-service. Using on-demand cloud infrastructure for disaster recovery can be cost-effective if you don’t need to maintain the excess capacity.”

Read the full report here.

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Related: Research reveals what steps the UK must take to become a world-leader in outsourcing

Infosys has launched “Zero Bench”, a new internal app that will allow existing Infosys employees to apply for projects taking place within the company that suit their skillsets.

Zero Bench has been designed to ensure that all company resources are being utilised to the fullest extent possible and to prevent external recruitment taking place when it isn’t strictly necessary. The app was inspired by Uber, which is similarly designed to maximise convenience and cut down on unnecessary effort, famously disrupting the transport industry as a result.

"Zero Bench is a next-generation people initiative that aims to maximise the potential of our talent who are currently trained and in between projects or on bench,” commented Ravi Kumar S, global head of delivery at Infosys.

“This is a gamified platform for people to post modular work based on their project requirements. We have seen tremendous response since the launch, supplemented by continuous communication through our internal channels.”

Other outsourcing firms such as Capita have also recently found success bringing gamified systems into the workplace.

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Related: 100,000 employees replaced by robotic automation at India’s top three service providers

Everest Group has release two reports identifying digital banking leaders in the UK and the US using its new Ability | Performance | Experience (APEX) Matrix.

When commenting on the report outcomes, Everest VP Sarah Burnett said that increased competition meant those in the retail banking sector were having to become more “agile and innovative” and that they will have to start “thinking and acting like startups” in order to appeal to digital natives.

The APEX Matrix compares digital functionality across mobility, social, online and branches/ATMs to the business impact of those investments, judged in terms of customer experience scores, brand perception and financial impact.

In the UK Barclays saw the highest score in terms of digital functionality while Lloyds Bank was rated highest for business impact, with HSBC and Santander also leading in those areas.

In the US Citibank lead the way for digital functionality while Capital One was an outright leader in terms of business impact, with Wells Fargo and Bank of America also scoring well for both criteria.

Access both full reports here.

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Related: Co-operative Bank and Capita agree on £325 million acquisition

Serco’s reported revenues for the first half of 2015 show signs that the outsourcing services group is stabilising, despite a post-tax loss of £92 million and a 28 per cent decline in revenues from UK central government.

The group lost its contract to run the Docklands Light Railway line in London, with deals involving the National Physical Laboratory and Colnbrook immigration removal centre also coming to an end.

Serco said in an official statement: “Following the significant disruption to our customer relationships with UK central government in 2013 and the subsequent corporate renewal process that was put in place over the course of 2014, rebuilding the pipeline is now a major focus, and we will look to identify new opportunities in our core markets of justice & immigration, defence and transport in the UK as they emerge from policy decisions taken by the new government.”

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Related: Serco Seeks Redemption after £1.3bn Operating Loss

US technology provider CSC has acquired Fixnetix, a UK trading technology group, in order to make strides in the high-speed trading and data services markets.

CSC and Fixnetix will both continue with plans to develop an array of services targeting banks and brokers, such as high-speed trading and a variety of other IT services. Both businesses see this as a lucrative market, with many banks looking to make the switch from trading over the phone to trading electronically.

According to speculation in the FT, the acquisition may have cost CSC just over $100 million.

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Related: Co-operative Bank and Capita agree on £325 million acquisition

G4S experienced significant financial losses on the stock market recently, after Goldman Sachs lowered the firm’s share rating to “sell” one day after its half-year results were published.

Analysts at Goldman Sachs cited a “fiercely competitive” security business environment and disruptive technologies “creating opportunities for new players” as current trends that will take away from G4S’s business, hence the downgrade.

The bank also claimed that economic pressures in Africa and Latin America are likely to negatively affect the company and impact on its end-of-year results.

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Related: G4S wins £80 million EDF Energy contract to guard new nuclear power plant facility

After confirming that its integration with new $4 billion acquisition IGATE will be complete by mid-2016, Capgemini has announced that it plans to expand its engineering services team in India as soon as things are settled.

"Definitely, engineering services is the next big thing in the IT industry," explained Aruna Jayanthi, CEO of Capgemini India. "We started an engineering services team 18 months ago and we will expand that going forward… Indian companies are realising that to go global you have to have a world-class technology backbone and that's driving a lot of the business. Our preferred set of customers has begun to invest.”

Despite the rise of digital technologies, many Indian IT firms are investing in engineering services first and foremost, an area that is expected to grow faster than any other Indian business sector this financial year.

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Related: HMRC will take on 250 Capgemini workers to ease Aspire contract transition

Research from arvato has revealed that the size of the local government outsourcing market rose from £53 million in 2005 to just shy of £100 million in 2010 during the coalition government’s time in power.

arvato stated that this rapid increase was caused in part by the uptake of shared service arrangements. However, global BPO director Debra Maxwell says that, despite this rise, “adoption of genuine shared services among local council has been relatively low”.

With further cuts to council funding expected from the government’s next spending review later this year, Debra expects councils to embrace outsourcing in previously unchartered territories, in an attempt to find revolutionary new ways of improving efficiencies while maintaining services at the same level.

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

Investors in outsourced public services firm Interserve are slowly starting to panic, as the group issued a warning that George Osborne’s planned increase to the national minimum wage will make the company’s profits at least 10 per cent lower next year than previously forecasted.

Interserve will need to pay at least 10,000 of its 15,000 cleaners a higher wage as a result - £7.20 an hour by April 2016 and £9 an hour within the next five years. Due to the unexpected nature of the summer Budget announcement, company analysts had not previously anticipated this decline in profits.

Interserve CEO Adrian Ringrose warned that there will also be “knock-on effects”, where more senior workers, such as staff supervisors, will expect their own wage increase to protect their pay differentials from junior employees.

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Related: Local councils must find extra £1 billion by 2020 to fund new minimum wage

An iGov survey, commissioned by Serco, has revealed that the majority of managers, department heads and directors working within NHS organisations believe outsourcing and shared services will make an important contribution to the successful delivery of NHS England’s efficiency plan over the next five years.

62 per cent of respondents shared this view, while just 41 per cent thought outsourcing and shared services are currently contributing towards their efficiency targets.

With Capita on the verge of taking the reigns of the NHS’s back office in order to improve efficiency and cut costs, Serco reported that there was “widespread agreement” among respondents that the delivery of immediate savings over the next year will be the easiest step to take. However, meeting NHS England’s demanding target of generating consistent savings of two-to-three per cent each year between now and 2020 was considered to be a much more significant challenge.

Procurement was seen by 54 per cent of those surveyed as the business support area where the largest efficiency improvements can be achieved, with 45 per cent also seeing that as the area where efficiency savings can be brought about most quickly.

The most highly sought outcomes off the back of these organisational changes were ultimately improving the patient journey (74 per cent) and successfully delivering integrated care models (73 per cent).

The “Efficiency Challenges in the NHS” survey polled a broad cross section of managers, department heads and directors from over 200 different NHS organisations.

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Related: NHS and Capita consider administrative cuts to achieve savings and frontline improvements