Industry news

Outsourcing: Beyond technical expertise, part of the Grant Thornton International Business Report, has revealed that “intangible factors” are considered more important than “technical factors” when making an outsourcing business relationship work.

A higher number (56 per cent) of the 2,571 business executives interviewed thought service reliability was most important when selection an outsourcing provider, followed by provider cost (43 per cent), trust in the supplier (35 per cent) and understanding of the buyer’s business (35 per cent).

The report also found that payroll and HR are the most commonly outsourced back-office processes globally – 34 per cent of those surveyed outsource those functions or intended to do so. Finance and accounting processes was just behind at 27 per cent.

Read the full report for more.

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Related: Equinix Buys UK Rival Telecity for £2.3 Billion, Scorning Interxion Merger in the Process

Sigma Financial Group, the Redditch-headquartered credit management and customer service specialist, has announced plans to expand into Birmingham, brining over 700 new jobs to the city.

The move into the McLaren Building on Priory Queensway will double the business outsourcing firm’s workforce. 200 new administration and contact centre staff will be recruited and trained by December 2015, followed by a recruitment drive for 500 further roles by the end of 2016.

Sigma CEO Tim Freeman drew on HSBC’s planned move to Birmingham’s Arena Central as proof of what a vibrant business community Birmingham is becoming: “Birmingham is booming and the city is on the cusp of becoming an even more important economy and centre for business in the UK.

“That makes it a hugely exciting time for us to be expanding and investing into the centre of Birmingham. It represents the beginning of a new chapter as we continue to grow our already significant ‘white label’ client base.

“To achieve that, we need to recruit the best people and we plan to have established a team of almost 750 in the city by the end of 2016. Those roles will be spread across middle and senior management, contact centre staff and specialist commercial and finance jobs.”

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Related: Teleperformance USA Expands Killeen Facility Bringing 400 New Jobs to Texas

Europe’s top football governing body UEFA has extended its outsourcing contract with Interoute, meaning the telecoms provider will host roughly 98 per cent of UEFA’s IT services (including digital media such as websites) during the next international UEFA European Championship, hosted in France in 2016.

The four year contract extension includes the launch of new Interoute-hosted services, including the use of Microsoft Lync and a new Bring Your Own Device strategy. Interoute will also be responsible for maintaining UEFA websites, with 160 million page visits expected around the time of Euro 2016.

"Interoute's networked cloud is the infrastructure platform for 98 per cent of all the IT services that UEFA provides, from digital media to vital back office activities," said Daniel Marion, head of ICT at UEFA.

"Interoute understands its events process and has an agile operating model to fit with the needs of supporting and managing the ICT systems it uses to run some of the most high-profile football competitions in the world.”

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Related: Europe Overtakes Asia in Setup of New Outsourcing Facilities for First Time

Business Standard has reported that Wipro is planning a massive expansion of its development centre in Bhubaneswar, which is expected to house 28,000 employees.

It’s alleged that the plans have come about in response to criticism from the Odisha state government in India, which claimed that Wipro’s expansion was unfolding too slowly.

There is no timeline for the expansion plan as of yet, although one may be proposed after the next meeting of the Board of Approvals (BoA) for special economic zones under the Union commerce and industry ministry.

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Related: Wipro in Talks to Buy Equiniti in Deal Valued at Over £1 Billion

Part one: Slovakia as an outsourcing destination

Where’s the best kept secret in European outsourcing potential?

That’s a question that in some people’s eyes is increasingly being answered by fast-emerging CEE (Central and Eastern European) nearshoring contender Bulgaria.

Though acknowledged as having a smaller IT workforce than some of its neighbours, the country’s tech scene is in buoyant mood. The Global Entrepreneurship Index recently placed at 44 out of 100 in terms of its attitude to business and starts up, putting it just ahead of local CEE IT services rivals Hungary and only just behind Slovakia.

That positive attitude towards development starts from the top down – with the country consistently setting the lowest corporate income tax in Europe, of only 10 per cent. No wonder, perhaps, that many big firms have made their way to Sofia, attracted by the nation’s competitive labour costs and access to a high-skills workforce, with SAP, VMware, Johnson Controls, Cisco and HP all having strong presences here.

It’s not all one-way traffic; a number of home-grown technology firms have even made it all the way over to Silicon Valley. Talk to local entrepreneurs, though, and a few gripes soon come through; the government is often criticised for not doing more to encourage tech development - and some commentators say that, while growing strongly, as we’ll see, the local tech community is still relatively small compared to other CEE economies.

Still, there is a real sense that Bulgaria is finally building to real take-off. The official inward investment agency, InvestBulgaria, says the country offers expertise in outsourced HR, working on world-level projects and at competitive salaries, while for Business Process Outsourcing, it notes that it’s among the leaders in the world in outsourcing.

Consultancy AT Kearney has put Bulgaria at number nine in its global list of outsourcing destinations for 2014, meanwhile, while the Bulgarian Outsourcing Association says outsourcing now accounts for almost 4 per cent of GDP.

That seems set to rise, given Bulgarians’ facility with foreign languages (especially English and German), that growing interest in start-ups as a way of life – and the fact that Sofia office space will cost you about half of what you’d pay in Warsaw or Berlin.

Is there something to that idea of Bulgaria as the next big outsourcing thing? Seems there could well be.

Bulgaria As An Outsourcing Option – The Facts

BASSCOM is the official trade body for Bulgaria’s local software industry, regularly publishing data on the country’s progress. Some recent findings support the idea that it’s quickly approaching maturity:

* Bulgarian software firms earned €702m in 2014, compared to only €132m in 2005 – a 500% jump, 60% of which was earned in the export market

* IT is one of the fastest growing of all Bulgaria’s industries, now accounting for 1.75% of total GDP

* 12,000 jobs were directly created in the local tech sector between 2005-14, with a 10% jump from 2013 to last year alone

* That means there are now 17,000 IT professionals in the country compared to less than 5,000 ten years ago

* These IT professionals earn more than most of their local peers in the services or other engineering fields – but their average wage is still highly competitive by EU standards, at just under €22,000 per annum.

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Soitron Group has been helping its customers build and retain a competitive advantage thanks to the smart use of IT solutions for over 24 years.

For more information regarding Soitron, visit the company's website.

Part three: Romania as an outsourcing destination

A select few companies – about one in five, according to the Accenture 2015 High Performance BPO research – have cracked the code in terms of getting the most from their outsourcing arrangements and can be classified as “high performers.” While these high performers share similarities, we found the two characteristics that stand out most are their approach to leveraging technology and their investment in talent.

Based on a survey of 296 respondents representing BPO buyer organizations with revenues of more than $500 million, our findings revealed that advanced technologies such as automation, analytics, cloud and mobility now separate the best BPO relationships from typical ones. In fact, 69 percent of high performers said gaining access to technology in a BPO relationship was important, while only 27 percent of typical performers agree.

In addition, companies are realizing that insufficient investment in people has reduced the value delivered from BPO initiatives. Overall, more than 75 percent of high performers cited the importance of the provider’s BPO expertise as critical to their success, compared to only 38 percent of typical performers.

In this environment, providers’ technology-enabled processes and talent, in both retained organizations and among BPO providers, are proving to be powerful value multipliers. It’s this mindset – viewing BPO as a value multiplier, rather than a process substitute—that enables businesses to experience transformational value. Through the implementation of innovative technologies, high performers are able to help humans apply their distinctive skills, such as discernment and judgement, to various aspects of work.

We have termed this distinction of using technology to clarify how and when distinctive human skills can be used as the “pyramid of work.” Here’s a further look at each layer:

• Bottom Layer – repetitive, task-based transactions which can be replaced by automation technologies. This increases speed, accuracy and standardization, removing subjectivity and enabling repeatability. It also increases productivity by eliminating process steps, letting operator process transactions by the hundreds instead of in tens or twenties.

• Middle Layer - the critical spectrum of analytics capabilities. The high performers identified in our research use data and information from the services of a BPO engagement to capture additional business benefits. Outsourcing providers with a mature analytics capability can deploy algorithms, models and statistical analysis to measure the right key process indicators, identify process weaknesses and opportunities, and redesign processes to deliver measurable business outcomes.

• Top Layer - insights and expertise. While new technologies and innovations are changing the current BPO model, they are also changing the kind of talent that providers need to deliver the greatest value to clients. This means that buyers and providers alike should focus on the skills that higher-value BPO talent can deliver, such as industry expertise and high-demand analytics skills.

BPO is rapidly changing from a commodity and transaction-based focus to a one centered on business outcomes. The key to developing a value-based approach is to not only to capture the data, but also use automation, analytics and talent to generate both insights and foresight. In doing so, companies will be in a position to make better business decisions, reduce costs, increase revenues and also position themselves among the select group of high performers that are leading the charge in the quickly evolving arena of BPO.

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Accenture Operations specialises in igniting essential processes for its customers and illuminating new pathways towards sustained growth.

For more information regarding Accenture Operations, visit the company's website.

Computerworld has reported that Disney has cancelled its plans to outsource specific IT work offshore to Cognizant, just two weeks after telling roughly 30 of its application developers that they would lose their jobs because of the move.

This change of heart comes just as the US government has started scrutinising outsourcing deals between US buyers and Indian service providers. The Indian Economic Times (ET) has reported that contracts involving Southern California Edison, Fossil, TCS and Infosys are all under investigation.

President of NASSCOM Shri R Chandrasekhar told the ET: "Undoubtedly [these probes] would have a damaging impact on future business. It is a serious concern… This has the potential of seriously destabilising the way the sector does business... and frankly, we are also dismayed by the way a hostile business environment is being created.”

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Related: Former Infosys Head and Capita Executive Join Forces to Create New BPO Startup

Worcestershire Acute Hospitals NHS Trust has outsourced IT responsibilities to Computacenter, in order to enable its member organisations to share IT capabilities.

The county’s three Clinical Commissioning Groups (CCGs) – Redditch and Bromsgrove CCG, South Worcestershire CCG and Wyre Forest CCG – will all be sharing the service.

Computacenter will also be providing 24-hour remote and onsite support for 9,000 NHS staff spread across 160 sites in the country.

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Related: NHS Shared Business Services Acquires McKesson Shared Services

The Indian Economic Times (ET) has reported that Blackstone Group has dropped out of the race to acquire Serco India BPO, due to the asking price being too high.

Blackstone was previously thought to be the most likely candidate to buy Serco India BPO, having previously owned the business from 2007 until 2011. However, the private equity firm has now allegedly joined a number of other companies in thinking that the price set by Serco Group for the BPO business is simply too much.

Many believe that, having bought the business from Blackstone for over $630 million, Serco is unwilling to sell it back for as little as $400 million, despite that being the current estimated value of the business.

A source “familiar with the matter” told the ET: "They [Serco] don't want to take the hit, but the fact is that the business is just not as valuable. The business is less robust than when Serco bought it and the margins fluctuate. Other European private equity players have also looked at it and backed off.”

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Related: Sale of Serco India Falters, “Price too High” Private Equity Firms Say

Asheesh Mehra, the former head of Infosys Asia-Pacific BPO operations, has resigned from the company in order to launch his own venture.

Known as Antworks, the new business is a BPO and technology startup that will serve the healthcare and financial services industries.

Former Capita, TCS and WNS senior executive Govind Sandhu is co-founding the operation. Their offices will be based in Singapore, supported by three delivery centres in India. The new company has been formed with seed capital of $8 million.

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Related: Gartner “Cautiously Optimistic” about Infosys’ Ability to Hit $20 Billion by 2020