Industry news

According to research conducted by Node4, the number of small and medium-sized enterprises outsourcing their IT infrastructure has increased six-fold over the past year. Six per cent now pass on these responsibilities to ITOs, compared to just one per cent last year.

These statistics came from a study of 250 IT strategy decision makers working for SMEs. 60 per cent of those surveyed claimed that outsourcing these functions gave them peace of mind.

The report went on to claim that 70 per cent of these SMEs would fail without this critical IT infrastructure within just one day. Reliability was quoted as the most pressing IT concern, closely followed by the worry that the infrastructure of these businesses is too dependent on hardware that could potentially fail.

Read more here.

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The UK Ministry of Defence (MOD) has opted to outsource its defence logistic commodities and services to health and engineering solutions company Leidos. The contract, spanning 13 years, involves procuring non-military essentials (such as food and medical supplies), and providing storage and distribution services for troops both at home and abroad.

The news was first broken on 10th February 2015. Seeing as this is the first time that the Ministry of Defence has undergone a tender of this scale with its logistics functions, this move could signify a larger change in business tactics for the MOD long-term.

Leidos's Chief Executive Roger A. Krone said 'This contract represents an important milestone for Leidos and will enable us to bring decades of proven logistics performance to help transform the UK armed forces’ storage, distribution and commodities procurement capabilities – all to ensure front-line troops can get what they need, when they need it.

'This is a new and significant external contract for the Ministry of Defence, whose team should be commended for its well-structured and managed procurement process throughout the last two years.'

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Trintech and Capgemini announced yesterday that they have extended their outsourcing relationship with a new agreement that will involve the integration of Trintech's Cadency solution into the Capgemini business process outsourcing (BPO) model.

Trintech is a provider of integrated Record-to-Report software solutions for the office of finance. They will be providing Capgemini with solutions that will automate the company's Record-to-Report (R2R) process. This will mean strategic, financial and operational feedback on how Capgemini's business is performing.

This news is part of a greater global shift in the global finance industry from old processes towards the more holistic R2R approach.

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Global Information Technology (IT) services company Tieto will be providing Swedish Customs with an operations overhaul in a deal with an estimated worth of approximately SEK 100 million ($12 million).

The deal is for four years, involves system and infrastructure development, and includes several consulting companies as well as Tieto themselves.

The hope is that Swedish Customs will be able to introduce electron customs handling, and will also be able to provide electronic communication between companies and customs that will provider a quick handling process at a lower cost.

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The customer management consultancy PeopleTECH has recently launched a new contact centre evaluation service. Their DARE (Discover, Analyse, Recommend, Evolve) approach provides a thorough review of operations, followed by recommendations for how to improve the service.

DARE is intended to provide recommendations for contact centre improvement in three key stages: immediate measures, tactical changes and strategic recommendations.

'A contact centre should constantly evolve and refine how it operates to keep delivering a superior customer experience. Advances such the Visual IVR and other solutions that make the concept of the single digital channel a reality are breathing new life into the contact centre,' said the PeopleTECH MD Mike Hughes.

'But as an independent consultancy, we aren’t wedded to a particular technology, vendor or approach so we always make the very best recommendation for the firm we are working with.'

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On Monday, India's second-largest ITO (IT Outsourcing) company Infosys announced its intentions to buy Panaya Inc., a provider of automation technology based in New Jersey.

The enterprise value of the deal is valued at $200 million. Infosys have made a number of large investments into automation and other ultra-modern technology, such as artificial intelligence and cloud-based platforms. It is thought that the company is trying to regain lost ground on some of its biggest rivals.

Infosys's Chief Executive Vishal Sikka claimed that 'the acquisition of Panaya is a key step in renewing and differentiating our service lines... freeing us from the drudgery of many repetitive tasks.'

His intention is for Infosys to focus on the more important strategic challenges that his clients face.

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The latest news in the United Airlines saga is that United has come to an agreement with its union - roughly 800 jobs will be kept, which were originally attended for outsourcing to outside vendors.

In early January, United announced its intention to outsource up to 2000 jobs across 28 US airports to outside contractors who could provide the same service for a lower cost.

The Machinists union has publicly accepted these 'reasonable adjustments', which have come after weeks of negotiation with United.

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On Monday, Cognia - a provider of cloud PCI compliant payment processing solutions - announced the news that Griffin Place Communications (GPC) will be its new business partner.

GPC is a relatively new contact centre outsourcer based in Wales. It entered into a contract with Cognia in order to provide 'secure PCI complian phone payment processing twenty four hours a day, all year round.'

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Read this next: Ventrica expands outsourcing contact centre and creates 80 new jobs

IBM has opened possibly its most innovative global sales centres in Cairo, Egypt, the move being just one of the company's many recent investments across the African continent.

The facility, worth roughly $3m, has been created as part of a three-year offshoring agreement with the Egyptian government to create more than 800 Egyptian jobs.

IBM has been present in Egypt since 1954, serving a range of clients across Africa the early twentieth century. IBM has expanded its presence and investments in recent years and can currently be found in 24 African countries.

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In outsourcing news yesterday, the Telegraph reported that Jon Cruddas, Ed Miliband's top policy chief, has said that the public sector should no longer allocate outsourcing contracts to firms that prioritise making money over 'social purpose'.

Cruddas is currently one of the Labour party members responsible for writing their 2015 general election manifesto. He has also been quoted saying it is 'staggering' that £10bn of UK public contracts are allocated to just 20 private sector companies.

A Labour policy along these lines could negatively impact on companies with the biggest government contracts - BT, Capita, HP, Serco and Vodaphone are all examples - not to mention the hundreds of thousands of British workers they employ and the billions of pounds that they generate for the UK economy.

The policy would also serve to reinforce claims that Labour's leadership is anti-business.

Kerry Hallard, CEO of the National Outsourcing Association, has responded: ‘Cruddas’s plans entirely miss the core premise of outsourcing: specialise in what is core to your business, then outsource the non-core to industry specialists who do them better and cheaper.

‘The UK public sector is the largest public sector market outside of the US – it has an enormous amount of services to provide and all within ever decreasing budgets. The austerity measures are not going away and engaging in outsourcing contracts with the private sector allows for these services to be delivered on time, within decreasing budgets and often to a higher quality.

‘To include more social outcomes when outsourcing, it would be more prudent for our next government to review its tendering processes and concentrate on developing its managers to become more intelligent customers. This would make them better able to maximize the value from outsourcing contracts whilst building ‘social purpose’ into the outsourcing contracts that they manage.

‘Cruddas would do well to remember that outsourcing is the second largest employment industry in the UK today and contributes more than £30bn to the Treasury, before he tries to destroy it!

‘Removing the public sector contracts will have far reaching ramifications for the entire UK outsourcing industry, its global competitiveness and significantly impact those UK employees within it, not to mention the coffers of the Treasury!’

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