Industry news

South Western, an Irish business process outsourcing company announced the creation of 260 jobs at the opening of their new offices at Little Island on the outskirts of Cork city. The new jobs will bring the total workforce to 1,100 employees. South Western clients includes Bord Gais Energy, Independent News & Media and the UK’s Department of Environment, food and Rural Affairs.

UK economic output speeds up as housing and job markets grow

The Ministry of Justice (MoJ) has written off £56m spent on an IT project after finding out it was late, over budget and was duplicated by the Cabinet Office. Steria was one of three companies contracted to run the MoJ programme worth £116m, their roles included staffing, procurement and payroll. Staff working for the joint venture company SSCL, will strike today over claims that a number of their jobs will be lost while others will be moved to India.

It’s been a mixed month for Serco

According to an article in the Guardian by Tom Gash (Director of Research at the Institute for Government), whilst its right to ensure contracted partners behave ethically, the Government need to do more.

He argues that although the report by the Committee on Standards in Public Life asks for service providers to adopt the seven principles of public life, just adopting these standards won’t solve the problems in government outsourcing.

He states that “selflessness” might need reinterpreting for profit making companies to have compatibility with the private sector’s duty to generate return for shareholders, but in terms of integrity, objectivity, accountability, openness, honesty and leadership there shouldn’t be a problem.

However, he warns that more needs to be done to ensure outsourcing success. Tom calls for more transparency, argues that ethical standards are no replacement for competence and asks for clearer commitment from all ministers and the civil service leadership to take contracting more seriously.

Outsourcing to take a hit at the next general election

Hampshire County Council is looking to investment up to £20.7m in telecare provision over the next five years in order to cater for a rise in demand from elderly constituents. The telecare system is designed to help elderly residents stay independent in their homes. Argenti Telehealthcare Partnership currently provides this service for Hampshire, the contract started in October 2013 and they estimate will save £315,00 in the first year.

Capita awarded £24 mil contract for children’s IT services

Everest groups annual report; 2014: Expanding New Horizons findings show a 12 percent growth of global multi-process Procurement Outsourcing in 2013. Everest’s Annual report also found that 75 percent of procurement contracts contained human resources categories, up from 67 percent the previous year.

Latest scheme to outsource MoD procurement meets criticism

After an analysis of public spending transactions, Think tank the Institute for Government and start-up firm Spend Network has announced that IT companies benefit the most from government contracts in 2012 and 2013.

Key findings from the analysed 38 million transactions involving 247 central and local government bodies include:

- HP was the largest single beneficiary with more than £1.7bn accrued takings in each of the past two years

- 180,000 supplier names featured in the analysis and the top 20 had contracts worth at least £10.2bn in 2013 - 20% of the spending examined

- In the top 20, six are IT suppliers, six are in construction and two are in outsourcing

- Second beneficiary is Capgemini earning 82% + of its government revenue, or £850m, from the Aspire contract, which involved an overhaul of the IT systems at HMRC

- Other featured outsourcing and IT companies in the top 20 include Capita, Serco, Fujitsu, Atos IT, IBM, CSC

However, be warned – they note that caution should be used as the data may not be accurate and needs further verification.

NHS told to learn from the high street and to privatise

Birmingham City Council will vote next week on whether to extend its current IT contract with their joint venture supplier Service Birmingham, with the aim of saving £150m over the next 7 years. Service Birmingham is a joint venture between Birmingham City Council & Capita that was set up back in 2006. A decision will also be made on whether to bring their contact centre in-house as way to gain more control on customer facing activities.

Gloucester City Council agrees IT outsourcing deal with Civica with targeted savings of £100,000

ISS, a leading global provider of facility services, has handed Cognizant a seven year deal to provide Finance & Accounting (F&A) business process services for ISS’ business in the Nordics region, spanning order-to-cash, procure-to-pay, and record-to-report. ISS is looking to Cognizant to enhance quality, further optimise and align its finance processes, and reduce costs.

BRIC dips, whilst Cognizant excels

The UK Governments spending on outsourcing has risen by 23% in the past two years to £2.3bn, the Institute for Government (IfG) think-thank have said the government saw outsourcing as a way of reducing cost. The rise in spend of outsourcing contracts comes while expenditure fell in other sectors. Winners from government outsourcing include Capita and Serco who earned £1.45bn and £810m respectively

Poor management to blame for SME IT delivery issues in Whitehall?

Few of us would doubt that outsourcing has an image problem. For many the sector is, mistakenly, synonymous with job cuts and off-shoring, and some high-profile failures and disputes over the past 12 months have not helped matters.

The net results of this is that the contribution outsourcing makes to the UK economy is overlooked – from the millions of jobs it sustains to the technical innovations it helps launch and the cost savings it delivers for a large number of organisations, public and private.

This is one of the reasons why we’ve decided to launch a quarterly index tracking the volume and nature of outsourcing deal activity in the UK market. We aim to help shine a light on the level of economic activity the sector is responsible for and, hopefully, to move the debate towards something more factual and positive.

Our first set of results shows an industry in rude health. In Q1 the total value of contracts rose 65% year on year to over £2 billion. In addition, more than 20 vendors secured large-scale contracts and more than half of deals were first-time outsourcing agreements - new requirements representing new work for UK employers.

If nothing else this demonstrates that there is a clear business case for outsourcing, with many organisations continuing to use it as a means to achieving their objectives.

This is particularly true for the public sector, where we saw a 168% rise in the value of outsourcing contracts year on year. This strong performance suggests that for government clients private sector partnerships remain a key strategy to reduce costs while protecting front-line services.

The fact that three quarters of all contracts secured in the first quarter involved all services being delivered in the UK should be also be considered a positive for UK plc.

Yet despite this level of economic activity the sector still lacks even one dedicated national newspaper journalist reporting on its performance.

Alongside the National Outsourcing Association’s (NOA) continued efforts to promote the best practice emerging from the industry in the UK, it’s up to the outsourcing partners involved to continue to share stories of success. By delivering real value through service excellence and investment into people and skills, outsourcing might just start to change people's minds.