Industry news

This blog looks at the emerging challenges and benefits that are now facing those outsourcing in the security sector

The security sector as a whole has evolved quite dramatically over the last few years. The proliferation of new technologies and increasingly sophisticated crime has meant security providers have had to adapt quickly in order to keep up pace with new and emerging threats. The industry has transformed into a vast, complex arena that many organisations are finding increasingly difficult to keep ahead of, and has forced some to consider the option of outsourcing security management to specialists for the first time.

All of this, combined with the world’s increasingly complex risk profile and accelerating demand from large public and private entities, has resulted in strong industry growth over the last 10 years. Even during the recent recession demand did not falter as businesses knew they had to manage their security needs. However, there are still unique challenges involved in the outsourcing of security management, especially with the stakes being so high. In handing over responsibility for their most vulnerable assets, companies will be worried about issues such as accountability, trust and effectiveness. Additionally, businesses and individuals still hope to minimise costs wherever possible, despite an improving global economy.

Organisations should recognise that the benefits to outsourcing their security services are equally pronounced. Outsourcing is cost-effective as it lays the groundwork for a more efficient and specialised security service which is tailored to specific needs. As an example, a successful security monitoring system would require round-the-clock maintenance on a real-time basis in order to respond to incidents as they occur. To do so, an organisation would need to build detection and response services for each of their networks, as well as hire 24/7 security staff. On the other hand, a private security provider would more easily be able to hire and train personnel and build an infrastructure to support them, spreading around the costs of maintaining such a system across all customers. The provider would also be able to draw from a bigger pool of experience, incorporating lessons learned from each customer and spreading that knowledge across its entire service user base.

Furthermore, outsourcing is more than just a delivery of services. It is a partnership which can enhance a business’s services and professionalism by allowing it to grow from cross-cultural exchanges, new resources and specialised knowledge. Internal staff can benefit from these collaborative efforts as the exposure to a different sector can help them gain and develop a new set of skills. For young people aspiring for a career in security, outsourcing is presenting an even greater number of opportunities to enter the industry with strong prospects for advancement and promotion. Outsourcing grants organisations more flexibility, as they can respond to operations that have seasonal or cyclical demands by bringing in additional resources when they are needed and releasing them when they are no longer required. Outsourcers are able to work from a variety of sites if required and have the mobility and resources to move around the country more readily if need be, bringing in the right skills for the right job.

As this has been increasingly recognised, it has helped transform the private security industry into a rapidly growing market. In the UK alone, the market for outsourced security guard services is now worth about £5billion. As an example, The Shield Group, as a company which relies on outsourced contracts, has seen phenomenal growth in the last few years, becoming very recently the ninth largest business security firm in the UK, winning a number of high-profile clients including the Imperial War Museum. With all of the changes taking place across the sector, outsourcing is clearly the best route to get optimum security.

Many organisations are adopting shared services because they want better support services for their businesses. But there’s a big variation in what they achieve when they take this step. All start out with high expectations – but only 50 per cent secure the benefits they hoped for. The other 50 per cent are disappointed.

The difference in results lies in the way shared services are sourced. Businesses that outsource most of their shared services are far less likely to get good results than businesses that keep a good chunk of shared services in house.

This is one of the key findings from recent research by PA Consulting Group. We spoke to 135 major organisations to find out what approaches they were using to develop shared services and how these approaches affect the results they get.

Outsourcing is a crucial part of the shared services mix

The research shows that shared services delivered mostly by outsourced providers are the least successful in terms of exceeding the expected benefits, But that does not mean there’s no place for outsourcing in the shared services world. The survey also showed that shared services delivered by a combination of in-house and outsourced providers achieved the best results of all. Outsourcing is a crucial part of the shared services mix but it matters how you do it.

The research told us that:

• none of the companies that use mostly outsourcing to deliver shared services said they had been able to develop shared services that exceeded their expectations

• 6 per cent of companies that use mostly in-house teams said they had managed to develop high-performing shared services

• 10 per cent of companies that use a more balanced mix of in-house and outsourced providers had seen results that exceeded their expectations.

While outsourcing was a critical issue affecting performance, there are other factors too. We identified three further drivers of success: service scope and reach, integration across functional silos; and a professional approach to change management.

How service scope and reach affect performance

Over the past five years, organisations have been adding more scope to shared services. Data analytics and procurement are increasingly being included in shared services. The geographic footprint of shared services has been expanding too. This is a good thing. The research showed that organisations delivering shared services with more functional scope and across a greater geographical reach also achieve superior returns.

Why integration across functional silos matters

Organisations with shared services are increasingly breaking down traditional functional barriers and integrating operations. We found that this kind of integration yields good results; 12 per cent of organisations that had brought all functional services under a common service delivery model said the results they got from shared services were better than anticipated. Where functions only shared components of the service delivery model, that figure fell to 5 per cent.

Managing change professionally has a big impact on results

Implementing shared services has always required organisations to undergo transformational change. It is essential to recognise this and invest in the change management that is necessary to deliver it.

Organisations we spoke to told us that the critical factors were:

• getting the right capacity in place to deliver the programme well

• putting a strong emphasis on managing and communicating with stakeholders

• establishing a new culture focused on customer service.

Implementing shared services can be a gamble – but organisations can increase the chances of success by using these four strategies. This clear focus on the sourcing mix, scope, integration and change management will make it much more likely that the move to shared services will meet your expectations.

G4S has been hit by a £136 million in losses relating to providing tagging services in the UK including a contract to provide tagging services to the justice department.

The amount of £136 million comes after a review of multiple electronic tagging contracts in the UK spanning a 9 year period.

The £136 loss includes a fee of £24.1 million in repayments to the Ministry of Justice following findings of overpayments by the government due to G4S billing practices.

G4S Chief Executive Officer Ashley Almanza said: “This has been an extremely challenging year for G4S. We have taken clear action to address longstanding issues and have introduced wide-ranging changes to strengthen our business.”

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Outsourcing company HCL has been awarded a £50 million contract to provide IT services and upgrades to the Student Loans Company (SLC) in order to modernise outdated legacy systems.

The contract award comes after SLC was criticised by the Public Accounts Committee for the poor quality of digital services to customers by the company.

HCL will work alongside Deloitte and Misys to create infrastructure designed accommodate future technologies and allow for increased flexibility, security and allow students to update information.

The new framework is expected to be in place within 12 months, with customer then being gradually migrated over to the new framework.

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Global BPO firm arvato has expanded services to the Philippines with the creation of a new site to the North of Manila.

The new site comes as arvato plans to double the size of its workforce in the region over the next three years.

The new site will provide increased capacity for current and existing clients with English-speaking support for support services aimed at North America.

The new site is expected to employ 500 workers by the end of 2014, with the site region selected due to the abundance of young, high-skilled workers.

Fara Haron, arvato Executive Vice President said: “The Philippines is a key strategic location for arvato, providing the skilled employees and secure infrastructure we need to deliver best practice BPO and CRM frameworks for leading global organizations”.

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Plans to outsource the maintenance of Ministry of Defence sites have been revealed by defence secretary Philip Hammond.

The contracts to run the administration function of military bases across the UK are valued at £400 million over a ten year period.

Capita will lead a consortium of private sector firms in running the Defence Infrastructure Organisation (DIO), which manages MoD sites and covers 1.1 per cent of Britain’s land mass, with 230,000 acres of land with a workforce of just 2,500.

The move to privatise the functions of the DIO comes as the government seeks promote cost savings within the MoD as armed forces return from Afghanistan.

Andy Parker, Capita chief executive, said: “The partnership will help to unlock the knowledge, skills and resources that already exist within the DIO, while adding capability to tackle the significant cost-saving targets currently facing the MoD.”

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A block on the selection of a provider for a £325 million contract for telecoms services to the Scottish public sector has been lifted by a Judge.

The challenge by BT was overturned by the Court of Session, with NHS National Services Scotland now free to select their preferred provider for the delivery of the Scottish Wide Area Network (SWAN).

BT had taken NHS National Services Scotland to court, claiming that its failure to be selected as a contract provider had been a due to a faulty tendering process and that the procurement competition should be re-run.

The Lord Malcolm however acknowledged that there had been failures in transparency, and that BT would be: “entitled to pursue a damages claim which, in comparison with some, will not be unduly complicated or difficult.”

NHS National Services Scotland said: "We are pleased that we are now able to proceed with the contract award and get moving with the implementation of the Scottish Wide Area Network.”

A BT spokesman said: “We are pleased that Lord Malcolm found in our favour with respect to the primary argument and agreed that the procurement regulations had been breached by NHS National Services Scotland."

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Capita has been selected by Hampshire County Council to deliver IT services aimed at children after it remained the sole contract bidder according to the award notice.

The contract itself has an initial five year lifecycle with options for extension and covers schools and child council services, with Capita delivering software, migration and support services.

By improving the sharing of data and joining IT systems the council expects to improve efficiencies and increase costs savings.

Councillor Keith Mans, Hampshire County Council's Executive Lead Member for Children's Services, said: "We expect to roll out the programme to staff from August this year, while ensuring that our work is uninterrupted as the new systems are put in place, which is likely to take place over a number of years."

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The Department of Work and Pensions is in the process of consulting the market regarding a two year contract to provide hosting services.

The contract is believed to be worth between 29.5 million and £120 million and is set to replace and exiting deal with HP.

HP currently manages two data centres, 3,000 physical servers, 465 virtual servers and 1,000 terabytes of storage space.

Selected bidders will be tasked with providing value for money, service transformation and developing increased flexibility.

The service itself is likely to be made up of multiple contracts, in keeping with the department’s policy of encouraging SME participation and cost effectiveness.

The NHS has moved to outsource a wide range of front-line services valued at £1.2 billion, placing services including end-of-life care and cancer treatment up for long term tender.

The outsourced services are due to start in the July of next year and will be focused across Staffordshire and Stoke on Trent, including services at hospitals, hospices and home care.

The move to privatise NHS services represents one of the largest and wide-ranging outsourcing programmes in the UK care sector.

The move comes as the NHS seeks to reduce a £30 billion shortfall over the next seven years, with many trusts seeing little alternative to achieving savings other than the privatisation of services.

The success of the outsourced program Staffordshire and Stoke on Trent is likely to be closely watched by other trusts and as a blueprint for future NHS privatisation programs.

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