Industry news

It is nearly four years since the banking crisis precipitated the recession and the majority of global businesses have cut costs to the bone. But as these organisations face up to the fact that the era of austerity is set to stay for several years to come, it is clear that business models need to be reviewed.

Following systemic under investment, internal resources are simply no longer good enough. Consolidation is rife; companies are looking at international expansion and building global business networks. Research carried out by TPI* in the third quarter of this year shows that there are many different models of outsourcing used throughout businesses around the world. However, with times tough and business competitive, it is key that each organisation chooses the best model of outsourcing to work for their business.

As Joanna Sedley-Burke, Business Development Director, Sovereign explains, in tough times, companies across the globe need to do far more with less and become far more savvy about leveraging external outsourced expertise to derive additional value.

One size fit all?

As Gartner describes**, the offshore IT outsourcing market is “big, and there's no turning back. Everybody is either doing it, planning to do it, or should be doing it.” But with this comes various additional options of outsourcing choice, from staff augmentation, out-tasking, project based outsourcing, managed services or BOT (Build-Operate-Transfer). However, the right choice for each business can vary immensely based on a whole array of varying factors. There is far from a ‘one size fits all’ approach.

The right outsourcing choice must be assessed on the best model to fit each organisation and this will vary hugely around the globe. Different countries carry out business in so many different ways and can be at differing ends of the scale in terms of their development when it comes to infrastructure and economy. Even from business to business, the culture of an organisation must be fully understood by any external provider in order to ensure the correct IT choices are implemented to complement and support the organisation appropriately.

Skills and costs

The TPI research suggests there is a trend in global outsourcing from EMEA, down by 23%, to Asia Pacific, that experienced an all-round year on year increase. It is clear that the availability of highly talented and experienced workers in this region are able to carry out the same level of work as in EMEA but at a significantly lower cost.

With rising inflation and escalating fuel costs just two examples of how businesses are being hit, each year is bringing a new financial challenge for business. Over the past four years, these organisations have cut costs to the bone – not least across IT. But is this really a sustainable long term approach? Is the current internal skill set really capable of supporting the current business needs or any potential expansion into more buoyant global markets? Can it deliver the robust communications required to create international networks of collaboration or exploit innovative technologies to increase efficiency and the timeliness of service delivery?

Leverage Expertise

Successful organisations will know the value of external expertise when used appropriately. But continuing to rely on limited internal resources as they come under increasing pressure is increasing corporate risk and potentially constraining opportunities for business growth. Companies would do well to exploit the proven experience and skills of external providers and look globally when they do.

Turning to an outsource provider in any part of the world offers companies a real opportunity to drive down the risk associated with day to day operations; provides a chance to reduce costs and delivers access to the experience required to build a solid business case for on-going investment. The TPI research shows that BPO is strong and expected to increase further, with businesses having to consolidate and keep the chargeable heads whilst the back-office functions go elsewhere and thus reduce the overheads.

It is those organisations that accept the need for external professional services provided by a company with no vested interest in boosting CVs, and with the required depth of skills and experience, that will be best placed to adapt and respond to the continuing economic challenge.

Outsourcing Yearbook 2012— the UK’s definitive guide to best practice in outsourcing

Buffalo Communications, in partnership with the NOA and sourcingfocus.com present the Outsourcing Yearbook 2012, the most comprehensive review of the UK’s outsourcing industry.

The Outsourcing Yearbook 2012 will be published in January. With over 100 pages of outsourcing insight available online or in one hardback volume, our yearbook is the essential guide for everyone interested in outsourcing.

The Outsourcing Yearbook 2012 will feature:

Latest research

Controversial opinions

Emerging players and destinations

Showcase of NOA award winners

Comprehensive Suppliers Directory

Quarterly updates throughout 2012 (online)

Contact us now to pre-order your copy or discuss profile raising opportunities.

Capgemini has announced the launch of its IBX Spend Capture Cloud solution.

The new IBX Capture Spend Cloud streamlines the procurement process and allows organizations to capture the benefit of on-line spending, which is often wasted due to lack of compliance with procurement standards

According to Capgemini’s CPO Survey 2010, many businesses have not yet realized the full potential of on-line procurement ,with 67% claiming that less than a fifth of their spend is through eProcurement. But cloud services have the advantage of being quick, easy-to-use, ready for use, and not requiring any data integration or customer installation. Capgemini’s IBX Spend Capture Cloud can be up and running in 90 days offering cost benefits of up to 50% compared to an on-premise implementation. The solution integrates with all major eProcurement systems and has pre-built integration package for SAP SRM.

Wipro Technologies, the global Information Technology, Consulting and Outsourcing business of Wipro Limited, has been chosen by Premier Foods, the United Kingdom’s largest food producer, as a strategic technology partner. Premier Foods plc produces and markets over 40 iconic British brands.

As part of the five year strategic relationship, Wipro will be supporting both systems and processes to enhance efficiency of Premier Foods’ supply chain. This relationship will enable Premier Foods to realize quantifiable benefits for a known budgetary expenditure with minimal exposure to variable costs.

According to Mark Vickery, Group I.S. & Change Director, Premier Foods, “We would like to congratulate the Wipro team for their focus, commitment and the passion in the discussions leading to our decision. Wipro’s strong SAP capabilities along with their deep CPG domain expertise made Wipro a natural fit for Premier Foods."

Diligenta, a subsidiary of Tata Consultancy Services and a leading BPO provider in the U.K., will assume administration responsibility for 3.2 million policies for Friends Life, a provider of pensions, investments and insurance. The agreement, effective March 1, 2012, is worth $2.2 billion over a 15-year period.

The deal will increase the total number of policies administered by Diligenta to just under eight million. Outsourcing much of its customer service and IT functions for its U.K. heritage business will allow Friends Life to focus on its new proposition developments, including its new corporate platform, in its core markets of corporate benefits, protection and retirement income.

N. Chandrasekaran, CEO and MD, TCS, and Chairman, Diligenta, said, “Our domain-centric, platform-based solutions enable us to help companies transform their businesses. Our strong presence in the insurance segment, track record and the early investments in building products and platforms have contributed to this win. This deal is the second largest one signed by TCS after the $2.5 billion Citi deal some years ago.”

The National Outsourcing Association Awards (NOAAs) took place last night (10th November), at the Park Plaza Riverbank Hotel in London. Now in its 8th year, the NOAAs celebrate best practice in outsourcing projects, and reward end-users, suppliers, advisors and destinations.

The awards were presented by comedian, Imran Yusuf. After the presentations and speeches, the party continued well into the wee small hours.

The proud winners were:

BPO Contract of the Year

National Rail Communication Centre and National Rail Enquiries

This contract delivered very real benefits to the general public through improved information and continuous performance improvements throughout the year.

IT Outsourcing Project of the Year

Wipro Technologies and Diversey

The judges felt the project was a powerful example of continuous IT service improvement and demonstrated various improvement techniques working together to generate impressive benefits, whilst streamlining the budget spend on IT infrastructure and new application development.

Financial Services Outsourcing Project of the Year

Co-Operative Banking Group, Operational Partnerships Management, Implementation of alternative format provision

This project involved a developing a future-ready scalable solution for customers with dyslexia or learning difficulties. The bespoke service allows for documentation to be designed to meet the specific needs of the customer, including the use of MP3 and Wav technology, as well a secure pin process for the visually impaired.

Public Sector Outsourcing Project of the Year

Arvato and Chesterfield Borough Council

Judges were impressed with Arvato’s transparent approach to service delivery – flagging, discussing and resolving issues in ways that prioritise citizen satisfaction and value for money.

Telecommunications, Utilities and High-Tech Outsourcing Project of the Year

Efficio Consulting Ltd and Thames Water

The panel felt that this award reshaped the procurement outsourcing space, by moulding the best features of a classic consulting engagement and a traditional outsourcing model. The results gave compelling benefits, enabling Thames Water to exceed all of the original project objectives.

Offshoring Operation of the Year

RR Donnelley and Anglian Water

This offshore pilot has proved a resounding success – delivering an effective solution for processing the large amount of correspondence generated by Anglian Water’s customers. This operation was recognised for bringing together the best outsourcing operations with excellent workflow technology.

Outsourcing Professional of the Year

KPMG – Shamus Rae

The judges felt that Shamus showed deep domain expertise, extraordinary creativity and was a very strong candidate based upon his industry experience helping organisations with strategy, implementation and execution of change programmes focused on corporate services.

Outsourcing Service Provider of the Year

Luxoft

The judges felt that Luxoft’s submission showed excellent depth in all key areas of successful outsourcing, along with copious good examples of corporate social responsibility across all of its collaborations.

Outsourcing Contact Centre Provider of the Year

bss and Office for National Statistics and Northern Ireland Statistics and Research Agency

The 2011 Census contact centre handled nearly 1 million phone calls, in 10 weeks, without any downtime. This project won due to its complexity, while not getting in the way of delivering a solution to the massive benefit of the authorities and the public alike.

Outsourcing Advisory of the Year

Hogan Lovells International LLP

Over the last year, Hogan Lovells has advised on most of the key outsourcings in the asset management, insurance and life and pensions sectors. This was a closely fought award; however, the judges felt that Hogan Lovells consistently delivered a wide variety of innovative and high-profile solutions throughout the year.

Offshoring Destination of the Year

Luxoft - Poland

Poland is the sole European country to demonstrate positive economic growth throughout the crisis. The total value of British investment in Poland has now reached $3.54 billion. The judges felt that the entry from Luxoft was extremely strong and demonstrated that Poland has remained price competitive with the required labour skills. It is expected the Polish IT market will maintain its status as one of the CEE’s fastest growing IT markets over the 2010–2014 forecast period.

Outsourcing End-User of the Year

Thames Water and Efficio Consulting Ltd

Thames Water’s “fully integrated consultancy” delivery model has challenged the market norm, creating compelling benefits. This project has been rewarded for its strong focus on leadership and relationship management. This emphasis on an effective gain-share pricing model has resulted in cost savings far greater than set out in its internal business case.

Award for Innovation in Outsourcing

Serco and Barclays Cycle Hire

Serco delivered Boris Johnson’s vision of making London a genuinely cycle friendly city, whilst having to learn an entirely new business and multi-sourcing with 10 sub-contractors. With 5000 bikes, and 10,000 docking points, the system is highly complex, yet very easy to use, making a positive contribution to the lives of 1000s of environmentally conscious Londoners.

Award for Best Practice in Outsourcing

Co-Operative Banking Group, Operational Partnerships Management, Supplier Operating Model

CFS’s relationship management capability provides a disciplined consistent, approach to making CFS an intelligent customer. It powers effective collaboration between all business stakeholders within the sourcing lifecycle – nurturing a culture of common language and thinking across the full range Co-operative business units.

Award for Academic Achievement

HML – Anu Biswas

2011 NOA Pathway graduate Anu Biswas worked her way to the top of the class with a tailored outsourcing development plan for an actual project, and input these into the HML strategy. Her project focused on development of the right skills, knowledge and behaviours to be able to strategically lead an outsourcing organisation.

Award for Corporate Social Responsibility

Infosys BPO Ltd and Project Genesis

This successful project follows a “train the trainer” model and has reached out to over 85,000 students through 2888 academicians in 1527 educational institutions in India.

Judges agreed this innovative programme provides students with the relevant proficiencies to perform well in this dynamic industry. Additional acknowledgements were made on the range of the industry partnerships and use of technology in analysing skills and enhancing language skills.

Samsung is to start paying Microsoft royalties for every sale of its smartphone and tablet computers that run the rival Google Android platform.

Microsoft has long accused Android of violating its patents.

Google said its US rival Microsoft was "resorting to legal measures to extort profit from others' achievements and hinder the pace of innovation".

Accenture, the global management consulting, technology services and outsourcing company has closed a deal to acquire Zenta, a residential and commercial mortgage processing services firm, by this month-end.

Accenture has started rebadging the US-headquartered Zenta’s 3,700 employees in India.

Capgemini Group reports Q3 2011 consolidated revenues of €2,378 million, up 13.0% on published revenues for the same period last year. Like-for-like growth (i.e. at constant Group structure and exchange rates) is 4.7%, with the difference between the two rates mainly due to acquisitions by the Group during the last 12 months (particularly CPM Braxis in Brazil and Prosodie in France).

This 4.7% growth in revenues, on a like-for-like basis, breaks down as follows:

· by business, the so-called “cyclical” activities (Consulting Services, Technology Services and Local Professional Services) continued to report sustained growth (+6.1% on average), with the greatest increase recorded by Technology Services (+7.2%). Outsourcing Services reported an average rise of 2.7%, while BPO enjoyed remarkable growth (+20%).

· by region, North America increased 5.0%; France – which retains its position as the Group’s leading country – reported improved revenue growth (+7.8%) on the first-half of the year; the United Kingdom and Ireland region, still affected by public sector spending cuts, reported more moderate growth (+1.3%), while the other regions reported average growth of 10.4% (12.4% for the Nordic countries). Benelux was the only region to report a contraction in revenues (-5.7%), reflecting the economic crisis which continues to affect the Netherlands.

Outsourcing company Xchanging said it is making progress with its cost-cutting drive and stood to benefit from companies looking to save cash in the economic downturn, sending its shares up 12 percent.

Xchanging, which runs back-office activities such as invoice processing, paying staff and procuring office supplies, said on Monday its operating cashflow was ahead of its expectations after implementing a series of cost-cutting measures since March in what it has described as a year of transition.

"In our view, steady progress continues to be made by management simplifying and de-risking the business," Espirito Santo Investment Bank analyst David Brockton said in a note.