Industry news

Accenture has been ranked No. 1 on the International Association of Outsourcing Professionals’ (IAOP) Global Outsourcing 100 list, marking the fourth consecutive year that Accenture has topped this ranking of the world’s best outsourcing providers.

The Global Outsourcing 100 is designed to help companies compare and select service providers using an objective methodology that mirrors the evaluation process a buyer would use to select a provider. Providers are ranked on quality following a rigorously judged application process that examines 18 criteria. The final rankings are based on a weighted average of the judges’ scores on demonstrated competencies, size, growth, management capabilities and customer references.

“Achieving the number one ranking for four consecutive years is certainly an accomplishment by Accenture, considering the high quality of the applicants and increased competition from around the world each year to hold on to the top spot,” said IAOP Chairman Michael Corbett, who led the judges panel. “The leading outsourcing firms make ranking high on the Global Outsourcing 100 a strategic objective and going through the rigorous application process benefits all applicants as well as helps buyers make better purchasing decisions.”

CPA Global has underlined its commitment to the Korean market and opened it's Seoul office. The company’s first in Korea, will be led by Steve Kim, CPA Global’s Director for Korea and a former Senior Corporate Counsel for Samsung.

CPA Global has had local agent representation in the Korean market for over 15 years, but is now establishing a direct presence and expanding its agent network in response to increasing demand for the company’s services.

Korea is the fifth largest international (PCT) patent filer in the world. In 2010, international patent applications from Korean companies increased by over 20%, the second highest increase in filings after China.

Speaking in Seoul, CPA Global’s Chief Executive Officer, Peter Sewell, said: “Korea is an important global market with many Korean corporations now operating on the world stage. Korean companies are increasingly developing their own IP, and the need to protect and manage those valuable assets internationally has never been more critical. This has brought a growing demand for specialist support in IP portfolio management. Responding to that demand, we are reinforcing our commitment to the Korean market by expanding our local agent network and establishing a CPA Global office in Seoul with a dedicated Korean team, offering local customer support.”

Today, increasing numbers of organisations are reviewing how they buy and manage their IT services and resources. More and more companies are turning away from the clear cut distinctions of in-house or externally managed IT, and looking at a blend of IT sourcing models to assist in achieving the optimal balance between cost, risk, agility and performance.

Indeed, by outsourcing, IT spend can be reduced by 15 to 20 per cent within the first year and if done properly can provide stability with predictable costs, guaranteed outcomes and optimised technology, improving service levels for both employees and customers. By outsourcing IT services to a third party, risk is minimised and existing employees can concentrate on a more strategic agendas, helping the overall growth and development of the business.

Outsourcing Trends

There are many ways in which outsourcing can help improve a business, from simple cost savings to encouraging best practise within an organisation. However, recent research from Ovum suggests that the UK IT services market is in a very fragile state at the moment, with growth predicted to slow in 2011 as the industry feels the full force of the public sector spending cuts. In fact, many sources have predicted that growth will slow to just two per cent in 2011.

Despite the aforementioned benefits of outsourcing, the current economic climate has resulted in many medium and large businesses bringing certain services back in-house. To either save money or take control, however this could be a risky long term strategy.

Both of these factors are frequently misconceptions: not only can outsourcing be far more cost-effective than carrying out tasks in-house, it can also be more effectively delivered, with dedicated teams of experts handling specialist tasks, using best practice processes and systems. This can be in stark contrast to overworked in-house IT staff, who can rapidly become over-stretched generalists with limited resources, or limited exposure for how to handle newer technical challenges.

Perceived Challenges

It’s important to prepare for outsourcing, rather than jumping straight in. For example, ask questions such as ‘how do we exit?’, ‘how long should we contract for?’ and ‘what are the vendor’s security practices?’ They should also research the third party, seeking proof the supplier has done this before ‘what’s its reputation like in this field?’ and 'do they have outsourcing best practices in place to accommodate my needs?’. All of these questions are vital to ensure companies get it right and don’t outsource to the wrong provider, undersource or even oversource. Consider outsourcing as fixed term M&A. Then evaluate, “can my internal team know what will be expected of them in a newly outsourced environment?”.

Many organisations today are switching to a smarter approach, taking ‘best-of-breed’ technologies and services from a number of organisations, rather than trusting monolithic organisations with entire projects. This approach is known as ‘multi-sourcing’.

The Art of Multi-Sourcing

Gartner describes multi-sourcing as an innovation discipline that takes organisations beyond ‘quick-fix’ cost cutting to enable capability building, global expansion, increased agility and profitability and competitive advantage . Yet in its simplest form multi-sourcing allows customers to reduce its reliance on a single supplier and allows the sourcing of service components from the ‘best-of-breed’ suppliers.

One of the main drivers behind the concept of multi-sourcing is that it helps leverage competitive pressures. Multi-sourcing allows companies to choose the most commercially and operationally compelling solutions, combining onshore, offshore and onsite capabilities, essentially customising the solution to meet needs exactly.

An example of multi-sourcing in action can be seen through the work FirstGroup has recently been doing to improve its IT support, IT user service and email management. A contract worth £36.2 million was put in place with three providers to host, manage and delivery technical support across the travel group. It quickly realised that by dividing the one contract between three, they would get a much better return on investment and also have a strong network in place to support all types of data all across the country.

Back to the Future

As the economic pressures across the UK and Europe continue to tighten, companies need to be savvy about their IT sourcing arrangements. Multi-sourcing can be a very effective model for coupling best-of-breed suppliers with the flexibility which can really enable a smarter, sharper business.

As IT departments start to get back on track and become more willing to try new solutions, it will be the flexibility and competitive edge that multi-sourcing offers which will entice businesses back into spending and trusting third parties with services and infrastructure. With the help of multi-sourcing, businesses can develop strong propositions and relationships across the globe, helping companies to be more flexible and cost effective. If money makes the world go round, multi-sourcing makes it go round in a much leaner and more agile way.

I’m often asked what the future of outsourcing is, and, as difficult as it can be to accurately predict what’s going to happen without using a crystal ball, it’s certainly worth considering the value that cloud computing is able to add.

Back in the cold, dark and rainy days of January I predicted that this year was going to serve as a key driver for growth in the outsourcing space. As we edge slowly into May, is it fair to ask why we have yet to see the much-vaunted explosion in cloud computing.

Research in the last year from data and advisory firm TPI showed that 78% of all IT decision makers have held internal discussions about cloud computing - a statistic which does little to explain why so few have decided to take the plunge and invest in the technology already. There seems very little doubt that some are continuing to give the cloud a wide berth, owing to a number of significant and very real concerns.

For instance, Amazon’s recent and well-publicised cloud outage, which disabled several popular websites, including Quora, Foursquare and Reddit, served only to heighten concerns over the reliability of cloud solutions. It’s also true that for many, the idea of their business critical information physically sitting in a data centre in a far, remote location, offers them as much assurance around security as the prospect of storing their life savings in a mattress.

For all of this, it’s worth bearing in mind that cloud computing offers a number of benefits, including increased speed and flexibility, as well as reduced hardware costs. We’ve even seen new software announced recently to enable companies to build their own cloud computing platforms, for clients to use as a web-based interface to install applications, configure databases and set up their own security.

So should we expect to see cloud computing replacing traditional outsourcing models entirely in the years to come?

It’s clear that more traditional models are constantly being evaluated, and that if it is felt that there’s scope for certain parts of existing outsourced estates to be run better and more flexibly in the Cloud, then that will be a consideration. It seems far more likely to me, however, that the real growth in cloud computing will still be as a complement to existing outsourcing services - it might just take a little longer than any of us expected.

Perhaps, particularly given the struggles faced by Amazon in recent weeks, it’s a stretch to say that industry will be clamouring to take advantage of cloud services this year, as too many concerns over security and reliability remain. However, as these flaws are ironed out and we see more software and services aimed at broadening the appeal of cloud across industry, it’s clear that it will remain an area for growth.

If you would like to hear more about how to embrace cloud computing as part of your outsourcing solution, the NOA will be holding a monthly seminar on this topic on Tuesday 24 May. Further details are available here.

The government’s forthcoming white paper on public services has been delayed while the plan to use more charities, social enterprises and employee owned mutuals is incorporated into the report.

With outsourcing set to broaden its reach from traditional private sector partnerships, it’s worth asking whether there has ever been a more important time to develop talent, standardise practices and encourage professionalism in the outsourcing sector?

The NOA Pathway is a set of accredited qualifications designed to support the development of competency and provide professional recognition in the outsourcing industry. The programmes are flexible to allow the participants to shape the programme around their own agenda and are framework based but not prescriptive.

Chris Halward, Programmes Director, NOA Pathway, said: “To develop outsourcing as a profession, it seems sensible that a talent programme should reflect that outsourcing is part of everyday business now. Talented individuals who do not understand outsourcing will struggle unless they realise the process. This process can be demonstrated through knowledge of the NOA Lifecycle which provides a recognised flexible framework to guide companies and individuals through the outsourcing process.”

NOA Pathway offers the following awards:

NOAC: NOA Professional Certificate

NOAAPC: NOA Advanced Professional Certificate

NOAD: NOA Diploma in Strategic Global Outsourcing

These qualifications are accredited by Middlesex University; one of the UK’s leading work-based academic institutions.

The NOAC and the NOAAPC are both undergraduate level courses and the NOAD is accredited at post-graduate (masters degree) level. Participants can follow the programmes from entry-level right through to diploma level, or complete one of the three qualifications. The NOA Gateway can be taken as a standalone module but it is also the first step towards completing the NOAC, the NOA Professional Certificate.

Dr.Richard Hale, Director of Studies, NOA Pathway, said: “The aim of the Certificate is to give a professional working in the industry, the ability to put their work into the context of the larger outsourcing arena and gain an accreditation. With the Diploma, we are dealing with people at a strategic level. Using Outsourcing Questions, participants need to reflect critically on their experiences and also demonstrate that they are able to undertake in-depth research and develop insightful analysis.

Based on post-grad research which I have conducted , rather than teaching, it is vital to develop professionalism through innovative knowledge sharing and development. The outsourcing industry offers a unique opportunity to professionals to develop new systems of best practice and create their own successful career path in an emerging market.”

The NOA also award post nominals for the Diploma and Professional Certificate and believe that the titles will enable individuals, who have invested in their professional development, to be more easily recognised. Post nominals after an ‘outsourcers’ name may go some way to solve the issue of self-promotion in the industry.

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As outsourcing continues to mature and evolve with the ‘Big Society’ vision, standardising practices in the industry will also be vital to its success.

The publication of the British Standard (BS) 11000 is a landmark for the world of business. It is the world’s first standard for collaborative business relationships and rather than representing a one-size solution for all it provides a consistent framework that can be scaled and adapted to meet particular business needs.

Adrian Quayle, NOA Board Member, took on the responsibility, on behalf on the NOA Board, of representing the outsourcing industry on the BSI panel.

Adrian said: “The broad aim of the standard is to support organisations across all industry sectors to participate in successful collaborative relationships by establishing a framework which allows those organisations to incorporate industry good practice in their approach to working with other parties.”

By standardising practices, developing talent and encouraging professional recognition, the outsource industry should only go from strength to strength.

For more information on the NOA Pathway and the BS 11000 – please visit http://www.noa.co.uk/

Balfour Beatty, the international infrastructure group, has recently been awarded two support services contracts, totalling around £200 million. These contracts add significant volume to the Support Services order book and are notable in highlighting the changes in local authority requirements, with a marked shift towards larger, multi-activity contracts and bundling together of contracts from more than one local authority.

The Warwickshire and Coventry highways term maintenance contract involves full maintenance of the region’s highways and bridges together with street lighting. The five-year contract, beginning in May 2011, is worth £100 million, with a possible four-year extension conditional to meeting performance targets.

The 25-year Cambridgeshire County Council street lighting PPP project we announced on 6 May 2011 has a significant element of support services. The maintenance contract, worth around £100 million, is innovative in the way it places emphasis on energy reduction by using the latest technologies.

Kevin Craven, CEO of Balfour Beatty Support Services, commented:

“We are developing our business to serve the Local Authority market more effectively. Balfour Beatty is well-placed in respect of the changing nature of local authority contracts which favour companies that can offer a broad range of capabilities, thereby providing savings as well as improved services for local government.”

Value Added Reseller (VAR) Trustmarque Solutions has announced the acquisition of cloud infrastructure and hosted services provider, Nimbus Technology Systems Ltd. Nimbus Technology Systems currently provides consultancy, planning and migration services as well as a range of cloud Infrastructure and software-as-a-service solutions for SME organisations. Nimbus' clients are able to access and run their businesses on enterprise-class IT systems, software and infrastructure without any capital investment.

This transaction is the first in a planned series of strategic acquisitions by Trustmarque as it aims to extend its expertise, range of capabilities and value added service offerings. The Nimbus acquisition will enhance Trustmarque Enterprise Solutions Group (TESG) services by adding a suite of hosted and managed solutions that sit between on-premise and SaaS offering a greater degree of customisation and customer alignment.

Simon Rutt will be heading up the TESG division, which will incorporate the Nimbus stack of services following the acquisition, and takes on the role of Services and Solutions Director. Rutt comments:

"Customers want to understand straight forward options around cloud and how we can help their organisation securely and safely adopt cloud technologies. They need sensible, knowledgeable advice and services that are dependable.

As the cloud market develops, more and more technologies are being offered as a managed service. This ‘externalisation' of IT is compelling as it offers the promise of agility and efficiency. However, questions remain around compliance, licensing, governance and security. There are complexities around interoperability and how best to ‘knit' these managed services together with on-premise applications, to deliver the best business process outcomes. We aim to help organisations negotiate these hurdles for better business outcomes."

Data Gathered by Lieberman Software Suggests Organizations Should Proceed Cautiously when Outsourcing Critical IT Security and Management Operations

A new survey from Lieberman Software Corporation, taken at the recent Infosecurity Europe 2011 event in London and mirrored at RSA Conference 2011 in San Francisco, shows that the relationship between many outsourcing companies and their clients is at a breaking point. According to the survey, an astonishing 77% of IT professionals who work in organizations that use outsourcing say their outsourcers have “...made up...” work in order to earn extra money.

The survey reveals that 43% of IT professionals work in organizations that have outsourced a significant portion of their IT. Larger organizations are more likely to have outsourced IT - with 55% of respondents at organizations having more than 1,000 employees replying that they utilize outsourcers, versus 30% at organizations with less than 1,000 employees.

However, the shock comes as 62% of respondents said that, compared to their original plans, their outsourcing agreements had cost them more than anticipated while only 11% said they paid less than they originally expected. Perhaps most surprisingly, fully 27% of participants said that their outsourcing agreements had cost “…significantly more than planned”.

According to Philip Lieberman, President and CEO of Lieberman Software, this should be no surprise to those who have put their faith in the hands of the outsourcing industry: “Fundamentally, IT outsourcing has been an exercise in reducing expenses and passing along HR issues to others. The unfortunate by-product of this quest for lower costs and fewer headaches is a situation where corporate collective knowledge, as well as loyalty and intellectual talent, has been lost.”

Cognizant, a leading provider of information technology, consulting, and business process outsourcing (BPO) services, has announced that Lincoln Trust, an established leader in the self-directed retirement plan industry, has selected Cognizant to provide BPO services supporting its full range of retirement plan products including member enrollment and on-boarding, distributions and settlements, and plan management.

"Providing an exceptional service experience to every client is a hallmark of our business," said Helen Cousins, Executive Vice President and Chief Information Officer, Lincoln Trust. "At a time of immense economic and regulatory pressures on the financial services industry, Cognizant's rich experience in the financial services industry will help us adopt and institutionalize global best practices and help compete with much larger institutions."

"We are honored to help Lincoln Trust set the standard for superior customer service in self-directed retirement plans," said Gajen Kandiah, Senior Vice President and Global Head, Business Process Services and Solutions for Cognizant. "The combination of our experienced staff, deep understanding of core business processes, and leading-edge technology and tools contributes to our ability to be responsive to customer needs."

Xerox and Cisco have announced that they intend to form an alliance to simplify IT management by delivering cloud-based services and technology solutions that combine network intelligence and print.

The alliance plans to bring Xerox's managed print and cloud IT outsourcing (ITO) services to customers over Cisco's intelligent network infrastructure. Both companies will arm channel partners with solutions that help businesses extend their existing IT investments to improve performance and reduce cost.

"This relationship puts Xerox and Cisco at the center of a simplified, connected infrastructure – bringing together networking, printing and cloud services," said Ursula Burns, chairman and CEO, Xerox. "Together we're helping businesses transition to the cloud in ways that best suit their operations, and add the services needed to enhance security and productivity for employees."