Industry news

Arvato expands BPO offering in UK with acquisition of Credit Solutions

Arvato, a global business outsourcing partner, has acquired the leading UK-based provider of debt recovery and management services, Credit Solutions, from ISIS Equity Partners.

The acquisition, for a total cash consideration of £10million, further strengthens arvato’s BPO capabilities in the UK and provides an opportunity for arvato to accelerate its growth in several key sectors where Credit Solutions has achieved strong penetration.

These key sectors are financial services, telecoms, utilities and the public sector - incorporating central government - a long-term strategic focus for arvato following its entry into the local government outsourcing market in 2005.

Established 20 years ago, Credit Solutions provides a range of integrated telephone- and field-based debt collection and management services, working on millions of live and closed accounts from early arrears to later stage debt recovery. They are ranked as one of the UK‟s top 10 debt collection agencies by revenue and will be integrated into arvato’s existing finance services offering under the supervision of Andrea Kaminski, president, international finance, arvato.

The company already provides billing, credit and collections, accounting and payment processing services and consulting to a range of clients including; Google, Sony Music, Paramount Home Entertainment, Chase Paymentech, Gumtree and leading players in the internet service provider and online retail fields.

Andrea Kaminski, president, international finance, arvato, commented: “Credit Solutions is a well-established, successful and highly reputable player in the credit services market, with an exciting portfolio of capabilities and customers.”

Matthias Mierisch, Chairman and CEO of arvato UK & Ireland, said: “The acquisition adds critical mass in several core vertical sectors including financial services, telecoms, utilities, and particularly in the public sector.

BT has been awarded a seven-year contract by DigitPA (Agency for the Digital Public Administration) to connect more than 340 offices in 125 countries, provide communication services and manage the global network of the Italian Public Administration.

BT will deliver a very reliable, stable and comprehensive network, which is paramount for the Italian Public Administration. The new Italian public administration network infrastructure will also benefit from security services, voice over IP for all calls and next generation videoconferencing in high resolution via BT’s Multiprotocol Label Switching (MPLS) network. The connected global offices, mostly belonging to the Ministry of Foreign Affairs, the Ministry of Defence and ICE branches (Institute for International Trade), will be able to access essential IT applications that are centrally held in Rome.

Corrado Sciolla, vice president BT Italia said: “We are extremely proud to have earned the trust of DigitPA. This contract reinforces our position as the preferred global provider of networked IT services for large companies and government organisations. In particular, the Italian public administrations will benefit from our government sector expertise and from innovative solutions that will help them meet their challenges and fulfil their missions all around the world.”

The South African government has today announced attractive investor incentives for its offshoring sector that will reduce the cost of operations in the country by around 20%. The incentives further bolster the country’s growing offshoring sector by strengthening its cost competitiveness.

The new incentives significantly reduce the cost of offshoring operations for investors whilst providing flexibility in usage and simplifying administration. These incentives may be offset against all types of expenditure at the discretion of the investor. The incentives are paid over a period of three years for every new offshore job created and maintained in the country. In addition, a graduated bonus incentive amounting up to 30% is available for investors that exceed certain job creation targets.

Dr Rob Davies, Minister of Trade and Industry, stated: ‘The South African government is deeply committed to the BPO sector and has put in place attractive incentives through its government Assistance and Support Programme (GAS). It has also supported various talent development initiatives to support the growth of the industry. We are confident that investors will be excited by the new incentive scheme which considerably strengthens South Africa’s attractiveness as an offshoring destination.”

South Africa’s offshoring offer is based upon high quality English-speakers, strong cost-benefits and a world class environment. South Africa benefits from a strong linguistic and cultural affinity with the UK ensuring a first-rate, friendly customer connection. Globally, the country has the third largest English-speaking talent pool among offshore locations and a growing talent supply of 350,000 graduates annually. For this reason five of the Top 10 global contact centre suppliers are already in South Africa. It is estimated that South Africa’s offshoring sector will grow to 40,000 jobs by 2015.

Electronic invoicing (e-Invoicing) networks are helping to save business customers vast amounts of paper each year by completely eliminating the need for printed invoices. e-Invoicing networks help to simplify and streamline the invoice-to-pay process by extracting invoice data from a supplier’s billing system and sending it to their customer’s accounting system – eliminating the need to process, manually key-in, or store paper invoices.

The sending and receiving of paper-based invoices can cause organisations to waste high volumes of paper, due to the fact that invoices are often wrong or inaccurate. Industry figures suggest that anywhere between 8 and 20% of invoice transactions regularly have errors in them. With electronic invoicing, this issue is avoided as the inaccuracy is picked up straight away in an electronic format so there is no need for sending paper duplicates; it even eliminates the late payment notification that is also sent out when problems occur.

Many companies worldwide - including HP, GM, Dixons Retail Group, GSK, Barclays, Kellogg’s and others in the UK public sector – have adopted an e-Invoicing solution to save valuable environmental resources and improve their corporate responsibility mandates.

The numerous ways in which e-Invoicing can assist companies to improve their CSR and ‘green’ credentials are impressive. Significant, measureable improvements can be made by switching to e-Invoicing, by reducing paper usage, fuel consumption, and storage space.

The amount of paper we waste each year is staggering; the UK consumes around 12.4 million tonnes of paper each year, and approximately 60-80% of all office waste is made up of paper, according to Envirowise. Paper invoicing significantly contributes to the UK’s office waste. Each invoice takes an average of 3 sheets of paper, which adds up to a lot of waste when the amount of daily transactions is taken into account. Furthermore, the global impact of wasted paper is a serious concern. According to recent statistics, within 15 years some 20% of Africa’s forests will be gone. The World Conservation Union’s Red List has said that more than 12,000 species (out of 40,000 assessed) face the risk of extinction. This amounts to 1 bird species in 8, 13% of all flowering species and 25% of all mammal species being affected.

Paper invoicing also raises the issue of storage and the ensuing implications for the environment. e-Invoicing removes the need for physical storage space, by providing digital copies of each invoice. Without it, however, each invoice must be archived for a several years before being disposed of.

Reduction in fuel and energy usage is another of the key benefits of e-Invoicing. Electronic invoicing dramatically cuts fuel consumption, and by doing so helps conserve limited fuel resources. OB10 has calculated that in the last year, its customers have saved enough fuel to run the average car for over 700,000 miles, sufficient energy to run the average home for over 290 years and over 34,000 pounds of air pollutants through their adoption of electronic invoicing.

By eliminating the need for printed invoices, e-Invoicing is addressing environmental concerns by helping to save trees, conserve energy, and reduce waste at the same time.

But there are sound business reasons for adopting e-Invoicing too. When companies switch to e-Invoicing, accounts also become more of a streamlined and simplified process. As a result, with the reduced hassle of manual tasks, transactional costs are also noticeably reduced, typically by 60%. By replacing printed invoices with electronic ones, companies can reduce their impact on the environment every single day, and in a number of different ways. Electronic invoicing aims to help companies improve processing for themselves, but also to help them make a contribution in an effort to help the environment.

Stefan Foryszewski

Founder & Senior Vice President, OB10

If we look at the number of organisations outsourcing their software development, IT service desk or WAN support to India and other cheap-labour countries, offshoring nowadays seems not only convenient and straight-forward, but as easy as abc. But what the media doesn’t seem to cover is an issue that is not at all uncommon: it hit Barclays, Quark, Dell and a large number of other companies – what happens if all is not well and you have to take the offshored back in-house?

The phenomenon has already been dubbed ‘backshoring’ in the US, where 30% of Fortune 500 companies have experienced it, according to Oxford Analytica. As for the UK, a survey conducted by the National Computing Centre found that 14% of the respondents who have used offshored facilities for their IT have switched work back to the UK, and another 24% are considering the move. This means that nearly 40% of organisations haven’t found offshoring satisfying.

However, the problem is that once you decide to reverse the decision, the process is not trouble-free. Of those who have taken services back in-house, 30% say they have found it ‘difficult’ and nearly half, 49%, ‘moderately difficult’. When we talk about IT, in fact, we are dealing with the pulsating heart and veins of a modern business, where everything seems to rely on technology. So the costs of reversing an offshore operation do not only cover the facilities and assets – it extends to data security, staff skills, system disruptions and inefficiencies, low user or client satisfaction, client loss, and maybe much more. What happens to the CIO who proposed or supported the offshore move?

Let’s look at some examples. Barclays’ recent ‘divorce’ from Accenture appears to be peaceful and grievance-free, just the best answer to their present needs. When the application development and management of their banking systems were assigned to Accenture in 2004, around 900 employees were transferred to the provider. But only 230 are expected to be taken back. What happens to the various development, support and maintenance staff and their skills every time they are shifted to the other side? Some are taken on by the new employer under TUPE arrangements - the Transfer of Undertakings (Protection of Employment) Regulations preserve employees' terms and conditions with the previous company - although the majority will be lost, either voluntarily or forcefully made redundant. Unfortunately, when you lose people you lose their acquired skills as well, and to that there is no remedy.

An organisation which decided to openly talk about their failure is Everdream, which provides customers with remote desktop management services, and that in 2003 decided to outsource their Californian help desk to Costa Rica to aid scalability as their business was growing. Fifteen people were sent to the provider to train the call centre employees ‘the Everdream way’. It turned out to be an ever-nightmare when trainers found themselves dealing with a completely different business culture where the idea of customer service was “move ‘em through”, clashing with the hands-on approach of the firm. The strong foreign accent also failed to impress the customers, who started to complain almost immediately. The ‘shallow talent pool’ led Everdream to pull out, as happened to Dell the previous year: customers unhappy with their Indian technical support launched in 2002 made the company decide to re-route calls back to the U.S. In Everdream’s case, the pull-out was spread across six months, making the transition softer and minimising the damage, and many employees had their jobs back. However, it did take some extra financial effort to take the work back in-house and the long-term damage, the relationship with customers, is difficult to measure.

Bad customer service and poor product quality is what brought many Quark clients to switch from their software to Adobe’s InDesign during the Indian experience, never to return – 60% of their customer base, it is claimed. When work was brought back home, the C-executive who decided and led the offshore move was fired without hesitation.

Finally, a mixture of reasons have brought many offshored Oracle projects to fail for a number of US companies, it was reported a few years ago. Communication problems, poorly skilled and trained developers and enormous cost over-runs were topped with the previously unconsidered difference in the Indian law system. Oracle jobs were re-shipped back to the US, but the unrecoverable financial loss left many organisations strained.

These examples confirm the findings of research in the area: the most popular reason for failure is the lack of preparation and execution not on the provider’s but on the client’s side. An organisation needs to be prepared and know what they want from the provider and if offshoring is the right move, to avoid disappointment. Poor joint planning is also often at the root: if the client does not clearly outline and clarify roles and responsibilities, expectations, performance metrics and flexibility prior to signing contracts, there is not much to be expected. Service Level Agreements have to be clear for both sides and have realistic metrics and targets. Experts also suggest defining an exit strategy for contract end or for under-performance, as in fact poor vendor performance is another important reason for failure. Problems related to communication between the in-house and offshore team and to their different culture are often the cause of poor execution, as highlighted with the case of Everdream.

It is important to note, nonetheless, that not all outsourcing projects end up in failure. There are plenty of instances where they do deliver real benefits, both in terms of cost-reduction and improvements in service. However, the success stories tend to involve the use of a partner closer to home, able to understand the client’s environment while allowing easier monitoring of their performance.

So in the case of offshoring gone wrong, what should a CIO take into account when considering the costs of its failure?

The most obvious, and often largest, cost comes about when taking down the offshored department and re-installing it elsewhere should things go wrong, either in-house or with an IT partner nearer to home. Then there are the costs related to lost skills: organisations are unlikely to be able to re-employ previously fired staff so it will be a case of starting again from scratch. New staff will have to be found and trained, and it will take time before service levels are sufficient to deal with business demand – meaning costs could quickly run to seriously damaging amounts.

Technical issues like data security are also not to be overlooked. Different countries have different laws, and might not be so respectful of the privacy of your data. It can be lost, stolen and leaked by redundant employees abroad, legal protection from whom might be weaker than in the UK.

Finally, one last consideration for any CIO is the cost to them as an individual. Should a project as controversial as offshoring fail the responsibility is likely to rest squarely on the shoulders of the person in control. This means ensuring offshoring is really the right path for your organisation is key, as is making sure you are able to clearly demonstrate that it was the partner, not the process, that was at fault should things go wrong – both of which being easier said than done.

Adrian Polley, CEO at Plan-Net plc.

About Plan-Net

A specialist in transforming IT operations into high-performance, cost-efficient platforms for business success, Plan-Net works with clients of all sizes and needs to help them maintain high levels of service while still meeting demands for a reduction in IT spending.

Celebrating its twentieth anniversary in January 2010, Plan-Net has helped to enhance performance, flexibility, security, cost-efficiency and, ultimately, user productivity at clients large and small for the two prosperous decades of its existence.

It was good to see so many attended the first two webinars - Strategic Operating Model Design and Managing Outsource Suppliers - in our Autumn-Winter series on operations.

The remaining two webinars in this series, accessible from our website, will offer key insights into: successfully managing major change, and getting the best out of your existing operations.

Our topic on Tuesday 23rd November at 1pm is “Managing major change”.

We have seen from experience that gaining an understanding of how large-scale change has been successfully managed is the first vital step for any company considering this process. Major change, if effected successfully, will ensure that maximum benefits are delivered and that the impact on BAU and product launches is minimised during the change process.

Change can often be an infrequent event for an asset manager, and the required skills are rarely found in-house. An integrated approach with a solutions provider thus becomes essential. This will prove central to securing commitment from all parties to the change process. Moreover, specialist experience will be required for integrating the change programme with BAU and small-scale change as well as setting up the correct project scope and monitoring the benefits.

Discussing these issues often raises many more interesting questions. By establishing a healthy interaction between professionals on this fascinating subject in the webinar we hope to gather together the thoughts and ideas of professionals from across the industry in order to analyse and write about our and their opinions. We very much hope you can join us.

Gordon Easden, financial practice lead, FusionExperience

For big companies, outsourcing works. If you’re Barclays Bank and you want to write a new core system and want to outsource that development to Infosys in India, it is absolutely the right thing to do. It’s a big project that’s going to require millions of man hours. It’s got a defined scope and it’s going to need to be very structured, because Barclays as a company is very structured, so the fit is perfect.

For small companies and start-ups, outsourcing can also work very well for non-core operations such as legal, accountancy and IT services. Whilst companies need to be careful in choosing the appropriate partner, these are functions which can easily be briefed out. However, for areas of the business which need control over who delivers them and how, outsourcing brings disadvantages for the smaller businesses which do not have distinct processes in place to keep projects on track when they are out of sight. As a result they can come across the following challenges:

You have a lack of control: Just when you have a great team member who understands your business processes and is really productive, they get moved over to another client and you then have another person in their place. You cannot control who is working in your team.

There is, inevitably, a lack of integration. An outsourced team can’t become part of your team; therefore they will not feel part of your company and understand your business culture – which can have a detrimental effect on productivity levels and quality of work.

You have limited day-to-day flexibility, which is normally a core requirement for SMEs. Outsourcers are very process driven, and SMEs generally are not.

There aren’t always cost benefits. People often outsource projects that last less than a year and subsequently don’t receive the perceived offshoring cost benefits or return on investment because the high planning, training, communication and travel costs mean that the wage differential can be severely reduced, while the training investment is lost when the project ends.

Lastly, there is a lack of IP protection and subsequently you can get IP leakage. If you are experts in something you have to teach an outsourcer your domain knowledge and, over time, the outsourcer becomes an expert as well. The next thing you know these guys are pitching that expertise to your competitors. They can’t help what they’ve learned and, as a third party company, they’re going to try and leverage that as much as they can. Larger companies are typically outsourcing non-core activities where IP is not as much of an issue.

So if outsourcing isn’t a good fit for your operations what are the other options for small companies? Well, for ad-hoc project work you should give it to a freelancer, or find a domestic company which already has an offshore model and expertise in place.

If you have on-going needs then look to build your own team abroad, in a location which meets your strategic needs. You can set up the team yourself, which does have a number of risks attached, or do it via a partner where you retain control but employ their local - or should I say global - expertise. And the final option is to consider a merger or acquisition to bring in a team in the relevant location.

For SMEs and start-ups which need flexibility, speed and control, have changing priorities, or where IP is a critical consideration, offshoring (be it DIY or assisted) is likely to be the best solution.

Legal services company Myhomemove faced exactly this dilemma. Having worked with traditional outsourcers in India and Sri Lanka for over four years, they were looking to move to a different model which would allow them to manage the staff in a way which fitted their company culture and ethos and gave them more control over decisions such as salaries, conditions and career paths of their staff. They considered setting their own operation, but were concerned by the complexity and bureaucracy involved.

By offshoring their operations through a partner they were able to have absolute control over day to day operations and culture compared to a traditional outsourced relationship and without the risks of setting up their own legal entity.

Whatever your needs do make sure you understand the different routes you can take and weigh up the pros and cons very carefully. Some companies make the mistake of confusing offshoring with outsourcing, and disregarding both models as a result. They are distinctly different and should be considered according to their individual benefits and disadvantages.

Neal Gandhi is the chief executive of Quickstart Global, which helps companies to expand globally, and is the author of Born Global which offers practical advice to entrepreneurs. www.quickstartglobal.com

In the fourth and final part of his series of blogs on the first 100 days as a new CIO, Alex Blues, Head of IT Sourcing at PA Consulting Group, reinforces the need to deliver projects on budget and to ensure the CIO’s visibility on the board spreads beyond IT-focused subjects.

We have already seen that a CIO’s budget will typically contain over 60 per cent in capital expenditure and business-driven projects. While the decision to do these projects may not rest with the CIO, they must ensure they are delivered well.

Typically, business cases are constructed on the basis of savings made, efficiencies gained, or revenue generated. When delivering complex transition projects, a useful approach is to start transitioning and signing off on key items that deliver benefits early and pushing items which deliver less value out to the end of the programme. Little thought is given to delivering parts of a project early, gaining some of the benefits early and maximising the return on investment. However this approach means the benefits can start hitting the bottom line straight away.

A final recommendation for newly appointed CIOs is to take advantage of their unique position in the senior management team. The knowledge a CIO has about the link between strategy and IT can prove invaluable in helping the company develop its corporate strategy. A CIO must put their hand up to take a big part in corporate strategy. This must not however be done at the expense of the day to day service – no CEO is going to trust you to deliver the company strategy if his PA's internet access is down.

My recommendation is to spend the first 100 days making a difference that will be felt sooner rather than later. Easing yourself in gently may seem the safe alternative, but by the time you start wanting to make real change, your honeymoon period will be over and you will not be forgiven so easily.

Alex Blues, Head of IT Sourcing, at PA Consulting Group

The group is aiming to get basic infrastructure in place with proof of concept by this time next year and are already said to have started the process of procuring a strategic partner and will start looking for solutions providers from January.

Merton and Sutton currently use private Cloud services but feel a "Community Cloud” shared by a group of organisations with shared concerns would be an ideal vehicle to provide both further savings as well as support a move to more shared services.

The former's director of transformation, Chris Pope, says the group will have to face various challenges in implementing the project, such as having different arrangements in place at the starting point and having potentially different aspirations for how they may use the service.

They will also need to ensure that the infrastructure meets the code of connection for the Government Connects Secure Exchange.

But Pope dismissed any suggestion the move was any kind of basis for a kind of South West London/North Surrey 'super borough', as the move is really driven by “an increasing recognition of the need to bring services together and integrate more fully”.

Source: http://www.publictechnology.net/sector/local-gov/london-boroughs-plan-their-own-cloud

China “hijacked” 15 per cent of the world’s internet traffic earlier this year, according to a report to the US Congress, in what could be a new form of cyber-terrorism.

A state-run telecoms firm is accused of diverting traffic including data from US military and government websites, and some in Britain, via Chinese servers.

Experts fear that the authorities could have carried out “severe malicious activities” as a result of the 18-minute operation, even harvesting sensitive data such as the contents of email messages or implanting viruses in computers worldwide.

The report by the US-China Economic and Security Review Commission says it raises the prospect that China might use its powers to “assert some level of control over the internet”.

It is the latest sign that governments worldwide are apparently seeking either to launch attacks on computer networks or to defend themselves from them.

The US military now has a “fully operational” Cyber Command, while Israel is suspected of being behind a computer worm known as Stuxnet that may have damaged Iran’s nuclear facilities.

Earlier this year Google announced that Chinese hackers had tried to access the email accounts of human rights activists in the country in a “highly sophisticated and targeted attack”, while the government has blocked access to popular websites such as Wikipedia and BBC News.

The new US report provides previously unpublished details about a suspected “hijack” of almost one-seventh of all internet traffic, which originated in China.

“For a brief period in April 2010, a state-owned Chinese telecommunications firm ‘hijacked’ massive volumes of Internet traffic. Evidence related to this incident does not clearly indicate whether it was perpetrated intentionally and, if so, to what ends. However, computer security researchers have noted that the capability could enable severe malicious activities.”

The attack took advantage of the way that data is sent via computer servers situated all around the world to reach websites.

When an internet user in, for example, California wants to look at a website based in Texas, the data makes several short “hops” via servers on the way.

Data are meant to travel by the most efficient route however this can be manipulated, as servers based in China can suddenly announce that they provide the quickest route to various websites.

For 18 minutes on April 8 this year, the state-owned China Telecom advertised “erroneous” network routes which led to traffic going to 15 per cent of all internet destinations being sent via servers in China.

These involved official US websites covering the Senate, army, navy, marine corps and Nasa as well as leading companies such as Microsoft, IBM and Yahoo.

A handful of websites based in Britain were also affected, as well as many in Australia and within China itself.

The Commission admitted it did not know if the “hijacking” was intentional or what happened to the data, but the report states: “This level of access could enable surveillance of specific users or sites.”

Computer users could also have been prevented from accessing their intended websites, or been sent to fake sites, and “perhaps most disconcertingly” the operation could have allowed hacking of “supposedly secure encrypted sessions”. The large volume of data diverted could have been “intended to conceal one targeted attack”.

“Although China is by no means alone in this regard, persistent reports of that nation’s use of malicious computer activities raise questions about whether China might seek intentionally to leverage these abilities to assert some level of control over the Internet, even for a brief period.”

Wang Yongzhen, a senior press official with China Telecom, said: “China Telecom has never done such an act.”

Maitland Hyslop, managing director at Internet Central, said: “The event confirms cybersecurity at the centre of state conflicts and confirms an international capability for cyberwarfare.

"Hard on the heels of the news about the Stuxnet virus it places the threat from cyber attacks high on any national or business agenda."

The Chinese have also targeted Indian government offices and the office of the Dalai Lama, stealing secret and confidential documents, according to reports earlier this year.

One of the techniques they have used to set up false social network accounts on sites such as Facebook in order to bypass established firewalls.

In March last year, researchers discovered the GhostNet cyber espionage network that had infected 1,300 hosts in 103 countries around the world, largely government-based, sending information back to Hainan in China.

MI5 and GCHQ have issued a series of warning about Chinese attempts to hack systems in Britain over the past three years.

Pat Clawson, chief executive of the internet security firm Lumension, said the problem with the latest attack was that it was so easy to spot. “Traditional espionage tends to be conducted more discretely, but increasingly public cyber attacks are bringing the issue into public consciousness. In a digital age, it can be like airing your dirty laundry in public,” he said.

But he said the attack may have been very effective, adding: “The redirection of traffic isn’t just political espionage, the inclusion of data from Dell, IBM, Microsoft and Yahoo raises concerns around corporate espionage.”

Source: http://www.telegraph.co.uk/news/worldnews/asia/china/8143460/China-may-seek-to-control-the-internet-US-report-on-web-hijack-warns.html