Industry news

A county council has agreed to slash its £1.1bn budget by 30% by outsourcing almost all its services. The decision by Suffolk County Council could be seen as model for other councils to follow.

Under the New Strategic Direction almost all council services will be offloaded to social enterprises or companies over the next few years. Unions have warned the plan puts a huge number of the council's 27,000 jobs at risk. The aim is to turn the authority from one which provides public services itself, to an enabling council which commissions other to carry out the services. It could eventually see the council's workforce slimmed down to just a few hundred people who would manage the contracts.

Council leader Jeremy Pembroke said: "This decision was made with consideration to the financial deficit in the public sector and the coalition government's priority to reduce the deficit and the size of the state.

"The coalition requires lesser government and a bigger society and Suffolk County Council has responded to this change.

"Now that full council has debated the issue and agreed with the future model for the county council, we can begin to talk with the people of Suffolk so they can be involved in the shaping of services for the future."

Local councils across the country are trying to find way to save billions as part of the coalition government's drive to cut the deficit. Some councils are considering sharing services.

The plan by the Conservative-controlled county would be the first time a local authority would ended up providing virtually no services directly itself and will be watched closely by other councils looking to make savings.

The union Unison had written to every councillor asking them to think about the impact that scaling back would have on people and the services they rely on.

Unison's Steve Warner said morale was low among members working for the council and they were very concerned about the future of services in the county, particularly those affecting the very young, older people and those with learning disabilities.

He said: "Those are the services that we are worried about. We're worried that the councillors will have less control over those services and that the people of Suffolk will find that those services are less accountable to them."

Some services could be outsourced later this year with others in three phases starting in April 2011.

In a new report (India and China: which will be the outsourcing powerhouse in the 21st century?), the independent technology analyst claims that even though the industry itself continues to grow, India’s share of the market is in decline and China is already providing substantial competition as the world’s outsourcing powerhouse in terms of footprint, awareness and capability.

“Both countries are often touted as the low cost delivery location of choice, with many non-domestic vendors investing millions of dollars to set up operations in multiple locations in both countries”, said Jens Butler, Principal Analyst. “Add to this China and India’s growing influence as global centers of political and economic power, and it appears to be a two horse race to the finish”.

However, according to Ovum, each market must be considered as a delivery location on an individual contractual demand basis rather than as a broad brushstroke, as each has socio-, political- and economic-competitive and comparative advantages.

Stability and governmental influence will play a key future role, with China’s five year plans and the associated federal infrastructure investment and India’s province-led support for its home-grown free-market organisations. And the focus on such investment and direction will need to continue, as there are a host of up-and-coming alternatives to these current “magnets” of the services delivery world (such as the Philippines, South Africa and Latin America). “These locations may not compete from a pure scale perspective, but they may well continue to extract market share from both, just as China as continues to take share from India”, concludes Butler, based in Sydney.

Napatech has taken its first steps into the Indian market with a Value Added Reseller (VAR) agreement with Rahi Systems. Rahi will become the first local Indian supplier of Napatech intelligent real-time network analysis adapters for OEM customers. Napatech will be exhibiting together with Rahi Systems at Interop Mumbai 2010 from the 28th to the 30th of September.

“We are excited about the opportunities we see developing in the Indian market”, said Erik Norup, President, Napatech Inc. “India is a well established IT market with world-class players who, we believe, can benefit from Napatech’s technology. Together with Rahi Systems, we can show how cost-effective, high-performance systems can be built for high-speed network monitoring and analysis.”

Rahi Systems, which is headquartered in California, with operations in India, will provide Napatech’s range of 1G and 10G Ethernet adapters to Indian OEM customers who require a system integration partner for development of high-performance network monitoring and analysis systems and for in-line security solutions. Rahi Systems has in-depth knowledge of Napatech technology, as well as expertise in building high-performance network appliances.

“We look forward to bringing Napatech’s products and technology to the Indian market, where there is a growing appreciation for the value of network monitoring and analysis appliances as a tool in planning, managing, securing and optimizing IP networks”, said Tarun Raisoni, Founder and CEO of Rahi Systems.

Visit Napatech and Rahi Systems at Interop Mumbai 2010 at stand #59.

The Black Book of Outsourcing’s 2010 survey* results are published this month and they’ll make unhappy reading for the big name global players.

The 2010 survey, which drew on feedback from more than 6,500 outsourcing customers’ with experience of more than 30,000 services, identifies a demand and respect for niche specialist providers.

Eamonn Kennedy, research director at Datamonitor, led the research programme between April and August 2010. He said: “Whilst feedback on the big names, such as IBM and HP, has been generally positive, the companies that have excelled and delighted in the services they provide have been smaller players.”

One possible reason for this is that the nature of large scale outsourcing is more complex and therefore more predisposed to a lower level of average satisfaction.

“Smaller outsourcing providers have been pushing their specialist knowledge and deep client understanding as their unique selling point for some time now, claiming that specialists provide a better service. While all outsourcers talk up their ability to specialise, this survey suggests that smaller players are best positioned to deliver on that promise”, adds Eamonn

This is reinforced by the global top 50 list of outsourcers published by Black Book of Outsourcing. Six of the top 10 providers are either specialist legal process or financial research outsourcers. American Discovery, which comes top of the list of global outsourced service providers by company satisfaction ratings, is a provider of legal process outsourcing (LPO) providing corporations and law firms with increased quality controls and cost efficiencies.

Eamonn concludes: “The high score for customer satisfaction amongst knowledge based outsourcing providers can be attributed to the focused nature of their work and the fact that they arguably work for clients with the strictest professional requirements”

*The 2010 Black Book of Outsourcing study, focused on customer satisfaction in the global IT and business process outsourcing industry, has concluded after three months in the field.

In the second of a two part series, Mike Henley, outsourcing expert at PA Consulting Group, having discussed the large scale changes afoot in the legal industry, assesses how a firm should go about flexing with the industry.

These dynamics are driving market changes which are fundamental and are likely to be permanent. As a consequence, firms who do not emerge from the recession in the winner’s enclosure will find it very difficult to recover from that position. Therefore the decisions being taken now by law firm management and partners will determine the long term destiny of their firm.

If we are truly in a period where several dynamics are converging to force the fundamental and systemic re-shaping of the legal market and therefore the law firm model, the response must be revolution, not evolution, and all embracing, not marginal. Therefore the single most important issue [right here, right now] for a law firm is not only identifying the right strategy or solution; it is establishing whether the firm is capable of grasping and understanding the scale of the change required and, even if it is, that it has the skills, resources and collective will to manage and deliver change of that scope and complexity.

This is a difficult issue for many firms. The law firm model has been with us for a long time, largely unchanged. Most lawyers have been going about their business of helping and advising clients in much the same way for most if not all of their professional careers. What are contemplated here are changes at an organisational level which will depend for their success upon the willingness and ability of each individual within that organisation to embrace that change sincerely and with true commitment.

That means partners (every single one of them without exception) have to accept and lead fundamental change in the way they interact with clients, deliver services, manage their people and are remunerated. The key challenge for senior management is to mobilise and motivate able and opinionated partners and lawyers, when the consequences for those individuals are likely to involve turning their professional lives upside down.

Further the new landscape is unlikely to be a fixed, stable target; rather like most other market places it will be constantly evolving picture. The risk therefore is that in adopting specific solutions a firm will find that if and when it has delivered its plans, the market has moved on. Therefore the change dynamic within the business needs to be a constant, embedding agility and continual renewal to meet the evolving and changing features of the market, and it’s competitive dynamics.

What is required is nothing less than transformation, at an organisational and an individual level. It is only when a firm has got to grips with the ability of its people to change truly and wholeheartedly, and continue to accept change as part of business as usual, that it will have created an environment in which it can confidently predict that any solutions it decides upon will in fact be implemented and adopted on a sustained basis. Without that environment it will not matter how good any strategy or solution is; the chances are it will fail.

Accenture (ACN) and National Australia Group Europe (NAGE), a subsidiary of National Australia Bank, have signed an application development and management agreement that extends their existing contract for an additional three years to 2015.

Accenture will continue to provide application development and management services for a number of the bank’s key enterprise and customer applications. The contract, which extends a similar agreement signed by the two companies in 2007, is designed to help NAGE achieve a more flexible and scalable IT function by increasing its use of Accenture’s Global Delivery Network.

“The extended agreement reflects Accenture’s role as a strategic business partner to National Australia Group Europe,” said Debbie Crosbie, CIO, National Australia Group Europe. “Our decision to continue to partner with Accenture is based upon the strength of our relationship to date, the quality of service provided and Accenture’s ability to help us deliver responsive, flexible and efficient IT service to our customers.”

“By keeping customers at the center of its business and keeping services in step with changing market needs, NAGE has positioned itself for the future,” said Sushil Saluja, Managing Director of Accenture’s Financial Services group in the U.K. “We are delighted with the extension of our relationship and look forward to continuing to help the bank increase efficiencies, manage costs and deliver a high quality service to its customers.”

Capgemini, one of the world’s foremost providers of consulting, technology, and outsourcing services, announced it has been selected as one of the leading Oracle Fusion Applications Global Solution Integration Ramp-Up partners, and is ready to implement and support Oracle Fusion Applications on a global basis.

For the past 15 months Capgemini has worked with Oracle to test its Oracle Fusion Applications as part of a development-led program with participation from six countries namely the United States, China, the Netherlands, France, the UK and India.

Capgemini investment in Oracle Fusion Applications includes in-depth Structured Product Training, including Functional Business Applications and Technical Foundation Architecture focused on application co-existence, integration, customization and deployment best practices. Working directly with Oracle Fusions Applications Product Development, Capgemini has also been involved in embedded product training and strategy initiatives focused on gaining deep hands-on product knowledge and expertise. Teams across the globe have performed extensive business process flow validation, user experience and quality assurance testing of the entire suite of products.

Oracle Fusion Applications, offer 100% open standards-based business applications that provide a new standard for the way businesses innovate, use and adopt technology. Delivered as a complete suite of modular applications, they help to evolve business to a new level of performance across various business functionalities including: financial management, HR, CRM, supply chain and portfolio management, procurement, governance, risk and compliance. The new applications will help speed up transactions, reduce inefficiencies, provide business strategic insight, reduce costs and maximize sales.

Capgemini will integrate Oracle Fusion Applications into its global solutions offering in 2011 and will include Oracle Fusion Applications in centres of excellence around the world to deliver and showcase these innovative applications.

Capgemini is announcing at Oracle OpenWorld the launch of ‘Oracle Fusion Lifecycle’, a new approach to leverage the full potential of the Oracle Fusion Application platform by providing managed services based on subscription pricing and built around a flexible business menucard and a tailored roadmap.

Andy Mulholland, Capgemini Group CTO, who will speak on Oracle Fusion Applications at Oracle OpenWorld in San Francisco (19-23 September) said: “Being a key Oracle Fusion Applications Global Ramp-up partner is strategic to our vision of collaborating with clients to offer outstanding service. We have been investing early and heavily in this technology and have been working closely with Oracle in this ramp-up preparatory stage. As experts in current Oracle applications our in-depth knowledge gained through testing will be invaluable in helping our clients evolve their IT strategy and transition from existing applications to Fusion applications.”

The taxman's IT director has lifted the lid on how the HM Revenue & Customs (HMRC) plans to squeeze more than £1bn of savings out of one of the UK's largest outsourcing contracts.

Mark Hall is overseeing the HMRC's Aspire (Acquiring Strategic Partners for the Inland Revenue) deal, the £750m per year contract led by Capgemini that provides the department with nearly all of its IT services and supplies.

The contract supports a vast IT estate, comprised of 600-plus computer systems, 8,000 servers, 80,000 desktop PCs and 7,500 laptops. The sizeable collection of computers underpin the government's ability to administer the UK's massive taxation system: the department last year collected £435bn in revenue and handles about 200 million calls and processes PAYE (Pay As You Earn) returns for 55 million employers each year.

At the core of the contract is a drive to reduce the number of computer systems used within the department from more than 600 to just 13 - fuelled by both the need to save money and to simplify and streamline its core systems. The systems were criticised for their fragmented nature by the former chairman of PricewaterhouseCoopers Kieran Poynter in his report into the department's loss of 25 million child benefit records in 2007.

"We had a challenging set of legacy systems and, with the cost of running those increasing every year, every pound that we spent on running them was a pound we could not spend on investment," Hall told the GovNet Efficiency through Service Delivery Partnerships conference in London yesterday.

One of the upshots of this consolidation of IT infrastructure has been that the 12 systems that were used to calculate how much PAYE tax a person should pay have been replaced by a single system called the National Insurance PAYE System (NPS).

The NPS allows HMRC staff to check a single customer record on one system - rather than different records on 12 systems as was previously the case - meaning it has become much easier for HMRC staff to spot when people are paying the wrong rate of tax.

This year was the first when the HMRC used the NPS to carry out its annual check on whether people are paying the right amount of tax - leading to a significant increase in the number of errors discovered, with 4.3 million people found to be paying too much and 1.4 million too little.

By ditching unnecessary systems, HMRC is working towards the contract's other main aim, cutting the cost of running HMRC's IT infrastructure.

Since Capgemini was awarded the Aspire contract in 2004 it has reduced the running costs of running the department's IT estate by £152m, and by the time the contract expires in 2017 the aim is that for it to have saved £1.2bn.

Savings are also being achieved by reductions to what HMRC pays its suppliers - with the HMRC maximising cost reductions by getting its supplier to reinvest money saved into new efficiency measures.

"Instead of taking the... saving we reinvest the pound and we achieve another two or three pound worth of saving," said Hall.

"The investment will lead us to achieve the £161m [HMRC's annual savings target from 2011/12] and to move forward with the decommissioning of our systems.

"We are transforming our IT estate with zero investment cost - recently we have updated our PC estate at no additional cost," he said.

Managing Aspire is no simple task, and it takes more than just setting "20,000 key performance indicators" to keep the contract's 240 software, hardware and IT services suppliers on track for the duration of the 13-year long contract, Hall said.

Most important, he added, has been recognising that HMRC's relationship with its suppliers needs to transcend the normal client-vendor dynamic, which means ensuring that both the suppliers and HMRC share the same goals and are rewarded for the same outcomes.

"It has to be about joint outcomes; it has to be about teams that are aligned and it has to be about both organisations taking the share of risk and reward," he said.

Cognizant (CTSH), a leading provider of consulting, technology, and business process outsourcing services, announced it has been selected by Oracle Applications Product Development to participate in Oracle Fusion Applications integration and migration co-development projects. The announcement was made at Oracle Open World 2010, San Francisco.

Oracle selected Cognizant to co-develop customer relationship management (CRM) software tools to enable the seamless, secure and rapid integration and migration of critical customer data from Oracle’s Siebel CRM to Oracle Fusion CRM applications. Cognizant is also assisting in Oracle Fusion CRM application testing, and Cognizant teams worldwide are undergoing extensive training in Oracle Fusion applications and technology, including its architecture and data model.

“Cognizant is a next-generation solutions partner with years of industry-specific business consulting and enterprise software experience, helping large global companies improve their customer-centric processes. By tailoring Siebel CRM applications to support those processes, Cognizant will allow Oracle Fusion CRM customers to move beyond mere sales automation by improving sales effectiveness and productivity,” said Steve Miranda, Senior Vice President, Oracle Application Development. “In addition, Cognizant will help ensure cost-effective, high-quality implementations across the entire Oracle Fusion Applications suite through its proven global delivery model and methodologies.”

As a Co-Development Partner in Oracle Fusion Applications Co-Development projects, Cognizant has demonstrated the highest levels of functional application domain and technological architecture expertise. It has invested in co-development efforts that typically span nine to 24 months, working closely with Oracle Product Development to deliver next-generation functional and technical integration for Oracle Fusion Applications.

“We are committed to working with Oracle and our clients to support the open technology foundation of Oracle Fusion Applications, which helps ensure their integration, security, and extensibility. We have gained deep experience with these applications prior to their release, and we look forward to participating in early-adoption client engagements, delivering co-existing and upgradable service offerings and best practices implementations,” said Peter Grambs, Senior Vice President, Customer Solutions Practice at Cognizant.

Convergys Corporation (CVG), a global leader in relationship management, announced today that its channel partner, IP Integration, (IPI) a leading UK systems integrator located in Reading, has signed a contract for Convergys solutions with NHS Professionals (NHSP).

Already an IPI client, NHSP will now use Convergys Intelligent Interaction Solutions, including Intervoice [R] Voice Portal, Intervoice Advanced Notification Gateway, and speech recognition, as well as IPI’s Classify ME call classification application, within its Service Center.

NHSP is the largest provider of managed flexible services to the National Health Service in England with around 50,000 nurses, doctors, administration and clerical, and other healthcare professionals signed to its bank; placing approximately 2 million shifts a year and providing reliable flexible workers to around 80 NHS Trusts all across England. NHSP was looking for solutions to help it drive improved efficiencies within its Service Center operation.

With the solutions from IPI and Convergys, NHSP expects to save over one million minutes of customer service agent time annually through inbound and outbound call automation. The solutions enable NHSP to deliver proactive outbound communications regarding available shifts, which help drive flexible worker loyalty. Finally, the Convergys solutions help NHSP deliver high customer satisfaction through a user-friendly, intuitive interface and application that recognizes callers easily. NHSP expects to see a return on its investment in the solutions within one year.

“IPI and Convergys stood head and shoulders above the competition during the selection process for our IVR project,” said Phil Bartlett, NHSP Telephony Services Manager. “They invested time understanding our business, challenges, and objectives and always placed our customer’s needs front and centre of any recommendations. Their approach allowed us to address immediate business requirements, while setting the foundation for a strategic self-service roadmap.”

“Partnering with Convergys has provided IPI with a competitive differentiator within the higher end of the UK contact centre marketplace,” said John Bacon, IPI’s Account Executive. “After raising interest at one of our customer seminars, Convergys worked directly with IPI to help us identify a great speech opportunity with one of our key strategic accounts. By combining Convergys’ applications and speech expertise along with IPI’s specialist development team CTI Labs, we were jointly able to develop that opportunity from initial concept through to reality. Convergys’ pragmatic and flexible approach to indirect partnerships makes it our preferred choice for complex speech self-service applications.”

“IPI has been a value added reseller of Convergys solutions for two years, and is starting to make a significant impact in the market place. IPI is a great example of the value that a focused reseller like this can bring to Convergys in the UK,” said Mike Betzer, President, Relationship Technology Management, Convergys. “We look forward to creating a sustainable, long-term partnership with IPI, supporting it in its business pursuits, and reaffirming why Convergys is its vendor of choice for speech self-service applications.”