Industry news

Hot off the press… Hugh Heffner has joined the outsourcing band wagon and has turned to it in order to cut costs. Outsourcing what, I hear you ask. To many Heffner fan’s dismay, he is not outsourcing his own bunny duties. Instead, Playboy Enterprises is outsourcing all its magazine functions to America Media. Not as exciting as you thought this news piece would be ey?!

American Media will soon handle the production, circulation, advertising sales, marketing and other services of Playboy magazine and the company’s other publications. The mens’ magazine has set March 2010 as the latest date to outsource its functions. The Round Up is certain American Media will continue to produce the publication in the highest ‘quality’.

So while the Playboy Enterprise gets accustomed to the idea of outsourcing the usual suspects have been forming outsourcing agreements all week. The UK’s troubled Royal Mail has signed a cloud computing contract with CSC. The contract is the first cloud computing services agreement of this scale. The contract may work in the mail giant’s favour. The fact that they are working to improve processes may take the media spotlight off of the recent strikes and perhaps reduce budget pressures?

There was also good news for Mitie, a support services and asset management firm, which has posted a rise in profits in the six months leading up to September. The firm is confident in the growth of outsourcing, which is good news all round for the sourcing industry.

What a wide range of outsourcing fun this week. Looks like 2010 is going to be a good one.

Nottingham Trent University has joined forces with IBM to help streamline information on finance, human resources, estate and student records.

The new system from the technology giant will consolidate data from each department into reports and dashboards, allowing the university to make more effective decisions about investment and resources.

The institution took on the new technology in a bid to improve its reporting and analysis capabilities and provide more reliable information.

James Lacey, Director of Finance at Nottingham Trent University commented: “Higher education is a highly competitive environment and universities are large complex organisations facing challenging times in terms of public sector spending cuts.”

“The volume of data we have to process is mind boggling, including applications, enrolments, completion rates and a whole number of other metrics for some 25,000 students. Turning this mass of data into meaningful management information is not a simple task.”

“We will gain a competitive edge by turning the data collected into useful information that we can analyse,” he added.

International mining firm Cliffs Natural Resources has joined hands with Wipro Infocrossing to provide IT infrastructure services in a multi-year deal.

Wipro Infocrossing will provide the mining company with storage and architecture services from its data centres, in addition to delivering desk-top support to Cliffs’ 2,000 employees in North America.

The company hopes the five-year contract will help in further supporting the business in preparation for growth and expansion.

Ron Aderhold, Cliffs Natural Resources chief information officer, said: “We selected Infocrossing as our business partner because of the firm’s commitment to customers’ success and an ability to deliver on its brand promise of superior IT infrastructure services, delivery capabilities, and industry expertise.”

Teleperformance has struck a deal to take on the major shareholding of Improved Financial Solutions (IMFS) in a bid to strengthen its debt collection offering.

The acquisition would give the outsourced contact centre and CRM provider “new service offerings” and “leading technologies” which would help serve customers more efficiently in the current climate, the company said.

Jeff Smith, Teleperformance UK chairman and ceo, said: “We are delighted to announce the acquisition of IMFS, which is a highly professional debt collections agency.”

“Most of the work in this sector is telephone based and we are finding with our expertise and training abilities we are able to create long lasting relationships with customers, who approached in the right way, are fully prepared to work out ways that they can better manage and settle their debts,” he added.

The collection agency, which has over 40 staff handling consumer and commercial debt including credit and store cards as well as loans, has gained up to 95% of its total annual income from consumer debt within the financial services sector.

Over 25,000 people are employed in the UK in debt collection – a figure that could rise further as the effects of the recession continue.

Cardiff City Council has signed a long term partnership with Tata Consultancy Services (TCS) in a bid to help drive the council's mission-critical ‘Strategic Transformational Change Programme’.

TCS will work closely with the Council's ICT Service to help deliver more efficient systems whilst both parties will benefit from an exchange of knowledge and experience.

This strategic partnership is said to pay dividends for the city’s residents by improving the day to day operations and improving service delivery, which is thought to have a total value of £150 million over its 15-year lifetime.

Cardiff Council Leader, Rodney Berman is optimistic about the partnership. He said, the council wants TCS to “bring their global technical expertise and private sector commercial know-how to support a major change to the way in which the council's technology infrastructure supports its day to day operations, this exciting collaboration will help us make savings in our spending on technology and enable the council to raise money through the development of technology-enabled products”.

The UK’s Royal Mail Group has signed a contract with CSC to provide cloud computing information technology (IT) services. The new contract is an expansion of a previous contract signed in 2003 with CSC to maintain the Royal Mail Group's desktop computers and manage and develop its servers, mainframes and IT processes.

The contract is the first cloud computing services agreement of this scale. Under the terms of the agreement, CSC will provide Royal Mail Group’s 30,000 employees with access to new IT services from Microsoft. CSC will also provide helpdesk support.

Royal Mail Group's Head of Technology Service Delivery, Carol Olney, commented: “This deal forms part of Royal Mail's drive to invest in new technology to improve efficiency and customer service.” She continued, “The Microsoft suite will give people across Royal Mail Group the tools they need to do their jobs more effectively, enabling our business units to collaborate with each other, partners and other external organisations more freely, easily and securely while securing cost savings."

Mitie, a support services and asset management firm, has posted a rise in profits in the six months to September 30 and said efficiency drives in the private and public sector will create further opportunities for growth in the next year.

Mitie, whose services include roofing, catering and painting, saw pre-tax profits climb to £42.3m from £37.6m over the same period the previous year on revenues that rose to £801.1m from £760.7m.

Chief Executive Ruby McGregor-Smith commented: ‘In the private sector clients continue to seek efficiency through multi-service and integrated facilities management contracts while budgetary pressures in the public sector will create substantial facilities management outsourcing opportunities, although the timing of these is currently difficult to predict.'

Mitie explained that the government is expected to rely heavily on outsourcing in the coming period as it seeks to balance the budget following stimulus measures that were prompted by the economic crisis. The company anticipates considerable impetus in the public sector over the next two years as all public sector bodies will be challenged to maintain front line service delivery with reduced budgets.

The University of Ulster has signed an ITO contract with IBM to improve reporting, analysis and forward planning. The planned IT platform will help to provide staff with an overview of how the university is performing across most key areas, including dropout rates, the percentage of students getting a good degree result, student retention by course and university expenditure.

In a statement the company said “Universities are facing more pressures today than ever before. There are more quality higher education institutions for prospective students to choose from, leading to increased competition for student applications. At the same time, there are new financial pressures as the Government cuts higher education funding.”

Patrick McLaughlin, database development manager at the University of Ulster commented: “We have always been committed to ensuring that our students have the best education experience possible, while attracting a high numbers of applications. But it is impossible for a university of our size to do this if it doesn’t have an accurate overview of what does and doesn’t work, and understand the best path to take for the future.”

Apparently Indian outsourcing suppliers are finding Europe a tough nut to crack. Compared to the U.S and North America, Continental Europe has not adapted the outsourcing models provided by Indian IT suppliers, according to research conducted by Forrester. So the Indian outsourcing giants are fallible.

That is not to say that Europe does not outsource, it just doesn’t seem to be outsourcing to Indian. However, the Round-Up does not think this will last for long. With all the news about the state of public sector outsourcing and budget cuts, it will be almost impossible to bypass the offerings in India. Just this week the news room has had an abundance of public sector ITO contract announcements.

For instance, the Ipswich Hospital NHS Trust has signed a contract with Kainos. Kainos is a IT consulting company and the contract will help manage the large amounts of paper based notes that are processed. It’s all going electronic now.

Universities are also getting in on the act. The University of Ulster has announced that it has signed an ITO contract with IBM. The IT overhaul that IBM will manage will enable staff to see a more comprehensive overview of the university’s performance matrix. The statement released by IBM confirmed that financial pressures on Universities have made outsourcing a more viable process to procure.

A short and sweet round up this week, it seems the run up to Christmas has seen a slow down in new contract news. Mark the Round-Up’s word, this will not last long.

By Dr Roger Newman, UK head of manufacturing and digital convergence relationship management at Mahindra Satyam

At many of the leading offshore, outsourcing companies the problem is not one of access to raw talent, we have quality IT graduates in abundance, the challenge is in converting that raw talent into somebody who can shine in any global IT organisation.

Over the past few years companies in India have invested heavily in training and HR processes. In our company there is a recognition that the ability to convert raw talent into ‘stars’ is a real competitive advantage. For example our Leadership school has world class facilities and trainers; recently I was showing off these facilities to a customer and he was amazed to see our staff training to work on his account, going through a business simulation game using his industry and his specific processes as part of the simulation. In many ways we are able to train staff better than our customers because of the investments made and the low cost base we operate in.

However for all these facilities and processes we are still not where we need to be in terms of talent management. In fact there is a growing realization that to take things to the next level we have to overcome more subtle, human barriers.

To really develop your ‘stars’ of the future you need people who will spend time mentoring them. Having a mentoring programme is not enough, you need your top managers to give up quality time, not easy at the best of times. You also need to give people broad experience and opportunity. If you have a potential star in your division it is difficult to give them up to another division to let them get broader experience. It is amazing how selfish I become when it comes to talent!

In India there is also a cultural tendency to be fairly hierarchical and demonstrate loyalty up and down the chain of command. There are many benefits from a service delivery perspective but can make it difficult to fast track people through the organisation. This has to be recognized and dealt with.

So, the outsourcing talent management race is very much on. Great strides have been made and there is a realistic assessment of the barriers still to be overcome. The prize will go to those companies that stick with it in the long run.