Industry news

The UK Driver and Vehicle Licensing Agency (DVLA) has signed a three-year extension to an existing ten-year agreement with IBM to help transform the way in which it delivers services to customers.

As part of the contract IBM will be responsible for the development and implementation of a range of business transformation and systems integration projects. IBM will also be responsible for DVLA's technical infrastructure and its ongoing operation, maintenance and support. A key element of the contract will be to deliver a robust and flexible IT architecture that will support a move to emerging cross-government architectures and further improve service quality and the customer experience.

Paul Evans, DVLA’s Chief Information Officer, added, “This agreement offers significant savings for DVLA and we look forward to building on the partnership that has already been responsible for a wide range of innovative projects.”

New analysis from Frost & Sullivan, Nigerian Contact Centre Market, finds that the market earned revenues of $8.29 million in 2008 and estimates this to grow more than tenfold by 2015 to reach $114.45 million. The application segments covered in this analysis are vendors and system integrators.

Despite industry challenges, the rising consumer demand from developing industry sectors will drive exponential growth in the Nigerian contact centre market. The outsourced contact centre segment, email and SMS services, the health and medical organisation (HMO) and the public sectors are expected to become key areas of market growth from 2009 to 2015.

Frost & Sullivan Research Analyst, Jiaqi Sun, explained; "Nigeria is an emerging economy and the most populous country in Africa. The booming telecommunications and banking, financial services and insurance (BFSI) sectors are driving the demand for contact centre services, while competitive labour cost structures are attracting offshore operations."

Frost & Sullivan anticipates that the government will introduce incentives and regulatory frameworks by 2013. This will also coincide with improvements in infrastructure that will boost the market.

The main challenges faced by market participants include a poor telecommunications infrastructure and limited commercial power supply. Moreover, there is no specific industry association to regulate the market.

"The limited availability of commercial power supply increases operational costs," explains Sun. "Insufficient bandwidth also inhibits the growth of contact centre services. The key factors to succeed in this market include enhancing the quality of customer services, seeking alternative means of power supply, and initiating employee training programmes."

Nigerian Contact Centre Market is part of the Contact Centres Growth Partnership Services programme, which also includes research in the following markets: South African Contact Centre Technology Market, South African Broadband Market Update, Angolan Broadband Market, and Nigerian IT Infrastructure Outsourcing Market. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

The Ipswich Hospital NHS Trust has signed a contract with Kainos, an IT consulting company, to deliver its document and record management using electronic documentation technology.

The contract with Kainos has been set-up to address the unmanageable quantity of paper based case notes that must be processed and stored. The Trust currently has more than half a million case notes both on and off-site and it operates across a 45-acre site. The retrieval and management of notes so that they are with the right clinician in the right department at the right time, has traditionally proved time consuming and complex.

As part of the contract Kainos will establish a high-end scanning operation on the Trust site. The scanning operation will be managed by Trust staff and will enable the scanning of case notes required for clinic appointments and also case notes for all new patients. The scanning operation has been developed to allow the bulk scanning of an initial high priority 40,000 existing patient case notes. Back scanning of existing case notes on the Trust premises removes any concerns around patient confidentiality, which could potentially arise with offsite scanning.

The Kainos contract will also aid the Ipswich NHS Trust in compliance with upcoming sector rules. Next year for example, electronic production and transmission of discharge summaries within 24 hours becomes mandatory and is a key target for all NHS Trusts from April 2010.

Neil Turnbull, Head of Programme Delivery, in the Information Management and Technology department of The Ipswich Hospital NHS Trust commented: “At the time we were selecting a partner to implement our Electronic Document & Records Management (EDRM) system, Kainos demonstrated a deep understanding of EDRM technologies and processes and their experience in managing large-scale projects was evident to everyone who met them.” He continued, “They know EDRM technology, systems and services and we understand healthcare and patient care. Blending these skills and knowledge bases is making for a very successful outcome.”

Unitech Wireless has signed a five-year contract with India based, Genpact, in an effort to provide multiple customer service solutions throughout the North of India.

Under the contract, Genpact will deploy customer service solutions for Unitech Wireless through its operations center in Jaipur, which also supports over ten global enterprises.

Unitech Wireless is the joint venture company of Unitech Ltd. and Norway based mobile services provider Telenor Group. Through outsourcing its customer relations services to Genpact, the company hopes to create a strong differentiating factor from its competitors.

David Meneghello, Executive Vice-President of Marketing comments, “Outsourcing of equipment, services, backend technology and processes has allowed us to do this differently from others – turn around and face outwards, towards the customer, from day one. With Genpact as our partner, we will build the quality of customer service as our strongest differentiator in this competitive market.”

Lockheed Martin, of Bethesda, Md, has subcontracted CSC to provide data capture centre support for the U.S. Census Bureau. The subcontract has a 15-month performance period and an estimated total contract value of $75 million.

Under the terms of the contract, CSC will operate the Baltimore Data Capture Centre to capture data for the U.S. Census Bureau. The centre's employees will process more than 65 million forms that are mailed directly from households or collected and sent by local offices for the 2010 Census. CSC and its subcontractors expect to hire approximately 2,500 contract employees to staff functional areas of the facility including warehousing, sorter/scanner operations, document preparation, keying from image and checkout.

The 2010 Census is a count of everyone living in the United States and is mandated by the U.S. Constitution. Census data is used to guide the distribution of more than $400 billion in federal funds to local, state and tribal governments each year. The information is also used to determine Congressional apportionment and to help guide planning decisions, such as the placement of schools, hospitals, transportation, and business and industrial development.

Samlink Ltd, a leading Finnish IT banking services provider, has signed a seven-year, 55 million Euro strategic outsourcing agreement with IBM. Under the agreement, IBM will manage Samlink's infrastructure services across its data centre environment, enabling Samlink to focus on core IT banking service activities.

Samlink hopes the contract will cost efficiencies whilst providing improved business flexibility, reliability, availability and security.

Heikki Sirve, Chief Executive Officer of Samlink commented: "We provide IT and product development services for our clients in the Finnish financial industry. To be successful, our clients need high-quality and cost-efficient services. The partnership with IBM will enable us to raise our services to the next level."

Contact centres are struggling to cope with the increased number of channels, a report has indicated.

Three-quarters of contact centre managers interviewed for the poll said agents were expected to use up to five different software applications to handle customer enquiries – a number which is on the rise.

The survey of 90 contact centre managers was carried out by technology provider Corizon across the UK.

“Each channel increases the complexity of an agent’s desktop exponentially,” argues Emma Chablo, Corizon marketing director.

“As a result of the demand for new contact channels, desktop environments are littered with dozens of different screens with agents scrambling between them to find the right answer.

“This is hampering customer service operations, making it difficult for many contact centres to achieve the quality of service customers want.”

Is Malaysia set to become the global centre of a new breed of Islamic finance outsourcing services? Recent research from ValueNotes, a Pune, India-based research firm suggests that this is the case.

Otherwise known as Shari'ah banking, Islamic finance is a system of banking consistent with the principles of Islamic law (or Sharia), which prohibit the payment or acceptance of interest fees for the lending and accepting of money, as well as investing in businesses that provide goods or services contrary to Islamic principles.

In its recent research, ValueNotes points out that the rapid growth of Islamic finance in the past 30 years has sent global banking giants, such as HSBC and Standard Chartered, scrambling to develop their own offerings for Muslim clients. The result is that Islamic finance is now offered in more than 75 countries worldwide. Total assets invested in this way, meanwhile, totalled between $750 billion and $800 billion in July 2009, according to a study conducted by the Federal Reserve Bank of San Francisco. By 2010, they should reach a staggering $1 trillion.

ValueNotes analysts think Malaysia is well-positioned to tap into the outsourcing needs of banks that offer Islamic finance services. Along with Iran and Saudi Arabia, Malaysia is one of the leading players in Islamic finance. The country currently has 17 registered Islamic banks, so there are plenty of people there with skills and experience to offer.

There are other positive signs, too. Maveric Systems, a software testing service provider, recently launched its own Malaysian operations in order to offer services in the Islamic finance domain. Along with setting up a center in Malaysia, the company has also partnered with Malaysia University of Science and Technology (MUST) to roll out courses and training modules in line with Islamic finance and software testing.

Overall, the Malaysian outsourcing industry has been growing 15% annually and will reach $1.1 billion for 2009, growing to $1.9 billion by 2013. Apart from a few small research companies offering services such as data collection and data processing to Islamic banks, Islamic finance is one of the niche segments in Malaysia that, as yet, remains untapped, say ValueNotes' researchers.

By Alex Blues – Head of IT Sourcing at PA Consulting Group

At PA Consulting Group, we are always looking to find best practice in and around the sourcing marketplace. As a result, we have found that it can often be useful to step back from traditional practices and ask the WHY question and challenge what has always been conventionally been accepted as best practice.

An area PA has recently focused on is the difference in, and potential overlap between, the role of the lawyer and the role of an adviser when concluding a sourcing deal. In recent weeks, there have been numerous comments highlighting the extremely high fees that rack up when law firms and advisers ‘help their clients’.

When striking a sourcing deal, an organisation is clearly going to be looking for a single outcome that is sensible, sustainable and achieves the overall business objectives. So why is it that in numerous instances the sourcing advice (sourcing strategy and SLAs), and the legal side of the contract are chosen and handled by two separate organisations?

For example, the lawyer is chosen by the legal department and the sourcing advisor is chosen by the procurement department or by the wider business. These two separate organisations are often thrown together in courtship without any clear view or guidance on how they are going to work together moving forward.

So who is co-ordinating the overall outcome? Who is looking at the roles of each function? And who is making sure that the client is not paying twice for these services? There is a substantial overlap between what the law firm deems is its responsibility and what the adviser believes is theirs, particularly if the respective parties have not previously worked together.

Therefore, for large, complex sourcing transactions, there should ideally be one single contract, highlighting comprehensible outcomes and including both legal advice and sourcing advice, enabling absolute clarity and avoiding any overlap. The client organisation is then fully reassured and protected and can clearly articulate the pertinent risks and desired deliverable under this one contract.

Public sector outsourcing has been a much spoken about issue of late. It has been widely reported that 2010 will see government agencies needing to follow the private sector’s example and use outsourcing to both cut costs and better deliver the services the public expects. However, a report this week from Deloitte has questioned local councils’ ability to manage IT outsourcing contracts effectively. The research also claims that councils' mega-outsourcing days are numbered. So where are councils’ going wrong and why does this mean the demise of large IT outsourcing deals?

Interest in public sector outsourcing has piqued recently for numerous reasons. A perfect budget-squeezing storm seems to be encircling the sector and outsourcing and even offshoring look to be vital solutions. One of the biggest drivers has been the recession which has sparked a wave of prudency in the sector. The government’s huge debts from the banking bailout mean there are harsh budget cuts to come, whether Tory or Labour. Increasingly it seems, government agencies will be looking towards outsourcing as a method of maintaining services whilst cutting costs. Bringing in outside skills will also be an important factor in increased adoption. But it is lack of skill in outsourcing itself that Deloitte is looking at.

The Deloitte report, 'Taking Control of IT', which is based on Deloitte's experience of advising local councils, explains that local council IT departments' have a tendency to outsource problematic technical functions which results in their outsourcing projects rarely being successful. Costi Perricos, author of the report, observes that councils have for "too long" viewed IT as a "black art that is better performed by external contractors”. The report emphasises that local councils need to change their overall approach to IT rather than hoping outsourcers can step in and solve all their technical problems. To those of us in the outsourcing industry this appears commonsensical in its essence.

Greg Jones, Senior IT Sourcing Advsior, PA Consulting Group agrees that the report highlights an “oft-repeated mantra in the sourcing industry” which is that a company, public or private, should never outsource a problem. Jones explains that this is one of the most fundamental pieces of guidance that can be given. More accurately, he says, it should perhaps be read as “don’t outsource a problem you don’t understand.”

However, Jones does not think this will spell the end for large ITO deals. He says all that is required is “a change of attitude and renewed emphasis on the business leading the transformation, and appreciating precisely why the deal is being pursued and what deliverables are being looked for.” This is not, however, a belief held by all in the outsourcing industry.

Alistair Maughan, Partner at Morrison Foerster LLP, on the other hand anticipates that megadeals are generally coming to an end. He explains that there has been “much more focus on multisourcing and best-of-breed outsourcing projects.” He describes that outsourcing is a casualty of the recession with the typical outsourcing deal being “more about cost saving and surviving the recession than about strategic positioning.”

Controversially Anwen Robinson, managing director of ERP software firm Agresso, thinks that local councils have been duped buy some outsourcing providers. He laments; “unfortunately many external consultants have seen local government as a bit of a cash cow and have delivered unwieldy, often unsuitable systems which subsequently demanded expensive support contracts to make necessary changes. You have to question whether or not they had the best interests of the customer at heart.”

Although the Deloitte research has opened a can of worms when considering local councils and IT outsourcing, it by no means predicts the end of public sector outsourcing. It outlines that outsourcing still has the potential to “lower operational costs” and bring in much-needed “expertise and capacity to transform”. Local councils’ must remember that building an effective corporate IT capability is not the job of the outsourcer. Outsourcers provide a skill but the management of that contract needs to be kept within the council. Local authorities need to provide “vital input from its service areas into defining, training and testing systems” insists the report.

The report has highlighted an important bugbear in public sector outsourcing. Outsourcing can be effective but only if it is not seen as the answer to all problems. Public sector bodies clearly need a new approach to outsourcing for 2010 and beyond. Only by acknowledging the mistakes of the past and working to understand how outsourcing can be, and has to be, a big part of the public sector going forward.