Industry news

The Government of Canada has signed a four year contract extension with CGI Group Inc. The US $78m extension covers the provision of engineering and technical services. The contract, originally signed in 2007, changes the existing arrangement from a Resource Based contract to a managed-services model, with a focus on outcomes.

“More and more government agencies are moving towards a longer-term managed services model with companies they rely on to help them succeed in their mission,” said Hicham Adra, Senior Vice-President and General Manager, National Capital Region. “CGI has been supplying IT services to the Government of Canada for over 25 years. We have a strong track record in government, and we look forward to continuing that with the services provided to PWGSC.”

The Korea Exchange Bank (KEB), the country's largest foreign exchange bank, has awarded IBM a five year strategic procurement outsourcing agreement.

Under the agreement signed in August 2009, IBM will provide to KEB a full range of enterprise strategic sourcing and procurement services, allowing the bank to focus on its core competency and competitiveness in the banking industry while achieving cost savings and improving industry compliance and internal control.

IBM will run KEB's overall sourcing and procurement operations end-to-end, covering areas of information technology, marketing, services, facilities and supplies. As part of the project, the company will establish and support the bank's purchasing strategies, improve the purchasing process and systems, as well as manage strategic sourcing processes and relationship with suppliers. IBM will also make purchasing decisions and settle payments.

The implementation of the procurement outsourcing project supports KEB's Zero Waste Project, which is an employee-engaged management campaign aimed to optimise the cost structure and enhance management efficiency. In addition to optimise the bank's operational efficiency, KEB also wanted to yield cost savings through an advanced, centralised and streamlined purchasing process conducted by IBM.

Telfort, a mobile telecommunications company in the Netherlands, has signed a five-year technology infrastructure and applications services agreement. Telfort hopes the outsourcing deal will augment business growth while improving quality and reducing operational costs.

Under the terms of the agreement, EDS will manage the development and operation of Telfort’s applications and infrastructure, amongst others to provide the company with improved agility and cost performance. As Telfort’s service integrator, EDS also will act as a single point of contact.

“In order for Telfort to grow our business in the low-cost wireless segment, it is necessary to adopt a cost leadership strategy and become more efficient,” said Marco Visser, chief executive officer at Telfort BV. “By partnering with EDS, we will be able to streamline our organisation for efficiency, providing us the opportunity to focus on new areas for growth.”

EDS will provide applications management services for Telfort’s critical business software applications, including new customer care and billing solutions focused on enhancing the customer experience. EDS also will manage the underlying infrastructure, including the network and data center, and provide service management and service desk services.

Although the UK can’t put a foot right in the eyes of the USA at the moment, there is one thing that we can get right, Cricket. Okay, so maybe the UK is not so good at political relationships, but who cares when there is sport! This week saw England win the Ashes and all bad news was forgotten. So the Round- Up will plough on with this week’s news with a spring in its step and brimming with positivity.

A trend the Round-Up has noticed this week, amongst others, is a surge of importance placed on improved customer services as a way of differentiating oneself from competitors. According to Fujitsu, 40 percent of CIOs see improved customer service as key during recession.

IT leaders are looking inwards as they seek new ways to deliver value amidst the recession, according to new research commissioned by Fujitsu Technology Solutions. The report, entitled “Dynamic Infrastructures and the Future of IT” found that more than half of the respondents prioritised the improvement of service levels when it comes to their investment in new technology.

However, this is not the main reason for Fujitsu’s visibility in the media this week. It seems the company may be in difficulty as it announced the plan to reduce up to 1,200 jobs of its UK operations. This measure is being proposed because of lower than anticipated revenues. It seems it is another knock-on effect of the lagging economy.

On a more optimistic note, (remember, just three paragraphs ago I promised springy steps cardiac positivity) interesting news came in the form of the U.S. National Guard outsourcing its training programs to CSC. It is promising that the training of America’s National Army is being entrusted to an outsourced IT provider. If outsourcing is good enough for the Army, then it is good enough for anyone!

And to end on an even higher note, Steria has signed a £45 million deal with the IPCC. The Independent Police Complaints Commission (IPCC) signed the ten-year contract with Steria to provide Information and Communication Technology.

Amongst other departments the IPCC also investigates serious complaints against HM Revenue and Customs, the Serious Organised Crime Agency and the UK Border Agency. The staff exercise police-like powers. So information and communication technology is a pretty important aspect of the department. The round-up is sure Steria will make sure no complaint goes awry.

But we’re not complaining this weekend in the UK as you well know. The August bank holiday has finally arrived and not a minute too soon. We’ll soon be welcoming tanned colleagues back into the office, packing kids off to school and wondering bewildered at where the summer went again. Enjoy the three days while they last!

As part of his studies towards the NAO's recently launched Diploma in Global Strategic Outsourcing, NAO member Graham Jump is conducting a survey into 'Price Benchmarking in IT Outsourcing'.

Due to the commercially sensitivity nature of benchmarking, real data can be hard to find and Graham's aim is to collect some intelligence on how price benchmarks are actually being used in the real world.

If you are a user of IT outsourcing services with recent (last 2 years) experience of price benchmarking and would like to participate please link to the survey at:

http://www.surveymonkey.com/s.aspx?sm=kg2SFG0aDDijkQEYzdzmGw_3d_3d

The survey does not ask you to identify yourself, your company or any third parties and so your response will not be identifiable among the other responses. It should only take 5-10 minutes to complete.

BP, one of the world’s largest oil and gas companies, has commissioned Infosys Technologies to manage and operate a large portion of its business systems. The applications outsourcing and support agreement will run for five years.

Over the last 12 months, BP has undertaken a programme to consolidate its information technology (IT) vendors for application development and application maintenance (ADAM). BP had a rigorous procurement selection process which assessed Infosys on capability, oil and gas sector knowledge and cost.

Dana Deasy, BP Group CIO, said, "I'm pleased to have selected Infosys as one of our strategic ADAM vendors. In awarding Infosys ADAM work for our Integrated Supply and Trading and Exploration and Production businesses, we look to leverage its capability and knowledge of the Oil and Gas sector. This agreement will enable BP to reduce complexity, standardize work processes, and lower our overall cost base."

Fujitsu Services operation in the UK has proposed a reduction of up to 1,200 jobs. This measure is being proposed because of lower than anticipated revenues. The reductions are expected to be complete by the end of 2009.

Fujitsu has said that the action is necessary to ensure that the company remains competitive in the current economic climate.

Fujitsu currently employs 12,500 people in the UK. It is an IT systems, services and products company with an annual revenue of £2 billion. To date the company has taken a number of measures to keep its cost base down and avoid job losses, including a company wide pay freeze, a reduction in the number of contractors and temporary workers, a re-training programme and tight control of recruitment. In addition strict controls have been applied to operational and capital expenditure.

USA Army has signed a contract with CSC to continue designing and developing training courseware. The contract has a one-year base period and four one-year options. It replaces a previous Army National Guard training services contract awarded to CSC in September 2003.

Under the terms of the contract, CSC will provide distributed learning educational products to the Army National Guard. CSC will develop and update new and existing courses as well as convert classroom-based courses to a distributed learning environment. They will provide services at the Distributed Learning Development Centre at Camp Dodge, Des Moines, Iowa, and the National Guard Professional Education Centre at Camp Robinson, North Little Rock, Ark.

Businesses across the world have been using outsourcing as a strategy to reduce costs, streamline workforces and improve quality. On the whole, this strategy has been effective and has resulted in management teams across all industries turning to outsourcing more frequently.

Now, if businesses outsource to UK based suppliers then jobs remain onshore, graduates have a chance to learn the vital basics and the UK moves into the future happy in the knowledge that it has a well skilled workforce. The problem is, many of the biggest businesses are not using UK suppliers, instead they are opting to offshore, leaving the UK with a growing skills gap. In fact it is safe to say that the gap is quickly becoming a void.

Over the past few months there have been a host of businesses receiving less than favorable reports about their offshoring practices. Most recently, Lloyds Banking Group has been under fire from the media as a result of a Daily Mail report that said Indian IT contractors were being brought into the UK to work in place of UK counterparts. The article was supplemented with internal documents that revealed the concerns Lloyds managers have about knowledge gaps within their IT department, hence they were possibly looking to their Indian partners to provide them with the necessary skilled workers.

What this means for Lloyds is that they lack the necessary skills to do basic IT processes without calling in the offshore cavalry. This is worrying; a large financial organisation should have the capacity and the business sense to keep a retained team of workers on-shore. It is probable that Lloyds became a little too focused on cost cutting and rapid ROI whilst losing sight of the future security of their organisation.

Mass offshoring is not just having an effect on the capabilities of UK businesses, it is also having a distinct effect on those yet to begin their business life, the graduates. Firms excessively offshoring work and not investing in their own staff has resulted in fewer graduate opportunities and in turn means that mid level IT specialists are becoming a rarer breed. Graduates need on-the-job training in order to become tomorrow’s IT specialists. Who will train future developers, networkers and IT managers if there is no one left in the country with the foundation skills?

Martyn Hart, Chairman of the National Outsourcing Association, commented, “As India and various other destinations enjoy a wealth of low level IT work, IT specialists in these countries will arguably have had better experience and training than their UK counterparts. In turn, those IT workers that have climbed the career ladder in key offshore destinations would have had such a breadth of experience that they may be better placed to manage the IT teams of the future.” So, where does this leave the UK?

Of course offshoring is understandable if not vital within a global economy. However, retained knowledge and balance are just as essential as offshoring. Companies must realise that they need to have an even spread between on-shore work and offshore. Their Indian suppliers will not tell them to keep work at home, that is for sure. So management teams need to wisen-up and be aware of the risks involved with overzealous offshoring.

Mr Hart points out the risks involved with handing over IT to an offshore supplier, “By not retaining enough good quality in-house IT expertise, businesses are at risk. They will no longer have the capability to design and run applications or IT systems themselves and will have no choice but to rely upon their offshore service providers. This would leave them in a very vulnerable position; suppliers could essentially charge what they wanted for applications and systems and they would lose their competitive edge because they would have to rely upon the same ‘off the shelf’ package as their competitors.”

So what are companies going to do? Well one area that is worth exploring is sending an in-house graduate team offshore for a period of time to learn the trade. The offshore suppliers will be best placed to train them because they have been fulfilling the work already, the graduates get the experience they need and supplier relations will be significantly improved. After the team’s tenure at the supplier’s base, they can return back in-house and bring their new found skills and knowledge with them.

The fact is that excessive offshoring is contributing to the UK’s ever increasing skills gap. If companies want to be best placed to ensure that they are prepared for future challenges, then they need to have the skills and knowledge in-house. Having a good mix of outsourced and in-house expertise is paramount if businesses don’t want to find themselves at the mercy of a supplier’s sales team.

Graduates need nurturing. It wont just be the likes of Lloyds quaking in their boots as they stare at their empty IT department, all businesses may find themselves at a distinct disadvantage unless UK organisations start taking the time to invest in the future of this country’s talent pool.

The Independent Police Complaints Commission (IPCC) has signed a ten-year, £45 million contract, with Steria to provide ICT (Information and Communication Technology) and telephony services.

As part of the contract Steria will provide the IPCC with a range of ICT and business services. The ICT will support flexible working and improve the access to information through new case and integrated information management systems.

The IPCC is a non-departmental public body, funded by the Home Office, responsible for overseeing the complaints system for police forces in England and Wales. It also investigates serious complaints against HM Revenue and Customs the Serious Organised Crime Agency and the UK Border Agency staff exercising police-like powers.

The contract with Steria contributes to the IPCC's wider change programme. It involves a restructure and is enabling the IPCC to build flexibility and efficiency to meet future challenges against limited resources.

IPCC Chief Executive Jane Furniss says, "The new contract with Steria provides us with modern ICT and critical business systems. These are crucial to the ongoing restructuring and development of the organisation and will underpin the work being done to provide greater frontline resources. In future as we develop and respond to new challenges the ICT infrastructure will give us the ability to provide the public with a more transparent and accessible complaints system."