Industry news

Most of us like to think we can drive a hard bargain, both in our personal and professional lives. And when it comes to negotiating a sophisticated, wide-ranging outsourcing contract in a time of widespread corporate cost-cutting, the ability to hammer out a good price could potentially make or break a career.

So I was interested to see the National Outsourcing Association (NOA) warn last week that the falling price of outsourcing contracts could hamper the success of deals in the longer term.

“With the increased pressure on companies to cut costs, many are pushing through higher volume, low-cost contracts over shorter time frames, which more often than not sets the outsourcing contract up to fail," said NOA chairman Martyn Hart. Put simply, he added, it is more important than ever that contracts work for both parties and that best practice be followed from the outset.

Some 18 per cent of outsourcing contacts decreased in length over the last 12 months, the NOA found. But during the same period, 20 per cent of respondents said they have seen the value of outsourcing contracts increase, with just 10 per cent claiming they have fallen.

Should companies in that 10 per cent of deals be worried about the deals they've forged? Maybe. If the suppliers involved are happy with the price they've accepted, then there should be no problem. But if they have been brow-beaten or bullied into agreeing to a deal where profit margins are already wafer-thin, how responsive and flexible are they likely to be when a customer needs to make changes or requires extra service or support?

A better way to look at the negotiation process is to dig down into the fine-grained detail of the proposed contract. No outsourcing contract should come down to one, all-inclusive rate - and any attempt to insist on that with a supplier is likely to stall discussions early on in the proceedings.

In some situations, that might be OK, confirming that a given provider is simply not the right one for your organisation. But given the resources most organisations devote to supplier identification and selection, these failed discussions do come at a cost.

Instead, it makes more sense to list all the aspects of a contract that are open to negotiation and form a position internally on each of them. These could include financial and payment terms; work hours; overtime rates; length of engagement; access to resources; multiple operation benchmarks and guarantees.

Times are hard and many outsourcing customers are looking for a deal, so there's no harm in spending time evaluating what a supplier's real bottom line is. But going below that bottom line could seriously backfire on your organisation. Is it really worth it?

Consumers blame banks for the current economic conditions but this has not adversely affected their loyalty towards banking institutions. Good customer service was still found to be the main reason for strong loyalty in a new report from Convergys Corporation, Recent Trends in Retail Banking.

Some of the key report findings include:

• Customer Service is Key - Nearly half of customers’ loyalty to their primary bank is driven by two service-related factors: bank employees and issue resolution.

• One and Done - Resolving customer issues the first time was cited as the most important factor in the primary bank relationship by 29 percent of respondents. Nearly half of all calls into the contact centre involve an issue or dispute.

• Anytime, Anywhere Access - Retail banking is truly a multi-channel experience as 4 in 10 customers contacted the bank through the web, the phone, and by visiting a branch in the last year.

• Bank Branches Remain Vital - 89% of customers who contacted their bank online in the last 12 months were satisfied with the experience, yet 72% of all banking activity reported occurs in the branch.

• Loyalty Focus - Slightly over half, or 55%, said they would stay with their bank if another bank offered an incentive to switch.

• Up-sell Opportunity - Approximately 40 percent of bank customers would consider new products and services, with financial/estate planning and online brokerage services generating the most interest.

“Banks face turbulent economic times, stiffer competition, and increasing legislation. At the same time, they have to balance cost of service, an increasing focus on customer satisfaction, building loyalty and profitability. In order to do this, banks need to be nimble in supporting their customers regardless of service channel while also providing their customers with the highest level of security and identify theft protection,” said Jim Boyce, President, Global Business Units for Convergys.

Resolve Corporation, a Canadian business process outsourcing (BPO) specialist, has extended its contract with CGI Group Inc., a provider of information technology services, until 2013. The five year contract is valued at approximately $13 million.

CGI will continue to provide full mainframe infrastructure outsourcing, operations and production control as part of Resolve’s end-to-end Canadian Student Loan Processing for the Canadian Federal Government.

“Our student loan processing system is critical to the daily operation of the student loan business,” said Stephen Gesner, Executive Vice President & CIO, Resolve Corporation. “For the past 3 1/2 years CGI has provided us with a solid and dependable solution allowing us to meet the requirements of our clients. We look forward to growing our relationship with CGI as they have become one of our most trusted and service oriented partners. ”

The state of Tennessee has signed a contract with EDS to update and manage the state's Medicaid Management Information System. The contract extends the 14-year relationship between EDS and TennCare, the state agency that oversees Medicaid services for more than 1.2 million Tennesseans.

As part of the contract EDS will update the TennCare system with new computer hardware and software. In addition, EDS will provide system management, maintenance and enhancement services as well as mailroom, data entry, suspense resolution, and scanning and indexing functions.

"We are pleased to continue our partnership with EDS,” said Darin Gordon, director at TennCare. “We look forward to our continued working relationship and the implementation of enhanced computer systems and improved business practices.”

Here is an interesting statement ‘offshoring saves British tax payers money’- a stark contrast indeed to Gordon Brown’s famous nationalist missive ‘British jobs for British people’. That’s the headline that was writ large across the Times front page this Wednesday. Another offshoring bashing article ensued reigniting the debate over the perceived evils and benefits of the offshoring concept.

The story looked at the British Council’s decision to outsource 100 jobs at to India as part of a massive cost-cutting drive to save taxpayers’ money. The council it seems has finally realised the possible benefits of using offshoring to augment performance in the UK. Sticking their heads above the parapet like this was a necessity for them but also represents the first public sector organisation to make such a bold (and deplorable in most media’s eyes) move.

Final decisions about which jobs will go to India will be taken in the next few weeks but they are expected to include 58 finance posts, up to 40 IT posts and 15 posts for a new centre of excellence. This is the first time the civil service body has directly exported jobs to save costs. The Foreign and Commonwealth Office, which funds the British Council, is exploring similar options.

The council, which promotes British culture and language abroad, said that 500 of its 1,300 British workers would have to go in the next 18 months to save 45 million pounds. More than a fifth of these posts are to be filled in India and the body plans to bring some of the Indian recruits over to 'shadow' finance staff in Manchester.

As per usual, the tangible economic arguments of offshoring’s real benefits are being conveniently lost amid the union hubbub. But it does put the debate back on the table and allows the NOA license to have its two-cents on the issue, something that is often difficult to convey. It will be interesting to see just how the debate unravels over the next week of so. Will British people want to keep jobs in the country or will they want lower taxes? Will this argument ever be presented so starkly? Will anyone ever make this choice? What a conundrum.

Into slightly less dangerous territory now; only slightly mind. Emap has outsourced its HR, payroll and benefits to NorthgateArinso. The B2B media group has outsourced all HR, payroll and benefits delivery to NorthgateArinso.

The move follows Emap’s acquisition by Apax and the Guardian Media Group in 2008. The contract is part of a wider strategic plan to outsource all IT, finance and HR services, enabling Emap to focus on its objectives for growth. Let’s just hope they don’t start offshoring journalism or they might also find themselves in hot water. Not that offshored journalists would write in fury about jobs being offshored to them…

Yet another decidedly British piece of news was reported on sourcingfocus.com this week. Buckinghamshire County Council partners with Hays for job seekers system.

Buckinghamshire County Council and the UK’s leading recruitment specialist, Hays have partnered to create an easy-to-use system for job seekers that is believed to improve the experience for applicants and once again cost the council taxpayer less. Lower taxes and outsourcing seem to be big news this week.

The new recruitment service aims to make it easier to search and apply for jobs with the county council using online recruitment. This service will also look to reduce the time applications take to process as well as keep applicants up to date on progress. This will be welcome news to those Buckinghamshirites who have found themselves out of a job in these torrid times. Hopefully we’ll all see an upturn in new positions soon to test out the council’s swanky new system.

And to finish up, the Round-Up will pay some diligence to our cousins across the pond. The all American Starbucks has signed an outsourcing contract with Unisys. Starbucks Corporation has selected Unisys to provide data center outsourcing services to support the global coffee company’s continued expansion in China.

It seems simply noone is safe from the Coffee giant. Soon all of china will be able to experience the wonders of the Caramel Macchiato – you’ll never go back, trust us!

Under the two-year contract, Unisys will provide systems management, network management, asset tracking and software image and voice systems management services delivered from the Unisys Global Services Center in Shanghai.

So, to offshore or not to offshore, that is the question? The Round-Up will keep you posted…

Starbucks Corporation has selected Unisys to provide data center outsourcing services to support the global coffee company’s continued expansion in China.

Under the two-year contract, Unisys will provide systems management, network management, asset tracking and software image and voice systems management services delivered from the Unisys Global Services Center in Shanghai.

The contract expands the existing relationship between Unisys and Starbucks in China. Unisys has provided end-user support services to Starbucks in China since 2007.

Bill Lum, IT director of Starbucks China commented, “As we expand our presence in China, it is important for us to continue to prove a high level of customer service and manage our brand in a way that makes it relevant to a wide variety of Chinese consumers. By outsourcing IT infrastructure management to Unisys we are able to better focus our resources on our core business and growth plans.”

SABMiller, one of the world’s largest brewers, has decided to pilot Infosys Technologies ShoppingTrip360 solution to evaluate and improve the effectiveness of its in-store shopper marketing campaigns.

Yvan Goupil, Head of Insights, SABMiller Europe, commented "Engaging our existing and new customers in a meaningful and relevant way is vital to the success of all our brands. Starting with a pilot program of the Infosys ShoppingTrip360 solution, we aim to improve the effectiveness of all our European in-store marketing campaigns by helping increase shopper engagement leading to greater sales,”

The services provided by Infosys will help SABMiller analyse important shopper trends associated with the placement of products on in-store fixtures. The insights gathered from the store will help SABMiller decide which promotional display is most effective at promoting their product and which product placement areas result in the greatest sales. The first pilots will take place in select stores of the Romanian supermarket chain, iVET.

Upon successful pilot completion in Romania, SABMiller will evaluate the results and look to roll out the Infosys solution in other key markets around the world.

Emap, the B2B media group, has outsourced all HR, payroll and benefits delivery to NorthgateArinso. The move follows Emap’s acquisition by Apax and the Guardian Media Group in 2008. The contract is part of a wider strategic plan to outsource all IT, finance and HR services, enabling Emap to focus on its objectives for growth.

Emap’s Performance Director, Tracey Gray, has a vision for aligning the organisation to its core values, which encourage staff empowerment and accountability. As part of her overarching strategy, Gray has appointed heads of resourcing, employee relations, learning and development and reward. The service that NorthgateArinso is delivering to Emap complements the strategy, providing core HR services and supporting her and the directors in helping to instil employee accountability and ownership.

Key elements of the service that are aligned to the core values include self-service, which enables staff to manage their own affairs, from booking holidays to reporting sickness. Managers are then encouraged to take responsibility for following HR procedures in their own teams, using the self-service functionality and supported with an advice line, run by experts at NorthgateArinso, who can be called for guidance whenever it is required.

All of Emap’s HR process will be integrated on one platform, creating a central database that will provide integrated business information via an intuitive dashboard display. This will give Emap’s senior team the workforce information they require for accurate decision-making across the business.

Tracey Gray explained: “Soon into our search, we realised that NorthgateArinso's values were well matched to our own. The team has a good understanding of our challenges and priorities, and is well placed to support our future growth,” she added “Outsourcing the HR, flexible benefits and payroll functions to a single, consistent point of contact will not only free-up managers’ valuable time, but will ensure all HR processes are supported by a single supplier from the day the employee starts in the business to the day they leave,” concluded Gray.”

Buckinghamshire County Council and the UK’s leading recruitment specialist, Hays have partnered to create an easy-to-use system for job seekers that is believed to improve experience for applicants and cost the council taxpayer less.

The new recruitment service aims to make it easier to search and apply for jobs with the county council using online recruitment. This service will also look to reduce the time applications take to process as well as keep applicants up to date on progress.

In the first year the county council expects to save around £690,000 if recruitment levels remain the same. As well as cutting the cost of recruitment for the county council, the new process is also designed to reduce the amount of time managers spend on recruitment.

County council recruitment staff have joined Hays consultants to create a team that will provide a streamlined one-stop-shop for permanent and temporary staff. The aim is to simplify the process, provide clarity about the roles and opportunities on offer and market them effectively.

Gillian Hibberd, Corporate Director People, Policy and Communications, commented, “Taking a more streamlined approach to recruitment will enable us to create a reputation as a first choice employer attracting quality staff to run local services. We’re delighted to have Hays on-board because their specialist skills in the recruitment sector will make a real difference to the way we employ staff. We’ll be managing our budget much more effectively, for example, by reducing the time to recruit candidates".

Spinvox, the UK company famed for its voice to text message technology, has been highlighted in a BBC ‘expose’ for the use of offshore contact centres in the conversion of its customer messages. According to the article ‘the BBC suggest that the majority of messages have been heard and transcribed by call centre staff in South Africa and the Philippines.’

The BBC story has sparked much commentary in the media about the privacy of customer data if it is being handled by agents rather than technology as it has always maintained. However, the company states that the BBC ‘article contains a number of allegations over its privacy standards, technology, evidence offered by a Facebook group and finances which SpinVox believes are both incorrect and inaccurate.’

It continues ‘Claims have been made to the BBC, suggesting that the majority of messages have been heard and transcribed by call centre staff in South Africa and the Philippines. These are incorrect.’

However, in a statement the company does not entirely deny the claim. It states that: ‘All speech technology requires training. This requires humans to correct and inspect some audio and text to provide the system with corrections.

Mark Kobayashi-Hillary, prominent outsourcing writer and NOA Director commented in his Talking Outsourcing blog: “Perhaps if the firm had been a bit more open about the global nature of their operations in the first place they wouldn’t have Rory ‘Katherine’ Jones from the BBC breathing down their neck?”

The NOA Communications Director, Kerry Hallard, conveyed a similar message: “These media reports demonstrate the importance of good communication in any outsourcing and offshoring deal. SpinVox could have avoided this media backlash by being open and honest about its offshoring partnerships from the outset. Cloaking outsourcing intentions or contracts in secrecy does more harm than good. Rumours can be hopelessly off the mark and can cause widespread unease about the company and in this case data security. Companies must actively and openly communicate with all target audiences as early as possible.”