Industry news

Call Centre Focus, the UK’s leading publication for the call centre industry, and the National Outsourcing Association has combined forces to bring the readers of CCF a thought leading supplement. Written by senior figures within the NOA and other industry experts the supplement will focus on the current issues and developments facing the outsourcing industry. CCF is providing the opportunity for a limited number of organisations to align themselves with this thought leading supplement. For more information on the opportunities that exist, please contact Mark Arneill at mark.arneill@ubm.com

Trintech Group Plc, a provider of integrated financial governance, risk management and compliance software solutions, has announced a strategic partnership with WNS (Holdings) Limited, the global BPO provider. Under the terms of the agreement, WNS will offer its customers financial governance applications, implementation services and technical support in order to tighten controls and increase ROI from financial operations.

"We are delighted that WNS has decided to offer Trintech's solutions to its client base. Our combined expertise in helping finance departments achieve operational excellence through automation process control and data-driven insight will result in real benefits for WNS customers," said John Harte, General Manager of Trintech's GRC Division.

I recently spent a very interesting four days in Kenya, visiting Nairobi-based Kencall, the country's first international call centre. During this time, I had plenty of opportunity to discuss with company executives how Kencall is already addressing the needs of major clients in the UK and US and their plans to capture an even greater slice of the market in future, as rising prices (and, to their minds, falling quality) in other geographies pushes such organisations to consider other options for offshoring. 

But what struck me most forcibly during my visit was the commitment, drive and enthusiasm demonstrated by a largely younger generation of workers to this vision of Kenya as a future hub for offshore outsourcing. 

In short, it's an opportunity for them to build careers - and better lives for themselves and their families. Kenyan universities produce some 50,000 graduates per year, but only 5,000 of these are typically able to find work at home, with many forced to look overseas for employment, Dr Bitange Ndemo, permanent secretary of the Kenyan Ministry of Information and Communications told me. 

So it's hardly surprising that, when a local company emerges that offers good salaries, regular incentives and a solid framework for career progression, as Kencall does, there's no shortage of candidates. "Few Kenyan companies do as much as Kencall to promote employees internally," says Pauline Kamande, Kencall's company's head of training, who joined five years ago as a first-level agent.

And Kenya's younger generation of workers, many of whom have studied or worked internationally, have much to offer international clients, with their clear accents and strong work ethic, points out Nicholas Nesbitt, Kencall chief executive.

But I was also struck by a palpable sense of how successive Kenyan governments have let the country's young people down. Following Kenya's disputed election at the end of 2007, a coalition government, cobbled together in February 2008 at the insistence of former UN Secretary General Kofi Annan, has limped along uncomfortably, hampered by internecine struggles, continued corruption and widespread inefficiency.

Geopolitical uncertainty is never good news for domestic outsourcing ambitions, and it seems clear that many would-be clients may hold back from taking a chance on Kenya until they can be sure that the fragile coalition will hold and that the next general election, due in 2012, will pass off more peacefully.

But from talking to the people who work at Kencall, it's clear that young, middle-class professionals have high hopes that things are changing in Kenya. I was told by several that Kenyan people are more insistent on good customer service these days and less inclined to view bribes and corruption as an unpalatable fact of life, whether they are dealing with businesses or their own government. And the outsourcing business is seen as a platform from which they can showcase their skills and talents in the business arena. "We have a natural ability to deal politely with even the most difficult customers," Kamende told me proudly.

Of course, it still comes as a surprise to many international customers to discover that they are speaking to a call centre agent in Kenya, rather than some of the more usual outsourcing locations. The agents at Kencall regularly get questions about the animals that foreign visitors have seen on safaris ("Do you have lions in your back yard?") and about the prospects of well-known Kenyan runners in forthcoming international sporting events, according to Paula Nyambura, Kencall's head of customer experience.

Above all, it's clear to me from my visit to Nairobi that Kenya has much to offer international outsourcing customers. Political stability remains the one vital ingredient that must be added to the mix if the next generation is to achieve its full potential. But there's no doubt to my mind that this potential is huge.

My thanks to everyone I spoke to at Kencall, who not only showed me incredible generosity and hospitality but also gave me a better insight into how powerful a catalyst for change outsourcing might be for day-to-day life for many in Kenya.

In my next blog, I will write about how the Kenyan government is investing heavily in the country's telecommunications infrastructure, with a view to making its outsourcing vision a reality.

There have been a number of occasions recently when I have been speaking to CIOs that they have said to me they don’t always think they are the most popular person in the senior management team in an organisation. I have had other CIOs say to me “I don’t really think I am properly understood” and I have been dismissing this as a little bit of paranoia from the CIO community.

Then last week I came across a CFO Research report entitled ‘Are CFOs from Mars and CIOs from Venus?’. I had a read of the management summary and I would like to share with you a couple of the key findings from this report which perhaps show that CIOs are not paranoid after all and it may in fact be true.

The first summary was that there is a perception gap between CIOs and CFOs that hinders a shared agenda. Questions about leadership, the ability to collaborate and long term strategic thinking and planning illicit marked differences in the way senior finance and IT managers see each other. Overall CIOs express a much better opinion of the CFO than vice versa. 6 in 10 CIOs rate their CFOs as excellent whereas only 3 in 10 CFOs rate their CIOs as highly.

The second key finding is when invited to state their biggest frustrations with CIOs, many CFOs concur that a better understanding of financial reality would help CIOs deliver more value - perhaps this is code for them speaking in too much of a technical language. But, better communication tops the wish list from most CIOs who also cite more frequent communication and even forced communication as the only ways to speak with a CFO.

So there does seem to be problem here: it does appear that CIOs and CFOs in a meeting room probably speak different languages. To frame respective priorities in a common language, research confirms that CIOs and CFOs must lay better ground work, but how? How can you make sure that there is that common language?

In my view the way to overcome this problem is to make sure you rotate the business experts into IT and give the IT employees opportunities in the business - get into each other’s shoes, share each other’s jobs and devise a common language.

So would anybody from Venus or Mars like to comment?

Henry Ford Health System, a leading US healthcare provider, has signed a new ITO deal with CSC. The new five-year, three-month agreement runs through March 2014 and has an estimated total contract value of US $115 million.

Under the extension, CSC will continue to provide all applications development and support services, including more than 200 applications covering clinical, departmental, revenue cycle and PeopleSoft ERP. These services support day-to-day operations and large strategic initiatives, including development of an enhanced electronic medical record program and remediation of more than 50 application systems for a new 300-bed hospital.

“Having witnessed CSC’s efforts firsthand, I applaud the company on this major milestone,” said Arthur Gross, senior vice president and chief information officer of Henry Ford Health System. “CSC’s applications expertise, disciplined methodology, outstanding collaborative teamwork, diagnostic and remediation skills, and account management all came into play in this decision.”

The original five-year contract was awarded to CSC in December 2000. In 2004, it was extended through March 2009 and the scope expanded to include additional services.

Nexus, Redbanc and Transbank, three financial service firms in Chilie, have signed a new seven-year, US $90 million technology infrastructure management agreement with EDS.

Under the new contract, EDS will work to consolidate the company’s five data centers. In addition to its global delivery centers in Argentina and Brazil, EDS will design and build a new high-efficiency data center near Santiago, Chile, to serve these clients. EDS also will provide end-user support and call center operations for about 1,200 employees in the companies’ locations across Chile.

“Today’s financial services industry moves at a rapid pace that requires the scale, reliability and agility that EDS provides while allowing us to improve service and deliver value to our customers,” said Carlos Johnson, general manager of Transbank. “We collectively selected EDS based on its solid service delivery and ability to respond to our technology needs in a secure, efficient and flexible way.”

Tech Mahindra, one of the largest dedicated telecommunications outsourcers, has enhanced its presence in Eastern India by setting up a new BPO Centre in Kolkata. The facility will focus on providing end to end customer service delivery to telecom service providers.

The new Kolkata centre will primarily be servicing Reliance Communications’ operations in the first phase of ramp up but will expand to service other clients in the future. The centre will have approximately 1,000 seats in the initial ramp up with 500 seats coming up in end July 2009 and another 500 in the end Aug 2009 time frame.

Reliance Spokesperson said, “We are delighted to partner with Tech Mahindra for our outsourcing requirements. We wanted to provide global level of customer support in India and felt that Tech Mahindra was the perfect choice for that. The company has unparalleled domain expertise in telecom sector & it also brings in immense International experience, having worked with top telecom players globally.”

Organisations looking for ways to cut the basic cost of doing business are fuelling steady demand for global outsourcing services, according to EquaTerra’s Q209 Advisor and Business/IT Service Provider Pulse Survey.

For most outsourcing buyers, the continued recession has shifted the goal of outsourcing from achieving competitive advantage to weathering the economic storm.

Stan Lepeak, MD of global research for EquaTerra, commented, “The fundamental motivation for outsourcing has always been cost savings. Now, that aspiration has become a mandate, driving narrowly focused, low-risk deals with specific cost-saving targets.”

Key findings from EquaTerra’s Q209 Pulse:

• Hot on the heels of a first-quarter surge in demand for business process/information technology outsourcing, demand in the second quarter remains steady with 46 percent of EquaTerra’s client-facing advisors citing increased demand (down only 3 percent quarter-over-quarter) and 65 percent of the service providers polled reporting continued growth in their new deal pipeline, up 8 percent over last quarter and 13 percent year-over-year.

• A majority of service providers polled (58 percent) cite the stagnant economic climate as fuelling demand for outsourcing, a jump of 20 percent from last quarter and the fourth consecutive quarter the percentage increased.

• Given the high-stakes nature of current outsourcing deals, EquaTerra’s Q2 Pulse polled both its advisors and service providers to pinpoint the most frequent cause of failure to meet outsourcing objectives. Not surprisingly, respondents flagged transition issues and observed that getting off on the wrong foot at this critical stage in the process typically proves to have a lasting negative impact.

• EquaTerra advisors pegged the two most common transition-related issues subsequently resulting in failure to meet cost-savings goals as being insufficient transition management by both parties and a lack of understanding of the deal/scope. Service providers (71 percent) attributed failure to meet objectives to an inability to form effective relationships and poor program governance during transition.

Since Q307, the last time EquaTerra polled to determine the hottest geographical destinations for both near and offshore outsourcing services, numerous factors have contributed to alter the global outsourcing landscape: the maturation of the industry and emergence of new outsourcing destinations; the expanded footprint of traditional offshore providers into emerging locations; industry upheavals caused by terrorism and financial fraud resulting in a flight to established providers and lower-risk geographic destinations; and prolonged economic recession, which has bolstered nearshore markets in South America and Central/Eastern Europe as U.S. and Western European buyers opt for outsourcing solutions closer to home where there is a perception of greater control.

In the Q209 Pulse, EquaTerra advisors and service providers identified India, Central/Eastern Europe and South America as the top three destinations for outsourcing, followed closely by the Philippines. While India remains the preferred location according to both advisors (61 percent) and service providers (60 percent), the level of preference has fallen dramatically, declining over 20 percent in last 24 months. India is still the top choice for IT outsourcing, but it has been steadily losing ground in business process outsourcing to emerging locations, especially China and South America.

This shift is attributed to the growing number of viable destinations coupled with the availability of outsourcing opportunities within destination domestic markets, and, in the case of South/Central America and the Philippines, desirable language skills. It’s important to note that while preference for India as a destination may be eroding, Indian service providers are still powerful players in the global outsourcing market and have expanded operations into emerging geographic locations to retain their competitive edge.

“What we’re seeing is the maturing of a worldwide industry and the emergence of a true global sourcing model where buyers deploy and manage global service chains just as they have global supply chains,” said Lepeak.

The Driver and Vehicle Licensing Agency (DVLA) has signed a four year contract for the not-for-profit IT services group, Eduserv, to provide them with managed hosting, web development and disaster recovery solutions. Eduserv specialises in providing IT solutions to the public sector and has worked with the DVLA over the past 6 years, providing managed hosting services for their corporate website (www.dvla.gov.uk).

Eduserv won the contract by supplying the DVLA with a secure hosting environment, essential Service Level Agreements (SLAs), including 99.9 percent application uptime, 24/7 support and disaster recovery.

Outsourcing is hard enough to get right when you are a big organisation. Now, imagine if you are a much smaller company, a Small to Medium-sized Enterprise (SME). If you are a company needing to buy a service from someone else on a small scale then you are not likely to think of offshoring it. You might think of outsourcing to an offshore partner, but for a small project there is no way you can go and personally check out the suppliers – the business trip might be worth as much as the project cost.

And, what about the suppliers? You might be an experienced supplier with a good track record of delivering smaller scale projects, but how does your potential future client know about you? They might be on an industrial estate far from London as you sit in an export-processing zone near Mumbai airport.

Outsourcing for smaller players is really difficult.

I asked Jaroslaw Czaja, the Chief Executive of Polish software development firm Future Processing, about some of these issues and he explained: “Currently a lot of our business comes from word of mouth recommendations and I think this is the most powerful tool for SMEs. Web 2.0 marketing, through its personal, groundswell-based nature, also works well and plays to SMEs strengths of being more flexible than larger companies and therefore sometimes being more willing to try something new. The online/forum grapevine of horror stories from destinations more geared up to larger scale outsourcing also works in our favour.”

Jaroslaw went on to say: “I think Future Processing is like many smaller outsourcers, we are an SME ourselves and often have limited resources to put into business development while always putting existing customers first.(But we also have a lot in common with our customers which is a great plus point). Some sort of online community for outsourcers who are SMEs themselves to find other SMEs to partner with would be really useful.”

I’ve been hearing these complaints from SMEs for years. Government agencies and trade associations often arrange trade missions for SMEs, but at the end of the day, unless the SMEs talk to each other there will be no progress towards creating more outsourcing opportunities for smaller companies. The NOA has worked for some time on helping SMEs and Bharat Vagadia, the SME director is currently working on a plan for a new series of workshops to help SMEs.

I have recently tried putting together a new business network that aims to try addressing some of these issues – to try driving small companies together, wherever they are located. It’s called Peerpex and it goes live in September, though you can register now if you are interested. And the first 500 suppliers to register get real cash credited to their account, so it’s worth signing up.

Take a look and let me know what you think – especially if you are an SME and working out how best to reach out across borders. I don’t think one website can provide all the answers, but it’s a push in the right direction.

http://www.future-processing.com/

www.peerpex.com