Industry news

Time Warner Cable Inc, a leading US television company, has extended its existing e-Care contract with Convergys. Time Warner Cable worked with Convergys for over a decade in various lines of business including billing solutions. The company will now extend its agreement in order to create a superior customer experience.

Convergys will work with Time Warner Cable to offer ‘e-Care alternative customer contact channels’ including both email and online chat in both English and Spanish. Through these channels, customers can receive account information and support, digital phone technical support, and answers to queries about billing, browsing, connectivity, and email issues. Along with live agent availability, Time Warner Cable offers a wide range of channels for support of its nearly 15 million customers.

“Time Warner Cable strives to provide its customers with the type of service and care opportunities expected from a digital company like ours and our relationship with Convergys supports our commitment to providing that level of customer care,” commented Time Warner Cable Executive Vice President and Chief Marketing Officer Sam Howe.

Atos Origin has acquired Shanghai Covics Business Solution Ltd, a leading Chinese SAP consultancy integrator. The move marks the first acquisition carried out by Atos Origin in China.

Through the deal Atos Origin hopes to reinforce its capability across SAP systems in China, notably in Beijing, Shanghai and Guangzhou. In addition, it will be able to double the number of its local experienced SAP consultants.

Herbert Leung, CEO Atos Origin in Asia Pacific, said: “The acquisition is no doubt a strategic move to sharpen our competitiveness of delivering SAP implementations complying with the highest SAP quality standards in China. This is also in line with our aim to use our China SAP operations as a major SAP Competency Centre across the Asia-Pacific region.”

After the acquisition, Shanghai Covics will be wholly owned by Atos Origin. Retaining the company name, Shanghai Covics will continue carrying on its business while Atos Origin reviews its operations and synergies during the transition period.

We are currently seeing more interest in innovation from our outsourcing clients here in the UK, although they do not always call it that. In fact, for some people the word innovation may be a word that they choose to avoid. That’s understandable as innovation can sometimes have a ‘bad rep’, especially if associated with gadgets or experiments that don't have business value. The fact is, innovation means different things to different people. However, in the new economy, there is certainly a need for companies of all sizes to differentiate (or ‘innovate’) and it is the CIOs who recognise the ways in which IT can provide that differentiation who are succeeding in the current economic climate. There’s often a pre-conceived misconception that only large organisations with equally large budgets can benefit from innovation programmes. This really isn’t the case. Approaches to innovation can and in fact must be tailored to match the size of the organisation, skills, business strategy and available resources.

At IBM, I lead a team that focuses on collaborative innovation and together, we have created specific innovation programmes (we call these "Value Creation Centres"). The innovation projects that we deliver (which fit easily into outsourcing contracts), range from the tactical to the strategic and from business to technical in focus. For each innovation project, a combined task force from IBM and from the client side is formed from the outset in order to establish a clear innovation management model that defines our joint approach. These programmes have been well received by our customers, but the focus of these has changed in recent months. Right now, a number of customers are interested in a more tactical approach to innovation.

Innovation in business can be defined in many ways and it’s not necessarily about inventing new and complex solutions. Very often there’s a simple answer to a challenge and the innovative approach needed to solve it. It’s important to remember though that innovation is not something that can simply be bought; it is a creative process that needs to be nurtured and managed systematically, using a range of tools and techniques, right through to delivery.

Successful innovation programmes don’t need to be a long-term commitment, they can run for a limited time to address a particularly pressing business need or to match personnel and resource availability. Whether you want to expand your core business, gain entry into new markets or simply become more efficient, an innovation project cannot be ignored.

Amid stories of doom and gloom, it was refreshing to see analyst firm Gartner’s recent report that outsourcing deals in IT are on the up. Companies today are clearly eager to remove the cost of operating IT whilst maintaining service levels. Moreover, this outlook proves how outsourcers can continue to add value by delivering innovative business processes.

Whilst clients have reaped the rewards of outsourcing traditional IT, very few have managed to realise the benefits of the latest mobile technologies. Mobile email is probably the most common example seen within many businesses today, though the plethora of ‘off-the-shelf’ solutions on the market prevents outsourcers from providing any value in this field.

But there are other fields where off-the-shelf falls flat. More precisely, ‘field services’ workers such as maintenance engineers and delivery drivers who can benefit from mobile IT. Here mobile email is more a hindrance than a help. Can you imagine a courier typing out an individual email to record deliveries to the hundreds of addresses they visit daily?

There are a range of applications such as CRM databases that field workers access but IT departments struggle to ‘mobilise’. This is because IT departments’ experience with mobile technologies is limited, and field applications are more complex. Another challenge is the fact that most field service organisations have unique business processes, which prevent any radical changes taking place. This means technology needs to be designed around the workers, not the other way around.

Adapting highly complex technologies to extremely diverse working cultures is like eating soup with a fork. Nonetheless, there is a desire for mobility within field workforces. In a recent report from Aberdeen Group, 95% of companies said mobility was important to their field service operations.

Unlike previous technology cycles, outsourcers can still make an early impact and lead this new era of business transformation. As I’ve already alluded, most companies lack the experience to build or manage mobile infrastructures. And with a variety of new vendors to co-ordinate, outsourcing these relationships removes any potential management headaches.

During this period of uncertainty, the best path is to scale mobile IT on an as needed basis rather than shoulder up front expenditures in areas such as mobile devices. Outsourcing can again lend itself to this approach by allowing clients to adopt an Opex friendly subscription model.

’Mobile Sourcing’ can add an entirely new dimension to client value, and offer outsourcers better-protected revenues than simply competing at the commodity end of the market for desktop PC services.

Outsourcing end-users are looking increasingly immature in the way they manage their contracts. What justification do I have for this sweeping and stinging appraisal? The new PA Consulting report ‘Outsourcing – what lies beneath’ - that’s what. A quality report, from a respected consultancy, based on reasoned, systematic research – who can argue with that?

Some of the findings are stark and provide a real wake up call for those that have been resting on their laurels where outsourcing deals are concerned. The first and most surprising in the current financial climate, is that 31 percent of respondents were unaware what percentage of their outsourcing spend went into managing suppliers.

The lack of knowledge on outsourcing management spend was also mirrored when respondents were asked about the levels of outsourcing maturity. Only 16 percent assessed themselves as having a mature governance model for their outsourced services. The report is clear, although many companies are now old-hands at outsourcing, the way deals are managed and the amount of focus placed on the management process has not massively progressed.

These stats are worrying when looked at alongside an ongoing industry trend. Multi-sourcing, where multiple suppliers serve different parts of an end-user’s requirements, has been the talk of the industry over the last few years. Gartner’s ongoing research into outsourcing ‘megadeals’ continues to see the overall interest in multisourcing growing. But PA Consulting’s report questions whether end-users know the risks involved in splitting outsourced processes into continually smaller parts.

Jonathan Cooper-Bagnall, Member of PA Consulting’s Management Group, commented, “We are seeing more and more that multisourcing is a developing trend, making integration of services all the more crucial. However, many ‘tier one’ organisations have already had to invest heavily in teams of people to fulfil the integration role, simply through lack of an early identification of the need for service integration.”

There is a clear clash between the industry’s drive towards multisourcing and its overall understanding of what the concept entails. But the somewhat blind trend towards multisourcing is set to continue with 28 percent of respondents in PA’s report planning to split their outsourcing by vertical service over the next five years.

So what is driving this lemming-esque trend? Smaller vendors surely have to take on some of the culpability, after all the larger vendors will continue to push their full managed-service offerings. Multisourcing is attractive for smaller vendors who are generally high in service expertise but lack in-house management resources.

However, by and large, the biggest thing prompting end-users to explore outsourcing are the prospects of cutting costs. 75 percent of respondents said they would use competitive multi-sourcing in an attempt to drive down cost. The aim being to ‘improve competition, maximise supplier skills and expertise and, critically, drive down costs by achieving better contract pricing’.

But this is where the problem lies. A large proportion of respondents were largely unaware of what goes into the management of multiple contracts and consequently are going to have a steep learning curve.

Graham Beck, Senior Sourcing Advisor for PA Consulting, commented, “In a single-source relationship where gaps in integration occur, the supplier will usually step up to the mark. But in a multi-sourced set-up where there are interface problems, no supplier is likely to take up the slack.”

sourcingfocus.com met with the PA Consulting team at the report launch to discuss the issues. The feeling was not that multisourcing is an inherently flawed concept, but that users need to be fully appraised of what’s involved before doing anything. The management extras that full-service suppliers provide, both paid and unpaid, are not easily visible from the outside. If an unprepared end-user decides to jump headlong into multisourcing, these hidden management activities could become all too visible, all too quickly.

As we all know, business process outsourcing (BPO) has taken off in recent years and now we are seeing this form of outsourcing overtaking ITO in growth. The BPO sector has evolved into a vibrant and competitive market and we have seen many new players from all corners of the globe enter the fray. Contact centres are synonymous with BPO and contact centre vendors provide the most customer centric service of the entire outsourcing industry.

As a result, contact centres have a love/hate relationship with the public (more hate than love usually) and end users tend to do as much as they can to hide the fact that they outsource their contact centres (especially if that service is offshored). As the outsourcing industry changes shape and technology advances, contact centre providers are evolving and adjusting their service offering. So, how are contact centres changing? What has technology done for the contact centre industry? And above all, what does all this mean for the millions of customers than engage with contact centres every day? sourcingfocus.com spoke with various industry experts to find out.

Chris Hancock, Managing Director of GasboxDMG, a high tech contact centre service provider believes that there is a “diversity of opinion in the business world on what contact centres can do.” Mr Hancock goes onto highlight that some use contact centres to provide “support in the most cost effective way possible”, this type of cost centric service lends itself to offshoring and is the type of service that first springs to mind when the words call centre are mentioned. However, Mr Hancock also identifies a modern, more sophisticated, contact centre, one which “best develops a relationship with the customer” and in turn can “determine the customers emotional attachment to the organisation.”

The contact centre has certainly evolved from low level outbound sales, such as the famed dinner time double glazer (although he still seems to call). Simon Gresswell, Director of ProtoCall One, believes that contact centres have become more intrinsic to a client’s business, “We are offering more. We are using different media to interact with our customers and we are finding that customers are expecting contact centres to have the information they need.”

Technology has obviously been key in the evolution of the contact centre and vendors are incorporating multi-channel communication into their service offering. As a result, innovative technology such as automated self service or voice recognition are being rolled out and, according to recent research from BT and Nortel, this is not to the detriment of customer service. The study found that 71 percent of US and UK consumers would be happy to receive a call that used voice recognition to inform them that their plane, train or bus will be late while 80 per cent would look favourably on automated calls that informed them of the time of delivery of goods to their homes.

Ruth Rowan, Head of Global Propositions and Marketing, CRM at BT Global Services believes that this form of automation is becoming more accepted, “Automation has been one of the success stories of the last few years. The research looked at 1000 consumers and found that customers were happy to interact [with automated services] where appropriate.”

This was echoed by Mr Gresswell, “ProtoCall One’s SMS offerings tend to be of an outbound nature such as SMS for travel alerts and other useful information.”

Mr Hancock believes that contact centres have become “much more diverse in the way they communicate with people. In the early 90’s it was purely voice-led communication. Now contact centres can use any number of communication channels including web-chat and instant messaging.”

However, despite this automation and plethora of technological advancement one fact remains, when a customer needs something a little more than information, voice wins every time. The BT and Nortel research revealed that 53 percent of UK respondents are happy to check timetables through voice recognition but only 23 per cent felt happy enough to use the same interface for actually purchasing tickets. We may all just want a quick automated service that allows us access basic information fast, but we want to speak to real people when we have anything more serious to address.

Customer service should be the first thing on the boardroom agenda, although it rarely is. But, the cost savings associated with automation are just too good to be ignored. According to Ms. Rowan and the BT/Nortel research it costs £6.50 for an agent to handle a base level inquiry, compare that to £0.70 for an automated interface and you would be pushed to find a financial director who doesn’t leap at the opportunity.

It’s clear that the contact centre has evolved into a more sophisticated offering. But, voice still remains intrinsic to a call centre’s service. SMS, web chat and instant messaging all add to the customer experience however they need to be implemented intelligently to work well. We are still a long way from a voice-free service offering as human contact is simply just too influential on customer satisfaction.

Sainsbury’s has signed a five year agreement with IBM, to transform its supply chain network. IBM will help Sainsbury’s enhance its customer experience by implementing new systems, which aim to increase stock availability for customers.

The new IBM solution, which is based on the ‘Wesupply network and visibility application’, aims to provide a platform to help Sainsbury's and approximately 4000 of its suppliers, find smarter ways of managing overall supply chain performance to support the continued growth of the business. The Wesupply service will allow information flows to be streamlined and afford greater visibility of real-time supply chain performance.

Tim Goalen of Sainsbury’s commented, “We were looking to enhance our collaboration with suppliers without a significant increase in cost, while continuing to introduce greater intelligence into our supply chain.”

There has been lots of conflicting news about the outsourcing world this week that has got the Round-Up’s head in a spin. It has been reported that India’s strong hold over the outsourcing domain is set to waver. Apparently, there are not enough skilled individuals to take up the bounteous employment opportunities that have resulted from the Indian outsourcing boom. The answer? To send the European workers whose jobs had been outsourced over to India to take up their previously owned job positions on foreign soil? With current UK job prospects it might not be a bad idea.

However, Gartner has also published a report spouting praise about India’s position within the outsourcing market. Apparently the old outsourcing giant is looking good for 2009. What to believe? You decide…

On a less perplexing note, the news on sourcingfocus.com has been all good in respect to EDS. The company has signed an ITO contract with The California Department of Corrections and Rehabilitation. The contract is a 4.5 year engagement, designed to transform the agency’s ‘digital environment’.

It is hoped that the affiliation will help to improve productivity, accuracy and ultimately, enhance staff, public and offender safety.

Additionally, EDS will create and manage the image capture, database, information storage and server environment where offender information will reside.

EDS has not stopped there this week. Continental Airlines has also them up to transform its Flight Planning Services. The contracts aim it to reduce flight operating expenses and create efficiencies for Continental by automating some aspects of flight planning.

EDS Flight Planning is the fourth component in EDS’ flight operations suite being implemented at Continental. EDS is also currently developing EDS Air-to-Ground Messaging Services, EDS Load Planning Services and EDS Aircraft Movement Services for Continental. What a lot of branding. Before you ask, no, I don’t work for EDS’s PR team.

That’s enough on EDS for this week. Now on to more general news in regards to outsourcing. To be more precise, knowledge process outsourcing (KPO). According to a new Datamonitor report the KPO market represents a significant growth opportunity for vendors.

Ed Thomas, is the analyst for business process outsourcing (BPO) at Datamonitor and author of the report. He points out that, throughout the evolution of the KPO market, one feature that has remained constant is the leveraging of offshore delivery models. “India has been the focal point for the KPO industry since its inception. Increasingly, however, KPO vendors are adopting a multi-shoring approach to service delivery.”

Datamonitor has identified eight key locations that have emerged in recent years as viable options for KPO service delivery, including China, the Philippines, Sri Lanka, Hungary, the Czech Republic, Canada, Mexico and Brazil. The report assesses the strengths and weaknesses of these geographies and looks at how they can form part of a vendor’s multi-shore delivery model.

But what’s this? More conflicting evidence?

On another contrary note, PA Consulting expound the dangers of multisourcing. In a report this week, featured in our news analysis, the consultants found that outsourcers simply don’t understand what they are getting themselves into with multisourcing.

Who’s saying what? Who’s right? Who’s wrong? Who knows? What a confusing week. Now where did I outsource those employees?

The maturing knowledge process outsourcing (KPO) market represents a significant growth opportunity for vendors, according a new Datamonitor report.

“KPO represents the next stage in the evolution of the outsourcing market,” says Ed Thomas, analyst for business process outsourcing (BPO) at Datamonitor and author of the report. “Unlike BPO, which refers to the transfer of mainly transactional, non-core processes to specialist providers, KPO involves the outsourcing of core business processes, for example planning and auditing, which require a high level of domain expertise.”

Within the report Thomas points out that, throughout the evolution of the KPO market, one feature that has remained constant is the leveraging of offshore delivery models. “India has been the focal point for the KPO industry since its inception. Increasingly, however, KPO vendors are adopting a multi-shoring approach to service delivery.”

Datamonitor has identified eight key locations that have emerged in recent years as viable options for KPO service delivery, including China, the Philippines, Sri Lanka, Hungary, the Czech Republic, Canada, Mexico and Brazil. The report assesses the strengths and weaknesses of these geographies and looks at how they can form part of a vendor’s multi-shore delivery model.

Thomas also notes that KPO enables clients to tap into large pools of talent and leverage skills in niche areas, which otherwise would not be open to them. “By improving efficiencies and freeing up resources within the client’s own organisation, KPO can help to improve customers’ time-to-market, a business benefit which goes beyond simply delivering ‘your mess for less’ services in the style of transactional outsourcing.”

The report also finds that despite recent trends towards consolidation, the KPO market remains extremely fragmented. When the hype around the industry was at its height during 2004/2005, new vendors claiming to provide KPO services would appear on an extremely regular basis. While many of them have not survived, a significant number did, and are still operating.

Thomas adds that, despite recent consolidation, scale is of lesser importance in KPO than BPO. “Whereas BPO vendors typically harness economies of scale to deliver significant cost savings, the main selling point of KPO is its ability to deliver targeted, domain-specific knowledge, with scale playing less of a part in a vendor’s go-to-market proposition.” Niche providers are therefore capable of competing with, and even outperforming, the giants of the outsourcing industry.

Cathay Pacific has extended its ITO contract with Unisys Australia for the development and management of its passenger service and logistics management systems. The new contract will run until 2012.

Under contract terms, Unisys will host and manage the Airline’s passenger service system, enabling Cathay Pacific to generate flight schedules, display seat availability, manage flight inventory, record passenger bookings, and handle passenger check-in and departures at airports across its network. The Logistics Management System suite of cargo applications enable Cathay Pacific to manage its cargo operations including inventory control, bookings, warehouse operations and customs interfaces across its world-wide network.

W Y Chow, Manager of IT Operations for Cathay Pacific, “The Unisys passenger and logistics solutions are mission critical applications. In today’s competitive aviation market and business environment, it is important to work with a partner like Unisys who understands our industry, the nature of our changing business and the need for system reliability and uptime to service our customers. The system availability provided by Unisys has exceeded our requirements.”