Industry news

Recruitment process outsourcing (RPO) is growing rapidly and has the potential to be a multibillion dollar market, taking advantage of the trend towards single process deals in human resources outsourcing. This is according to the latest report by independent market analysis firm Datamonitor. The report Opportunities for Recruitment Process Outsourcing in a Changing HRO Market estimates the global RPO market in 2007 was worth $720 million and forecasts it will grow by 22% in 2008 to $880 million, and surpass the $1 billion level in 2009.

According to the report, demand is predominantly from Fortune 1,000 companies in the US, but the market is growing rapidly in the UK and continental Europe and is beginning to gain traction in the Asia Pacific region.

However, the predictions come at a time when many businesses are facing the prospect of redundancies, as the 'perfect storm' of the combined credit crunch and soaring food and energy costs are hitting many sectors hard – in some cases, very suddenly.

While RPO vendors claim to reduce costs by up to 40% in some cases, it is the lure of recruiting a higher quality workforce that has been driving growth, says Datamonitor. Nevertheless, the growth forecasts themselves are extrapolated from 2007 data and presumably do not factor in the effects of a precipitous decline in the Western economy.

Although the strategic importance of recruitment means quality will remain of utmost importance, says the analyst firm, it is likely in an economic downturn that it is those who can deliver on both quality and price that will succeed.

“Despite the expectation that outsourcing will thrive as companies search for ways to cut costs, increased unemployment will result in lower business volumes which will be reflected in the variable price nature of RPO contracts. But, this will be mitigated by the increasing demand for RPO from new clients,” says Patrick O'Brien, IT and BPO analyst at Datamonitor and author of the report. “For RPO to continue its rapid growth in the near term, vendors may have to go to market by pricing more aggressively as recruitment will need to be seen as a primary function for easy cost reduction among company processes.”

RPO vendors are split over the use of offshore provision. Many players have little experience or understanding of how to derive the fullest benefits from RPO, while others see it as unworkable in recruitment services which require constant contact with both the client organization and, using the client’s brand, with candidates.

Approximately half of RPO vendors have some offshore workforce, mainly carrying out tasks around name generation, sourcing, early screening of resumes and other administrative duties. A few have moved tasks which involve contact with the candidate offshore as per customer demand.

“While there is a lot of resistance from vendors, the increasing competitiveness of the market and the growing focus on cost cutting in the economic downturn will push vendors into examining ways in which to begin to increase the use of offshore delivery,” says O'Brien.

The first half of 2008 has seen a wave of acquisitions as vendors attempt to build out their recruitment expertise, technology capabilities and geographic footprint. A number of competing vendors still need to broaden their capabilities, and many of the larger vendors are looking to expand further overseas.

Some companies have put forward global request for proposals (RFPs), but these have subsequently been split into regions and handed to different vendors. The one-vendor global deal has not arrived yet, but a number of vendors believe that a breakthrough will occur in the next 12 months. The key reason for the break-up of global RFPs has been the fact that vendors do not have the capabilities to deliver on an international basis. Many have taken heed and are busy investing in international expansion, acquiring companies, building a global set of processes and forming partnerships with vendors in other regions.

Despite awareness of the information security risks associated with outsourcing projects and well publicised cases of data loss or theft, many companies still ignore the potential problems until it is too late. That is the warning highlighted by the Information Security Forum (ISF) – an independent organisation with some 300 major business and public sector Members from around the world.

“The potential to cut significant costs and increase speed to market clearly make outsourcing and offshoring an attractive proposition,” says Simone Seth, author of a new report published by the ISF. “But without the right level of security expertise from the outset to fully identify information risk, there will always be important gaps in the business case. If the necessary controls are not budgeted or put in place to mitigate the risks, it can have serious consequences and even threaten the long term success of the outsourcing project.”

The ISF’s research shows that information risk management is often integrated as an afterthought, and information security professionals become involved too late in the lifecycle. This can often be explained by a lack of awareness at the highest levels and a failure to understand the importance of information risk management through all stages of an outsourcing project.

“Failure to involve information risk managers at the start of a project and through its lifecycle increases the enterprise’s exposure to risk; whether it’s data theft, information leakage or disputes that may arise from questions of ownership of intellectual property,” says Simone Seth.

Information mangers need to identify all outsourced processes, operations and technology and agree business criticality levels through all four steps that comprise an outsourcing lifecycle: Prepare, Implement, Operate and Review. Information risk managers are also able to add contractual clauses that relate to information security regulatory requirements and offer additional protection from a legal standpoint. It is also important to understand regional compliance requirements and regulations as well as the wording of contractual terms to prevent future disputes over the ownership of intellectual property and the transfer of data.

Typical risks at implementation and operational stages that can occur if the right controls are not effective, include fraud, data theft or hacking that can lead to data loss and confidentiality breaches.

The ISF is a not-for-profit international association of some 300 leading international organisations, which fund and co-operate in the development of practical, business driven solutions to information security and risk management problems.

French IT services company Atos Origin recently announced that it has been appointed by France's National Secure Credentials Agency to manage the development and rollout of the biometric passport system in France.

The new passport, which is the result of a European Union directive, is expected to improve personal security and reduce fraud. The introduction of a biometric passport is part of France's modernisation strategy and secure identity programme, and will see Atos working with identity systems supplier Sagem Securite.

The value of the contract was not disclosed, but it is clearly an ambitious programme and an important win for Atos. Under the deal, Atos and Sagem Securite will deploy nearly 5,000 data acquisition and processing systems in 2,000 French town halls and 350 prefectures and sub-prefectures before June 2009, making it possible to include fingerprints on passports.

Cynics might say that being French helped Atos and Sagem win this contract, which has clear national security implications. However, both companies have a good track record in the area of security and identity globally.

It is not a surprise to see Atos winning a biometrics contract: the company has extensive expertise and relationships in this field through its UK public sector business. It undertook a biometric technology trial for the UK Passport Service and defined an implementation strategy, framework and business case for the rollout of a citizen multi-application smartcard in Scotland.

It also has strong relationships with GCHQ and the Border and Immigration Agency and, as IT partner for the Olympic Games, has security-specific offerings high on its agenda.

Despite these existing relationships with key UK public sector security and identity organisations, it missed out on the e-Borders contract and has failed to win a framework contract as part of the procurement for the national ID card scheme (CSC, EDS, Fujitsu, IBM and Thales were the successful suppliers here).

So it is likely that Atos is hoping that this flagship project in France will prove a useful reference site as it looks to grow its security and identity business across Europe. Biometrics will increasingly become important to many European governments as a way to monitor the flux of populations. If Atos can deliver this project successfully, to time and to expectations, then it could put itself in a strong position to meet future demand for these capabilities.

Atos' next major opportunity to demonstrate its security and biometric credentials could be the Olympic Games. As the official IT partner to the International Olympic Committee since 2002, Atos plays a key role in the supply of IT systems and services during the Olympic Games. With the threat of terrorism ever present, a large part of the IT requirements will be focused on security, and in particular identity management.

The NHS Connecting for Health (CfH), a division of the health service charge with implementing the National Programme for IT, has appointed IT health specialist, CSA Waverley, as a specialist SME supplier for its Additional Supply Capability and Capacity (ASCC) framework.

The framework agreement will see CSA deliver and manage a large range of end-user and other hardware services and provide ongoing consultancy services.

The deal has been implemented to aid the NHS CfH in its delivery of the National Programme for IT and to help it comply with a range of wider NHS business requirements.

The NHS Connecting for Health (CfH), a division of the health service charge with implementing the National Programme for IT, has appointed IT health specialist, CSA Waverley, as a specialist SME supplier for its Additional Supply Capability and Capacity (ASCC) framework.

The framework agreement will see CSA deliver and manage a large range of end-user and other hardware services and provide ongoing consultancy services.

The deal has been implemented to aid the NHS CfH in its delivery of the National Programme for IT and to help it comply with a range of wider NHS business requirements.

London’s Metropolitan Police Service (MPS) and the Metropolitan Police Authority (MPA) have taken on Steria to transform the MPS’s Human Resources (HR) function.

The contract will support a significant improvement in the delivery of the MPS’s HR service, and will drive cost savings through the creation of a new HR Service Centre in Central London and implementation of HR business partnering.

The MPS expects to generate significant efficiencies to release additional funds for front line policing. In addition, the new system will help the MPS improve the quality and consistency of the service, bring the ratio of HR professionals to employees in line with the public sector, and more effectively support the strategic aims of the organisation.

The programme, which goes live in Autumn 2009, will ensure the provision of a more efficient and effective HR service to the MPS’s 55,000 employees. Steria’s implementation team will begin working on-site this month to begin the next phase of the Transforming HR programme. Steria will also provide ongoing support for the technology implementation for two years after the service has gone live. The Shared Service and business partnering model that underpins the new HR provision will comprise of: 

- A 24/7 Advisory Centre: which will be the primary point of contact for employees, managers and external contacts to obtain HR advice and guidance through a single telephone number and email address 

- An Expert Centre: qualified teams to manage the main administration and case management responsibilities and respond to queries that have been escalated from the Advisory Centre 

- Business Partners to support the MPS’s strategic HR and organisational objectives 

- Strategic HR Advisors who will support the Business Partners working closely with line mangers advising them on policy interpretation and delivering solutions which enable them to achieve their business objectives 

- A Strategic Centre: which will design and implement HR programmes, processes and policies; manage consulting projects; and monitor the compliance and effectiveness of HR strategies, policies and standards 

- Operational Support Teams managed by the HR Shared Service Centre, providing face-to-face support for managers relating to performance issues, absence management, and recruitment interviews

Martin Tiplady, HR Director, Metropolitan Police Service, commented: “The HR requirements of the MPS are different to those of other organisations. Finding a strategic partner that understood the unique needs of our service, from the organisational structure to our culture, was vital. Steria demonstrated not only the capability to work with us through the changes that the upgrade to our service would create, but a genuine ability to deliver real cost and efficiency benefits, and the best possible HR service for our employees.”

The service provided by the Service Centre will benefit the MPS’s workforce by providing timely access to consistent and relevant information through the organisation’s intranet. The new self-service functionality will be a vital step forward in enabling managers to view and approve requests for job or personal circumstance changes for their employees. Steria will also manage the deployment of Oracle’s Human Capital Management, iRecruitment and Learning Management software as part of the new HR service, and the software company’s applications will also underpin the technology in the new Service Centre.

The Canadian subsidiary of Unisys, Unisys Canada, has won a contract from NEC Corporation of America to provide outsourced IT support services for 470 7-Eleven retail convenience stores throughout Canada.

Under the contract terms, valued at approximately $6 million, Unisys Canada will provide maintenance and support services for IT back-office equipment, on-site wireless networks, point of sale (POS) and inventory ordering systems for the 470 Canadian 7-Eleven retail stores from Ontario to British Columbia. In addition, Unisys will provide deployment services for new systems that 7-Eleven rolls out to its stores for the next three-years.

Sharon Stufflebeme, CIO for 7-Eleven, commented: “Unisys outsourcing expertise combined with NEC’s retail solution integration skills will assist us in growing our 7-Eleven business in Canada. We’ll be able to serve our customers more effectively and efficiently through enhanced in-store technology support.”

As part of a global alliance between the two companies, Unisys is the preferred provider of technology support and maintenance services for NEC in markets outside Japan.

The Directorate General for External Relations, the body responsible for the external policy of the European Commission has signed a four year ITO deal with Fujitsu Services.

The deal will allow the Directorate to deal with various new organisational changes including the increased workload of its delegations. The new contract covers the supply of IT services, the management of the helpdesk, infrastructure management, user support and the management of the projects of the Delegations of the European Commission across 5 000 users and 134 Delegations worldwide.

According to Yves Schellekens, Managing Director Fujitsu Services Belgium and Luxembourg, “This new contract will allow us to pursue and develop our activities among the European Institutions, which, for Fujitsu Services, represent a strategic sector of activities”.

The contract will start on the 1st of June 2008.

Virgin Mobile USA, a leading national provider of prepaid and hybrid wireless plans to North America, has signed off on a new IT services agreement with IBM.

Under the terms of the agreement IBM will manage Virgin Mobile’s IT operations and new applications development. This will entail the migration of existing it infrastructure and applications to IBM systems and the ongoing development of differentiated wireless applications and service offerings in partnership with Virgin. IBM will also provide data centre outsourcing and application management services

Virgin Mobile USA expects that, as a result of its new relationship with IBM, the company will achieve IT-related operational cost savings over the next five years, while increasing the company's competitive advantage in new product and service delivery. The expected benefits of the company's new relationship with IBM are key components of Virgin Mobile USA's focused expansion and value creation strategy.

Jonathan Marchbank, Chief Operations Officer for Virgin Mobile USA, said: "We have built our success as a customer-centric innovator, and always seek to enhance our product and service offerings. These steps will continue to raise the standards in the prepaid market overall and allow us to stay current with, and ahead of, trends and evolutions in the overall wireless industry. With over 5 million customers, the scale we've achieved now puts us in a position to take advantage of IBM's proven best practices, scope and unparalleled experience in running and building IT infrastructure."

The company expects the transition of its existing IT infrastructure and application suite to IBM to be completed by December 31, 2008.

Excelon Corporation, one of the largest electric utilities companies in the US, has signed a new five year IT services deal with CSC.

The contract, reported to be in excess of $150 million, will see CSC provide Exelon with a broad spectrum of infrastructure support services, including help desk, desktop support, database administration, telecommunications and data network support and server management services. Work will be performed at various locations in the US as well as CSC’s World Sourcing delivery centres in Malaysia and India.

Daniel Hill, Senior Vice President and CIO of Exelon, commented: “We are pleased to have CSC bring their experience and expertise to Exelon. Exelon is committed to operational excellence and providing superior value for our customers, shareholders and employees. We believe CSC will be a valuable partner in helping Exelon deliver on our commitments."