Industry news

A third of UK workers believe that their jobs will be automated within the next decade – and almost ten per cent think it’s likely to happen within two years - according to research by payroll firm ADP – and of those, over half think their employers are not doing enough to reskill them ahead of time.

Fears over automation are distributed unevenly amongst different demographics, according to the research cited by The Independent newspaper and others: just under 50% of employees aged between 16 and 35 see their jobs falling to automation within ten years, whilst workers in London are more fearful than those anywhere else: 46% of those surveyed in the capital worry about losing their jobs to automation over the next decade.

“Automation may seem like an issue for future generations, but our findings show that machines could replace thousands of employees in as few as five years… By starting to upskill and retrain workers now, employers can ensure they and their employees are as ready as possible to work side-by-side with the machines,” Jeff Phipps, managing director at ADP UK, told The Independent.

The global business process outsourcing (BPO) industry added fewer jobs last year than at any time since 2010, according to a report by India’s outsourcing trade body Nasscom. Net job growth in the $28bn BPO exports business stood at 36,000, with a global total in the region of 1.2 million, according to the Nasscom study. The annual average since 2011 has been in excess of 50,000 net new jobs.

While hiring growth has slowed, however, revenues are still strong, indicating that the shift to more automated work is accelerating. Earlier this year Cognizant became the first outsourcing major to hit 10% annualised growth whilst decreasing headcount, and several other leading players are expected to follow suit when their results are announced this month.

“This is, absolutely, not just a sign of things to come but of things that are already here,” said Jamie Liddell, Head of Content for the Global Sourcing Association (GSA). “Outsourcers of all shapes and sizes are scrambling to leverage the full power of automation and AI as quickly as possible to move away from the FTE-based model on which they’ve relied for many years. I’d be very surprised if we don’t see negative job growth this time next year, while revenues continue to rise.”

The Trades Union Congress (TUC) has called for a “beefing up” of labour laws affecting employees of outsourcing firms, saying that current legislation is insufficient to support subcontracted workers. The organisation has suggested that the government bring in legislation to allow such workers to challenge their “parent companies” to ensure full access to benefits such as holiday pay and even the national minimum wage.

According to TUC estimates, up to five million workers – 3.3 million employed through outsourced providers, at least 1 million by recruitment agencies and similar firms, and 615,000 by franchised operations - in the UK cannot enforce their basic rights.

TUC general secretary Frances O’Grady said: “This is an issue that affects millions, from fast food workers to people working on building sites. Employers have a duty of care to workers in their supply chains. They shouldn’t be allowed to wash their hands of their responsibilities… Joint liability must be extended to parent employers. Without it they can shrug their shoulders over minimum wage and holiday pay abuses… Our labour enforcement laws urgently need beefing up.”

A spokesperson for the Department for Business, Energy and Industrial Strategy said: “The government recently set out plans to ensure millions of workers, including agency workers, will benefit from enhanced rights and protections. We are also considering repealing laws allowing agencies to employ workers on cheaper rates.”

A report by the OECD on the impact of artificial intelligence and automation suggests many fewer jobs in the UK and USA will be lost than previously thought – though the revised figures still represent many millions of positions at risk.

According to the report, some 10% of US jobs and 12% of UK roles will be lost to automation over the next decade – significantly lower than the 47% and 35% respectively predicted by a highly influential Oxford University study released in 2013. Nevertheless, the figure for the UK represents around three million employees, and that for the USA at least 13 million, the report claims.

The research suggests that while fears of the impact of automation and AI have been to some extent overblown, the consequences will still be significant, with “further polarisation of the labour market” potentially leading to greater wealth inequality, and with countries not sufficiently prepared for the retraining burden which will result from such widespread job losses.

“The large share of workers whose jobs are likely to change quite significantly as a result of automation calls for countries to strengthen their adult learning policies to prepare their workforce for the changes in job requirements they are likely to face,” the report warns.

A report by the OECD on the impact of artificial intelligence and automation suggests many fewer jobs in the UK and USA will be lost than previously thought – though the revised figures still represent many millions of positions at risk.

According to the report, some 10% of US jobs and 12% of UK roles will be lost to automation over the next decade – significantly lower than the 47% and 35% respectively predicted by a highly influential Oxford University study released in 2013. Nevertheless, the figure for the UK represents around three million employees, and that for the USA at least 13 million, the report claims.

The research suggests that while fears of the impact of automation and AI have been to some extent overblown, the consequences will still be significant, with “further polarisation of the labour market” potentially leading to greater wealth inequality, and with countries not sufficiently prepared for the retraining burden which will result from such widespread job losses.

“The large share of workers whose jobs are likely to change quite significantly as a result of automation calls for countries to strengthen their adult learning policies to prepare their workforce for the changes in job requirements they are likely to face,” the report warns.

LONDON, 28/3/18: The Global Sourcing Association (GSA), the industry association for strategic sourcing and outsourcing professionals, has launched its new #ReshapingOutsourcing campaign intended to improve and futureproof the outsourcing model. At an extraordinary meeting held in London on March 26th, over 80 senior professionals from across the industry convened to discuss the challenges facing outsourcing – including a welter of media and political criticism, a wave of disruptive technologies and the emergence of new partnership and contractual models – and possible solutions designed to improve service quality and outcomes and to shore up the reputation of this critical sector.

Prior to the event, a GSA survey of the community showed that over 80% of respondents desired change in the industry (with only six per cent believing no change at all is necessary), and breakout sessions on Monday showed a clear desire for fundamental improvements in areas as diverse as communications, hiring, public relations, upskilling sourcing professionals, preparing for the future working landscape and more.

The discussions generated at the event will now be used as the basis for working groups, to meet regularly over the course of the next few months, designed to formulate a series of actions which will combine to form a coherent programme of work to be unveiled at the GSA UK Symposium & Awards, to be held in London on November 22, 2018. Kerry Hallard also informed the conference of a range of new GSA activities to run alongside these working groups under the broad remit of ‘Reshaping Outsourcing’, as well as an expansion of the GSA’s workshop programme to provide an immediate boost to the upskilling imperative expressed by the group.

“This industry is on a burning platform,” Hallard said. “Don’t get me wrong – in most cases outsourcing works – but we seem too unwilling to share those successes. I propose that we come together as an industry like never before, to celebrate our successes, acknowledge our shortcomings, agree that we want to make some changes – and agree what those changes are, and develop and deliver a targeted plan.”

The GSA is now calling for members of the strategic sourcing and outsourcing space who were unable to attend Monday’s meeting to throw their support behind the campaign, including by joining the nascent working groups to help shape the future of the industry. Those interested should contact Kerry Hallard, CEO, GSA UK, at kerryh@gsa-uk.com or on +44 (0)7774 690447.

For more information on the GSA UK Symposium & Awards 2018, see https://www.gsauksymposium.com/ or contact Natalie Milsom at nataliem@gsa-uk.com or on +44 (0)7817 040202.

For information on the GSA’s workshop programme – including forthcoming sessions on design thinking and intelligent automation – please contact Debbie Mackay at debbiem@gsa-uk.com or on +44 (0)7398 262548.

About the GSA:

The Global Sourcing Association is the industry association and professional body for the global sourcing industry, and the home of the Global Sourcing Standard, a world first for the provision of a portfolio of best practice methodologies and accreditation programmes supported by both buyers and suppliers of sourcing. The GSA is a not-for-profit membership association with fully licensed, affiliate and associate members, and serves to share best practice, trends and connections across the globe. The Global Sourcing Association has a presence across the globe and provides guidance in economies such as the United Kingdom, France, Germany, Italy, Belgium, the Netherlands, Spain, Norway, Poland, Romania, Bulgaria, Russia, Egypt, China, India and the United States.

British Airways (BA) has cancelled plans to outsource hundreds of call centre jobs in the north of the UK and committed to investing millions of pounds in new technology, according to reports this week. Over 750 staff in Manchester and Newcastle will remain in place after BA and provider Capita failed to agree a deal “after nine months of talks” over taking on the airline’s global customer contact set-up, according to the Manchester Evening News.

BA’s chairman and chief exec, Alex Cruz, told the press that he was “pleased that following a very detailed review, we are planning to retain both of our long-standing UK call centres in Newcastle and Manchester… We have highly experienced and knowledgeable teams in both cities, and by modernising how we work as well as introducing new technology we can ensure we offer the very best service to our customers.”

The news was greeted with delight by trade union Unite, which referenced the current anti-outsourcing backlash in its response: “I think there is a new mood across business and other organisations in the UK that, following the recent Carillion debacle, outsourcing is not necessarily the best option if you wish to develop your business successfully,” said Unite officer Oliver Richardson.

BA also announced that it will keep 900 more staff in-house in centres in Germany, Hong Kong and India, but is also looking at setting up another centre in Cape Town which would be run by a third-party supplier.

“Capita is continuing to work with British Airways about elements of global customer contact transformation and support. This includes discussing a potential new contact centre site in Cape Town,” a Capita spokesperson said.

With less than two months before the new European General Data Protection Regulation (GDPR) comes into force, concerns are growing that India’s leading IT firms are underprepared for the changes involved, with press reports this week claiming that “only a third” of the country’s providers are in line to be compliant by the May 25th deadline.

“Only 30%-35% of all IT/ITeS companies have started their journey to work towards GDPR compliance,” Jaspreet Singh, Cyber Security Partner at EY, told the Economic Times on Tuesday.

With fines for breaches of the new regulation potentially reaching four per cent of global turnover (and with data protection in the public eye as never before thanks to the ongoing Facebook/Cambridge Analytica scandal) the consequences of failure to observe GDPR are enormous – yet analysts are concerned that some Indian firms may not be taking their obligations seriously enough. Some observers are also highlighting the extra cost burden and its possible impact on current and future deals: NASSCOM chairman Raman Roy suggested Monday that “IT services providers will have to rework the contracts and they will see a cost increase. But the cost impact depends on the incremental work (due to GDPR compliance) that needs to be done.”

In an interview with the GSA, DLA Piper partner Kit Burden said that “there remains a huge amount of work to be done on GDPR; in fact, there is too much work now than could possibly be done in the time available. There are still organisations amazingly enough which are only now waking up to what needs to be done. Equally there are more savvy organisations which did realise that they needed to do something, who are still coming to terms with the sheer scale of how much that ‘something’ actually is, and are therefore still running up against the deadline in terms of completing all their remediation activities in time to be ready by May.”

The UK government has come under fire after the announcement that new post-Brexit British passports are to be made in France by Franco-Dutch printing firm Gemalto. The decision to send the work offshore, taken in accordance with EU procurement rules, has been lambasted in various media channels by pro-Leave commentators including former cabinet minister Priti Patel, who described it as “disgraceful”, and is being appealed by the incumbent supplier De La Rue, which immediately issued a profit warning following the announcement.

However, the Home Office said on Wednesday that the new contract will save taxpayers in the region of £100m-£120m. A spokesperson said: "The preferred bidder has been selected following a rigorous, fair and open competition and all bidders were notified of the outcome last night. The chosen company demonstrated that they will be best able to meet the needs of our passport service with a high quality and secure product at the best value for money for our customers and the taxpayer. It's been the case since 2009 that we do not require passports to be manufactured in the UK. A proportion of passports have been made overseas since then with up to 20 percent of blank passport books currently produced in Europe with no security or operational concerns."

De La Rue CEO Martin Sutherland expressed anger at the decision to the BBC on Thursday: "Over the last few months we have heard ministers happy to come on the media and talk about the new blue passport and the fact that it is an icon of British identity. But now this icon of British identity is going to be manufactured in France…I'd like to ask Theresa May or Amber Rudd to come to my factory and explain to our dedicated workforce why this is a sensible decision to offshore the manufacture of a British icon."

The news that new UK passports would revert to a traditional dark blue colour was greeted with enthusiasm by many Britons who believe it represents a symbolic break with the past after 2016’s Brexit vote; since 1988 British passports have been burgundy in line with EU norms. Anti-EU campaigner Nigel Farage described the decision as “the first real, tangible victory” since the referendum. Others, however, have taken a rather different view: entrepreneur James Caan tweeted that “a country that would spend £500m to change the colour of a passport while children sleep on the streets is a country whose priorities are wholly out of whack”.

Tiago Catarino is the CEO and Co-Founder of Lisbon Nearshore, a technology company based in Lisbon, Portugal which offers customised software development and IT staffing services to clients worldwide. We spoke with Tiago about his company, the attractions of Lisbon as a sourcing delivery location, the ongoing war for talent, and what makes a true leader...

*

Tiago, thank you for joining us today. Let’s get a bit of background: can you tell us a little about yourself and your career thus far?

Tiago Catarino: Over the last 11 years my main focus has been to develop and implement processes which drive and improve outsourcing agreements. I lead a team of professionals, responsible for developing, selling and delivering differentiated, innovative, and operationally excellent services to clients seeking outsourcing or nearshoring solutions to help them achieve high performance. As a senior leader, I help clients experiment with new structures, incentives, and processes in order to meet their strategic goals. My day-to-day job involves consulting and helping clients to address complex challenges related to innovation. It was the complexity of these challenges that led me to obtain a Certified GSA-UK Diploma in Strategic Outsourcing.

Innovation is one of the biggest problems we have in the outsourcing industry. I am passionate about how technology and people combine and drive organisational changes. From 2007 onwards, I developed a “people first” leadership approach to merge technology and processes, helping clients to unlock the potential of innovation in new outsourcing service models.

What does “people first” mean specifically for you?

TC: For me, a "people first" approach entails the developing of a company culture that puts the employees' well-being at the core of the business processes.

Lisbon Nearshore is a relatively young company: what was your thinking behind its foundation? Why was this a good time to set up such a venture?

TC: Nearshore has boomed in Portugal over the last two years. Before that, it was a relatively small market on this side of Europe for mainly one reason: companies pursuing nearshore models were only focused on price and cost-cutting. Now the focus has shifted towards the quality of the work produced, keeping in mind that it must still be affordable.

Portugal is a country which boasts a highly qualified workforce - I believe our best developers and engineers do not lag behind their counterparts in Central and Northern Europe - and significantly lower labour costs than the EU average; however, it cannot compete in price with Eastern European countries such as Bulgaria or Poland. As Portuguese, we have always strived to push our boundaries further and that still stays true today. We are pushing the boundaries of technology to new frontiers, and that is exactly our value proposition, what’s in our DNA: the desire to excel, the quality of our talent and our willingness to discover the new.

Can you give us a little insight into the kind of work you typically carry out for your clients?

TC: Our setup implies a true business partnership: we don’t do individual project deliveries. We set up a development centre with our clients, in Lisbon, that can be scalable according to their needs and which includes software engineers, web developers, project managers, software architects, etc. Our aim is to develop our client’s Lisbon tech hub. We are not just a service provider: we are your partner in Lisbon.

So without giving us any confidential details, what would that entail – what kind of work do your clients send over to you that they don’t or can’t do in-house?

TC: Our clients reach out to us, not just because they have a need to outsource parts of their business processes, but also because they simply are not able to find and attract quality talent. In this industry the talent gap, the gap between the available talent and the industry's needs, is widening every year. It is becoming increasingly difficult to attract and maintain qualified IT professionals; the turn-over rates are increasing. A client comes to us because they know they will get a highly qualified, highly motivated team without needing to worry if they will be able to scale the team or if it will be cut in half due to its members going to find work somewhere else.

Answering your question more directly, we can do several kinds of work with our clients, from applications, front and back-end development, to ERP development (SAP and Oracle, for example) and IT infrastructure management.

Lisbon’s got a pretty interesting value proposition: what makes it a good place to do business right now? And how does it differentiate itself from other service delivery locations?

TC: To be honest, we as Lisboetas have always seen that value proposition and felt the world was just mistakenly looking at other places [laughter]. As I stated before, Portugal boasts a high-quality education which translates into highly skilled professionals. Not only that, but the country possesses a world-class telecommunications infrastructure, a mature market economy and several government incentives to companies wanting to invest in the country. Couple all that with a positive relationship of quality/price/talent and you can’t get a better bang for your buck.

How are you working to stay at the cutting edge of technology at a time of such great change in the industry? Do you find yourselves having to work with a broader spread of partners, for example?

TC: I believe that the key requirement for anyone working in tech, whether as a developer or in management, is to never stop learning. This is a fast-paced always-changing industry and you need to get your feet on the ground and be aware of its global dynamics if you want to stay relevant. At Lisbon Nearshore we are technology-agnostic and, therefore, we work with a broad spectrum of tools. We always look for the best tech to fit a specific project and try to be on the lookout for new tools that can help us improve our work. We also have a Learning Centre where our developers can further improve their skills. Besides that, we also offer them the possibility of attending international conferences and events related with technologies they are working with. Just last month, we had a few of our developers in Paris for the ng-Europe Angular Conference.

What are the key skill-sets and characteristics you look for when hiring?

TC: At Lisbon Nearshore we only hire experienced and seasoned IT professionals. Even though the self-taught engineer has been glamorised in this industry, the first thing we look at when we evaluate potential candidates is their education. Did the candidate continue to hone their skills after getting into the job market? Is the candidate from a reputable university? We believe that a quality education and a willingness to keep improving are the cornerstones of good developers.

The second thing we look for is their soft skills: are they team workers, honest and able to work in a fast-paced environment?

Are you finding yourself in a “war for talent” in a fast-growing market such as Lisbon?

TC: Yes and no. In this industry, no matter what, you are always competing for talent. However, when you have interesting international projects, you provide full benefits and a dynamic company culture, the fight for talent becomes an easier one. We are able to differentiate ourselves from our competition by the amount of energy we place in making sure our staff is happy and well taken care of, finding meaning in the work they do.

Conversely, what do you think are the most important characteristics of leadership in this space right now?

TC: I believe in a leadership approach that puts the well-being of your employees at the core of everything you do. I strongly believe that if you treat your employees well, they in turn will take care of your business. In a space as challenging and competitive as this one, if you push your employees to the limit of their physical abilities, you’ll end up with poorly executed work and a turnover rate that will go through the roof. Leaders shouldn’t be authoritative, but cooperative and point the way. Leaders should inspire and protect.

Finally, what’s the secret to the perfect sourcing arrangement?

TC: To be honest, there is no secret to sourcing arrangements. It is actually more straightforward than most people think, but it has to be supported on a few key principles: honesty, transparency and cooperativeness. If these key principles hold, then, for an agreement to be optimal, it is only a matter of specifying correctly a few technical aspects: well-defined needs by the organisation pursuing nearshoring services; well-communicated scaling abilities and challenges by the nearshore service provider; tried and true communication and work methods; and so on.

I believe that, at the end of the day, if there is an alignment of both organisations’ cultures and ethical principles, the technical challenges of each sourcing arrangement are more easily overcome, and both organisations are able grow and develop together.