DOING BUSINESS BETTER. TOGETHER

Better out than in? TfL and Nowich Union

31 Jul 2008 12:00 AM | Anonymous
As the economy weakens, news reaches sourcingfocus.com of two very different approaches to the challenges. First, Transport for London (TfL) is reportedly embarking on a massive shake-up of its outsourcing deals, bringing some work back in house.

The move may be yet another blow to embattled Fujitsu, which is currently dealing with the fallout of its severed relationship with the NHS National Programme for IT. Fujitsu, along with BT, CSC and others is one of TfL's main IT outsourcing partners.

TfL intends to complete the review by the end of next month, and currently has 17 prime outsourcing suppliers – a number it intends to slash and replace with “a blend of in and out”.

The organisation feels that it will have greater control over its intelligence assets by bringing them back in house.

Meanwhile, insurance giant Norwich Union has announced that up to 500 back-office IT and financial admin jobs are to be culled as it outsources two operations, which are currently based in York, to partner firms in Essex and Scotland.

Norwich Union Life CEO Mark Hodges said: "It is too early to give an indication of the likely number of redundancies for both of these partnerships and we understand that this causes uncertainty for staff.

"Our priority will be to keep employees fully informed throughout this process and we will do everything we can to minimise the impact of this decision.” Wise words, as all too often enterprises demotivate staff by keeping the truth from them until the last minute, creating a culture of rumour, gossip and mistrust.

Rather than being a short-term cost-cutting decision, in Hodge's estimation, Norwich Union says it is investing in future growth opportunities, including a greater focus on the Internet.

One thing any seasoned observer of enterprise IT will tell you is that the larger and more bureaucratic the organisation, the more cyclical and seasonal their outsourcing strategies will be.

Many such organisations go through cycles of farming work out, becoming a hostage to third-party terms, conditions, and prices, and then setting up in-house units to do the work at apparently lower cost while regaining control over quality. In the medium term those attractions wane, the unit is deemed not to be core to strategic objectives, and then the cycle begins again.

The economic downturn will doubtless bring many such stories to light before the year is out.

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