Industry news

Alsbridge has expanded its business to the Antipodes (Australia and New Zealand), setting up offices in Sydney.

Alsbridge provides consultancy services in the areas of outsourcing, robotic process automation and cloud transfer services. The company expects both the Australian and New Zealander outsourcing market to boom in the coming years, as companies looking to save money by contracting out parts of their business processes.

According to its directors, Dom Bower and David Snell, both the Australian and the Kiwi outsourcing sectors are yet to reach maturity. Bower pointed to the local resources boom at the time of the 2008 financial crisis as the main reason for the sector’s underdevelopment.

The boom meant that both Australia and New Zealand were not faced with the budgetary pressures that opened a space for outsourcing as a cost saving resource in countries such as the UK and the US.

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Related: Alsbridge Acquires Source in Bid for UK Expansion

For the second in a row, Firstsource Solutions has taken home the award for Outsource Contact Centre of the Year at the Welsh Contact Centre Awards held in Cardiff last night.

The annual ceremony celebrates the best of the Welsh contact centre industry, which contributes £650m to the country’s economy.

According to Sandra Busby, Managing Director of the Welsh Contact Centre Forum, “The sector is enormously important to the Welsh economy and contributes a huge amount both financially and socially to communities throughout Wales”.

Firstsource owns one of Cardiff’s largest contact centres, which employs over 1000 people. Last week, the company announced its plans for the creation of a further 300 jobs in Cardiff.

In a press release following the award announcement, Kathryn Chivers, Firstsource’s VP of Sales Operations declared that “the win is testament to the hard work and dedication of our superb team in Cardiff.”

“As we continue to expand our operations in Wales, we are always on the lookout for talented and motivated people to join our team,” she concluded.

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Related: Firstsource champions university-accredited degree for contact centre staff

Today’s IT landscape is characterised by an increased focus on a “bi-modal” approach to management, whereby CIOs make a conscious distinction between “run the business” services on the one hand, and “change the business” services on the other. The run the business or “slow” side of IT oversees stability, security and up-time, and places a premium on rigorous testing and process discipline. The change the business or “fast” side of IT, meanwhile, is all about flexibility, agility and a fail fast mentality.

While these dual streams of service delivery are well established, the recognition that different types of processes, organisational structures and financial controls are needed for each signals a heightened level of management maturity, as well a recognition of the increasingly ubiquitous role of IT in business. From a sourcing perspective, clients have traditionally worked with service providers to address run the business/slow IT requirements. By contrast, change the business/fast IT activities have typically stayed in-house within the domain of the internal IT organisation.

Why have outsourcers not played a more prominent role in change the business IT functions? One fundamental obstacle is the established model of outsourced service delivery. Service providers typically prepare and submit a proposal for a specific scope of work, execute the agreed-upon services and then charge a fee based on the terms of the agreement. The trouble is, this discrete, project-based approach doesn’t apply to the needs of “change the business” IT, where teams quickly align and realign to services and products, and where success is rarely measured as a function of investment in a project. To take an example, a traditional sourcing arrangement simply doesn’t accommodate the “fail fast” philosophy of change the business IT.

Today, some CIOs are recognising that excluding service providers from the fast side of IT results in expertise, and for service providers to deliver additional value to their customers. As a result, they’re reconsidering their approach to bi-modal IT, and looking for ways to make service delivery agreements more amenable to the requirements of change the business IT.

At a high level, CIOs are working with their service provider partners to develop delivery models that assess the value that a vendor delivers to the business, and then link the provider’s compensation to that value contribution. One innovative approach being taken is to dedicate service provider resources to a client’s agile service teams on a long-term basis. This enables enhanced control, knowledge management and training that typically wouldn’t result from a more tactical contracted resource model. The dedicated resource approach offers opportunities to innovate and develop new compensation models. As resources are invested in long-term success, value can be assessed against overall service performance rather than the traditional deliverables-based approach.

Bringing service providers into the fold of fast IT requires a change in the CIO’s role to more of a conductor or orchestrator who ensures that service providers stay engaged on both sides of the bi-modal IT model. Balancing “fast” and “slow” presents a variety of new challenges, not least of which is understanding the role service providers play in delivering business value. Recognising this and building an embedded agile capability can enhance the role of providers and present the CIO with greater flexibility in meeting these demands.

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In recent weeks, multiple articles have appeared in the Guardian claiming that outsourcing has fallen out of favour with UK local government, and encouraging councils to bring as many services back in-house as possible.

These articles – which are largely opinion-based – fly in the face of recent research conducted by arvato published in the Outsourcing Yearbook 2016, which saw public sector outsourcing surge in popularity in the second half of 2015. The total value of local government outsourcing contracts more than trebled in the third quarter when compared to the quarter before.

arvato even found that local authorities are signing longer agreements, “with the average length of contracts nearly doubling to 102 months in Q3, from 54 months the previous quarter”. This is unexpected news, as NOA research (also found in the Outsourcing Yearbook) suggests that outsourcing contracts on the whole are getting shorter.

arvato’s report claims that, due to the possibilities offered by shared services and advances in robotic process automation (RPA), the increase in public sector outsourcing is set to continue as councils seek new ways to operate in a more cost effective manner.

But should councils be outsourcing less? Some reporters at the Guardian certainly think so, pointing to recent public sector scandals involving Serco and G4S, along with successful case studies where council backsourcing has proven to be successful. A report is also cited suggesting that over 25 per cent of outsourcing arrangements involving the public sector have failed to deliver. Yet, as Professional Outsourcing points out, “any report that says just over a quarter of projects have failed must by extension be saying that almost three quarters have been a success”.

2015 was also a year when local government bodies looked to outsource in an increasingly innovative manner. The most prominent example is Northamptonshire County Council, which proposed plans to save £150 million through the creation of four new service provider companies, all created and part-owned by the council. The Financial Times frequently report cases like these throughout the year, arguing that more and more councils are embracing outsourcing as part of an austerity-driven innovation push.

This evidence suggests many claims made by the Guardian are spurious at best. And while it is important for local government to rectify failing outsourcing contracts – and even terminate them while necessary – it is equally vital for council representatives to understand that outsourcing can be highly beneficial when properly thought out and implemented correctly.

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In April, the National Outsourcing Association hosts its first Public Sector Conference offering civil servant insight into what the future of government outsourcing holds.

The National Outsourcing Association has launched its latest Outsourcing Yearbook, the annual compendium of outsourcing insight.

The 2016 edition features:

• The NOA’s own Outsourcing in 2020 research, looking into what trends and technologies will impact on the sourcing industry between now and 2020

• Contracting research provided by the law firm Eversheds, studying how buyers of outsourcing can best prepare for a mismatch between expectation and supplier delivery

• A legal round-up of 2015 provided by law firms active in the industry

• Predictions for the future provided by leading industry analysts

• A whole host of articles and video interviews, covering a wide range of future-focused topics, provided by some of the most prominent organisations from the buy and supply-side

• A directory of active outsourcing service providers

The NOA has emphasised that now is a pivotal time for those working in the outsourcing industry, with changes that took place over the last 12 months surpassing the number of changes seen throughout the last 12 years.

The 2016 Yearbook has been compiled to help those organisations and individuals determine what the future has in store for them, and how to adapt accordingly.

Access the Outsourcing Yearbook 2016 online free.

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Related: NOA says Brexit is no good for outsourcing, but Britain needs reformed EU membership

npower has confirmed that it will be cutting 2,400 jobs based in the UK - roughly one-fifth of its workforce – after announcing loses of £106 million for 2015.

The decision has left service providers contracted by the company uneasy. On the one hand, the decision could result in increased outsourcing as npower looks to save money in other areas, but existing outsourcing contracts are equally likely to be cut for similar reasons.

npower experienced a tumultuous 2015, losing 351,000 customer accounts, and being subject to a record £26 million fine in December, provoked by the sheer quantity of customer complaints over billing received throughout the year.

Paul Coffey, chief executive at npower, attributed the failures to a business trying to do “too much, too soon”, while Unison general secretary Dave Prentis has accused the German-owned company of not being “committed to its UK operations”.

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Related: Interserve cleaners punished after writing to foreign secretary

The National Outsourcing Association (NOA) has appointed Tom Quigley – former head of marketing and events for Capita’s Insurance & Benefits Services division – as marketing director to drive the NOA’s communications programmes, overall marketing strategy and worldwide growth.

Tom brings a wealth of experience to the role, having worked in senior marketing and communications roles internationally for Capita since 2008. His addition to the NOA’s executive team will be essential as the association looks to promote brand awareness internationally, and expand its presence in the UK, Europe and beyond to the benefit of NOA members and the wider outsourcing community.

“As a former representative of the NOA Council, I have spent the last year helping to shape the strategic focus of the NOA,” Tom commented. “I look forward to harnessing this experience and taking it a step further as marketing director. The NOA has plenty to offer key outsourcing growth markets abroad, India and China being just two examples, and I intend to make sure that individuals, companies and governments with a vested interest in outsourcing globally are aware of this.”

Kerry Hallard, CEO of the NOA, added: “I’m absolutely thrilled that Tom has decided to come join us at the NOA. With his keen business insight and intuition for effective marketing, I am confident he will have an instant impact, and prove to be an essential part of the NOA achieving its growth ambitions. His strong pre-existing relationships within the NOA membership are, of course, an added bonus.”

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Related: Capita set to win £139m deal across five councils

Ukraine has been named Europe’s top IT outsourcing and software development destination, according to a report conducted by industry specialists AVentures Capital in association with Sourcingfocus.

The nomination is a testament to the sector’s rapid and consistent growth in the country, which has managed to weather extreme political instability. The IT service and software development sector has, over the years, reported double-digit growth figures.

The growing importance of IT for the Ukrainian economy can be explained by the conflux of a highly internationally-focused group of local IT companies, and the large sums of investment poured in the country for R&D development by global IT giants. Big players like Cisco, Oracle and Samsung have all invested in the country’s booming R&D sector.

The report reveals that by 2020, Ukraine’s IT engineering workforce will double to reach 200,000. IT is now the third biggest export sector in the country with an export volume of $2.5bn. At the moment, the US is by far the largest destination for Ukrainian IT exports representing over 80 per cent of trade volume.

The report also discloses that the current period of political turbulence has had little effect on Ukraine’s IT sector, despite having hampered overall growth in the country. The findings are in line with declarations by both local and international IT companies.

Read the full report.

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Related: Ukraine launches outsourcing initiative to counter recent economic instability

G4S is expected to announce losses on its contract for housing asylum seekers in the UK this Wednesday.

This is not the first time that the contract with the Home Office has proven financially unviable for the world’s largest security firm. Last year, G4S recorded losses of nearly £25m related to the deal.

This year, however, the increased inflow of asylum seekers and the company’s difficulties in finding appropriate housing are expected to cost G4S a larger sum than in 2015.

The loss is another blow to the security giant, which in the last three years has been involved in a significant number of high-profile incidents, inevitably denting its reputation. Just last month only, G4S closed off its youth justice centres arm in the UK, after a video emerged of children within the centres being abused by staff.

At the moment, Serco, G4S and Clearel are the providers of asylum housing facilities. Between themselves, the three firms won the six contracts put out by the Home Office in 2012. G4S is not the only company suffering losses from the asylum seekers contract. Serco, which has a smaller cut of the contract (33 per cent), has already written off £115m of the contract’s value until its end in 2019.

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Related: G4S debates whether to exit young offenders contracts in US and UK

The FT has suggested that the NHS is in the process of boosting its private practices in order to tackle insufficient funding, offering a number of examples where this is currently taking place both in the UK and abroad.

In the UK, state-owned King’s College Hospital is expanding private wards at its Denmark Hill site in London, while overseas it is showcasing treatments for cirrhosis, diabetes and other liver conditions across the Middle East.

Ted Townsend, analyst at LaingBuisson, told the FT that, in his opinion, selling private care alone will not sufficiently transform the NHS’s finances. “It is still a small proportion of their income overall, although it is growing,” he said. “But some hospitals still do not believe that servicing private patients should be part of their remit.”

In 2014, a report compiled by six different NHS bodies found that the NHS budget will face an annual shortfall to the tune of £30 billion by the end of this parliament if practices are not radically improved.

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Related: BMA calls three new strikes over disputed new doctors’ contract

Are you involved with public sector outsourcing? The NOA's Public Sector conference in April will showcase how outsourcing and new technology can be used to delivery "more for less" in the public sector in the face of government cuts. Find out more.