Industry news

  • 6 Nov 2015 12:00 AM | Anonymous

    The Clyde and Hebrides procurement process has not seen better days. After overcoming a first stage characterised by a dispute between unions, CalMac and the Scottish government, this process has been supported by an independent panel, which was created specifically to provide assurance about the tendering process.

    Composed by representatives from four different councils – Western Isles, Argyll and Bute, Tiree and Islay – the panel’s reports helped to achieve what transport minister Derek Mackay aimed from the outset of this process: the creation of an “open and transparent procurement process”.

    The Clyde and Hebrides ferry procurement process is now being disputed by Caledonian MacBrayne and Serco Caledonina Ferries Limited.

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    Related: Serco fined £200,000 for death of Woolwich Ferry staff member

  • 6 Nov 2015 12:00 AM | Anonymous

    The latest arvato Quarterly Outsourcing Index reveals that £2.21bn worth of outsourcing deals were struck between July and September of this year in the UK. The number represents an outsourcing spend that has more than trebled in the third quarter of 2015 when compared to Q2.

    Contract length also increased by 38 per cent since the second quarter, with contract value increased by 69 per cent compared to the same quarter in 2014.

    Post-election confidence

    The report points to a sharp increase in market confidence following May’s general election, a likely cause for the steep increase in outsourcing spend. According to arvato, the 269 per cent surge in contract value, when compared to the previous quarter, could indicate the withholding on the part of both private and public sector to enter into big contracts before the election results were revealed.

    In the words of Bryan Mouat, CEO of arvato Financial solutions in the UK and Ireland, “political certainty following the general election has clearly had a positive impact on the outsourcing industry. With market confidence returning, organisations across the private and public sectors are continuing to turn to outsourcing partners for the expertise and technology to help them achieve their objectives”.

    Public sector outsourcing integral part of growth

    The rapid growth in public sector outsourcing value has been a key part of the latest surge in the outsourcing market. Q3 2015 saw contracts worth a total of £2bn signed between the public sector and service providers, compared to £105m in the previous quarter and £275m in the third quarter of 2014.

    Of the £2bn signed this quarter, £1.73bn alone was spent on seven mega contracts between the central government and service suppliers for the provision of a wide range of functions, from IT infrastructure solutions to back office services.

    Local government deals have followed the general trend, largely due to severe cuts in funding and the minimum wage increase. Outsourcing in the sector has increased at an average rate of 67 per cent year-on-year, and contract value surged 200 per cent compared to the third quarter of 2014.

    As Debra Maxwell, CEO of CRM and Public Sector at arvato UK and Ireland, commented: “with even greater cuts to funding expected in this month’s Spending Review, the growth seen across local government will only continue. Councils are increasingly looking to change how they operate and deliver services to leverage significant savings.”

    HR remains popular, while telecoms and retail increase outsourcing

    According to the survey, the value of HR outsourcing contracts increased by 193 per cent year-on-year, making it the most outsourced BPO service line this quarter. HR’s quarterly success is in great part due to the public sector, which makes up 60 per cent of the sector’s outsourcing value.

    Apart from the public sector, the telecom industry has been the biggest outsourcer this quarter. Its outsourcing amounted to £133m for Q3, with a year-on-year growth of 244 per cent.

    Finally, the report also revealed a remarkable surge in retail sector outsourcing. The sector increased from outsourcing services worth £5m in Q3 2014 to an impressive £42m this last quarter.

    Read the full report.

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    Related: “Local Government Continues to be the Vanguard of UK Outsourcing” says arvato

  • 6 Nov 2015 12:00 AM | Anonymous

    Ricoh has been selected by Westminster City Council to help it go digital. The local authority – which receives over 12,000 planning-related applications per year – hopes to cut its reliance on paper, as well as to improve its services, while also reducing costs and saving physical space.

    Anthony Oliver, chief procurement officer at Westminster City Council, says that this partnership will ensure that they “provide services in the most efficient and environmentally-friendly manner”. He added that, in today’s connected world, the access to information and services online is a mandatory requirement demanded by any user.

    Moreover, this partnership will significantly improve the Council’s productivity at a reduced cost to the taxpayer and push another public sector body towards the paperless trend already adopted by similar bodies, such as the Camden and Islington NHS Trust.

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    Related: Councils expect to save £38 million over next 10 years through IT shared services deal

  • 6 Nov 2015 12:00 AM | Anonymous

    Tom Davenport – the Harvard Business School professor who is seen by many as responsible for the term big data’s rise in popularity – has caused a stir on LinkedIn after claiming that “companies have stopped outsourcing IT” and the rest will soon follow.

    While the big data expert and author acknowledges that “IT outsourcing still drives about 60% of the entire services sourcing industry”, he goes on to say that the “practice is in decline for all but the most commoditized IT services”.

    His belief is that the rise of digitalisation, big data analytics and cognitive technologies has made IT simply too precious a resource to outsource, proposing that “even in the heyday of outsourcing, some companies realized this”. He adds that automation, along with the rise of as-a-service and cloud-based tech, are also contributing to the demise of IT outsourcing.

    Davenport adopts a narrow perspective to say the least. Firstly, his argument neglects all but the largest companies. The benefits that IT service providers, proficient in the exact fields he mentioned - digital, big data analytics, cognitive technologies - can bring to smaller organisations that are not financially capable of expanding in these areas are massive.

    Furthermore, it seems a tad naïve to argue that your Accentures, IBMs and Wipros no longer have anything to offer buyers of IT outsourcing – even the largest ones. Certain ITOs will need to adapt their services in order to stay in the game in the build up to 2020, but they will always be able to primarily focus on IT-related fields, incorporating new digital services as and when they come. As always, IT vendors will be able to take over particular operations they specialise in on behalf of the buyer, allowing that client to concentrate on core tasks that are responsible for bringing in revenue.

    As one high profile industry expert commented on Davenport’s post: “No sane organisation outsourcers everything in IT, and few sane organisations outsource no IT at all”. New trends and technologies are not going to change that fact.

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    Do you want to know what outsourcing will look like in 2020?

    The National Outsourcing Association has published the preliminary results from its “Outsourcing in 2020” research, which you can access online. Have you participated yet?

    The survey is still open here.

  • 5 Nov 2015 12:00 AM | Anonymous

    The Markit/CIPS UK Services PMI for October has indicated that the UK services sector has bounced back after disappointing performance in September.

    The Markit/CIPS services business activity rose to 54.9 for October, reaching above the consensus of 54.5 and well above the 50 point mark, indicating clear signs of expansion. Nevertheless, Markit did point out that this was still the second-weakest figure since May 2013, with September’s figures representing a 29-month low.

    Kerry Hallard, CEO of the National Outsourcing Association, recently wrote in Business Reporter that David Cameron and the UK government’s lack of support is holding back the UK outsourcing industry – the same goes for the wider services sector. Increased backing from Whitehall could play a vital role in helping the sector get out of this slump once and for all.

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    Related: The UK’s trade deficit could be overcome by our service industry’s untapped potential

  • 5 Nov 2015 12:00 AM | Anonymous

    Atos has been selected by the Metropolitan Police to provide its service integration and management (SIAM) tower.

    The contract includes the provision of the SIAM layer, as well as service desk and management services. Chris Naylor, director of digital policing at the Met Police, said that this partnership offers a “wealth of experience in managing the SIAM Towers” as well as a “change in the way the department delivers IT”.

    The Met Police is not the first public body to implement the SIAM tower model – the Ministry of Justice and Transport for London is in the middle of a SIAM implementation. However, this new contract increases the number of services outsourced by the Met Police, which already include human resources, payroll and finance functions.

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    Related: London Assembly tells Met Police to “improve commercial expertise” before outsourcing

  • 5 Nov 2015 12:00 AM | Anonymous

    Cognizant Technology Solutions Corp, the US-based IT services provider, has revised its expected earnings for the third time this year. The increase in expected revenue was announced on a company conference call on Wednesday.

    The call also reported on 2015 third-quarter results - Cognizant’s highest quarterly growth in the last three years. The 23.5 per cent growth in quarterly revenue was prompted by increased revenues in the company’s health and finance sectors in the US.

    Cognizant’s healthcare division has experienced rapid growth this past year owing to its $2.7bn takeover of healthcare IT services provider TriZetto Corp and the enforcement of the US Affordable Care Act, known colloquially as ObamaCare. Revenue from this division rose 43 per cent, amounting to $939.2m.

    The company’s financial division, however, continues to be its most profitable, rising 18.6 per cent from last quarter to reach $1.28bn.

    Cognizant’s 2015 revenue was revised to $12.41bn from its previous forecast of $12.33bn. If predictions are correct, the company will have raised its revenue by 21 per cent, from $10.26bn last year.

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    Related: Capita Unworried by Halved Dividends in First Quarter

  • 4 Nov 2015 12:00 AM | Anonymous

    Xchanging Plc has announced this week that Apollo Global Management LLC has pulled out from talks on its takeover.

    The insurance-focused outsourcing company has confirmed Apollo briefed them regarding their decision to no longer pursue the bid. Apollo’s withdrawal effectively puts Capita at the top of the race to acquire Xchanging - the outsourcing giant and the US-based private equity firm were the only contenders for the takeover.

    Last month, Xchanging informed it had settled with Capita on a recommended cash offer worth £412m.

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    Related: Xchanging board recommends shareholders accept Capita takeover bid

  • 4 Nov 2015 12:00 AM | Anonymous

    Serco has been fined £200,000 with costs of £220,000 by Inner London Crown Court for the death of 19-year old Woolwich Ferry deckhand Ben Woollacott.

    Woollacott died after being dragged from the ferry while the mooring ropes were being untied. Serco has been charged for failing to ensure the health and safety of its crew, but was cleared of failing to ensure the safe operation of the boat.

    MCA area operations manager Andrew Rudge commented: “This case serves as a reminder that owners and operators of ships should review their procedures and risk assessments regularly, ensure they are fit for purpose and are being used correctly by their employees.”

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    Related: Serco prison officer dies after Blackfriars attack

  • 4 Nov 2015 12:00 AM | Anonymous

    India is a fascinating country that, over the past 20 years, has developed into one of the world’s most dynamic economies. It has also become the centre of outsourcing and offshoring activities with organisations around the world, taking advantage of lower labour rates, skilled workers, the prevalence of English language skills and a developing infrastructure. Some of the world’s biggest outsourced service providers are Indian-based organisations such as Infosys, Wipro and HCL who provide services to organisations across the world, particularly to North American and European organisations.

    As a result of India’s success and growth, working with the people of India is an everyday occurrence for professionals all around the world. Project managers will need to engage with Indian technicians based in Hyderabad to progress the development of IT projects; supplier managers will be talking regularly to their Chennai-based vendors about the service levels being provided; senior managers and directors will be negotiating new service contracts with Indian service provider account managers and directors.

    Anyone that has experienced working and communicating with Indians will have recognised that – whilst of course not all Indians behave the same - there are some common behaviours and conventions. It is helpful to be able to both recognise these, so as to adapt one’s own behaviours in order to be more successful doing business in India.

    Relationships

    Around the world relationships are key to business success. This is never truer than in India. Business people are unlikely to progress far without paying particular attention to nurturing relationships. While in some parts of the world the transaction is the focus and relationships are secondary, in India the relationship is the primary focus. Indeed, you may find that Indian business people might be prepared to lose a lucrative business deal if they are not comfortable with the relationship aspect. Having said that, do not expect Indian business people to lack basic business acumen for this reason – the success of the Indian economy in recent years proves that to be a misconception.

    Bear in mind that the need to build trust is likely to require both persistence and patience. Networks will also be of particular importance in India - being personally recommended is of considerable value.

    Formality and Respect

    Along with the importance of relationships, non-Indians will observe a high level of formality and respect shown in the way Indians behave. They will usually be exceptionally friendly but there may be a sense of them being somewhat guarded. Initially they will be uncomfortable about discussing personal matters, preferring to keep conversations based on non-personal and non-contentious topics: items of business news (or perhaps cricket) can be safe ground (although take care not to assume that every Indian is a fanatical cricket fan!)

    Handshakes are the common method of greeting, particularly in the key business hubs (so don’t feel you need to use the “praying” greeting), although it is not unusual for the handshake to be less firm than that in the US and the UK. As in other parts of the world, it is often polite to be slower to offer to handshakes to the opposite sex as some may feel less comfortable. Smiling though is de riguer when meeting people of either sex!

    Saying "No"

    Respect may often be behind a common complaint that many have about Indian colleagues and contacts, namely their reluctance to say “No”. Many Indians will find it uncomfortable to say no - particularly to a client organisation - for fear of causing offence. The result can often be that an Indian manager will seem to agree with a request without in fact any realistic prospect of being able to meet it. Someone who is trying to get agreement to a proposal may not hear ‘no’ but rather will go through a series of non-committal meetings until they eventually just give up!

    The key here is to listen very carefully to what is being said and, when communicating face-to-face, then observe the body language. An Indian might use euphemisms for “no”. They may say “I will try” or “Possibly” for example. If you are working with Indian suppliers you should consider how you can help an Indian manager to decline a request, perhaps by exploring exactly how they will achieve the request and identifying issues which can then lead to suggesting a variation of the request.

    Hierachy

    It will not take long for anyone dealing with Indian organisations to recognise the importance of hierarchy. If you meet with an Indian team it is likely that you will find yourself talking only to the most senior person. Indeed, it is important when entering a meeting to ensure that you do greet the most senior person first, even if there are others there that you already know well.

    It is highly unlikely that anyone in the Indian team will disagree with his senior colleague. Senior, both in position and often in age, is still respected in India and a considerable degree of deference is shown to those who are most senior.

    This can make it more difficult to progress matters given that many in the team will feel unable to express views and opinions immediately. Often such discussions will need to take place “offline”. You may then find that a subsequent meeting is arranged which will appear to be covering very similar ground.

    Serial meetings may also occur in order to involve more people in the decision-making process. As matters progress it may be considered necessary to involve other people for a number of reasons – sometimes simply to ensure that appropriate people are involved in the process. Do keep in mind when dealing with Indian organisations that decisions are made at only the highest levels. It can often be a surprise to less hierarchical organisations that quite senior managers appear to delay decisions for no good reason. The truth is often that they need to get a sign-off from a more senior colleague but will not want to make that clear to the other party.

    Again – patience is the key!

    Your behaviour

    While it is helpful to consider particular common behaviours and conventions the key to successful cross-cultural engagement is to first appreciate one’s own cultural behaviours and conventions (our own cultural baggage if you will). It is surprising how little most of us are aware of our own personal attitudes and behaviours, and how they might impact on others.

    Having a simple list of “hints and tips” is helpful. If you are likely to be engaging a lot with India and its people, it is crucial to invest some time in developing your own skills and behaviours along with the ability to recognise the indicative behaviours of others.

    In this short article it is not possible to cover all of the aspects of dealing successfully with business in India. If you do want to explore the topic further the NOA has developed an Offshore Communication Skills workshop that you may find of interest. This workshop explores the challenges of working cross culturally and enables you to think about your own style and compare it to the cultural styles of others in the countries in which you are interested.

    If you are interested in attending the Offshore Communication Skills workshop and improving your foreign business skills, email admin@noa.co.uk or call 0207 292 8686.

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