Industry news

In reaction to a letter written for the Guardian by Mark Serwotka, general secretary of the Public and Commercial Services union, National Gallery director Nicholas Penny has penned his own Guardian article ironing out some of the vagaries and misconceptions concerning the gallery’s intentions to outsource.

Penny began by pointing out some inaccuracies in Serwotka’s original article, explaining that the procurement process for outsourcing some visitor services was not brought forward, and that the timings for each stage of the tender were made public and not deviated from.

Penny went on to assure existing employees that “there will be no redundancies, and terms and conditions of employment will be protected”. He also explained that any employees transferred will continue to be paid the London living wage at minimum and will enjoy additional benefits working for new service provider Securitas.

Plans for the National Gallery to outsourcing jobs such as security, visitor services and ticketing were announced roughly a year ago, in order to improve the level of service offered by the gallery.

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Related: UNISON expresses concerns over Northamptonshire County Council’s extensive outsourcing

Construction services operator Carillion is among a total of 19 suppliers chosen by the government to service its new Facilities Management Services agreement.

The project involves a standardised pool of facilities management resources that government departments and other public sector bodies will subsequently use. Ultimately up to £4.1 billion of services could be outsourced under the new agreement between now and July 2019.

The agreement replaces an old framework for facilities management contracts and should save taxpayers somewhere in the region of £200 million.

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Professional Outsourcing has reported that the Indonesian government’s ban on outsourcing – instigated in 2012 to stop local jobs moving overseas – has failed in its intentions, as many of those low level jobs are now serviced through robotic automation instead.

The decree only allows Indonesian companies to outsource five kinds of roles: cleaning, security, driving, and support services such as mining sites and catering. In the case of alternative roles, it is possible that the uptake of automation has actually driven further unemployment since the law was passed.

In the Jakarta Post, chairman of the Indonesian Outsourcing Association (ABADI) Wisnu Wobowo commented: “Jobs that were handled by people in the past are now filled by machines.”

He cited banks and toll road companies as just a few examples of firms that had started to adopt automation: “To some extent automation is inevitable, but the decree has accelerated the process.”

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Related: Meet the fastest growing Indian companies in the UK

Transport for Greater Manchester (TfGM) has ended its outsourcing contract with Atos. In 2012, a deal was agreed where Atos would design and introduce a new oyster-style transport payment system to be used by Manchester’s citizens.

By October 2014 the new system was put in place for 500,000 concessionary travel pass holders in Greater Manchester, which is now used around 60,000 times a week. However, delays to the wider roll-out of the system have been cited as the main reason for the contract’s termination.

“The parties have decided it is in their best interests to agree to a mutual termination of the contract, on commercial terms, the details of which remain confidential between the parties,” said TfGM and Atos in a joint statement.

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Figures from the latest arvato UK Outsourcing Index have shown that shared services accounted for £1.2 billion in central government outsourcing since the 2010 Treasury Spending Review, in comparison to a measly £58 million in the five years beforehand.

arvato suggests that the 2010 HM Treasury Spending Review “heralded a huge surge in demand for shared services in the public sector”, hence the significant rise in public sector shared services spending.

Such trends are more than likely to continue, with George Osborne’s latest set of austerity measures motivating government, on a local level in particular, to search for more innovative ways to cut costs while maintaining or even improving services.

Debra Maxwell, CEO at arvato UK, commented: “Central government departments moved quickly to work with private sector partners to drive their shared services agenda as part of their strategy to deliver billions of pounds in savings.

“Though shared services was not new within government, private sector outsourcing partnerships can bring in the necessary expertise for real, large scale transformation, including the drive to standardise processes and implement new technology platforms to do the job.

“With departments likely to be asked to deliver even more efficiency savings in the forthcoming Spending Review this autumn, the drive to share services will only grow.”

Read more here.

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Related: Public spending cuts pose serious risk to Britons’ “health and wellbeing”

In anticipation of the end of the Aspire contract held between HMRC and various service providers, due in 2017, Capgemini has agreed to transfer 250 “business-critical” employees to HMRC by December 2015.

The personnel transferred will be those working on either the Case Management unified platform, the Customs and International (Excite platform) and other third-party supplier contracts.

“We have an ambitious digital vision – to transform our IT services and use the data we hold in smarter ways, so we can deliver world-beating digital services for our customers and colleagues,” said Mark Dearnley, chief digital and information officer at HMRC.

“The changes we’re announcing today will allow us to maintain consistency of service for customers while we plan for the future which, as now, will include a mixed model of both internal and external delivery using multiple partners.”

The Aspire contract was worth £800 million-a-year, and involved Capgemini and Fujitsu as service providers. In June HMRC issued a £20 million tender for consultants to advise on how to shift away from this current arrangement, towards a deal that will involve a larger network of smaller IT service providers.

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Related: Local councils embrace outsourcing as part of austerity-driven innovation push

Grant Thornton UK LLP has revealed the top 36 fastest growing Indian companies in the UK, as part of its report “India meets Britain: Tracking the UK’s top Indian companies”.

The list contains a mixture of obscure and well-established names, with the top five being as follows:

Rolta India Ltd (359% latest growth)

Bharti Airtel Ltd (320% latest growth)

Essar Global Fund Ltd (107% latest growth)

Secure Meters Ltd (53% latest growth)

TV Sundram Iyengar & Sons Ltd (49% latest growth)

Some of the better known organisations listed included WNS Holdings Ltd (12th), Tata Motors Ltd (17th), Tata Communications Ltd (29th) and HCL Technologies (34th).

It is possible that the future growth of these companies may be affected by the UK government’s proposed new rulings on intra-company transfers (ICTs). Its intention is to reduce the number of individuals working in the UK from outside of Europe through raising minimum pay thresholds, reforming the skills shortage list and introducing an addition charge for ICT visas.

Download the full report.

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Related: Tata Motors procures Accenture’s services to cut down on bureaucracy

Xerox has retained its position as the number one provider of managed print services for the sixth year running, according to the latest worldwide market landscape report conducted by analyst research group Quocirca.

Quocirca identified Xerox as the definitive market leader in providing print services, followed by HP, Ricoh, Lexmark and Canon.

The news comes after Xerox CEO Ursula Burns announced the expected cut of 3,000 Xerox employees from the organisation’s services business.

Read the full report.

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Outsourcing offshore to reap the benefits of labour arbitrage has been a common occurrence in the textiles manufacturing industry, with countries like China frequently seen as prime locations.

However, writes Quartz, “now it seems China is beginning to return the favour”. Chinese companies, in their search for cheap and convenient energy, raw materials and labour, are now opting for locations in North America.

For instance, Chinese textiles producer Keer Group has recently invested in a new 230,000-square foot spinning mill located in Indian Land, South Carolina. The state’s workforce, the close proximity to cotton producers and easy access to a port were all given as prime drivers behind this decision.

Thilo Hanneman – a researcher at Rhodium Group who monitors Chinese foreign investment – has commented that Keer Group’s activity is just one example of a recent spate of Chinese firms outsourcing production to the US, with 20 Chinese-owned manufacturers choosing the Carolinas alone as their most viable destination for outsourcing.

Manufacturing now accounts for one-third of all Chinese FDI to the US, with the number of Americans employed by Chinese-controlled companies approaching 90,000 and rising exponentially.

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Related: Donald Trump Vows to Prevent Offshore Outsourcing if made President

The British Chambers of Commerce (BCC) has warned the UK government that it is set to fall well short of its target of reaching £1 trillion in exports by 2020. According to the BCC, on its current trajectory the UK won’t achieve this target until at least 2034.

However, through its International Trades Survey the BCC has found that the UK’s services industry could be the answer to turning around that deficit. While the country’s manufacturing industry dwindles, the UK’s services sector saw its highest ever trade surplus in 2014, valued at £86 billion – equivalent to 5 per cent of GDP - with outsourcing activity making key contributions to this total.

On top of this huge achievement, the BCC believes that the UK’s services industry has far more untapped potential. Its survey revealed that only 23 per cent of services firms in the country currently export, with a further 17 per cent having either previously traded internationally or looking to do so over the next two years.

Meanwhile 53 per cent of manufacturers currently export their goods, and an addition 13 per cent have done so or plan to do so again. The fact that the services sector is so dominant, despite the greater number of manufacturers exporting internationally, demonstrates the huge potential that the UK’s services sector currently has.

The BCC survey also found that, in order for UK services to grow further, the government must attempt to open up markets and encourage a wider variety of skills among the country’s workforce, so that UK businesses can be more competitive internationally.

John Longworth, director general of the BCC, commented: “The services sector is regularly overshadowed by manufacturers in the media and public imagination, despite the fact that we are one of the world’s leading exporters of financial and professional services. The low proportion of these firms actively exporting highlights the enormous untapped potential UK services firms hold.

"For some time we've been saying that we need a radical change in how we support export businesses. That we are set to miss the export target by 14 years tells us that the radical shift needed has not happened. We cannot continue doing the same things, yet dream of different results.

"For our part, the BCC will continue to grow our global network, providing practical support to UK businesses of all shapes and sizes around the world.

"The government must take these figures seriously and help exporters to catch up. Our businesses have the potential to meet the target. They need ongoing support and access to finance to help them thrive on the world stage."

Read the press release on the BCC website.

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Related: Public spending cuts pose serious risk to Britons’ “health and wellbeing”