Industry news

The Metropolitan Police has formally made the decision to outsource finance, procurement and HR to Shared Services Connected Limited (SSCL), the majority of which is owned by Sopra Steria.

The business case for the new outsourcing partnership has now been passed on to the London Mayor’s Office for Policing and Crime for final approval.

The decision came after the Met completed market-testing for the three services, where the future impact of both outsourcing and keeping services in-house was considered. The analysis found that “in order to match the financial performance benefits of a market solution, [their] existing in-house business support services could not make the changes required.”

Deputy assistant commissioner Craig Mackey added that the alternative solution to outsourcing would have seen 30 per cent staff cuts in order to meet the required cost savings.

The Met has been debating the decision to outsource back office services for months, in order to find £800 million in savings by 2020. The Force will be looking to replicate the success of Cleveland Police – its five-year relationship with Sopra Steria has successfully achieved cost-savings, highly integrated processes and more police officers back on the front line.

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Related: Metropolitan Police Weighs Up Pros and Cons of Back Office Outsourcing

A report published by Everest Group has found that over 70 per cent of enterprises see cyber security as a major concern when adopting new digital technologies such as social media, mobility, cloud and analytics, yet over 40 per cent of those organisations have not invested in digital security sufficiently.

Everest writes that “this creates significant opportunity for service providers; however, only those providers who can architect a security ecosystem for the modern digital enterprise will succeed.”

The infrastructure services market grew by roughly 0.6 per cent in 2014, well behind the overall growth of the IT services market (2.4 per cent), demonstrating that many ITOs are yet to cash in on this opportunity.

Yugal Joshi, practice director at Everest, commented: “Enterprises realize that digital adoption is a vital business strategy for being agile and nimble in the marketplace. Though enterprises have aggressively expanded the mandate of cyber security in light of digital adoption, they are still not giving it the attention that is due. We believe this creates significant opportunities for service providers to demonstrate differentiated capabilities across digital and security services.”

The full report “Digital Businesses: Mind Your Security” is available to download on the Everest Research website.

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Related: Xchanging finds supply chain risk is the greatest external challenge for businesses

Thurrock Council has elected to terminate its strategic services partnership with Serco which was originally intended to continue until at least 2019.

This is not due to any incompetence on the service provider’s part. In a press release, the council stated that “overall Serco has provided appropriate quality services, which have met the requirements of the contract which was negotiated in 2004.”

However, Thurrock Council’s assistant CEO Steve Cox said that ending the contract was still ultimately necessary:

“A world dominated today by austerity and budget cuts is very different to that envisaged in 2004 when this contract was signed and as we continue to shape a different way forward for Thurrock Council.

Both Serco and the council came to realise this and a series of tough, but fair negotiations began, culminating in [this] announcement.”

The cost of the contract termination is yet to be disclosed, with some sources suggesting that it could be in the range of £5 million to £9 million.

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Related: Serco makes new plans for India BPO with few buyers in sight

Numerous Scottish politicians are up in arms after the newspaper publisher Scottish Provincial Press (SPP) outsourced work to India, making 11 local employees redundant in the process.

SNP MP Paul Monaghan, and Labour councillors Deirdre Mackay and Sean Morton, have all publically attacked the move, claiming that the local economy is struggling as it is and needs jobs of this sort coming in, not going out.

However, the publisher has retorted that the decision was made in order to protect over 240 roles within the company, with SPP managing director Thelma Henderson referring to the decision as “sensible business”.

Councillors Mackay and Morton have launched a petition in protest, while Mr Monaghan has called on SPP to reverse the decision in order to “preserve links” between itself and the Highland communities.

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Related: arvato partners with NHS National Services Scotland on HR delivery contract

Prolonged austerity measures have given Britain’s local councils cause to think more innovatively about how to simultaneously provide services and save money, with outsourcing often at the heart of their strategies.

According to the FT, councils from Suffolk to Kent are positioning themselves as trading companies and commissioners, rather than direct providers of services. Research undertaken by Localis, the local government think-tank, has shown that the vast majority of councils share some services with their counterparts, over half own a trading company and, going by current trends, almost all will do so by 2020.

“Councils are setting the pace because they have faced tough finances for longer. They are more confident than central government in outsourcing, merging the back office and joining up front-line services,” commented Andrew Haldenby, director of pro-market think tank Reform.

Recent analysis conducted by the Local Government Association found that UK councils will have to find an extra £1 billion by 2020 in order to fund the new minimum wage proposed in the government’s summer Budget.

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

Tata Motors has hired Accenture to instigate an “organisational restructuring and performance improvement programme” in order to cut down on unnecessarily bureaucratic decision-making.

While Tata Motors is currently India’s largest vehicle manufacturer, competition along the lines of Mahindra & Mahindra Ltd and Maruti Suzuki India Ltd is gaining ground. It’s thought that a nimbler, streamlined operation would help Tata widen the gap between itself and those contenders.

Accenture is expected to increase the output of Tata Motors’ 28,000 employees, as well as achieve particular benchmarks involving sales across multiple divisions. Restructuring, performance management, leadership development and an HR systems overhaul have all be cited as responsibilities that will be part of Accenture’s remit.

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Related: TNT chooses Accenture for five-year back office deal

Capgemini and SSP, the global provider of insurance technology, have entered into a services agreement to help insurance companies replace legacy systems and “accelerate their digital ambition[s].”

Two leading UK insurers have already chosen SSP Select Insurance within the last three months. SSP’s work, which is already underway, involves the instigation of digital programmes focused on both UK households and automotive businesses. Capgemini is already actively supporting the work.

"In today's increasingly competitive market, flexibility and the ability to provide a consistent experience to customers across all channels is more important than ever,” said Stephen Lathrope, managing director of SSP’s Insurer division.

“We are delighted to be working with Capgemini to add to our ability to create innovative digital insurance solutions for our customers, and to accelerate the pace with which we are able to help them to realize these ambitions."

Nigel Walsh, vice president and head of UK insurance at Capgemini, commented: "Insurers are looking for cost-effective ways to create the capabilities that they need in order to drive profitable growth. Legacy platforms don't provide the flexibility or agility that insurers need in order to compete successfully, but implementing new platforms and achieving a smooth migration can be challenging.

“Capgemini has a strong record in working with insurers from digital strategy to design, implement, and run business critical systems. We are delighted to be working with SSP and the Select Insurance product."

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Related: Capgemini finalises acquisition of IGATE

Various sources have suggested that four Indian service providers – Infosys, Wipro, TCS and Tech Mahindra – as well as Microsoft, have all entered bids for the project to provide India with a new country-wide goods and services tax (GST) network.

The Indian government plans to implement a single rate GST to subsume central excise, service tax and other local levies across the nation. The programme was set in motion by an RFP on 21 April, with a closing date for bidding set for 6 July. The government wants the project to be completed and ready to go from 1 April 2016.

“We have received five bids for building the GSTN system. We will finalise [the decision] by the end of the month,” said GST Network chairman Navin Kumar. "For registration the target is to get it ready by January 31 so that there is two months’ time for testing. And payment and returns will follow months later, because the first return will be filed only in May.”

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Related: AstraZeneca move signifies big changes in Indian outsourcing market

Capita Asset Services has found that a total of £29.2 billion was paid out in dividends by UK companies in the second quarter of this year, the highest level of shareholder payments since 2008.

Underlying dividends accounted for roughly £28.3 billion of total pay-outs; this figure was subsequently pushed up to its full total by special dividend payments. Banks unsurprisingly contributed a great deal, with HSBC hiking its payments and Lloyds paying out a total of £595 million, in its first dividend payment since the close of 2008.

Capita now forecasts that total underlying dividends will reach £84.8 billion in 2015.

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Related: Soames says Serco in “good order” despite year-on-year profit decline

A contributor to Forbes has suggested that the progress of 3D printing will spark a revolution, tipping balances in favour of insourcing and localisation as opposed to outsourcing and globalisation.

Panos Mourdoukoutas suggests that the key drivers of outsourcing (and particularly offshoring), such as cutting costs, improving services and boosting efficiencies, will be negated once 3D printing is adopted on an industrial scale.

By allowing companies to keep their manufacturing processes in-house, he also claims that 3D printing will let businesses keep their supply chain as one “single integrated process,” rather than the “fragmented and disintegrated process” that is brought about by the use of numerous service providers.

You can find the full piece here.

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Related: Xchanging finds supply chain risk is the greatest external challenge for businesses