Industry news

Although Europe is frequently seen as the next big frontier for the major Indian service providers, companies such as Wipro, Infosys and TCS are finding the continent to be an increasingly vulnerable place to do business.

One reason is the euro’s volatility. Furthermore, the top Indian IT firms, previously enjoying growth rates of 25-30 per cent in Europe, are also now struggling due to top customers in the region, such as AstraZeneca, cutting down on their spending.

As a result, the Indian Economic Times has found that revenues for the majority of Indian’s biggest service providers operating in Europe have declined in the last quarter of 2014 and first quarter of 2015.

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Related: Infosys Reveals Blueprint of Plan to Achieve $20 Billion Value by 2020

The Central London Community Healthcare (CLCH) NHS Trust has entered into a strategic partnership with Capita.

The contract, worth £80 million over ten years, will be to provide ICT, HR and Estates Management Services for the Trust.

CLCH is one of the primary healthcare providers for London boroughs including Barnet, Hammersmith & Fulham and Kensington & Chelsea. This partnership will allow CLCH to focus on providing high quality healthcare by having Capita focus on their back office support.

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Related: East Cheshire NHS Expands Successful Partnership with arvato

Bangalore has retained its ranking as the top city for outsourcing in the world, according to a report released by global outsourcing and research firm Tholons.

The Indian city was followed by Manila in the Philippines, a location that recently featured in the Financial Times due to its fast growing economy.

Tholons’ report identifies the top 100 outsourcing destinations for 2015. The top 10 remains largely unchanged since last year, with Shanghai replacing Dublin at number 10 but the other nine staying put. India features six cities and the Philippines has two, with locations in Poland and China filling the remaining slots.

Despite India’s apparent dominance according to this report, the country failed to top the Philippines in the Cushman & Wakefield study "Where in the World? Business Process Outsourcing (BPO) & Shared Services Location Index". Philippines came second to Vietnam, while India ranked a lowly twentieth in the list.

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Related: Vietnam Confirmed as the World’s Top Outsourcing Location

General Election 2015 saw the Conservatives secure a surprise majority in the House of Commons, all but guaranteeing Tory rule in the UK for another five years. What do these unexpected political circumstances mean for the country’s outsourcing industry?

Investment Week has already identified that shares in outsourcing companies operating in the UK have risen since the election. Presumably this is largely due to Labour’s lack of success – the party’s election campaign was seen by many as “anti-outsourcing”, with policy chief Jon Cruddas actively coming out and attacking Britain’s biggest service providers.

Now that Labour has failed to achieve power, confidence in the continued success of these big players has been restored. Not to mention the fact that coalition doubled the government’s use of outsourcing during its time in power, investing £88 billion into the industry – this pro-outsourcing trend is expected to continue.

We’re also expecting to see more outsourcing in the NHS, with hope that the use of third-parties will help to bring more efficiency and innovation to the Service.

Last year, Health Secretary Jeremy Hunt assured his critics that his focus was outsourcing and not privatisation: “Using a charity like WhizzKids to supply wheelchairs to disabled children or using Specsavers to speed up the supply of glasses is not privatisation… When the last Labour government used the independent sector to bring down waiting times, that wasn’t privatisation either.”

In their manifesto, the Conservatives also pledged to “raise the target for SMEs’ share of central government procurement to one-third, strengthen the Prompt Payment Code and ensure that all major government suppliers sign up”.

If they come through on this policy, it would be a fantastic, and much-needed, boost for smaller service providers here in the UK. CEO of the National Outsourcing Association Kerry Hallard supported this policy, but warned: “There remains the issue of how many contracts are awarded directly and indirectly.

“Many SMEs work through subcontractors and these cause the bottleneck in payments – so although it all sounds great for smaller businesses, there is currently no guarantee of speedy payment to sub-contracted SMEs working on Government contracts.”

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Related: The Election Manifestos: What they mean for outsourcing

Accenture has acquired the independent Salesforce implementation partner Tquila. The acquisition means significant growth for Accenture’s Emerging Platforms business, increasing Accenture’s presence as a Salesforce services provider.

The merger will make Accenture one the UK’s biggest Salesforce providers, with a total of 185 consultants.

Emma McGuigan, Accenture Technology’s managing director for the UK and Ireland, explained the thinking behind the merger: “We have seen significant growth in SaaS as more companies adopt the cloud and digital strategies to collaborate better, drive greater operational efficiencies and accelerate the development of new products and services.”

The acquisition comes at a time when Salesforce itself may be up for sale. The CRM software market leader has recently been courted by the likes of IBM and Oracle; it is thought that only SAP, Apple, Microsoft, IBM and Oracle could actually afford the takeover.

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Read this next: Accenture Wins £350m NHSmail Contract

Paul Boyle, CEO of Capita Travel and Events, has stepped down 15 months after taking up the role.

So far, Capita has declined to give a reason for Boyle’s departure. He will be replaced by James Parkhouse, the former CEO of Capita Travel and Events, who has since been working for Capita as an Executive Director.

A spokesperson from Capita commented: “Paul Boyle, chief executive of Capita Travel and Events, has left the company. Paul has helped lead the business through significant transformation, and we thank him for his service over the past two years and wish him every success in the future.

“We are pleased to announce James Parkhouse, who previously led the business, will assume the role of chief executive of Capita Travel and Events, bringing with him a wealth of experience of the business.”

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Related content: Capita Wins Contract to Build Cardiff’s £27m Eastern Bay Link Road

Research conducted by MooD International, the research-from-technology company, has found that 52 per cent of buy-side IT directors focus on reducing the cost of IT, rather than on service improvement or business growth, when budgeting their spend on service providers.

This is despite the fact that only 21 per cent of those IT directors cited cost reduction as the most beneficial aspect of outsourcing. Reducing cost isn’t the top priority, yet that’s still where the majority of the money is going.

This could be due to pressure from the top – 58 per cent of the IT managers surveyed believed that, over the past year, it’s become more difficult for suppliers to deliver within the agreed budget.

George Davies, CEO of MooD International, commented: “IT directors and managers are getting pressure from multiple directions when it comes to outsourcing. On one side they’re facing pressure from their internal clients to show clear business value, whilst driving out costs and demonstrating innovation. On the other side they have suppliers who are trying to make a fair profit in an increasingly complex role.

“Outsourcing can bring benefits that are felt at all levels of a business, from the data centre right up to the CIO, but if these benefits are not communicated properly then the improvements being made can be missed. There needs to be a common view which joins up all the parts of the supply chain and can identify gaps – and resource-wasting overlaps – ensuring there is transparency across the business and not inefficient silos.”

MooD’s research included over 160 IT managers and directors responsible for managing one or more IT or BPO project, along with overseeing the budget for the project(s).

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Read this next: ISG Finds Global Outsourcing Market in Decline

arvato has prolonged its relationship with Valero Energy to manage the company’s Texaco Star Rewards loyalty programme, signing a three-year extension on a deal which began in 2012.

arvato will continue to manage the loyalty-scheme, which is used by over 600,000 members across 850 UK service stations. The firm has overseen a significant upturn in customer engagement through the scheme, with the average number of people registering for promotions and company communications after enrolment increasing by 11 per cent.

Debra Maxwell, managing director at arvato UK, said: “We’re excited to extend our successful relationship with Valero, which demonstrates arvato’s ability to implement innovative loyalty solutions on a large scale.

“The strong reputation of the Texaco brand means it’s critical the Star Rewards programme delivers a great customer experience, is managed effectively and helps Valero leverage additional commercial opportunities”.

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Read this next: Accenture Lands $966m US Education Contract

Leicester City Council is going to tender for a single supplier to provide a new CRM system, as well as support, maintenance and development of the system.

The council’s current system is out of date and is not assisting with the reduction of costs and improvement of customer experience. They are also looking to have the new system integrate with back office systems and to allow customers to log in and view their own enquiries.

The contract is for four years, with an option to extend for a further six years, and is due to go live in October.

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Read this next: Leicestershire Councils Tender for a New ICT Supplier

Tata Group has confirmed that Tata Business Support Services (TBSS) has almost completed a merger with e-nxt Financials Limited, the Indian Enterprise Solutions company, with all loose ends expected to be tied up by mid-May.

TBSS has roughly 13,000 employees, while e-nxt Financials sports 7,000. The combined workforce of the two companies is expected to help Tata compete with Genpact, India’s top provider of BPO.

Find out who the top three Indian BPOs are here.

Srini Koppolu, currently the CEO of TBSS, will oversee the combined entity. He commented: “The merger is a unique one. TBSS is a large corporate organisation and a BPO, while e-nxt is a feet-on-the-street collection business major. It is a good extension of our own business.

“The strengths of e-nxt are that it is strong in the BFSI [banking, financial services and insurance] segment, has big presence in Mumbai and globally in Europe, which TBSS does not have.”

It’s also been a busy time for Tata Consultancy Services (TCS), who has hired a new global head of BFSI – Arun Batra – as part of a reorganisation following the exit of their ex-global head of business process services.

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