Industry news

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).

For weekly news updates, subscribe to our email newsletter.

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”.

For weekly news updates, subscribe to our email newsletter.

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.

For weekly news updates, subscribe to our email newsletter.

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.

For weekly news updates, subscribe to our email newsletter.

Read this next: Apple’s Indian Outsourcing Activities Uncovered

March 2013 saw Cornwall County Council sign a 10-year outsourcing deal with BT, which involved the running of IT, HR and document management, along with other services. Now, just two years into the contract, Cornwall councillors are threatening to sack BT if it doesn’t improves its performance over the next few months.

A strategic partnership review carried out by the Council in April found that BT are only achieving 64 per cent of the mutually agreed KPIs (well below what is expected), while “service transformation” guarantees were only measured at 38 per cent.

Andrew Wallis, an independent Cornwall councillor, made his feelings known on his personal blog: "BTC [BT Cornwall] has had two years to deliver this contract and have failed. There are only so many second-chances you can give. For me if, by summer, BTC does not deliver its commitments, than [sic] I am afraid we must be in the area of looking to terminate the contract. I feel if this was a full private sector deal, the contract most likely have already been torn-up [sic]."

For weekly news updates, subscribe to our email newsletter.

Read this next: Sopra Steria Signs £37m Contract with Harrow Council

The Federal Bureau of Investigation (FBI) is requesting proposals from external suppliers for professional, management and support services for up to $100 million.

The provider will be expected to offer a wide range of support services, including “providing consultation, data collection and analysis, intelligence interviewing, training, and assisting with project implementation and management, and policy and program development”.

The request for proposals is expected to be released by 6th May, with the contract to be awarded by September.

For weekly news updates, subscribe to our email newsletter.

Read this next: Metropolitan Police Outsources 700 IT Roles to Save $800m

T K Kurien, CEO of Wipro, has announced that he expects his company’s recent investments in automation and artificial intelligence to bring about a 30 per cent reduction in headcount over the next three years.

He added that this will not lead to employees being laid off; rather attrition will be balanced with redeployment to new, high growth revenue streams.

Kurien believes that Wipro’s main future focus will be digital technology. “We expect digital to be among the top three service lines in the next three years,” Kurien revealed, speaking at Wipro’s analyst day.

For weekly news updates, subscribe to our email newsletter.

Read this next: Wipro Healthcare Expects $2 Billion in Revenue By 2018

Capita Property and Infrastructure has been chosen by the Welsh Government to design a road linking Cardiff Bay to the M4, the building of which will cost £27.3 million.

Capita will be cooperating with Dawnus Construction Holdings and Ferrovial Agroman UK, both of whom have been chosen to build the road, which is expected to open in December 2016.

Capita Property and Infrastructure’s business director, James Allard, expressed enthusiasm over what the road will do to help residents of Cardiff Bay: “This project will create a seamless route from the M4 to the eastern end of Cardiff Bay, which will improve journey times and help ease congestion in the city centre.

"By improving infrastructure in the area, the scheme will also bring real business and development opportunities to this thriving city, and it is exciting that Capita is at the heart of this project.”

For weekly news updates, subscribe to our email newsletter.

Read this next: Capita Unworried by Halved Dividends in First Quarter

Amid intense debate over a bill lifting outsourcing restrictions in the Brazilian National Congress, President Dilma Rousseff has instead called for further regulation.

Currently, Brazilian law only allows firms to outsource services which are secondary to the company’s main activity, such as cleaning and maintenance. The proposed bill currently being discussed in the Senate, having been passed by the Lower House, could potentially lift these restraints.

However Rousseff has thrown her weight behind the bill’s opponents, saying: "It is urgent and necessary to regulate outsourcing, so that millions of workers have job security and decent salaries. It is also important for business owners, because clear rules on outsourcing lead to more security for them as well."

The President holds vetoing powers and can reject parts of the law she disagrees with, even if the bill is approved by the Senate.

For weekly news updates, subscribe to our email newsletter.

Read this next: Brazil’s Lower House Approves Outsourcing Bill amid Protests

The introduction of the Mortgage Market Review (MMR) in April last year was one of the biggest changes we have seen to the mortgage market for nearly a decade. Most industry commentary has been focused on how the new rules have affected lenders and brokers, looking at the potential increase in application times and the change of process needed in order to remain compliant. Fewer people have devoted their comments to the customers’ perceptions following the MMR.

Customer view

We recently partnered with YouGov to conduct a research survey of 2,000 consumers, looking into borrower spending habits following the MMR. With more rigorous checks being undertaken by mortgage lenders, 42% of respondents said that they would change their spending patterns in an effort to ensure they got the mortgage deal they were happy with. A further 33% of borrowers said that they would be more likely to take out a new mortgage with their existing lender if it meant that they would face fewer checks and fewer questions.

Borrowers are clearly aware that there has been a shift in the way mortgage applications are being processed, even if they don’t fully understand the new requirements. They need more help than ever from advisers who can alleviate any fears or concerns they may have by explaining the process and ensuring that borrowers are only put forward for deals that are suitable for their specific circumstances. Advisers who have the right systems in place to do this, and can stay in tune with changing lender criteria, have an opportunity to win over consumer trust and confidence.

Outsourcing helps lenders keep a competitive advantage

Whilst the MMR is still bedding in, lenders need to continue to streamline and improve their processes. In addition to supporting compliance and easing administrative pain, outsourcing can also help lenders retain a competitive advantage. Third party administrators are in a position to undertake multiple roles dependent on the lender’s requirements. By outsourcing these processes, management teams are free to focus on improving and diversifying propositions and driving their business growth.

Outsourcing is more relevant than ever in today’s market, especially with these tighter regulatory rules. Selecting an outsourcer with the right experience can enable lenders to access improved technology, enhanced processes, market insight and operational expertise. This results in good practice so that lenders can focus on what they are there to do. Aside from the tangibles, it also comes with the assurance of predictable costs and leveraging a regulated servicer to deal with the ever shifting regulatory landscape.

For more pieces like this, subscribe to our email newsletter.

Target Group is one of the longest standing servicing and software providers, with over 35 years of experience across 50 major international financial institutions.