Industry news

Finnair, the flag carrier and largest airline of Finland, is planning to outsource cabin services in a bid to achieve its cost reduction target. It plans to outsource cabin services on approximately 20 long-haul and short-haul routes over the next two years with an aim to outsource 1-3 routes this year. The exact cost savings have not been released as these will come into fluition once the strategy is formulated.

Lufthansa plans to outsource ground staff

Government outsourcing contracts have come under fire once again from both Labour and UKIP, as both parties promise improve government outsourcing contracts as the general election draws closer.

Labour have promised if elected in 2015, to reduce the roles of outsourcing providers in delivering the government’s back-to-work programme and have put in plans to enforce all government suppliers to guarantee the “living wage” to their employees. Labour have criticised the structure of the Work Programme arguing it favours larger providers as they are able to offer upfront investment. Labour have promised to challenge the “status quo” by splitting the programme into smaller contracts.

The leader of the UKIP party, Nigel Farage condemned the relationships which have developed between the big outsourcing providers and government and assured voters he would crackdown on the outsourcing of public services. Farage also aired his concerns weather outsourcing has led to improved public services.

Cameron told ethical standards from public services should also apply to outsourced contract provide

Allianz Global Assistance UK has awarded a five year contract to Banner Managed Communication (BMC) for a number of activities including print management, hybrid mail and multi-channel marketing communications. As part of this new deal a number of Allianz staff will transfer over to BMC under TUPE regulations. Just a few weeks ago BMC announced an investment of £1.5m on new equipment at its multichannel facility in Guilford.

Allianz moves to outsource services to IBM

The NAB wealth management arm, MLC, is reported to be investigating outsourcing its IT and back office services which would mean hundreds of those in internal teams get moved across to an external provider.

In a bid to restructure its operations, NAB has been reviewing options as the division has long been considered an underperformer since it was acquired in 2000 for $4.6 billion from Lend Lease.

Potential suppliers that have been sent the “expression of interest” include incumbent providers Accenture, Genpact, IBM and Tech Mahindra, plus another six additional companies have been identified including Tata Consultancy Services, HCL Technologies and Wipro.

Poor management to blame for SME IT delivery issues in Whitehall?

The Department for Education (DfE) has confirmed that councils will be able to outsource children services functions but only to non-profit providers. Coming in to effect in Autumn this year, councils will be able to delegate certain functions excluding adoption and independent reviewing officer functions. The DfE hopes that this move will allow social workers to have the freedom to deliver services in a new way and allow time for specialist social work practices.

Can Outsourcing Children’s Services Innovate Approaches to Social Care?

According to the FT Vince Cable, BIS and Ed Davey, DECC, have told the Prime Minister that “shambolic IT provision by smaller firms has brought their departments to a virtual standstill in recent weeks”. However, looking past the deadline and contrasting views from all involved, it appears this could be another case of poor procurement and outsourcing management and Government departments yet again trying to pass on the blame for their own failings.

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DWP select SME firm Auriga

In a recent report conducted by Horses for Sources and supported by KPMG, results show that outsourcing is not dying. It’s just becoming part of a broader enterprise operations strategy: Integrated Global Services.

HfS surveyed 312 end-users (buyers of outsourcing services) to find out what their investment intentions were going to be over the next two years. The findings shows that 1 in 4 are reinvesting in their global shared served operations, and 7 out of 10 are continuing to make investments in their outsourcing delivery.

For full details on the 2014 State of Outsourcing study – click here.

Outsourcing is the norm

The Committee on standards in Public Life has told the prime minister that the same level of ethical standards expected from public services should also be apply when services are delivered by outsourcing providers. It warned that at present ethics were not taken seriously enough by providers. This advice comes from research conducted with polling firm Ipsos MORI which found the public feared providers would cut corners to deliver below par services in order to achieve value for money.

Outsourcing: “a live risk to ethical standards”

Several organisations and reports have illustrated that outsourcing can help alleviate poverty by deploying BPO services overseas.

According to an Outsourcing for Social Good report from Telus International and Impakt, BPOs can play a role to shift social landscapes in emerging economies around the world, which is a view also shared by The Rockefeller Foundation. This foundation has established a project that aims to improve one million lives in six African nations – called Digital Jobs Africa.

Similarly a company called Digital Divide Data (DDD), a New York-based nonprofit that operates for-profit data centers in Cambodia, Laos and Kenya, also advocates the concept of socially-responsible outsourcing. It also uses this approach to help differentiate itself from others in the market.

The Telus report goes on to predict that reputation-conscious brands will ask for more socially-responsible behaviour from outsourcing firms, just as they have from their other suppliers.

Out and Proud

The Department of Transport (DfT) has announced that Virgin Trains has been awarded the contract to continue operating the west coast mainline rail franchise until 2018. Virgin have agreed to providing thousands of extra standard seats, better Wi-Fi and station upgrades as part of this deal. Virgin have run this service since 1997, however nearly lost it in 2012 when the government initially awarded it to FirstGroup before the decision was disputed.

Virgin Trains starts West Coast court action