Industry news

The Department of Work and Pensions (DWP) has faced criticism from the Committee of Public Accounts, regarding the department’s management of its medical assessment contract with outsourcing firm Atos.

The report attacked the Work Capability Assessment service delivered by Atos and citied DWP as the main party responsible for failings.

Appeals made against the Work Capability Assessment have been successful in one third of all cases without the need for requiring new evidence, suggesting a flawed process.

The report by the committee criticised the relaxed nature of the DWP and their “light-touch approach to managing the contract”.

Labour MP and committee chairman, Margaret Hodge, called for a “substantial shake-up” in contract management at the DWP, adding “The department is too often just accepting what Atos tells it. It seems reluctant to challenge the contractor. It has failed to withhold payment for poor performance and rarely checked that it is being correctly charged.”

Sudlows has been awarded a contract, valued at £2.25 million, to provide a new modular datacentre facility, based on campus.

The new facility, because of its modular design, will allow for increased flexibility and agility. The datacentre is also expected to provide significant savings through energy efficiency.

The on-site centre will allow for rapid access and maintenance, with the whole centre designed for expansion to meet future IT demands.

Manish Khandelwal, sourcing expert at PA Consulting Group discusses India's IT Industry, it's advantages in a global marketplace and it's future direction.

It’s February and there’s a real buzz. Valentine's Day is fast approaching and the entire Indian IT industry is excited. But it’s not romance that is setting hearts aflutter but the Nasscom India Leadership Forum.

It’s now a must attend event, easily the largest gathering of the Indian IT industry, but with increasing participation from global outfits.

The buzz at Nasscom feels very different to any other industry event. The growth is dizzying and numbers mind boggling. The event is a real celebration of the Indian IT industry.

So, how has India got IT so right?

Partly it reflects a dauntless Indian spirit and a desire to succeed under any circumstances. India’s lack of quality infrastructure helped the Indian IT industry to succeed in a curious way. While traditional industries such as manufacturing are highly dependent on the raw materials and demand heavy and reliable infrastructure, IT primarily needs human capital. In the pre-liberalisation era, when industries such as manufacturing found it hard to succeed, more and more Indians looked for alternative jobs, and they found them in IT. The sector offered a powerful combination of significantly higher returns on investments for the employers and global growth opportunities for the employees.

And Indian IT was in the right place at the right time. In the ‘80s the industry was just emerging, by the ‘90s it was starting to gain some interest from around the world. Then came the Y2K bug. The world needed large volumes of basic IT skills and Indian companies were there on their doorstep to meet that need. The world’s IT glitch was India’s opportunity.

That drove a rapid transformational change. In the western world, it became acceptable to have an IT problem resolved in a faraway country, at a fraction of the cost. And no other country offered technical skills in the volumes that India could supply.

Inevitably, there were pessimists who said once Y2K was over Indian companies would struggle to find work. The reverse was true. Changing economic realities, growing demand for technical skills and the valuable experience Indian companies now had meant they were much more in demand. Industry revenues that were 10 billion USD in 2001 crossed the 100 billion USD mark in the year 2012.

Other than the cost differential, India has another advantage over the rest of the world. It has an English speaking technical workforce that is willing to travel, relocate within or outside the country and explore. India produces innumerable numbers of English speaking graduates every year. So while there are specialised skilled teams in various places in the world, outside India there are not many options for an outsourcing operation that requires large numbers of English speaking IT or business process outsourcing skills.

Then there is the fact that success breeds success. Today’s Indian IT industry is actually no longer about Indian companies. Almost all the leading global service providers have their base in India and it’s where they find most of their skills. This has led to a virtuous circle, where the country has attained a critical mass of skills, so attracts more business and more skills.

So, what does the future offer?

It hasn’t always been easy for the industry and it won’t be in the future. Some western governments are taking more protectionist positions. Inflation is sky high therefore threatening the cost differential, the fundamental driver of offshoring. Infrastructure remains the perennial problem and the political landscape is as fragmented as ever. Then there is the issue of inconsistent quality of skills. And competition is hot on the heels, with many other countries wanting a piece of the offshore IT services pie.

India will need to use its experience and its head start to stay in front of the competition. More needs to be done to move ‘Brand India’ away from a focus on cost and more towards its ability to undertake large scale transformational programmes. More investment will need to go into products to balance the services portfolio. While the large outfits may continue to dominate, the smaller players will need to be more agile and nimble to explore the opportunities. Growth will need to be more inclusive, and need to touch the hinterlands of India.

One thing is sure though. With India accounting for more than half of global sourcing business, India’s crown is not going to slip anytime soon. So, the Nasscom India Leadership forum will be as upbeat, energetic and full of optimism as ever. Not many can challenge St. Valentine in creating a buzz. The Indian IT industry can.

The DfE has started to gather advice from within the private ICT sector for the development of the ICT curriculum through a consultation of industry leaders.

The new curriculum is designed to provide the requisite skills to develop the UK IT industry, and replace the past outdated curriculum that failed to stimulate students or provide the skills that the industry is looking for.

The first draft of the curriculum details how it: “combines creativity with rigour: pupils apply underlying principles to understand real-world systems, and to create purposeful and usable artefacts”.

UK based National Express have won a contract to provide railway services to the German railway industry.

National Express has taken on the running of services between Cologne and Bonn with the German rail market representing the largest in Europe.

While the contract is relatively small at £1.3 billion, it is in a market that is almost twice the size of the market in the UK, which has been damaged by the fallout of public sector procurement failings in the West Coast Main Line scandal.

In winning the contract National Express has gained a foothold in a lucrative market and offers the potential for future expansion.

“National Express is delighted to have been selected to run these two German commuter rail contracts” said Dean Finch, the chief executive of National Express.

The Post Office is looking to partner with retail firms in a bid to reduce losses of £40 million a year.

The company partner high street branches with retail firms as a way to help keep the branches in their current locations.

The Post Office already operates branches from within retail stores such as the Co-op and WH Smith.

In a statement the company said: “Our investment will maintain the size of the network and modernise branches to meet customer needs” adding that, “Crown branches are a

fundamental part of our long-term growth strategy and need to be brought into profit, currently operating at a £40 million annual loss.”

HMRC have made significant cost savings over 2012 contributing to savings of £296 million as the department seeks to reduce running costs by 25 percent in 2014.

Significant savings have been made from ICT service contracts including outsourcing services to Aspire with a contract renegotiation saving £200 million by lowering the cost of IT services.

Amyas Morse, the head of the National Audit Office, said: "In one year, HMRC has managed to deliver a third of the savings it is required to deliver over the four years of the spending period, at the same time as maintaining performance in key areas such as maintaining tax collection and reducing tax debt".

US based IT outsource provider Cognizant has reported a quarterly profit jump of 16 percent as the European market drives increased sales.

Cognizant achieved 13 new deals in Europe during the last quarter of 2012 with a total of 201 clients added over the year.

The continued impact of the global recession has driven European companies to reduce costs and increase the use of outsourced services, driving long term growth in the market. Increased IT spending is being expected to continue to drive the employment of outsourcing within Europe over 2013.

The company has seen stock rise by 14 percent in the last three months as the IT service supplier continues to outperform expectations, outperforming the fiscal results of rivals TCS and Wipro in 2012.

In a week full of reviews of failed procurement practices within the public sector, the Parliament’s Justice Committee added to the criticism levelled at the Governments lack of outsourcing expertise.

A review into the Ministry of Justice’s (MoJ) procurement of interpreter services from Applied Language Solutions found that the agreed service did not deliver a working model.

Sir Alan Beith, chairman of the committee, said: “The Ministry of Justice’s handling of the outsourcing of court interpreting services has been nothing short of shambolic”.

The review found that the MoJ had failed to communicate the needs of the court when outsourcing services or listen to industry advice.

Applied Language Solutions, who later became Capita Translation and Interpreting after a takeover, managed to save the contract by being prepared to invest heavily in the service despite the failings in communication.

MP’s have raised concern over outsourcing key functions to foreign firms during a House of Commons Defence Committee report.

The report focused on the feasibility of the implementation of a government-owned, contractor-operated procurement entity (GoCo).

In the report, worries were raised regarding the impact of outsourcing on future UK security.

Conservative MP James Arbuthnot said: “we believe problems might arise if a non-UK company were given responsibility for UK defence acquisition.” He added ““If it transpires that others are not prepared to give UK industry the opportunities the UK gives to theirs, it might become necessary for the government to reduce its open procurement.”

With the MoD’s budget for equipment reaching £160 billion for the next 10 years ,even with severe cuts to services personal, the outsourcing of services is predicted to provide significant savings, reducing the overhead cost of defense and potentially reducing job cuts.

UK Defense already employs technology and equipment, alongside training programs and shared service operations with a variety of countries including non-NATO members.