Industry news

BMT Defence Services and IPL, who already provide IT services to the Ministry of Defence, have been selected to provide information management systems.

The management contract is designed to "address known technical update requirements, resolve legacy issues and improve usability for all users across the operation”, according to the MoD.

The two companies will partner together to deliver the services, which is expected to drive down development cost and reduce reliance on long term support.

New IT and BPO outsourcing contracts dropped from 516 to 411 in the second quarter of 2012, according to research firm Everest.

The reduction in new contracts by 20 percent has been blamed on the economic crisis in Europe and uncertainty surrounding its future impact. The run-up to the US presidential elections has also seen US based companies look to distance themselves from the practice, with outsourcing linked negatively to off-shoring.

Practice director for global sourcing at Everest Group, Salil Dani, said: "The market is growing, but the pace of growth is slowing down".

G4S who failed to deliverer on its Olympic security outsourcing contract, have donated £2.5 million to the armed forces, who were drafted in to cover the gap in security.

The donation by the global security firm will be divided between the armed services, welfare organisations and sports groups.

A G4S spokesman commented that: "We wanted to recognise the huge contribution made by the military after it became clear that there would be shortfall in workforce delivery.”

Microsoft and the New York Police Department have joined together to develop a crime and counter-terrorism prevention system.

The system Domain Awareness System (DAS) will include smart cameras and license plate readers and will be able to relay information to the NYPD surrounding suspicious vehicles and packages. DAS will also include real time access to video feeds, records, and call logs.

New York city mayor Michael Bloomberg, said “we are finding new ways to leverage already existing cameras, crime data, and other tools to support the work of our investigators, making it easier for them to determine if a crime is part of an ongoing pattern, and will allow the NYPD to better deploy its officers".

The system has raised concern from privacy groups regarding the wide-sweeping nature of data collection by police and the involvement of a private corporation.

CSC CEO Mike Lawrie, has said that the company is making progress with the NHS, saying: “We made good progress with NHS. We're continuing to work with NHS”.

While Mr Lawrie was positive about on-going negotiations with CSC regarding the failed Lorenzo project, he failed to announce if an agreement had been reached regarding the National Programme for IT (NPfIT).

CSC have currently delivered management software to three trusts in the UK, contract negotiations regarding the programme are set to be resolved this month, with a deadline set for the end of August.

Google will settle US charges for $22.5 million for privacy violations regarding the tracking of Safari users through cookies.

The fine from the US Federal Trade Commission ranks as the largest ever handed down.

Google falsely told Safari users that it would not create tracking cookies within their software or place targeted ads on their browsers.

Jon Leibowitz, chairman of the FTC, said: “No matter how big or small, all companies must abide by FTC orders against them and keep their privacy promises to consumers, or they will end up paying many times what it would have cost to comply in the first place."

A study carried out by Virgin Media showed that UK businesses want ‘smart cities’ that can employ Big Data.

The study showed that 84 percent of UK businesses wanted ‘smart cities’ in order to reduce logistical pressure such as heavy traffic.

The study comes after the Chancellor pledged £100 million to create 10 citywide networks.

Lee Hull, director of public sector at Virgin Media Business, said “Big Data supporting better transport and road systems may just be around the corner for the British public”.

Infosys are facing new visa fraud allegations. In a lawsuit against the company, past employee Satya Dev Tripuraneni, claimed that he raised concerns to Infosys regarding visa applications.

Tripuraneni claims that he was asked in regard to an Infosys employee to persuade a client, “to agree not to bill a person on site, but rather to bill for dummy resources outside the United States who were not involved in the client's business."

Tripuraneni in the suit then claimed that on having raised these issues with his supervisors, he began to receive negative performance evaluations and later an anonymous caller threatened his family.

The case is scheduled to begin on the 20th of August.

The failure of G4S, rather than one of competency, was one of recruitment policy. The security company has never claimed to be an expert in outsourcing, but rather is a specialist in outsourced business processes. G4S was never equipped to recruit 10,400 staff for the London Olympics. As much as its ability to manage its own sizeable network is admirable, the model of direct resourcing was tailored to a far smaller scale than was required for this contract. Unfortunately, such a policy is hopelessly ineffective when applied with no thought to scalability, as was the issue here.

G4S’s tried and trusted recruitment model was perfect for gradual, small-scale recruitment, but hopelessly flawed when applied to the unique challenges posed by high-volume, short-term hiring. The company’s drive to hire a significant number of new employees singularly failed to take into account the human element involved, where, with so many candidates being offered positions, inevitably some would face issues and barriers which would require support. The news that G4S failed to communicate with candidates, leading to confusion over whether they had actually successfully applied for the job, illustrates how completely the company failed to provide this support.

The government, Olympic and regulatory authorities regularly call on international outsource and facilities management companies such as G4S to coordinate complex, expensive and high-volume projects. A specialist recruitment company could have advised G4S that many factors need to be considered when evaluating such a high volume of candidates, such as the overlooked fact that they needed to capture many more applications for each job than they sought. This is the only way to ensure the right quantity of recruits, even before getting on to the issues of quality.

The ‘embarrassing shambles’ could easily have been avoided if the government, who seem to have largely escaped blame, had awarded the highly important contract to a company better equipped to fulfil its requirements. It begs the question, why was G4S ever expected to deliver by the government, and how exactly did they successfully tender? The first possibility that springs to mind in this age of austerity is that G4S was simply the lowest bidder.

Despite this error on the part of the government, G4S is ultimately culpable for either not realising that they were going to be unable to fulfil the contract early enough, or realising and not revealing it until it was too late. In either case, the best solution would have been for the security company to sub-contract some of the work, rather than depend on recruiting staff to make up the numbers.

Indeed, it would seem that the government has learned something from this experience, awarding the contract for the recruitment of staff at the 2014 Commonwealth Games to a specialist company called Search. In terms of lessons for G4S, if they are to recover their reputation and avoid losing out on future contracts they must set up a more malleable, adaptive recruitment plan that flexes with the size of the contracts it is awarded. They will also be aware going forward that issues of lesser significance when recruiting in small numbers, such as the human element involved, become magnified when attempting to hire thousands simultaneously. The unique challenges posed by short-term, high-volume recruitment can, as evidenced in this case, cause a crisis if not properly controlled.

According to research by KPMG, ineffective governance of provider contracts can cause value leakage ranging from 17% to 40%. So how do you maintain quality and reduced costs in this complex environment?

One of the biggest problems in outsourcing is the loss of value during the life-cycle of the project. In times of unstable economic forecasts for many organisations, this loss of value can undermine the success of the project. In conducting outsourcing contracts and relationships, users are often faced with ‘value leakage’. This loss of value often comes about during contract development and governance.

Failures in implementing good governance and establishing effective contracts both damage cost savings and value.

George Davies, CEO of MooD International, a next generation software provider, comments: “The key to reducing value leakage lies with the client and supplier working together every step of the way.” He adds that, “It is not enough simply to award an outsourcing contract and then just expect the supplier to get on with it. Both sides need to make things happen. The supplier will need things from the client to be successful, and vice versa. The answer is having a common approach to the way you view the contract and the data. Rather than leaving one side or the other to monitor everything, both sides should have access the same data, a single pane of glass along the whole contract through which both sides can look at any time. That way both sides can monitor where everything is simultaneously, keeping the value where you want it – in the business outcomes.”

‘Value leakage’ can be more common place in certain outsourcing relationships than in others. Shared services can represent a fertile ground for loss of value through mismanagement due to scale and multiple suppliers. The focus can shift rapidly when using shared services with multiple vendors, often the shift in focus comes too early.

Loss of value can also come from rigid organisational structures from both sides of the supplier/user relationship. Sachin Shah, a London-based partner at global management consulting firm Bain & Company’s IT practice, said “people who remain within the business after transition to shared services do not actually change their roles or develop new skills, resulting in more duplication, and less transformation.” A government plan can prevent these issues from occurring, if properly introduced in the planning phase of the outsourcing project.

Multi-sourcing – the challenges for Governance and Compliance

Establishing accountability during service delivery prevents both users and suppliers from neglecting communications and services. Accountability also serves in rapidly identifying and acting against errors while holding users and suppliers to account for collecting data and ensuring value.

As already mentioned, management of the outsourcing relationship is fundamental aspect of any relationship. Ensuring that both sides understand the required deliverables and obligations at the outset of the engagement goes a long way in preventing loss of value from miscommunication and misinterpretation of roles and services.

Colin Craig, Director, Information Services Group, comments: “ In my experience, those relationships that display a strong degree of trust also have a much better, deeper understanding between the parties, a greater focus on the longer term relationship and a desire to adopt risk sharing rather than a risk avoidance approach – all resulting in delivering greater value from the contract. Strong governance will be the key differentiator between effective, efficient outsourcing relationships, and those leaking value and long turned sour.”

Managed governance services can reduce value leakage. It is vital that users manage suppliers and both sides understand and manage the services to be delivered, the implementation of a governance plan is essential.

The establishment of a government plan must include the management of:

Financials

This is designed to avoid loss through inaccuracies in accounting, including invoice and payment errors.

Performance

Managing performance is necessary to identify ‘value leakage’, such as where targets are not being delivered, so that such loss can be prevented.

Consumption

In large outsourcing contracts resources can often be under or over-used, even in small contracts it is easy for services to be mismanaged and become under or overextended.

Relationships

Failure to effectively manage relationships between users and suppliers can lead to loss in value, establishing effective communications is a large part of relationship management and preventing ‘value leakage’.

Strong governance is the key element to reduce value leakage, generating a government plan in the early stages of an outsourcing project can prevent loss of value at later stages of the project. Governance can be expensive and time consuming but comes into its own in the long run, where cost savings and speed of delivery gained form reducing value leakage out ways the initial expense. While it is important to monitor multiple areas with the project in order to reduce loss, relationship management is at the heart of any outsourcing relationship. Facilitating the creation of a strong relationship can often be the best practice for reducing ‘value leakage’.