Industry news

With the economy hitting bleak times, corporate social responsibility programmes have taken a back seat while companies take measures to ensure survival. Juxtaposed to this is the coalition government’s vision for the Big Society, which aims to go beyond CSR and put power and responsibility directly into the hands of the people. So it follows that companies that are seen to look out for the people will become more attractive, and gain more business.

Is CSR firmly back on the agenda in 2012? How is it being done? This feature will look at the current state of play regarding CSR in the outsourcing industry, and how companies are looking to accrue positive headlines through socially responsible actions.

Dr Steven McCabe, Director of Research Degree Programmes at Birmingham City Business School believes that that some will still consider price to be the dominant factor in any purchase: “Paying extra to receive something that they can get cheaper elsewhere may seem unnecessary. Indeed, as we all experience the effects of global problems and austerity we all search for a bargain. Therefore, there is an argument that CSR could become an expensive appendage and that the additional costs may make your products and services uncompetitive.”

However, the good publicity that CSR brings can directly lead to business benefits and conversely, adverse public opinion can lead to the opposite. A trajectory study by 23red suggests that 91% say how good a company is and 90% say how it behaves towards its customers and communities, is significant when considering acquiring a product or service. Jane Asscher, Managing Partner and Chairman of 23red stated: “People are rewarding ‘good’ brands with their custom.” She continued: “Leaders in the field such as Unilever, P&G, and M&S continue to garner positive PR as a result of their long-term commitment to their CSR programmes.”

Is this is the case, in the age of social media and whistle blowing, it is difficult to for businesses and their processes to remain impervious to public awareness. Asscher states that: “It is easier by the day for uncomfortable truths to be told. So in the face of this most sensible companies are going with the flow and the city analysts who have argued that CSR is a waste of shareholder’s money are losing credibility.”

Unilever in particular have reiterated their public promise to halve their environmental impact over the next ten years. While providing good publicity for Unilever, it also provides other benefits, as Asscher stated: “It also causes problems for their competitors by giving Governments, NGOs, journalists and citizens a stick to beat them with. This bold declaration will also galvanise the company, its employees, and its suppliers to live up to their very public promise.”

CSR can also help to perpetually provide an affable economic climate for their business to operate in as Dr McCabe believes: “We have a duty to invest in the growth and development of those employed in local economies as well as the emerging ones. If the objective is to increase consumption of our own goods home and abroad this will be undermined if people’s wages are cut and they work for conditions that are unfair and exploitative.”

While the examples above apply in general to B2C organisations, the conclusions can be directly transferred to outsourcing users, specifically in the public sector. Organisations affiliated with legislation such as the ISO 14001, an EU standard for environmental management, can be extremely beneficial. Asscher states: “There are a number of Government procurement departments which request confirmation as to whether or not a potential supplier has ISO 14001, the environmental standard. While it may not be mandatory, if the tendering company thinks their chances will be improved, even marginally, then it would be worthwhile achieving the standard.”

So it seems then that CSR is, and should be, on the present and future agenda for businesses. While for some price will remain the ultimate purchasing factor, CSR is a deciding factor and can distinguish an organisation from its competitors. In terms of procurement, new legislation has meant that, while not always mandatory, CSR can provide firms with a far greater chance of winning contracts. CSR, particularly with widespread participation, creates an economic domino effect in which businesses reap the rewards of their actions by creating advantageous business conditions.

Cognizant recently topped the customer satisfaction and recommendation rankings in the four-country region (Finland, Norway, Denmark, Sweden) in KPMG’s Outsourcing 2012 study of service provider performance in the Nordic region.

sourcingfocus.com spoke to Jayajyoti Sengupta, Cognizant's Country Manager for the Nordics to find out about how Cognizant ensure customer satisfaction.

Please can you elaborate further on this: “Our high-touch relationship model, deep domain expertise and consulting skills, unique reinvestment philosophy, and our ability to build strong multicultural teams around the globe have helped our customers navigate structural changes in the economy and their industries, enabling them to stay efficient, effective, and innovative.”

Clients across industries—financial services, healthcare, pharmaceutical, retail, media and entertainment—are going through structural shifts driven by globalization, virtualization, digitization, regulatory changes, consumerization and new technology architectures (such as social, mobile, analytics and cloud). This has led to clients seeking dual mandates of cost agility (efficiency and effectiveness) and innovation (business transformation).

While clients IT budgets have largely been flat to modestly up, they expect to achieve much more from less. This calls for working with a partner who can address the dual challenges of cost agility and innovation off one platform within the available budget.

That’s where a company like Cognizant excels because of its years of managing its target operating margins lower than comparable peers but reinvesting the excess back into the business for high levels of customer relationship management, technology excellence, multi-cultural and domain expertise. Today, Cognizant has over 1,000 client partners and account managers who are responsible for the high-touch relationship architecture, over 3,000 pure-play consultants and dozens of technology centers of excellence, and 1 MBA for every 25 software professionals, globally.

These investments help clients drive cost down on existing infrastructure and applications and helps clients to use the freed up dollar to invest in growth and innovation, thereby addressing both the bottom-line and topline needs of clients.

How does the high-touch relationship model differ from traditional governance?

We have seen two traditional models depending on the starting points of companies and how they evolved. With global system integrators who started off in the US or Europe, the center of gravity was in the US or Europe and their offshore/global delivery locations were started as extensions. It’s more of a passing-the-baton or throw it over the wall model. While for Indian companies their expansion to the rest of the world was with the view that expansion to other parts of the world was a necessary sales and marketing activity. The centre of gravity of these organisations was in Mumbai, Bangalore, Hyderabad, etc. For many people who went to work for these companies in geographies outside India, it created a very difficult environment to be successful as an executive or as an individual because the centre of gravity was in India.

In our model—what we call the two-in-a-box model—the centre of gravity is not geographic but vested in a group of people. Through the two-in-a-box model—at an account level, at a customer level—the centre of gravity rests with two individuals, the Delivery Director and the Client Partner.

Does having named leaders offshore effect delivery?

It makes no difference that the Delivery Manager is delivering from India or China, or that the Client Partner is engaging with the client in the US or Europe. Each one individually and jointly feels accountable, empowered and responsible for the success of the client. In the two-in-a-box model, they together define the success of the client along the same terms—a sort of soft concept, but that’s how it really works on the ground.

We believe the two-in-a-box model is superior to the passing-the-baton or throw it over the wall models of other companies because there is no opportunity for loss or dilution anywhere in our model. In the passing-the-baton model, you need to align two sets of people in two separate stages.

Ours is more of a relationship model and the execution is good because there is alignment of all stakeholders from the start.

GM will save 2,100 jobs and create hundreds more after the company announced that it has chosen Ellesmere Port car factory to create the next-generation Astra. The Ellesmere Port complex had been highlighted by GM as being likely to face closure in part of the company’s efforts to cut European losses.

The deal is expected to be announced after workers at the Ellesmere factory accepted the terms of the deal offered by GM. The turnaround comes as the UK car manufacturing industry enjoys growth after the downturn years of 2008-09, seeing a six percent increase in growth from 2010.

The business secretary, Vince Cable, said "Today's decision to ballot the workforce signals a very strong vote of confidence by General Motors in the UK automotive industry. “

Outsourcing company Atos is set to enter into the final test phase of its Olympic Games support systems. The company will have 3,500 staff deployed during the Games to cover more than 140 sites and 10,000 end user devices.

The systems including the Games management system, data distribution services and workforce management systems, and these will be tested in rehearsal throughout next week before the whole support system goes live at the beginning of June.

Atos will oversee the IT operations of the Games and co-ordinate with third-party IT suppliers to the Games including BT, Panasonic, Acer and Samsung as well as supporting the Olympic media partners.

CSC and HP have joined together in a global collaboration with Fraunhofer FOKUS, EMC, RSA, McAfee and Sourcefire to open the Cybersecurity Demonstration Center (CDC).

The site located in Berlin will be used to create new defences against cyber attacks by researching and testing multiple and varied types of attacks on IT infrastructure. The research gained from testing is intended to safeguard and educate the security industry against vulnerabilities.

Head of Fraunhofer FOKUS, Professor Radu Popescu-Zeletin, said “The base for trust, data protection and security are constantly changing. It is important that there are systems that are able to react effectively on danger”.

Contact centre operator Journeycall based is Aberdeenshire and Angus is preparing to expand including hiring 50 new staff members in preparation for meeting increased demand from Olympics-related customer calls.

The centre will increase its workforce in hiring both full-time and part-time workers as well as temporary and permanent advisors. Journeycall which handles business for rail and bus clients is looking at massively increased demand for its services as the 2012 Olympic Games impact on transportation.

Trisha Pirie, Journeycall MD, said “We’re gearing up for an exceptionally busy few months when many of our rail and bus clients may experience unprecedented demand both before, during and after the Olympics and Paralympics events.”

Research carried out by Quartet FS found that 100 percent of UK banks saw big data as a significant problem. The research has 20 percent of IT managers placing big data as a ‘extremely significant’ problem.

The research comes as investment banks are increasingly predicting that in-memory analytics will come to the fore as the standard architecture in solving big data within the next three years.

Georges Bory, co-founder and managing director of Quartet FS, said “With the majority of the UK’s investment banks still relying on spreadsheets to analyse their data, it’s no surprise that they are struggling with the ‘Three Vs’ of big data: Volume, Velocity and Variety.”

Randstad Managed Services and SourceRight Solutions have combined as part of a rebranding strategy to become Randstad Sourceright. Randstad procured SourceRight Solutions having purchased their parent company SFN Group in 2011.

The combined brand will provide core services in recruitment business outsourcing (RPO), Managed Service Provider (MSP) solutions and in advising clients in formulating a talent strategy. The amalgamation will see the two services’ combine resources in order to achieve client expansion.

Sebastian O’Connell, UK director at Randstad Sourceright, commented: “This is an incredible evolution of our MSP and RPO services as we combine two leading brands to support our client’s growth and agility plans.

Despite the UK being behind the US on cloud adoption, recent times have seen that gap diminish as the UK trend for the cloud continues.

A survey from the Cloud Industry Forum (CIF) shows that current cloud adoption in the UK is at around 53% of organisations, compared with 76% in the US, however the UK cloud adoption is up 48% from this time a year ago.

Andy Burton, chair of the CIF said: "The most rapid growth in the UK is in the public sector as it catches up with the private sector, although it is still lagging at around 52% adoption compared with 54% in the private sector."

The continuing trend could have something to do with consistently high satisfaction rates, with the UK coming in with 96% just behind the US’ 98%.

Burton also referenced private clouds and developing models of cloud, predicting that most organisations are likely to pursue a hybrid model in the near future, which means a mix of on-premise, online, in-house and outsourced.

Many enterprises do not want to have their own device management infrastructure in-house; as a solution SAP's Afaria mobile device management tool is now available on the Amazon Web Services cloud.

"We have a number of customers that don't want to deal with and implement their own device management infrastructure in-house, because they view it as non-core, and instead they want a cloud-based offering," said Kevin Ichhpurani, senior vice president, Ecosystem and Channels at SAP.

One of the selling points of SAP’s Afaria is simplicity. It requires users to log on via Amazon Marketplace and can now be used on Google Chrome, Mozilla Firefox and Apple Safari, in addition to Internet Explorer.

SAP sees the outsourcing of mobile device management as an emerging trend that will continue to grow, and the company is also working with telecommunications operators and system integrators on other offerings, according to Ichhpurani.