Industry news

Business process outsourcing (BPO) partner arvato is increasing investment in its Manila operations to support several BPO programmes.

arvato has already increased its highly skilled workforce in the region by 50% in the last six months. The expansion plans will enable a 50% growth in headcount over the next 12-18 months and revenue growth of up to 25% over the next three years from the region.

Debra Maxwell, Country Manager, Philippines and Global BPO Director, arvato, said: “Our Manila location provides organisations with a highly skilled, flexible and reliable workforce combined with a secure, high-spec infrastructure that can be mobilised in days, not months. Expanding our capabilities in Manila enables us to grow our partnerships with existing clients, as well as provide a compelling proposition for organisations looking to reduce costs and standardise global operations.”

This investment supports arvato’s strategy of providing secure infrastructure, high-quality dedicated client teams, and best practice frameworks for global organisations seeking to align and standardise processes for their global customer base.

A study carried out for service management software provider BMC, shows that as much as seventy two percent of senior information officers believe cloud computing has increased pressure on IT divisions.

The study of 327 chief information officers within enterprises, showed that CIOs believed that cloud computing is seen as a way to circumvent IT teams, and that the notion that cloud services could provide cost reduction and streamlined services, has increased the pressure on IT teams to deliver results.

The survey has raised concerns by CIOs that businesses risked increased security issues when cloud software was used to bypass IT divisions. Dominic Wellington, cloud computing manager at BMC, said: "If someone from the business team copies the data across to Amazon's public cloud offering, then suddenly the business's sensitive data is sitting out there in the open.”

The government has announced twelve networking firms to provide the Public Services Network framework alongside BT, Fujistu and Virgin Media.

The PSN has been created in order to combine communication services into a single network, in order to reduce costs and streamline services. The twelve suppliers include several SMEs along with larger industry names in part of the government’s promise to increase the use of SMEs within Whitehall.

The construction of the framework is expected to be worth between £500 million and £3 billion. Cabinet Office minister Francis Maude, said: "We are confident that the PSN programme will substantially reduce the cost of communication services across government."

Government suppliers in the private sector are rushing to gain billions of pounds of new work from the overhaul of the benefits system, including the reassessment of the disability allowance.

A range of contracts from £ 300 million to £5 billion are expected to be awarded to companies including G4s, Serco and Capita over the coming months, as the coalition moves to rapidly expand its outsourcing drive.

Nina Zamo, policy and campaigns officer at charity Papworth Trust, said in regard to reform of disability support: “there were obviously concerns that it may replicate the problems with the Work Capability Assessment. This test for personal independent payments has to be fair.”

Iceland looks to move its public sector to open source software within one year as it begins to edge towards financial recovery.

Iceland will join other governments such as France and US who are making a move to open source software, with the aim to save resources with lower costs while avoiding restrictive licensing terms.

Tryggvi Bjorgvinsson, project leader, reported: "The goal of the project is not to migrate public institutions to free and open source software in one single year but to lay a solid foundation for such a migration which institutions can base their migration plans on."

Research published by the European commission shows that European school leaves do not have basic skills in digital and IT technologies.

The research predicted a shortfall of 700,000 school leavers without IT and digital skills by 2015. At present over 50 percent of young people are unemployed in Italy and Greece, with an expected reduction in low-skill jobs and increase in high-skill jobs over the coming years.

Antonio Tajani, European commissioner for industry and entrepreneurship, said: "Young people need to appreciate the professional aspects of the new digital world. This is more important than ever in the current economic context.”

Arvato has successfully developed and implemented a bespoke loyalty platform for Valero Energy Ltd.’s Texaco branded Star Rewards card based loyalty programme.

The Star Rewards loyalty programme, launched in 1986, has progressed over the years to a card based loyalty scheme that currently processes customer rewards earned in over one million transactions a month across 850 Texaco branded service stations in the UK.

Tim Medcalf, General Manager of arvato’s loyalty business, said, “The development and implementation of the Texaco brand Star Rewards loyalty platform has been an opportunity to showcase arvato’s approach to providing right-sized technology solutions for complex multi-stakeholder loyalty programmes.”

Following our last blog, on the subject of contracting for Agile software development, this week we visit another hot topic: innovation. Innovation can mean many different things, but in an outsourcing context it can generally be thought of as new ideas or ways of working to drive efficiency, commercial gain and/or competitive advantage. But what can be done to stimulate innovation within an outsourcing relationship in a way which is aligned to the customer's needs? We believe that a contractual structure which is aimed at driving innovation can be a significant advantage. At the same time such a framework can rarely move a supplier to innovate where innovation is not within its DNA. For best results, customers should aim for a combination of evidenced supplier commitment to innovation and a contractual framework that keeps both parties on track. Here are our top ingredients for success:

Track record

Favour a supplier with a track record of thinking outside of the box, with multiple innovation successes.

Joint leadership

Both parties take a lead role and each appoints a named leader for innovation- the biggest challenge facing innovation is tomorrow's deadline.

Innovation plan Have an enterprise-wide innovation plan that defines purpose, objectives and timeframes; and importantly has buy-in from key stakeholders.

Common understanding Define what innovation means, and ensure an alignment of understanding with your supplier.

Fostering trust

"Trust is the key, detailed contracts are unimportant".

This is too extreme a view, but building a trusted relationship with your partner through thoughtful communication and collaboration will reap rewards.

The importance of contract design

There is an inverse relationship between innovation and certainty. The greater and more radical the level of innovation sought, the less certain and more incomplete is the contract. The result – contract design will be a priority.

Innovation lifecycle phase 1: Idea generation

Regular market testing and well-managed brainstorming on the latest trends, processes and technologies will aid thinking as to what can be achieved. What your supplier is doing for its other clients is a good starting place.

Innovation lifecycle phase 2: Contract flexibility

Once an idea has been selected for implementation and a business case approved, project terms will need to be agreed with your supplier, including roles and responsibilities, deliverables, timeframes. Anticipating this, the challenge at the outset is to build a contractual framework which guides the parties to agreement.

Shared funding

This is particularly important the more radical the change you are looking for. First, it will be important to get agreement between the parties to fund failure – innovation does not come without failure and the customer must accept that failure does not mean the process isn't working. Second, this is the customer putting its money where its mouth is.

Your supplier to share in the upside

Consider performance based pricing, such as gainshare. The true win/win: greater customer value (through innovation) and increased supplier profitability. The incentive for your supplier to perform.

Early involvement of technical community in contract design

Ineffectual contract design is usually to do with a lack of involvement early enough by the engineers on matters of technical specificity, e.g. task descriptions, contingency plans and communication protocols. Get specialists involved early.

Competition

Competition between suppliers in your ecosystem can drive valuable innovation, particularly where the reward is more profitable opportunities. Consider suitable frameworks such as multi-sourcing.

As the Olympics’ draws nearer, people all across the UK are starting to prepare for the festivities and the upheaval that comes with hosting a major sporting event. Whilst certain businesses look forward to the extra revenue that the visiting spectators will bring, others need to safeguard their devices during the two month period.

According to a Freedom of Information Act request to Transport for London over 4,500 mobile devices were lost during the summer period last year alone. This means as over 5.5million extra visitors flock to the capital to watch the games, the need to secure mobile devices such as mobile phones becomes crucial.

Results show that as the number of visitors grow, there is a risk that a further 2,840 mobiles, 231 USBs and 121 laptops will be lost. This means that countless amounts of data will be lost as well, which could potentially cost businesses and consumers a fortune and create long lasting issues.

For this reason, device owners should take specific steps to protect their assets and implement remote access solutions that can manage and resolve this risk. Good examples of this would be to utilise centrally managed solutions such as MobilIron’s Mobile Device Management or Vmware’s Horizon Mobile platform, as each gives IT access and control to the corporate data & IP on a remote device, which if necessary can be locked down or remotely wiped if compromised.

By implementing such security and back-up solutions, any lost device is simply that, a lost device. Through taking action now, the potential threat of over 3,000 additional lost devices full of data turning up in the Transport for London’s lost property box or worse a stranger’s pocket will be eliminated.

Without doubt the Olympics will bring disruption to the capital this summer, however whilst people can’t do anything about the millions of extra visitors and congestion, simple measures can be taken to ensure everyday life isn’t disrupted and devices are more secure, so they aren’t left feeling the consequences after the final ceremony on the 9th September.

Humperdinck is currently back in vogue thanks to his forthcoming appearance representing the UK at the Eurovision song contest. And the words from his 1967 hit, “Please Release Me”, are now being heard in more than one board room as companies question once again whether their outsourcing contracts are a help or a hindrance. Yet with contract values worth hundreds of millions of pounds, changing them is expensive and some exit costs can be completely prohibitive. Added to that there is the time and effort needed to deliver change, and the management distraction from current business needs. That means it can be hard to find a viable alternative to simply sticking with the current situation.

For the purposes of this discussion, let’s assume that bringing the services back in house has been explored and the board has ruled it out as an option. So the debate is about how to change the current outsourced arrangements. The extreme, and bold, option is to terminate the whole agreement. And sometimes the position has become so untenable that this can seem like the only sensible course. But before going down this route, the company needs to be sure that simply changing providers – particularly if it’s a straight replacement – will really make a difference to delivery.

This means taking a hard look at whether there are aspects of the services that the current outsourcing provider delivers well. This could then create an option of setting up a new and profitable extended arrangement for these services, but handing over the less successful parts to alternative providers. Customers often think this won’t appeal to providers but they may well be willing to scale back agreements, if they can deliver successfully and make money. The problem can be that the sales team, with their focus on short term targets, won’t be enthusiastic - but conversations with the senior executive team can often lead to agreement on alternative options. They can be particularly receptive to this approach if it is an alternative to some form of termination. Ending a contract often gets into the public domain and can be embarrassing for all concerned, and avoiding reputational damage can be a powerful motivator.

The other critical consideration is to assess the performance of the team with responsibility for working with the current provider. Managing big outsourcing providers is a complex discipline and talented people in this area are in short supply. Getting a detailed understanding of what interventions have been made to help the team deliver effectively is a sound investment before changing providers. That means checking everything from how they build relationships through to how to avoid micro managing performance. It is not uncommon to find organisations that have changed providers and then discover that many of the underlying problems were in their own team.

If companies do carry out this careful analysis, they might find that they can replace “Please Release Me” as the outsourcing theme tune with Engelbert’s EuroVision song, “Love Will Set You Free”. And even if customers cannot quite learn to love their contractors, if they can understand them a little better, they will both benefit from a new way of thinking about how to change major outsourcing relationships.