Industry news

Tech Miranda and Mahindra Satyam today announced a merger which will result in the creation of a new offshore services leader with revenues estimated at US$2.4bn, a 75,000+ strong work force and 350+ active clients across 54 countries.

The strategy of the combined companies will consist of a balanced mix of revenues from Telecom, Manufacturing, Technology, Media & Entertainment, Banking Financial Services and Insurance, Retail and Healthcare.

Commenting on the merger Mr. Anand G Mahindra, Chairman, Tech Mahindra said “This merger will help propel the combined entity into the top tier of Indian software and services companies, achieving the Group’s key objective of being in a leadership role in each of our focus business areas”.

Mr. Vineet Nayyar, Vice Chairman and Managing Director of Tech Mahindra and Chairman of Mahindra Satyam said “This merger is a key part of our strategy to deliver industry leading performance”.

Atos announced today that it has signed a 10 year contract worth in excess of £100 million with EDF Energy, after a 12 month procurement process, to provide data centre services for its UK business in a bid to consolidate EDF Energy’s data centre infrastructure to cut costs by 20% over the life of the contract.

Ursula Morgenstern, CEO for UK and Ireland at Atos, said: “This contract extends our relationship with EDF Group and represents the start of a long term partnership between Atos and EDF Energy in the UK […] and demonstrates our strength in the UK market in infrastructure outsourcing.”

Under the new contract, Atos will provide EDF Energy with significant additional data centre capacity to meet increased demand, whilst also enabling its services to be flexed up or down according to requirements.

Atos is ranked number one in managed services in Europe and one of the leaders in cloud computing with 30 major data centres, 900,000 SAP users and management of more than 90,000 servers globally.

In the G-20 nations, the Internet economy will grow more than 10 percent a year through 2016, according to a new report published by The Boston Consulting Group (BCG) as part of its Connected World series.

The report states that in the developed markets of the G-20, the Internet economy will grow approximately 8 percent annually; in the developing markets, it will grow more than twice as fast—at an average annual rate of 18 percent. Argentina and India will grow the fastest, at 24 percent and 23 percent a year, respectively. The leading developed markets—Italy and the U.K.—will grow about 12 percent and 11 percent a year, respectively.

BCG projects that the Internet economy will contribute a total of $4.2 trillion to the G-20’s total GDP in 2016. “If it were a national economy, it would rank in the world’s top five, behind only the U.S., China, India, and Japan, and ahead of Germany,” said David Dean, BCG senior partner and a coauthor of the report.

United Parcel Service Inc. has agreed to buy TNT Express with a bid of 5.16 billion euros ($6.8 billion), the biggest purchase in the U.S. company’s 105- year history, to challenge Deutsche Post AG (DPW) in Europe.

TNT accepted an offer of 9.5 euros a share in cash, the companies said in a joint statement today. That’s 5.6 percent more than the 9-euro bid turned down last month by Hoofddorp, Netherlands-based TNT and 54 percent more than the closing price on Feb. 16, the day before the talks were made public.

Rolls Royce has awarded a three-year outsourcing contract to Capgemini. Capgemini will work with Rolls Royce to overlook the IT outsourcing provided by a number of vendors, ensuring that they deliver the best possible services in over 50 countries.

The contract, which has the option to be extended for a further two years, is part of a new multi-vendor IT strategy.

Simon Ricketts, CIO at Rolls-Royce, said: "It is vital that our products, services and people are supported by world-class IT and that is what our new strategy is designed to achieve."

The strategy is tasked with allowing 40,000 Rolls Royce IT users in 50 countries use the system seamlessly. The contract will begin by the end of this year.

Chancellor George Osborne has launched a £20 billion lending scheme for small and medium-sized enterprises (SMEs).

It is hoped that the scheme will kick-start a private sector recovery to fill the gap in demand left by the government cuts.

John Walker, national chairman of the Federation of Small Businesses (FSB), said: "Recent FSB research indicated that around 60% of small firms believed that credit is unaffordable and so this scheme should help reduce that burden."

The British Chambers of Commerce (BCC) has welcomed the credit easing scheme.

Throughout the UK, companies remain under pressure to reduce costs without compromising on good customer service. But is the decision to save money by outsourcing a company’s reception a step too far? Glenn Jackson, Managing Director of Moneypenny, the UK’s leading telephone answering service, looks at whether companies and their clients can benefit from outsourcing this critical function.

A company’s reception is a vital part of its brand, because it defines the business to its customers, right from the initial point of contact. The importance of getting call handling right is also highlighted by research which shows that 62% of callers will not ring back if they hear an engaged tone, whilst 79% say they won’t call back if their call goes unanswered. A recent 2011 UK-wide survey also found that being put on hold was the third most likely cause of people becoming impatient and annoyed with an organisation.

Of course, employing additional staff to handle peak call volumes can be expensive, but these costs can be reduced through outsourcing. It is however critical that if choosing to outsource, the right partner is selected: one that you can trust to best represent your business. Having the right partner not only ensures that the brand is protected, but also that all calls are handled promptly and professionally, regardless of call volumes.

There are obvious savings if a company chooses to outsource their reception through a reduction in the amount paid on salaries. The average salary for a receptionist in the UK is £17,381 plus National Insurance, holiday entitlements and other benefits. But many companies may still want or need a friendly face to greet visitors and so the key is striking the right balance as requirements differ between organisations. Whether you choose to outsource completely, divert calls at peak times, or stick with traditional reception staff, seeking short-term solutions tends to prove a false economy.

If a business is looking to maintain an in-house function, the outsourcing of overflow calls can bring real benefits. Even the best receptionist in the world cannot answer three phones at once and offer a VIP visitor refreshments, as well as a friendly chat all at the same time. Yet staffing up for such occurrences can be costly. Partial outsourcing can provide an office with essential back-up at busy times, save on the need for temporary cover and ensure that no calls are missed. Equally, during periods of low call volumes, companies are not paying for unnecessary staff.

Picking the right partner and the people working on your business is critical. Time should be invested in educating your dedicated outsourced receptionist as to how you would prefer calls to be taken and processed, and to provide her with the required information so that she is familiar with the company, personnel and other key business information.

This extra knowledge acts as a highly effective reassurance in a competitive marketplace and is essentially the difference between a genuine outsourced business partner and a basic `call minder’ type of service. Let’s not forget that customers make judgements within seconds of speaking with someone; make sure you have the right team in place to ensure it’s the right judgement first time.

Business Process Outsourcing (BPO) has traditionally been used to outsource the processes peripheral to the key business strategy, in order to use time, money and resources more effectively. Some of the most common outsourcing activities include human resource management, financial services and accounting, information technology and legal process management.

An austere economic climate has seen the BPO contract count climb to an all-time high, as organisations look to cut costs in an effort to survive. This feature will be looking at three growing trends in BPO – HRO in SMEs, integrated BPO / ITO packages and the use of BPO in financial services.

HRO and SMEs

The rise in outsourcing contracts bought by SMEs has recently been dramatic. Particularly fragile to economic downturn, SMEs have looked to use their resources more effectively in an effort to survive. Human resources and payroll tasks can be arduous and time consuming, often requiring dedicated departments and infrastructure. Outsourcing HR has proved to be an effective way for SMEs to save time and money.

EISER was formerly wholly-owned by Fortis Investments which was a subsidiary of BNP Paribas Investment Partners Group. The Partners in EISER completed a management buy-out to become a single, independent entity. Prior to this, all of EISER’s back office services, including HR, were supplied by Fortis. The challenge was to transfer all their employees out of Fortis and become fully self-sufficient in HR with no drop in service quality.

plusHR’s dedicated HR Administrator handles all day-to-day HR tasks, including issuing employment contracts and employees and maintaining HR data. Employees are able to book holidays online via self-service, and managers can view employee reports for their teams. Payroll is entirely outsourced, freeing up internal finance to concentrate on value added tasks. With plusHR, EISER now have a dedicated, full-service HR and payroll function at a fraction of the cost of hiring their own in-house team.

Integrated ITO services

For larger businesses that operate internationally, ITO integration services can provide clarity and ease of use across all platforms. Avis Europe plc is a leading car rental company in Europe, Africa, the Middle East and Asia operating the globally recognised Avis and Budget brands.

Avis Europe identified a need to provide greater clarity and improved efficiency in order to maintain its reputation as a customer-focused business. With locations across Europe generating some 15 million documents per year, it was becoming increasingly difficult and time consuming for staff to store, retrieve and process customer documentation. Although the company had separate online imaging systems within each country, these were not integrated and did not allow for cross-border working.

After a competitive tender process, Avis Europe selected EDM to provide high volume processing and storage services. As part of its consultancy service, EDM set up EDM Online, a secure information management system. This system allows Avis’ shared service centre to access essential customer information from any branch – all at the click of a button.

Around seven million documents a year, out of a total of 15 million, are now shipped to EDM’s Manchester mailroom in the UK for capture and storage on EDM Online. The remaining documents are added to the system through dedicated on-site scan stations, which are located at individual Avis Europe locations and securely connected to EDM Online via the web.

BPO in Financial Services

Within financial services, bureaucratic and administrative workloads can often become excessive. Nationwide’s merger with Portman generated an increase in the volume and variety of customer records, which highlighted the need for a centralised, audited and efficient document management service for the business and its customers. The solution needed to bring together information in multiple formats and locations, including a microfiche/film archive in excess of 40 million frames, 68,000 boxes of customer records and 25 million scanned images.

EDM designed and implemented a purpose-built document archive and retrieval solution through its secure Scan-on-Demand service. EDM’s transition team catalogued all customer records and managed their secure transfer to a dedicated facility purpose-built for Nationwide. Now, as records are requested, EDM scans and uploads documents to its hosted web service, EDM Online, to give Nationwide staff secure and instant access to archived customer data from any networked PC across the organisation. The complete service assures seamless document security.

Summary

It is apparent that emerging technologies and economic activity continue to change the face of BPO. Business process outsourcing manages to drive a range of efficiencies in a number of different types of organisations. A wide variety of organisations will continue to benefit from BPO in these austere times which can also support a collaborative approach to contract negotiations.

As the business process outsourcing (BPO) market matures, buyers are expecting outcomes from BPO beyond just cost reduction. Next generation BPO buyers are demanding services providers bring industry expertise and insight, analytics and innovation to their engagements; adjust nimbly to shifting business directions; and drive better business outcomes. Accenture considers relationships that are achieving these exceptional results to be high performing.

So what distinguishes high performing BPO relationships from “typical” BPO relationships? Accenture set out to explore this question in a new study, conducted with the Everest Group and The Outsourcing Unit at The London School of Economics. The study uncovered eight best-in-class behaviours that separate the high performers from the rest:

1. End-to-end approach: Holistically managing the scope of the BPO relationship

For those that are most successful, the entire, end-to-end business process is within scope of the BPO arrangement, including elements managed within the client’s enterprise, those run by third parties as well as related processes that may impact overall performance.

2. Collaborative BPO governance: Adopting a partnership attitude

The disparity between high performing and typical BPO engagements is particularly evident in this practice. Nearly 85 percent of high performers consider their BPO provider to be a strategic partner versus just 41 percent of typical engagements.

3. Change management: Managing the effects of change during transition and beyond

The gap between high performers and typical performers is large in terms of attitudes toward change management, but especially when it comes to executing a robust change management program. Eighty-eight percent of companies working within a high-performance BPO relationship regard change management as important and execute carefully planned change programs.

4. Value beyond cost: Focusing on benefits beyond cost reduction

In high-performance BPO, both client and provider acknowledge the importance of cost reduction, but do not see that as the prime motivation. This mindset manifests itself in several ways, including how the business case for the BPO program is constructed.

5. Business outcomes: Targeting strategic outcomes, not just more efficient transactions

High performers aim for specific strategic outcomes from a BPO arrangement that can be measured and that can help achieve competitive advantage. Beyond that, they also forge deals that incentivize both parties to achieve those outcomes. .

6. Domain expertise and analytics: Contextualising data to create business value

As BPO evolves and matures—and as it enables richer and more complex business outcomes—the field of providers is beginning to separate out in terms of their ability to provide new levels of value. Part of that value is in the ability to use deep domain and industry knowledge—and the ability to analyse data about the functions and processes being outsourced—to more predictably drive business outcomes.

7. Retained organisation transformation: Enabling the retained organisation to perform effectively in the new environment

High performers place as much importance on internal transformation as they place on transforming the outsourced processes. Companies with high performing aspirations also need to re-align the retained organisation around the outsourced delivery model in terms of roles, responsibilities and requisite skills.

8. Technology as a business enabler: Driving operational improvements and business innovation

Technology should be a source of innovation and advantage, not just the infrastructure of delivery. For example, 40 percent of high performers consider technology provided by the service provider to be an important component of the BPO relationship, compared to only 27 percent of typical performers.

Overall, the research found that only 20 percent of those surveyed are classified as high performers. It’s clear there’s a significant opportunity for organisations to capture greater business value from BPO, adopting the behaviours and practices associated with high performance to build new competitive strengths. Those that continue to view BPO purely in terms of transactional processing and cost will be competitively challenged.

Research from the International Securities Association for Institutional Trade Communication (ISITC), shows that over the next two years, almost three quarters of global financial services firms are expected to increase spending on IT.

The research gathered from polls of leading financial services members including executives, managers and brokers pointed to increased financial spending on IT services, however the research also revealed that the future of the industry was uncertain as to how the market would appear by 2020.

Jan Snitzer, chair of ISITC, said: "What is clear is that although progress has been made in improving our industry's infrastructure and processes, there is still much room for us to improve."