Industry news

Vodafone and Teleperformance, a UK leader in outsourced customer services, have announced a new strategic partnership which will see Teleperformance taking on some of the work currently managed at Vodafone’s Newark contact centre.

This new partnership will see the transfer of 207 roles in three of Vodafone’s specialist operations team to Teleperformance. This will mean continuous employment for these individuals with the same terms and conditions.

Teleperformance has been chosen for their experience and expertise as a leader in the provision of customer services in the business sector. The partnership underlines the importance of Vodafone’s operations in Newark and our commitment to provide the best service for all business customers.

Alistair Niederer, CEO of Teleperformance said: “This will be a true collaboration with Vodafone and the partnership will ensure a great future for the Newark contact centre and the services we can provide for business customers. We look forward to welcoming our new colleagues over the coming months.”

According to the Autumn 2011 Labour Market Outlook research from the CIPD, the number of UK firms planning to offshore jobs to other parts of the world decreased from 10% to just 6% in the past year. If you look at these figures for the private sector alone, this drop in ‘offshoring intentions’ was even more precipitous, down from 16% in autumn 2010 to 9% in autumn 2011.

The reasons behind this change are clear: not only has the cost of offshoring to many of the most popular offshore locations increased in recent years because of rising wages, but many of the costs associated with offshore project management have also gone up. As a result, many banks and other financial services firms are seeing a significant reduction in their offshore margins.

Of course, rising costs are just one factor, and few would argue that onshoring is more attractive than offshoring based on wage inflation alone. However, along with these rising costs, a number of practical challenges associated with offshoring have also become more apparent over the years, including logistical/time zone challenges, language difficulties, cultural differences, data security concerns, and/or incompatible IT systems.

Onshoring offers the perfect solution to many of these problems, which is why many financial services organisations are starting to partner with nearshore and onshore outsourcers as a way of streamlining their operations, tightening their internal controls, and creating a more collaborative development process that makes it easier to bring a wide range of compliant and customer-friendly products to the market very quickly.

This last point – collaboration – is especially important in this regard, since many of today’s financial services firms are now aiming to launch new products in just 30-60 days. Short timescales like these are entirely achievable, but a close partnership with a firm’s outsourcing partner will be essential, since frequent, real-time communication will be a vital ingredient in delivering this level of efficiency.

Also, by working with an UK-based outsourcer in an area like third-party administration, banks can now delegate the responsibility for all of their customer communications with confidence, along with product distribution, complaint handling, marketing and more, since it is much easier for these onshore partners to embed themselves in the heart of the bank's operations. As a result, financial institutions will be able to devote their time and energy towards selling a whole new generation of easy-to-understand, fully compliant products that are in tune with their culture and brand and which will satisfy customers and regulators alike.

Even with all of these benefits, however, no one is suggesting that onshoring is going to completely replace offshoring any time soon; certain activities will continue to benefit from ‘follow-the-sun’ processing and reduced labour costs. However, a strategy that brings an onshore element into the mix can undoubtedly offer enormous benefits, since greater collaboration in the form of face-to-face contact, regular meetings and timely feedback can speed up the time-to-market for new financial products considerably.

And make no mistake: in a market where financial services businesses are fighting it out to secure market share and keep hold of their customers, every second counts.

How many people recognise a scenario of a never-ending project, with endless meetings about meetings, with consultants tying users in knots with jargon-laden presentations, gant charts, and flow diagrams? That’s what a Times reader asked last week, and it struck a chord.

He went on to suggest that many people in meetings don’t have a clue what’s being said/going on but lack the balls to say so, to challenge what’s being said and demand some much needed clarification, for fear of looking stupid or appearing negative.

So how many people empathise with that situation? A lot I’d guess…

Working client-side, I’ve been through meetings about corporate rebrands, with consultants who come copiously armed with acronyms, casually dropping buzzwords, seeming to thrive on the blank looks and vacant nods reflecting back at them. I’ve even seen clients volleying suppliers’ buzzwords back at them, reinforcing the façade that everyone understands what the **** is going on.

This, obviously, is startlingly bad form.

There’s no such question as a stupid question. If it needs asking, then the person presenting is the one at fault – in communication, the person receiving and perceiving is king (or queen!). And in business, the customer is king. But when hired as an expert, maybe the supplier knows best?

Wrong. Well, sort of. Both parties know best, in different ways. You know your business, they know theirs. Work it out together. It’s that middle ground where that killer solution is found, and the masterplan is drawn up.

That’s why suppliers and clients should challenge one another. In plain English, with metaphors and analogies as required, to ensure deep understanding within all concerned. ‘Simple is a dirty word these days’, says our man in the Times. I don’t agree with that at all. Simple is genius. Over-complication is a cloak to disguise where genius (or even good old common sense) is sadly lacking. There’s a great quote from American bluesman Woody Guthrie: “Any fool can make something complicated. It takes a genius to make it simple.”

So, if it sounds dead complicated, it’s probably not the masterpiece you were hoping for.

Nodding and smiling, when, underneath the surface you’ve got a burning question, can turn out to be a serious waste of money. And who’s got money to waste, these days? So know what you want, know how to ask for it. And speak your mind, all the time.

It’s no exaggeration to say that the last few years have seen a sea change in attitudes towards offshoring. For many organisations, what began as a very attractive cost cutting strategy is now becoming a challenge compared to providing the same service in-house. There are a number of reasons why an increasing number of businesses are starting to bring key areas back in-house, but it’s nonetheless clear that a significant number of businesses have totally underestimated the impact caused by replacing key in-house skills with outsourced staff in offshore locations.

One of the principle cost drivers for this about turn is that IT salary inflation in emerging markets such as India and China is now becoming a major issue. The cost of retaining the resource base in these markets is growing much faster than the West (eg 3-5 times) and putting great pressure on the budgets of companies that use them as a result.

There’s no doubt that an increase in the levels of competition for skilled employees in countries like India and staff turnover of key, skilled staff is also playing a key role in this process, levels of turnover of 15% and above are common. After all, outsourcers exert a great deal of effort to retain skilled staff, while some workers chase the best wage and benefits from role to role, sometimes flouting employment law and best practice in the process.

However, it’s also true that organisations have chased cheap 'day rates' and services around the world under the assumption that cheaper day rates will automatically result in lower overall costs. However, this assumption tends to made without fully considering or even understanding the potential drop in productivity or time-to-market for new products. Organisations have subsequently found that although they were originally buying an offshore service, they have ended up with large numbers being transferred onshore, with extra costs, as communication issues arise and the need to work closely with their business counterparts becomes apparent.

As a result, there’s a growing acceptance from businesses that they now need to be much more selective about how they approach offshoring, as well as a more strategic approach to what can be effectively outsourced to an offshore provider. As a consequence, CIOs are beginning to realise the importance of having much better resourcing strategies in place to get the blend between in-house and offshore staff and skills right. As productivity and time-to-market become increasingly influential factors, CIOs need to be able to articulate this argument convincingly so that they can persuade their Financial Directors that cheaper days rates does not always mean cheaper overall costs.

So what’s the future for offshoring? Clearly there will always be a need for services to be provided in locations where commodity skills and experience is plentiful. However, as more businesses begin to recognise the importance of using offshoring strategically, and more sparingly, we’ll continue to see more and more of them moving selective services back in-house.

Motivation and drivers play a key factor in outsourced recruitment and talent management processes, but on a global scale what really engages staff will vary from place to place. As the Asia Pacific region becomes increasingly important to the global economy, organisations in this area need to ask themselves what really motivates their employees.

Typically in western culture, the criteria used by employees to gauge whether their career is advancing tend to focus on three key factors:

1. Am I developing my skills in my role?

2. Are my skills good enough that I can teach others?

3. As I improve, am I being recognised by my superiors and rewarded appropriately and financially?

It doesn’t always work the same way in Asia Pac though. The measures employees tend to rate their career progression on, in rank order, are:

1. The professional title on my business card – what status do I get from this? How does it affect the way the world sees me?

2. How much money do I earn - determining the level of pride my family have in me and the more I can pay for in support

3. How many people do I manage? What does this mean for my status and influence in the business.

So, as long as job title, money and team size are moving north, many employees are likely to believe their career is advancing; skills and abilities rarely factor anywhere in these considerations.

As larger numbers of employers look to attract and retain talent by meeting the criteria required by staff they are, in effect, creating over inflated expectations within the workforce, an issue the recruitment process outsourcing (RPO) industry in the region must deal with.

With the emphasis placed on job title and status, the result is a workforce with highly ranked titles whereby the job requirements don’t necessarily align with those of similar titles globally. As organisations increasingly begin operating at an international level this can cause disconnect between similar, internal roles across the globe.

For example, if a company opens an office in Spain, an Asia Pacific employee applying for the same job title in the new office may struggle as they come up against external recruits with the same title but more experience and skills. In order to balance this out, employers and RPO organisations themselves will need to work at shifting the perceptions of career development in the region.

Perhaps, as the west has lots to learn from the east, so too do we have something new to bring to the table. It is impossible to change hundreds of years worth of culture and that is certainly not what we are recommending.

Ultimately this is not going to change unless employers understand not only how they should approach the workforce, and why, but also that any change will be a slow and subtle process. Adjusting a behaviour which has been engrained over an extended period of time cannot be done overnight. Instead APAC organisations should be encouraging staff to stop and analyse their career progression, their skills and where this can take them.

The current situation with job mobility and candidate driven motivations is unlikely to continue forever and once this changes the APAC workforce may struggle when it is no longer so easy to leave a job for more personal reasons rather than career progression. The impact this has on both employers and the workforce can be reduced if small changes are encouraged sooner rather than later.

If 2011 was the year of the cloud, with increasing adoption across the market, then this year will see the technology move into its awkward adolescent years - and like any growing solution, it will be difficult to keep under control. Critical for 2012 is that cloud services can operate within a hybrid architectural environment, and deliver truly enterprise-class services. To realise this, the outsourcing industry will have to adopt an approach which adheres to a more industrialised method.

Recent reports from both Gartner and IDC have identified industrialised models as an emerging trend and highlight that it will become increasingly important to standardise IT processes in 2012. In order to cope with growth, change and the ability to react quickly to business demands, standardisation of IT process will extend beyond platform standards (already implemented by many organisations to replace the bespoke application-per-environment design and implementation practice of the past) and into standardisation of IT management practices; from the service catalogue of what can be delivered to what SLA; through to the underpinning tools and process which cover service design, service transition and service operation.

Industrialising such services makes them infinitely more scalable, repeatable and transparent. Such industrialisation relies on the adoption of standard practices, but also on the management tools and systems which will support – and indeed govern – IT practices. Integrated service management tools will underpin consistency in delivery, and also facilitate the automation of service management activities.

With ever more pressure to deliver effective, lower cost IT services, 2012 will see the increasing adoption of automation, and increasing emergence of autonomics. Rather than chasing the promise of low cost resources around the globe, delivering IT services using adaptive self-learning technologies will not only reduce costs, but also offer improved scalability, flexibility, and compliance.

Automation is beginning to see mainstream adoption; organisations are starting to recognise it as an essential tool for industrialisation and a key level in reducing costs and improving consistency. But self-managing, self-governing, and self-healing technologies are also emerging strongly. From appliances and products that can proactively detect and heal problems, through to holistic support infrastructures that automate not just execution of activities, but decision making based on multiple inputs and circumstances.

The critical difference between automation (systematic execution of a series of tasks) and autonomics (self-governing systems) is that ability to automate complex decision trees, and add contextual awareness to such decision making. To extend this capability across multiple disparate systems that underpin a complex business service requires the integration of monitoring, management and automation technologies into a single platform with the ability to continually learn and improve based on experience.

Naturally the automation of activities reduces reliance on IT staff who would otherwise be required to undertake these tasks. Firstly, automation is a much more robust approach to staff efficiency than the typical and traditional labour arbitrage through offshoring. Secondly, automating low level, systematic and often mundane tasks actually liberates expensive, intelligent IT staff to focus on change programs and services which add business value. All CIO’s, bar none, would love to refocus their teams away from “run the business” and on to “change the business”. Automation provides a great way to realise this desire.

Outsourcing is traditionally associated with getting help to do things you might not normally associate with your core business. Andrew Kershaw describes a different approach to outsourcing that can establish IT excellence and create significant commercial advantages as a result.

Over the last 15 years, I have observed a number of different IT teams and experienced a wide variety of situations where outsourcing has been involved. But what distinguishes a really good IT team from an also-ran?

Let’s first look at the role of business technology. Experience has shown me that IT has two very different roles; as a ‘utility’ providing technology on tap; and as an ‘enabler’ that improves the bottom line.

The ‘utility’ perspective of IT is well-disposed to successful outsourcing. However, as a successful operator in the field, we know that outsourcing can be far broader in its scope and potential. To really make a difference to your organisation, its clear priority must be enabling and delivering technology-based innovation. This is where competitive advantage can be gained and goals materialised. It is vitally important that IT contributes more than just running infrastructure effectively and inexpensively.

Outsourcing doesn’t mean having to move all of your IT functions out to a supplier. Ideally, the first thing you should do is identify the strengths and weaknesses of your business in its ability to deliver quality business technology. Once this is established and you have a better idea of what you want (and what you don’t need), you’re in a position to choose the right supplier to add value.

A good outsource partner provides complementary skills, knowledge, ideas and creativity to help their client achieve competitive advantage; meaning effective providers are viewed as strategic partners rather than suppliers.

Good relationships and communications are crucial Successful IT outsource partnerships are built on strong relationships. If the customer is to extract maximum performance from his outsourced partner, he must approach the relationship with similar vigour. Communicating at the right level leads to productive and profitable relationships; a business leader, such as the CIO or IT Director, should act as the key point of contact for the outsource provider helping to keep IT in line with the business strategy.

Efficient execution of the ‘utility’ side of IT is an absolute priority. If it isn’t, then system availability, reliability and support issues will start to impact on the relationship with senior people. This will distract the IT leader, whose time will be spent in fire-fighting and damage control. Both credibility and relationships are almost guaranteed to go downhill as a result.

Must add value Outsourcing can be associated with cost benefits, although this is not as simple as it at first seems. To achieve cost reductions, an outsourced provider needs to find ways to deliver services for less, which may not be feasible where client IT functions are already fairly lean. In this case value can be added in the form of expert capabilities and service quality. An internal IT department must deliver a considerable number of capabilities; this is only possible with smaller IT functions by drawing on specialist expertise. Outsourced providers can offer flexibility as well as continuity with such capabilities. If you need a particular expertise every now and again, it can be hugely advantageous to draw on the same team you’ve invested in by building relationships and domain knowledge. A good outsourced provider will deliver this sort of flexibility as an implicit part of their contract.

Service quality can vary between providers; but the inevitable competition between the best helps to ensure constant focus on service quality. As an outsourced service provider, delivering consistently high standards of service is critical to survival: otherwise we risk losing clients who always have the option to change providers. We deliberately structure our contracts so it’s straightforward for our clients to do this without penalty; it keeps us on our toes!

Far from being a tedious necessity, IT Outsourcing can be a revelatory and transformative addition to your operation. In an unpredictable world and uncertain times, change is all. And achieving the correct changes to survive and prosper, your business should look to those who understand, and often create, these disruptions.

“Effective immediately, we will be bringing our technology, tools, and team to the revenue engineering team at Twitter,” Dasient wrote on its company blog.

Known for its anti-malware platform, which can scan web addresses to assess the presence of harmful content, Dasient represents Twitter’s second web security acquisition in three months. In November, Twitter bought Whisper Systems, an encryption startup that originally built encryption software for Android.

The purchase of Dasient is the latest sign of San Francisc0-based Twitter’s growing dedication to online security, an issue that the company had skimped on in the past. Along with its web address analysis products, Dasient has also created a service that can hunt down malicious online advertising to protect the ads and content of customer websites.

Stepping up his campaign against outsourcing, US President Barack Obama announced a series of measures that would offer incentives to those firms which will create jobs in the country, a move that may also affect companies in India.

"If you're a business that wants to outsource jobs, you shouldn't get a tax deduction for doing it," Obama said in his State of the Union Address during which he presented an economic blueprint aiming to take his country away from outsourcing, bad debt and phony financial profits.

Many of his proposals centred on changes to the tax code, including limiting deductions for companies that move jobs overseas, rewarding companies that return jobs to the United States and increasing taxes on wealthy Americans.

UK economic activity shrank by 0.2% in the last three months of last year according to official figures.

It marks a sharp drop in economic activity from the third quarter of 2011, when gross domestic product (gdp) expanded by 0.6%.

The figures, from the Office for National Statistics (ONS), are a preliminary estimate, which could be revised either up or down by 0.2%.