Industry news

Firms offering Business Processing Outsourcing (BPO) are now using leading-edge software to provide a range of innovative solutions for the financial services sector, says Jim Muir, Director at AutoRek.

As manpower costs for Business Processing Outsourcing (BPO) providers continue to rise and further erode margins, companies in this area are increasingly looking for new ways to reduce manpower without compromising service levels. The first step in achieving this goal, however, is for BPOs to look at how much manpower they are actually using at the moment.

This activity is often expressed by a metric known as ‘full-time equivalent (FTE)’, which is an easy way to measure a worker's involvement in a particular project. The most common way of determining an FTE for any given activity is to count up the number of people working in this area on a full time basis, as ‘one FTE’ relates to a single employee working full time. As a result, the more full-time employees that a BPO has working on a task, the higher its overall FTE will be.

So why does this matter? Because this FTE figure can help to identify the amount of manpower that BPOs are using for a particular task, and – if it is too high – this figure can often be reduced by implementing more streamlined systems and/or automated IT solutions. For example, automated financial reconciliation software can reduce reconciliation FTEs by 75% compared to manual processing, and can completely eliminate additional FTEs in ancillary processes such as collections, stopped payments and banking and cashiering.

As a result, it is now possible for BPOs to use software solutions like these to generate nine-month breakeven paybacks – and a total return on investment of 500% (recurring) – for an investment that will cost them less than employing five UK workers for a year.

With benefits like these on offer, many BPOs have decided to take this route, and to use sophisticated sales ledger cash allocation software to analyse cash receipts and then automatically post the entries to sales ledgers in real-time. With this approach, the manpower savings can be over 50% of the sales ledger cash team and, more importantly, this same software can also be used to automatically create and send emails to payers in order to query any unfulfilled promises to pay and/or to highlight other settlement discrepancies.

At the same time, this solution will allow BPOs to automate the escalation of these issues internally to stakeholders, in order to drive even greater savings in terms of FTE, interest and bad debt expense. As such, the latest software in this area is already making it possible for BPOs to reduce manpower significantly – and easily – without compromising on service levels.

Although many of these same BPOs may have relied upon ‘low-salary territories’ to deliver savings to their financial services clients in the past, wage inflation in some of these locations (including India) has now risen into double digits, which means that the cost per head in some locations is simply no longer competitive.

This approach has therefore become untenable and – with many of these providers on a cost-plus deal or in the process of renegotiation – a new model is definitely required. Unfortunately, very few companies have adopted the approach that Aegon has taken in India, for example, which was to build excellent processes at the time of the initial ‘lift and shift’.

As a result, the cost per person for some companies operating in these regions has risen from £3k to £18k in a very short space of time, which is clearly not ideal. Along with the cost, many UK businesses have also been disappointed by the lack of visibility and accountability provided by their BPO, and have therefore opted to bring much of this work back in-house, which could have a serious long-term impact on the BPO industry as a whole.

For all of these reasons, many BPO providers are now looking for scalability and automation (as opposed to endlessly chasing the end of the low-salary rainbow), by leveraging new software tools that provide automated reconciliations, settlements and cash allocation. Automated transaction matching reconciliation software, in particular, can dramatically reduce the time spent reconciling data from virtually any internal and/or external source, so that the BPO’s resources can be freed up to resolve problematic transactions, manage risk effectively, and provide up-to-date management information.

What BPOs need to look for here, however, is a purpose-built, high performance-matching engine that uses user-definable matching rules to compare and match data from any imported files. Applied sequentially, these rules can then facilitate the matching of data with incredible speed, whilst also exposing any exceptions. As a result, 99% of data can be reconciled automatically by using tools like these.

BPOs serving the financial services sector will often need to reconcile high volume trading environments, as well, and many are therefore using innovative software that has been specially designed for confirmations, settlements and custody reconciliations. The latest tools in this area now offer fully integrated case management, workflow and management information tools, as well as robust exception management solutions that work with industry standard feeds and interfaces in order to minimise the cost and time required for deployment.

By automating these processes, BPOs will be able to reduce manpower, and yet still escalate any ‘breaks’ to interested parties and other stakeholders very quickly. In addition, stakeholders benefit from immediate access to all of this vital data and other key management information (MI), so that they can track and monitor matching behaviours and performance easily.

Any data related to collections and credit control is also very important for BPOs, especially in the financial services sector, as they need to be made aware of any problems in these areas immediately. Again, the latest reconciliation software can help here too, as it can provide BPOs with instant alerts for any problem accounts, leading to faster allocation of cash and better client relations.

This last point is important, as cash allocation can be another time-consuming process, especially when it’s hampered by poor quality, late or missing remittance advices. As a result, the timeliness of sales ledger information can often be weak (and laborious to interpret) when it comes to implementing robust and effective credit control. Clearly, as cash becomes tighter in today’s challenging economy, organisations will need to address these issues at the earliest opportunity, and in the most cost effective way possible.

It’s no wonder that modern BPOs are looking for a more innovative way of handling all of these processes. Innovative software solutions can significantly reduce the costs associated with sales ledger and credit control personnel, and can also help to provide a cleaner sales ledger, faster cash allocation, cleaner recoveries, a reduction in bad debts, and an overall improvement in customer relations. Even more importantly, all of these factors can lead to increased sales, as confidence in the good payers increases.

For all of these reasons, the latest reconciliation technology doesn’t just help to reduce headcount, but actually helps to enhance the BPO’s overall productivity instead. With access to powerful, easy-to-use tools that makes their work easier and more accurate, employees often find that their work is a lot more rewarding and fulfilling. Meanwhile, for the BPOs themselves, this increased satisfaction can often lead to a reduction in staff turnover and better continuity of service – in addition to all of the productivity, cost and risk management benefits that automation can provide.

A quick glance across the UK retail banking, life & pensions and investment management sectors reveals an interesting finding: retail banks, building societies and other mutuals are the ‘black sheep’ of the outsourcing family. Whereas some financial services sectors are veterans in their outsourcing journey, including those coming full circle and bringing operations back in-house, the retail banking sector is taking its first steps. There are, of course, pockets of experience, such as credit card outsourcing, ATM replenishment and overflow contact centres but the core current account, savings account and mortgage operations of UK retail banking providers remain largely in-house.

New entrants have been the lifeblood of the retail banking outsourcing industry for some time and, by their very nature, they have tended to be smaller, more niche providers. Consider the wave of new mortgage lenders leveraging the capabilities of outsourcers, such as Deutsche Bank’s mortgage subsidiary ‘db mortgages’ using Vertex and Kensington and GMAC-RFC signing agreements with HML. There are also the foreign deposit takers, such as First Bank of Nigeria’s FirstSave and Iceland’s Landesbanki subsidiary IceSave, which outsourced their operations to Newcastle Strategic Solutions Ltd (NSSL).

The outsourcing trend was undeterred by the credit crunch. In 2009, Aldermore announced it had signed a contract with NSSL to develop and administrate its multi-channel savings offering and Tesco Bank announced a similar deal with Vertex for mortgages a year later.

There appear to be three key reasons why new entrants cannot resist outsourcing, whereas it continues to be eschewed by established banks and building societies.

Sunk Cost and Capability

Technology is one of the largest fixed costs faced by banks. New platforms cost tens – even hundreds – of millions of pounds to build, let alone maintain, develop and replace. Removing a major product line and giving it to an outsourcing provider is also not cheap or easy. Only several rows into an NPV spreadsheet, it can become very difficult to make the business case stack up, regardless of the potential downstream cost savings. Of course, many costs are sunk – the platform cost £100m whether it continues to support mortgages, current or savings accounts or not, and normally just increases the dreaded central overhead or recharge to other product lines. That is without considering the large number of technical, development and support jobs, let alone the operational staff, who are dependent upon it.

New entrants tend to have few if any of these problems. Indeed, outsourcing offers the opportunity to acquire capability without sinking a huge amount of capital. Metro Bank has communicated the benefits of its relationship with Temenos, which is based on ‘pay-per-transaction’, rather than infrastructure costs. Furthermore, outsourced relationships can be more attractive to potential buyers, rather than being faced with a costly and time-consuming IT integration programme, just at the time they want to be leveraging increased scale from the acquisition.

Speed to Market

In the largest banks, it is generally accepted that major new product or channel innovations take a lot of time. Unperturbed by stories from new entrants getting from scratch to market in six months or deliver major innovations in months, it is simply accepted as the flipside of the many benefits associated with greater scale.

However, a hybrid model does exist, whereby strategically-important innovations and developments are delivered through third parties, enabling quicker market entry and, potentially, first mover advantage. For new entrants, speed to market is absolutely critical, as they continue to burn capital until they turn a profit. For the incumbents, who are normally already delivering profits, the capital burn does not seem anywhere as critical and the urgency to get to market is therefore often correspondingly smaller.

Oversight and Governance

The increasing scrutiny of the regulator on outsourcing relationships and specifically the requirements under SYSC (8), represent a significant challenge and cost for those outsourcing operations. To do this properly requires fundamental changes to operating models, governance forums and even job roles and descriptions. But these challenges are much smaller for new entrants. Building an outsourced operation ‘from scratch’ can be simpler and there may be less resistance to change from existing staff, albeit it still represents a major and onerous undertaking. Indeed, with the right outsourcing partner and model, it can be much easier to prove to the regulator that the necessary skills, experience and competencies are in place through a third party that may otherwise take a long time to recruit, train and establish in-house.

In Summary

Outsourcing certainly is not the solution for every new product, channel or innovation. Indeed, it might not be the right solution for some banks, building societies and mutuals at all depending on their strategy, change capability and cost base. Mutuals, for example, may value local staff employed locally as a core part of their proposition, which cannot necessarily be retained in an outsourced relationship. But even allowing for the obvious differences in circumstance, the difference in the use of outsourcers by new entrants compared to incumbents is striking. Rather than ignoring new entrants as a different breed with a different set of circumstances, it would be wise to consider whether incumbent institutions should reconsider the value these options might offer. Now that could be something to change the playing field and the fortunes of shareholders and members respectively.

Banks and financial services companies are struggling to contain costs in the current recession whilst at the same time seeking to innovate in a fast moving financial marketplace. One major weapon in their armoury is the use of outsourcing and, over the last decade, financial sector firms have made increasing use of it to drive down costs whilst giving them a more agile and flexible infrastructure.

On the cost control side, outsourcing has been a major success for financial services firms. Therefore the outsourcing trend is likely to continue, as companies look to concentrate on their core competencies and offload the headaches of day-to-day administration, which will allow corporate focus to be maintained on innovating products and services to keep ahead of the market, whilst providing certainty around the costs of providing and administering the said products and services.

Innovation inhibited by rigid infrastructure

However, on the innovation side, the report card is not so good. One reason for this is that everyone underestimated the extent of technology driven change in consumer behaviour that has occurred over the last decade.

As consumer demand grows for new products and better access to existing products, in a world that is coming increasing focused on personal mobile technologies, the financial sector is no more immune from the need to adapt their offerings than other sectors.

All financial services firms are going to have to embrace new consumer models or stagnate. Unfortunately, financial services usually lag other sectors in adapting to new consumer habits. And the rigidity of their IT infrastructure and architecture is commonly given as a major reason for failing to respond rapidly to the changing business environment.

Outsourcing has exacerbated the problem

Aside from the cost issue, one of the main reasons that firms embrace outsourcing is to break out from the restrictions of bureaucratic IT departments and to have in IT infrastructure that is responsive and flexible and has the ability to support the use of new media and provide the new levels of services that the consumer market is now expecting as a right.

However, when drawing up outsourcing contracts, all the emphasis is inevitably put on the cost control factors and the service level agreements for existing services. This incentivises the outsourcing company to concentrate on providing the basic existing level of services and to pay little attention to supporting innovation in the client firm.

This has led to a disappointment with outsourcing projects, even where the SLAs are being met and the cost control promised is being delivered. Firms have been left feeling even more restricted than when they had full control of IT in-house. And so, they have re-examined the whole process in order to identify a solution.

Joint partnership

Many financial firms are now taking a better approach by involving their outsourcing partners more in the innovative side of their business. This means separating out the basic service provision side of the contract and ensuring some of the contract is left for the outsourcer to ‘earn’ by pitching new ideas at the firm or by involvement with the product / service development side and offering new services to support the emerging new ideas.

This model of working together is going to become more common as financial firms try to increase the level of products and services they supply to the mobile “i-Generation”. It refocuses the supplier away from a purely cost-driven approach that has supplied the bulk of their revenues to date, and onto broader thinking about new ways to offer value.

Changes in the financial services sector

Already the majority of personal and small business banking is done on-line from home and work PCs. Over the next decade, consumers will expect to have access to all financial products and associated services on demand; in whatever way suits them, wherever it suits them. Mobile phones and tablets are increasingly likely to take over from personal computers as the favourite way to interact with their banks, life and pension providers and investment brokers. Gartner have forecast that worldwide their will be 40 million tablets by 2012, accompanied by a corresponding drop in the sales of pcs, and the UK will be to the fore in this technological revolution.

This means that financial institutions need to be prepared to engage with their customers in the manner desired by the customer, not the manner defined by institutions.

Outsourcing companies bring value to the table

Outsourcers are in a position to supply the skillsets to exploit the new technologies, which would not necessarily be available or cost-effective for firms to have in-house, as they can spread the costs across multiple clients. Outsourcers can also use private cloud architectures to give financial firms scalability and agility that they need and would be unable to supply themselves; this will allow financial firms to access the flexibility and strength of the cloud model while maintaining high security levels over their data – a key compliance issue.

In particular, the ever-increasing need to handle new technologies means that a good partnership between firm and outsourcer allows the creativity of the firm to be supported by a rapid response from the outsourcer giving a short time-to-market and allowing emerging technologies and platforms to be embraced in the early stages.

Future provision

Over the next two years, we can expect to see a whole new approach to outsourcing as more financial sector firms seek to move beyond pure cost control and start to partner with their outsourcers in order to achieve the levels of innovation required in the market. Outsourcers need to be proactive in seeking to show that they can provide this level of value to the financial sector.

Those who succeed will be able to move up the value chain by increasing the level of services they provide and the value of those services to their customer base. Those who don’t will be left behind as financial firms find that pure cost control is not a compelling enough offering to make them include outsourcing as part of their future strategic plan.

Organisations, especially SMEs, are being encouraged to move to the cloud to drive down costs and cut internal IT heads. But will this really work? As vendors look to pack ever more complex features into product sets, is the cloud really the best way to access this technology?

Critically, do organisations ever really need such functionality? Since 90% of the features in most software applications such as CRM remains unused, there is a strong argument for providing a radically cut down alternative – at a drastically reduced price. Or even for free.

As John Paterson, CEO, Really Simple Systems, argues, the cloud represents a chance to not only transform the way software is delivered but, more critically, the opportunity to radically change the type of product on offer.

New Model, Same Software

The shift towards cloud computing continues to gain momentum. Vendors are embracing the lower cost of delivery and reduced support requirements; whilst organisations of every size and market focus are grabbing the chance to reduce internal IT skills and move from a capital expenditure to operational expenditure model.

But is cloud computing really just an opportunity to deliver the same software in a cheaper way? The vast majority of software applications being delivered via the cloud are nearly identical to the vendor’s on-premise solutions. Indeed, even those which were designed specifically for the cloud are still highly complex software packages, full of intricate functionality that demands significant user understanding and commitment.

The result is that while there is a small cost saving over the on-premise systems, these applications are still inherently far too complex; they require significant support and extensive end user training. Any business that was deterred from investing in traditional on-premise CRM systems, for example, due to complexity, is still not going to make the move just because the delivery model is cheaper. Instead, these organisations – which represent the vast majority of SMEs in the UK – will continue to track sales via spreadsheets.

So just what is being gained from the move to the cloud?

Simplicity Equals Productivity

The cloud offers a fantastic, fast, low cost software delivery mechanism. Yet by attempting to deliver existing on-premise solutions via the cloud, IT vendors are missing the point: they are creating a huge support overhead and reinforcing the problems associated with user dislike of over complex systems.

In contrast, following the cloud model to its logical conclusion, vendors must strip out the unnecessary and unused features in the software. With a simple, intuitive application, there is no need for an organisation to invest in user training, pay for support or accommodate the complexity of these larger systems. The overall cost to use reduces significantly, whilst productivity and user acceptance increases.

And this is key: simplicity has a huge value to businesses. It ensures people understand and use applications more effectively. Simple applications are also far more robust, cause fewer problems and demand minimal support.

There is, of course, a trade off between simplicity and functionality. An organisation has to decide: opt for a less functional product that is easy to use and will gain universal adoption across the organisation; or insist on a more expensive solution that ticks every single feature box and accept the fact that at best 20% of users will get to grips with the system.

For any SME that has been deterred by the over complexity of traditional on premise CRM or ERP systems, the opportunity to invest in simple yet functional systems is compelling.

Tipping Point

As the cloud model gains momentum, vendors need to think again. The SME software market is becoming commoditised: the emphasis is on low cost, even ‘freemium’, systems delivered via the cloud. These systems are essentially simple, ensuring users can be up and running within ten minutes, with no training and require minimal support.

In this marketplace, persisting in adding new, increasingly arcane features year on year is delivering no incremental value. The core software is inherently functional; it works effectively; it meets the vast majority of needs. Adding functionality and complexity makes the solution less, not more, valuable to the majority of businesses.

So while analysts may get heated about the ease with which a CRM system can integrate with LinkedIn, back in the real world, those running SMEs just want a system that makes it incredibly simple to load their data from a spreadsheet.

Critically, the cloud makes this new model viable. Vendors can provide a simple, yet effective, commodity application that meets the vast majority of business needs at a fraction of the cost of traditional on-premise solutions.

Conclusion

Cloud software is becoming a commodity offering. Prices will shift ever lower. And there is huge pent-up demand across an SME marketplace that has failed to successfully adopt a raft of applications, from ERP to CRM. The essence of cloud computing is not just a low cost delivery model but the chance to develop and deliver a simple to install, simple to implement solution that is easy to use and requires minimal support. So will this drive some much needed pragmatism into the software industry, with vendors focussing on what people need and ease of use, rather than marketing-driven new features?

The arrival of any new approach to technology is traditionally accompanied by hype, and nowhere is this more true than in cloud computing. Yet it has become very clear that cloud computing, or more specifically cloud-based Infrastructure as a Service (IaaS), is far from a fad: we are moving towards a point where this approach will become the norm for corporate IT. The benefits appear obvious – reduced costs, increased automation and simplified IT are often cited – but lingering doubts exist outside the IT department. So is the IT department being held back from investing in the cloud – and potentially transforming the way IT is delivered – by others in the business?

Recent research suggests this is indeed the case. SunGard Availability Services recently polled 100 Chief Financial Officers (CFOs) in mid-sized organisations, and found that a mere one third admitted to understanding fully the benefits of moving their IT into the cloud. This was substantiated at a seminar hosted in September 2010 by the Institute of Chartered Accountants in England and Wales (ICAEW), where half the delegates admitted that the 'finance department is a laggard in the adoption of cloud computing'.

This initially may seem strange, particularly when considering one of the key benefits of cloud-based IaaS solutions: reduced cost. The efficiencies, which cloud computing enables, can allow organisations to pare back on new capital investments, and instead fund projects from operational expenditure, helping maintain a lean balance sheet. It also offers the flexibility to scale with ease, adopt the latest technologies cost-effectively, and eliminate surplus equipment being left under-utilised within an organisation’s data centres. IT would also point to the easier change management of infrastructure including maintenance and upgrades, improved agility to deploy solutions and choice between vendors – all of which have a positive impact stretching beyond the walls of the IT team and out into the business.

So why, at a time of budget squeezes and economic uncertainty, have CFOs so far been wary of the cloud? The research revealed that the main source of CFOs’ reluctance is centred around the lack of control when outsourcing the management of their IT infrastructure, with fifty-six per cent of respondents also citing fears around the security of sensitive customer or commercial data.

Perhaps it is understandable – there have been several high profile outages and security breaches from cloud solutions from big name providers, and forty-five per cent admitted that high-profile media stories around IT outages or data losses made them more inclined to keep their data in-house, despite the cost implications. But one of the research’s most telling statistics was that only just over a quarter of CFOs said they fully understood the difference between private and public clouds – two very different approaches to cloud computing.

Public clouds, as the name suggests, include resources (such as computing or storage) which are shared with others, and can often by used by anyone with a credit card. Many believe that the public cloud will be the dominant way of IT delivery in the future. But despite the major capital and operational expenditure savings the public cloud offers, the vendor’s focus is usually to provide flexible IT resources at a low cost, which does not tally with the needs for secure and available data and infrastructure which are high on a businesses’ list of requirements for many elements of their IT.

In order to exploit the benefits of modern computing, network, virtualisation, and storage resources which the cloud offers, it seems finance needs much more reassurance that they will not relinquish control and security. To do this many organisations are turning to an enterprise-class private cloud-based IaaS solution, as IT resources are delivered from within the corporate firewall and therefore within the boundaries of an organisation’s own security policies.

It is crucial, however, that a private cloud provider’s resilience can be proven. Organisations need to be supremely confident in the availability and integrity of the data or infrastructure they pass over to a third party provider. If this can be demonstrated, the private cloud allows businesses to leverage the benefits of the cloud, without any fears surrounding loss of control, security and overall performance trade-off.

IT – both vendors and internal IT departments – have a job on their hands to ensure that businesses do not miss out on the cloud by communicating its benefits, and the right type of cloud approach. Many business leaders are already familiar with provisioning IT ‘as-a-Service’ through Software-as-a-Service, and the old ASP (application service provider) model, but the real value comes by taking IT further into the cloud and provisioning their IaaS. Using a trusted partner who can demonstrate data integrity and resilience, permits IT to focus on revenue generating projects rather that performing endless maintenance on legacy systems.

The right IT systems are essentialfor business growth, says Jon Milward, Director of Managed and Support Services, Northdoor plc, but modern businesses still need to domore with their ITin order to stay competitive

Driving profitable growth is the top priority for every business leader. Whether the route to growth is organic or through mergers and acquisitions, IT will play a critical role in helping small to medium enterprises (SMEs) achieve their key business objectives.

IT should not just be seen as a tool that enables the day-to-day running of the business. As a matter of fact, IT can help a business grow in a number of key areas, such as developing new revenue streams, streamlining processes, increasing efficiency, andincreasing cost competitiveness.Furthermore, IT can enable the creation of a crucial network between partners, clients, or even employees.

With increasing economic pressures in the form of tax increases, rising manufacturing costs and inflation, SMEs tend to focus their strategy on cost reduction, rather than investing in growth. Undoubtedly, in challenging economictimes, companies need to achieve more with fewerresources. But what do businesses need to consider so they can advance from the survival mode (saving for now) to the growth mode (investing for the future)?

Building the foundation for growth

In order to determine whether you are getting the maximum value from your existing IT operation, you need to understand what your company’s key efficiency factors are, and how you can evaluate the performance of your IT against these controls. These efficiency factors can be the ability to deliver the services faster or cheaper, for example, or to reduce any service downtime.

There are few key criteria that you need to consider when it comes to evaluating these factors.As a starting point, it is essential that you look at whether you have automated all the processes within your business wherever all possible, and especially those thatcan help to reduce any manual tasks that lower workforce productivity.

By streamlining your business and production processes in this way, you can vastly reduce the cost of your products and services.After all, a business that has lower operating costs can normally translate these reduced costs into their business pricing strategy, and thus help to gain a more competitive edge in the marketplace.

At the same time, the automation of manual processes that have low productivity, but which are necessary for your business (such as customer service), can also speed up production and free up vital resources that are often limited in SME businesses. As a result, these resources can be used to focus on business growth instead.

You also need to evaluate how you are currently delivering and managing the IT services that are required to support the business. In some cases,you may want to consider outsourcing your IT infrastructure, as this approach can often help to reduce costs and also free up in-house resources that can be focussing more on business growth.

Recent developments with cloud computing and business virtualisation can also help you to manage a number of business functions more efficiently. It’s also a good idea to assess whether your in-house IT support team has sufficient understanding of these new,rapidly evolving technologies, and to determine whether they have the knowledge required to implement and manage them.

In any case,itis crucial to sit down and analyse the split between your business spend for maintaining day-to-day IT operations, and then compare it with your spend on developing advanced IT capabilities and infrastructure that can differentiate you from the competitors. Developing new infrastructure and technologies can give your business a more streamlined and competitive edge.

Investing in technology that gives you the competitive edge

Investing in new IT technologies can allow your business to develop and support important new business streams, which are vital for growth. The latest internet technology can be utilised to conduct business between buyers, sellers and other trading partners in the form of e-business. For example, a retailer can use the internet as a platform for both domestic as well as international sales and marketing activity, either to other businesses or to the consumer directly.

In this way, IT can be used as a vehicle for the creation of high-value networks with business partners and clients that enhance communication and the exchange of knowledge. Furthermore, this network can allow you to outsource key business processes to your partners through a shared technology platform, which frees up in-house resources to concentrate on business-critical areas like supply chain activity and accounting. With this approach, remote working can also be achieved via collaboration and communications tools, such as messaging, video conferencing, and SharePoint.

In addition to the day-to-day running of the business, IT will also be an essential tool in supporting a wide range of sales and marketing activities, as it can help you to attract (and interact with) customers more effectively, and to create an online presence that fully supports and encourages customer engagement.

E-business strategies like these can also vastly increase the scope for potential sales and growth by allowing a business to enter into new geographies. A business whose activity takes place offline may ultimately have a more reduced audience, thereby putting them at an immediate disadvantage.

New initiatives? Don’t let the costs spiral!

We’ve seen many large-scale IT projects that have gone sour or failed to deliver the desired results, even after millions pounds of investment. But how can businesses be sure that their new IT projects/investments deliver the desired outcome (and provide the enhanced capabilities that the company needs), without having the costs spiral out of control?

First of all, when planning any large scale IT project,you need to identify the desired business outcomes and benefits of implementing a project clearly, whilst also justifying the investment. There is no sense in implementing a costly and time-intensive project if the benefits don’t outweigh the costs involved.

You also need to be aware that it’s vital to involve your IT department or a specialist (if this expertise is not available in-house) in the early stages of the planning, in order to make sure that you get the IT elements right. These elements will include important factors likescope, pricing, and complexity.

It is also worth taking time to asses the risks involved when investing in a new initiative, these could be both financial (in the sense that costs can spiral) and operational(in the sense that there may be ‘downtime’ whilst the IT project is being implemented). There may also be the risk that the project does not yield the expected outcomes / benefits.

These risks can mitigated, but only when you fully understand the IT elements and implications of the initiative, and if you are able to secure sufficient expertise and resources (by freeing them up from the day-to-day operation) to focus on the new project). It will also be essential to have an efficient and robust operation that is able to cope with / reduce any likely disruption during the implementation.

The benefits of outsourcing are evidenced

Without a doubt, efficiency in your IT infrastructure is a business imperative. If the costs involved with running your day-to-day IT operations are too high, you are likely to endanger your business growth by not investing in capabilities that will categorically put your business ahead of the game.

Furthermore, only by increasing the efficiency of your IT operation can you free up your resources for more strategic business initiatives, and create the foundation that’s needed for sustainable growth.

You will need to make sure that you have easy access to proven project management skills throughout this process; if you don’t, even (what seem like) simple IT projects can very quickly escalate out of control. Whether it is at a consultation, implementation or service managing stage, outsourcing can therefore be significantly beneficial, especially when an SME doesn’t have the in-house knowledge and resources to undertake such a project.

We have seen many successful stories of IT outsourcing and over the years, it has become a strategic and validated option for managing and delivering core business services. Utilised rightly, outsourcing can help you to reduce costs, improve service quality and gives you the agility, scalability and even the specialised knowledge that you need for growth.

Demand for Tata Consultancy Services (TCS)'s outsourcing services is so robust the information- technology company hired 70,000 workers last fiscal year and plans to add 60,000 more this year.

Tata Consultancy projects annual sales, which have quadrupled since 2005 to $8.4 billion, will increase 20 percent a year for the "foreseeable future." That has it and rivals Infosys Technologies and Wipro hustling to find hundreds of thousands of qualified candidates as global IT purchases grow 7.1% this year to $1.7 trillion.

TCS's expertise at using low-cost IT workers to replace more expensive labour in developed countries helped it land contracts with Deutsche Bank , Hilton Worldwide and Air Liquide last fiscal year. The company, Asia's largest computer-services provider by market value, reported record annual income of $2 billion.

"As long as there's growth, you don't want to leave business on the table," said Ajoyendra Mukherjee, TCS' vice-president for human resources. "What we're trying to do is make sure the supply chain is large enough to meet our growth requirements in the future."

Nearly 300 jobs are under threat in Swansea at a call centre outsourcing company.

Conduit UK said it had lost a major client which had undertaken a "strategic consolidation of suppliers".

The firm said work for 290 will end in October unless it finds new clients.

Chief executive Denis Creighton said: "Whilst we are hugely disappointed to lose a key client, our main focus is on ensuring that we support our staff during this difficult period."

The 2011 National Outsourcing Association Awards (NOAAs) for Best Practice in Outsourcing is inviting suppliers, users and integrated teams to enter a submission to this industry leading event by the 5th August 2011.

For the first time ever the NOA will be bringing together it’s annual Sourcing Summit and Awards on the 9th and 10th November 2011 at the Park Plaza Riverbank Hotel, London. Held on the final day of the summit, the eighth annual awards will recognise and reward innovation and achievement by suppliers, users and integrated teams within the outsourcing industry. The winners represent the length and breadth of the outsourcing industry, from banking to telecoms, small companies to large, individuals and major corporates.

With planned attendance of 500 guests, the glittering evening will provide an ideal setting to entertain and network with leading players from the industry. The NOAAs are unique in that they are completely independent, and as such they are highly respected and coveted within the industry.

Contact Natalie Milsom, NOA Head of Events, 0207 2928689 or email awards@noa.co.uk for further information.

Visit www.noa.co.uk for registration details.

Accenture will help CF Industries Holdings, a global leader in fertilizer manufacturing and distribution, to implement a management and information platform to increase operational excellence and information flow across CF Industries’ businesses.

CF Industries expects that the new IT system will support growth and drive competitiveness through coordinated business processes such as supply chain management, customer interaction, finance and inventory, among others. The company also has an objective of enabling its team to make more timely business decisions through easy access of accurate data and business information.

“The new system with its self-service approach to business information and standardized processes across functions will make CF Industries a more effective organization,” said Douglas C. Barnard, Vice President, CF Industries. “We chose Accenture because they understood our business objectives and for their knowledge of leading industry practices.”