Industry news

Contact centre outsourcing is set for significant growth in the public sector as organisations attempt to cut costs, according to analysts Ovum.

A combination of budget cuts set against increased demand for better services by citizens, will make call centres increasingly attractive to the sector, indicated the analysts.

Ovum also expressed the potential for increasing use of "non-traditional CRM" systems as part of government contracts. Interactive voice response, analytics and outbound notification are all potential growth areas.

Ovum said it remained "bullish" about outsourcing opportunities in the public sector despite the fact staff were likely to "fight aggressively to prevent the use of outsourcers as a means of reducing public payroll headcount".

It also indicated that there was likely to be widespread resistance to increased levels of offshoring – something frequently condemned in the media. It said cost savings would need to be created "through automation rather than labour arbitrage".

Malaysia's outsourcing and shared services (SSO) industry is likely to undergo a consolidation of sorts as it seeks to reinvent itself in the face of stiff competition in the global market, according to reports.

Outsourcing Malaysia is rolling out a three-year plan to promote the creation of two or three SSO consortiums, which will be ready to compete globally by 2012.

Outsourcing Malaysia chairman, David Wong, commented: "In the outsourcing business, the name of the game is the ability to scale. Obviously, if you are small, you'll find it difficult to do that and won't be able to bid for major global contracts".

Australian bank Suncorp Group has extended its two BPO agreements with Unisys to provide services across Australia.

Unisys Payment Services will continue to provide Suncorp’s with cheque processing services for a further two years and direct entry electronic payments for a further three years.

Unisys will provide the services from centres in Sydney, Perth, Brisbane, Melbourne and Adelaide.

Suncorp Bank General Manager Terry Wasmund said: “Having Unisys provide these services allows us to focus on other core areas of our business, knowing that back-end payments are being processed in an efficient and cost-effective manner.”

Since 2001, Unisys has processed approximately 68 million cheque, direct debit and credit payment transactions annually for Suncorp.

Financial services firm Jones Lang LaSalle (JLL) has joined hands with IBM in a seven-year IT services deal.

Under the agreement IBM will provide JJL with infrastructure support services across 19 of the countries where JJL operates, throughout the EMEA region.

The contract will supply end-user support in nine different languages across a number of functions including server operations, application management, helpdesk, network management, asset management, IT procurement, service management and system security.

“Jones Lang LaSalle has a long-standing business relationship with IBM which understands the specific IT requirements in the real estate sector. The relationship is vital for us in continuing to adopt new technologies to service our worldwide operations,” said Andy Palmer, chief information officer, EMEA, Jones Lang LaSalle.

The value of outsourcing contracts in EMEA surged during the fourth quarter of 2009, research has indicated.

Total Contract Value (TCV) in the region managed to hit €12.4bn in the last three months of the year - an increase of 135 per cent on the previous quarter and 61 per cent year-on-year.

However, in spite of the improvement in the number of large deals taking place, the overall market shift to smaller value deals continued, according to the fourth quarter EMEA TPI Index.

However, as in other regions of the world, the strong quarterly performance was not enough to offset the effects of the global recession and the pause in outsourcing decision-making on full-year results, said TPI.

“The fourth quarter showed clear signs of recovery, but as expected, the recession took a toll on the full-year results,” said Duncan Aitchison, partner and president, EMEA at TPI.

Additional findings include:

•IT Outsourcing (ITO) dominated EMEA market activity in the fourth quarter, up 127 percent from Q3 and 62 per cent year-on-year.

•Business process outsourcing (BPO) in the region grew 214 percent compared to the third quarter and 57 percent year-on-year.

•Contracts awarded in Financial Services, driven by mega-deal activity, increased 57 per cent from the first half of the year.

“While we don’t expect a bounce back to pre-recession levels, we are maintaining a positive outlook for 2010 as the market starts to show momentum in key industry verticals and signs of steady recovery in the broader market,” concludes Aitchison.

Virgin Atlantic has signed a five-year agreement with SITA services to provide IT support for the airline, it has been reported. Under the five-year agreement, SITA services will take over 40 contracts from previous suppliers.

The IT outsourcing contract will include the provision of international and domestic IP virtual private networks, voice-managed local area networks, cabling, network support and vendor and service management.

Tim Livett, director of finance and business services, Virgin Atlantic, told Offshoring Times that the agreement is intended to improve service delivery while generating significant economies of scale.

Littlewoods, Kays, Great Universal and LX Direct owner Shop Direct could close three of its call centres after increasing numbers of customers turn to online shopping.

The emerging trend has resulted in the decline of call volumes within the centres leaving them with excess capacity.

The home shopping retailer answered 19 million calls in the past year in comparison to the 33 million calls made through Shop Direct's call centres less than four years ago. Highlighting the magnitude of the shift towards customers choosing online retailing, the company is said to now expect more than 70 per cent of group sales to be made online by 2011.

"We recognise that this is a very difficult time for those teams affected by the proposed contact centre closures. We are working closely with the trade unions to help staff through the consultation process and support them in finding future employment," said Mark Newton-Jones, chief executive.

Long-term outsourcing staff at PT Jakarta International Container Terminal (JICT), Indonesia’s largest container port, staged a protest this week having been denied permanent employee status.

Many of the workers, working in IT and administration , have worked there for up to 20 years, according to press reports. They are now being asked to sign contracts as outsourcing workers or to give up their employment at the port.

Those employed on a part-time outsourcing contract are reported to earn one tenth of a full-time wage; approximately £90 a month against £900 for a full-time worker.

"We have been working at the firm main division for 15 to 20 years but we have yet to become permanent employees," Sutimanto, chairman of the JICT outsourcing worker association, said as quoted by Kompas.com.

"The labour law bans a company from outsourcing jobs in its main division."

Approximately 500 workers protested in front of the main gate of the Tanjung Priok port, North Jakarta demanding permanent employee status.

Hewlett-Packard (HP) expects outsourcing and off shoring IT infrastructure to be an emerging growth engine for the global technology services industry, the company has announced.

The technology giant also estimates this remote infrastructure management market to exceed $8.6 billion in India by the end of 2010.

HP plans to increase its IT infrastructure outsourcing, business leveraging on the scale and labour arbitrage operations within India, said Ludger Rohlmann, HP VP and ITO of delivery operations.

“Today, there are increasingly more remote operation opportunities, with an apparent shift from work onsite to remote working. In some parts of ITO, up to 80 per cent of work can be done remotely," said Rohlmann.

"We expect more work to come to India through the increasing pressure on our customers to reduce their costs and thus outsource to locations like India.”

Barack Obama has announced plans to slash taxes for American firms to generate jobs in the US, it has been widely reported.

The move is aimed to counteract the outsourcing of jobs; however, analysts say this is likely to create more problems than it aims solve.

A survey conducted by Asia Sentinel in India has concluded that it will be difficult to impose tax penalties on US firms that outsource jobs.

John Daval, a New Delhi-based outsourcing consultant said: "This is a really complex issue as enormous job losses have taken place in the US and it is difficult to quantify the exact tax losses triggered by outsourcing."

If the President does manage to impose tax breaks, it is believed this will hit American companies more than the Indian outsourcing industry.

However, the President's stance has caused some concern for the Indian outsourcing industry as nearly 70 per cent of India's US$40bn software is directed at the US market.