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OUTSOURCINGINNOVATIONS AND PARTNERSHIPS

Work together: Take advantage of each others strengths to see your organisations succeed

THE KEY TO SUCCESS

Recruit rightYvonne Williams on how to choose the best agency for you

Green ITOutsourcing cuts your costs and saves our planet at the same time

The opportunitiesBoosting the UK economy by building on relationships

4TIPS TO

MAKE THE MOST OF OUTSOURCING

PHOTO: SHUTTERSTOCK

No.6/Nov ’10AN INDEPENDENT SUPPLEMENT DISTRIBUTED WITHIN THE DAILY TELEGRAPH

2 · NOVEMBER 2010 A INDEPENDENT SUPPLEMENT DISTRIBUTED WITHIN THE DAILY TELEGRAPH

Innovation and partnership are key

With the UK economy slowly but surely pulling itself out of recession, an increasing number of organisations in both the public and private sectors have looked towards innovation as a way to get ahead of the rest by achieving significant cost-efficiencies coupled with increased performance

A good example of where innovation is going to be vital came from the re-cent government spending review which saw many

predicting that government organi-sations will be left with no option but to outsource work to the highly com-petitive private sector.

Multiple choices

1With pressure to reduce costs on current contracts, more and

more outsourcing suppliers are facing the need to innovate in order to keep working in effective partnerships, im-prove business processing functions and meet end-user demands.

However, although innovation can yield high profit margins and secure market leader status, suppliers need to recognise that it does not come without risk, especially in an exist-ing contractual environment.

End users are increasingly faced with a wide range of destinations and suppliers to choose from, mak-ing differentiation a highly powerful

tool in securing lucrative contracts. The ability to offer end users cutting-edge, innovative services creates a unique selling point likely to bring in the most sought-after clients and to hold onto them, which is something that organisations which remain static and fail to keep up with devel-oping trends cannot offer.

Innovation complexities

2The decision to innovate will in-evitably lead suppliers down

one of two routes. Assessment should identify if businesses would benefit from building upon current process-es and improve the efficiencies or if thinking outside the box and creat-ing new processes will work better for the business in the long run.

It’s easy to identify the benefits in-novation offers outsourcing suppliers, however there are a number of relat-ed complexities that need to be taken into consideration. Plans to innovate can easily create tensions between suppliers and end users, particularly when a contract has been negotiated for the lowest price possible.

The message is clear that both sup-

pliers and end users are striving to come out as winners. Suppliers still need to ensure they are undertaking the same level of work whilst ensuring that innovation does not lead to a re-duction in their profit margins. Whilst end users are keen to take advantage of innovation, and its ability to offer them cost and time savings, it can put further onus upon contracts to protect the interests of both side’s interests.

Current trends

3There are a number of key areas for innovation that will be ex-

plored within this issue. Key areas for development include virtualisation and software as a system, which will offer the businesses the opportunity to no longer need all software sys-tems on their corporate network. The growth of green issues and sustaina-bility is consistently getting higher on agendas as businesses seek newer ways of meeting eco and green objec-tives. Partnerships also look set to take off as the private sector picks up new contracts and seeks to stream-line and create business processing efficiencies.

“Be very careful that you contract with a company which shares your values”

Yvonne WilliamsGet the most from your recruitment agency

WE RECOMMEND

PAGE 8

Partnerships p. 41. Working with companies individual strength can benefit both parties

Green IT p. 102. Outsourcing creates an efficient use of power

OUTSOURCING, INNOVATIONS AND PARTNERSHIPS 5TH EDITION, NOVEMBER 2010

Country Manager: Willem De GeerEditorial Manager: Katherine WoodleyBusiness Developer: Christopher Emberson

Responsible for this issueProject Manager: Tom LathamPhone: 0207 665 4442E-mail: [email protected]

Distributed with: The Daily TelegraphPrint: The Daily Telegraph

Mediaplanet contact information: Phone: 0207 665 4400Fax: 0207 665 4419E-mail: [email protected]

We make our readers succeed!

CHALLENGES

Martyn Hart Chairman of the National Outsourcing Association

“Both suppliers and end users are striving to come out as winners”

Xchanging provides procurement, accounting, human

resources and technology services across industries.

These include banking, insurance, manufacturing, retail

and real estate among others. We combine functional

expertise with deep industry knowledge to provide

industry-specific outcomes for our customers worldwide.

To find out how we can help your business, please contact

+44 (0)20 7780 5066

or visit www.xchanging.com

www.xchanging.comGlobal Business Processing

Some partnerships just work…

4 · NOVEMBER 2010 AN INDEPENDENT SUPPLEMENT DISTRIBUTED WITHIN THE DAILY TELEGRAPH

Question: How are outsourcing providers innovating?

Answer: They are providing value added services which can raise the importance of the work they do and foster closer partnerships with clients.

Outsourcing has now become com-mon place because it has, over several years, shown that it can deliver effi -ciencies through improved processes and reduced costs.

Now, though, the outsourcing in-dustry is moving beyond the tradi-tional remit of providing back offi ce services to pushing itself further up the value chain. Rather than provide an alternative means of carrying out a business task, forward thinking out-sourcing companies are seeking to in-novate their platforms and overall of-fering to market improved services which also take on capabilities with greater responsibility and seniority.

At the top of this wave of innovation in outsourcing are companies coming together to partner on projects where each benefi ts from the other’s skills and technology, as Lee Ayling, Direc-tor of Innovation at the National Out-

sourcing Association explains.“A good example is someone like Vo-

dafone outsourcing the running of its mobile network to Ericsson,” he says.

“They know this is Ericsson’s core business and so the partnership out-sourcing deal allows them to concen-trate on marketing their mobile serv-ices and innovating new off erings. So, it works well for both partners.”

New solutionsIn fact, such innovation, where clients and outsourcers become part of a joint venture, is opening up new opportuni-ties that neither could have exploited on their own, enabling outsourcers to bring extra value to their clients.

A case in hand is ABN AMRO need-ing to change its banking systems in Brazil to meet a new regulation which stipulated citizens should be able to withdraw money from any bank branch, even if they do not bank there.

“The bank wasn’t sure it would have the capability to add this ability and they only had a matter of months to do so,” points out Ayling.

“However, it turned out one of their partners, IBM, had a solution and it was only through their outsourc-er that they were able to remain ac-tive in Brazil within the time frame and with no problems. This is prov-ing typical. Outsourcers are now pro-viding innovative solutions to clients which open up new opportunities.”

At the same time, outsourcers are fi nding that the knowledge, skills and technology they have built up over the past decade are now enabling them to off er services at a far higher seniority. Increasingly, and particu-larly in the fi elds of technology devel-opment, HR and in legal services, cli-ents are outsourcing higher levels of responsibility to outsourcers. While this is mostly gaining traction where the roles are not client facing, Ayling believes this will progress and move in to the foreground as has been the case with most developments in outsourcing.

Lee AylingDirector of Innovation at the National Outsourcing Association

INNOVATION DRIVES OUTSOURCING PARTNERSHIPS

SEAN HARGRAVE

[email protected]

NEWS

USE BUSINESS PARTNERSHIPS

1TIP

NOVEMBER 2010 · 5AN INDEPENDENT SUPPLEMENT DISTRIBUTED WITHIN THE DAILY TELEGRAPH

Since the middle of the current dec-ade he started to notice companies were asking for his advice on how other parts of their business process outsourcing could be handled better, leading the company to, as he puts it, “move up the value chain”

“We were fi nding, like many serv-ice providers, that we could do great things in the parts of the process we were being given, but it’s like a relay,” he says.

“We may well have run a very fast lap but then we’d pass on the baton and the process would slow down and the client wouldn’t get the effi cien-cy savings they were hoping for. Then in around 2004, and particularly af-ter 2007, we started to fi nd that clients would ask us how we could improve

the rest of their back offi ce through better, more effi cient processes and having the work carried out by the right people in the right location.”

Political issuesAggarwal is the fi rst to admit that he was surprised when the trend started to gather serious momentum two to three years ago, particularly because, from his understanding, high rank-ing executive offi cers often appeared to be asking for advice on transforma-tion programmes they already knew had to happen, and had a good idea how they should be executed.

“As we moved up the value chain I noticed that top executives often knew exactly what needed to happen and so I kept on wondering why they weren’t just doing it themselves or appointing someone internally,” he says.

“Then it struck me, during a fasci-nating and frank chat with a top CEO, that the top guys normally know what they want done, and they have an idea of what we’ll advise them to do, but these big transformations can become very political and so they want someone from the outside to be making those suggestions and car-rying them out. This need is one of the major driving forces behind the trend for closer partnerships.”

Sandeep AggarwaSenior Vice President at Intelenet Global

Anyone in any doubt that the big trend in outsourcing is for clients to work more hand in hand with their service providers need only ask Sandeep Aggarwal, Senior Vice President at Intelenet Global, what his recent experiences have been

CAPTURE HEADLINELorem ipsum dolor sit amet, consectetuer ad-ipiscing elit, sed diam non-ummy nibh euismod.PHOTO: NAME SURNAME

Outsourcers move up the ‘value chain’

SEAN HARGRAVE

[email protected]

NEWS IN BRIEF

GOVERNMENT CONTRACTS

No supplier ‘squeeze’

TRENDS

IT outsourcing on the up

Computer Economics research shows that IT Outsourcing has nearly doubled its proportion of overall IT spending between 2008 to present. It has risen from 4 per cent to 7 per cent of total IT budgets and 50 per cent of those engaged with outsourcers report they have received a better service.

Capita, G4S, Carillion and Com-pass have issued reassurances they will not ‘squeez’e suppliers as part of the Government’s bid to slash £800m from its 19 lead-ing outsourcing contracts. This comes after Serco, which sup-plies outsourced services across the public sector from prisons to schools, was forced to back down, under Government pressure, af-ter telling suppliers they would have to face a blanket 2.5 per cent reduction in prices to carry on supplying the company. Serco had reportedly promised before-hand not to make such demands.


Partnership model generates revenue streams

In a time of austerity there are ma-jor effi ciency gains and even new revenue streams to be enjoyed by companies and organisations that can think beyond the traditional ‘your mess for less’ model of out-sourcing and actively embrace a partnership approach.

When the term ‘partnership’ is mentioned, David Andrews, CEO of Xchanging, points out the cru-cial point is both parties need to move beyond the traditional fi xed contract arrangements, where eve-ry detail is legally noted down, to embracing a more entrepreneurial spirit.

“There is nothing wrong with the traditional model of a fi xed contract for a fi xed fee but there are times when a company wants to in-novate with its outsource partner,” he says.

“With fi xed term, fi xed priced contracts you’re confi ned to the sit-uation that existed when the deal was signed so how can you adapt once both sides have got the early benefi t of the arrangement.”

Business thinkingAndrews claims the fl exibility re-quired can come through a large cli-ent, with critical mass, forming a joint venture partnership which benefi ts both sides because each has a stake in a the partnership which can then mar-ket its services to a wider audience.

“You can actually turn a cost cen-tre into a revenue stream if you em-

brace the entrepreneurial, partner-ship model,” says Andrews.

“Most of outsourcing is a scale game where you drive effi ciencies through doing something very well in high numbers. If a company has a large scale requirement for a process and then can partner with a service provider in a joint venture, you then have a body that can off er the same

high level of effi cient service to other companies. This generates a revenue stream and so gives both partners a reward for having the entrepreneur-ial spirit to set up the joint venture.”

Central playerSuch partnerships could work well in the public sector and could also help Britain become a central player in the global outsourcing industry, but there would need to be major cultur-al changes for both client and service provider, Andrews points out.

“It needs the people from the client and the service provider’s people to think as entrepreneurs and move be-yond the processes they are working on and think of themselves as running a mini business which they then need to sell in to other clients,” he says.

If the idea continues to gain trac-tion Andrews claims it could generate an innovative impetus behind out-sourcing in the UK that would make the already mature market far more central to the global outsourcing mar-ket and make Britain a launch pad for collaborative outsourcing deals.

With innovative partnerships proving successful, Andrews believes global businesses will be increasing-ly attracted to Britain as a base to set up joint venture arrangements as well as utilise the effi ciencies of ex-isting partnerships.

“You can actually turn a cost centre in to a revenue stream if you embrace the entrepreneurial, partnership model”

David AndrewsCEO, XChanging

SEAN HARGRAVE

[email protected]

Question: How can client and outsourcer relationships evolve to bring further mutual benefi ts?

Answer: Large clients and service providers are starting to form joint ventures so they can share risk and reward and even establish new revenue streams

A CENTRAL PLAYERPartnerships could help the UK become a leader in outsourcingPHOTO: MICHAL BARANSKI /

SHUTTERSTOCK

NEWS

LOOK AT SCALES

2TIP

FACTS

The TPI Index for Q3 has shown

a slowing of new outsourcing con-

tract awards in Europe. It measures

contracts worth more than 20m Eu-

ros which, at 5bn Euros for Q3, were

down 8% compared to Q2 and down

10% year on year. Globally, the index

showed a decline of 20% year on year.

Restructuring contracts is domi-

nating the market more than ever be-

fore. ITP Index fi gures suggest that

$6.8bn dollars worth of contracts were

renegotiated in Q3 of 2009, some 48%

of the total value of outsourcing con-

tracts. For the fi rst three quarters com-

bined renegotiated deals accounted

for a third of all contracts signed, com-

pared to the 20% normally expected.

After a strong start to the year IT

outsourcing has dropped off resulting

in a fl at year, so far, compared to last

year. However BPO contracts, after a

similarly strong start to the year, have

tailed off and fallen 15%, by contract

value, year on year.

DAVID’S TOP TIPS

A catalyst for changeEvery organisation today walks the tightrope of bal-

ancing improved service with cost savings. This requires a fun-damental change in the way a cost base is handled. A partner-ship acts as a catalyst for this change. With costs, risks and benefits truly shared, both or-ganisations can create value be-yond the boundaries of tradi-tional outsourcing relation-ships

A socially responsible approach

A partnership, unlike clas-sic forms of outsourcing,

aims to retain the partner’s em-ployees, offer them new career opportunities and indeed create new jobs. This is because the in-terests of both partners are aligned and have growth as a common goal. A partnership can go to market, capture new cus-tomers and grow in revenue and number of employees. This works as an effective and effi-cient way to reduce cost and im-prove service and performance.

Transparency and trustTransparency and trust are the basis of a partnership.

The commercial principles are based on outcomes and benefi ts sharing that align the key inter-ests of the partners. The open book nature of the partnership eliminates costly and protracted negotiations, allowing rapid start up and early capture of value.

People make it happenWhatever savings and effi-ciencies are agreed, the

people in the back office and their customers are key to suc-cess. Reinventing the back of-fice involves broadening the ar-ea of impact by emphasising staff and customers as well as processes and IT. This requires a mindset change of all involved to maximise the value and build new ‘businesses’.

Commitment at the topAs with any major change programme, leadership and

commitment from the top is critical. At present, the potential for new approaches to outsourc-ing are not as well understood. Creating a successful partner-ship requires the leadership of a passionate and committed champion of change.

All the big players come here.

Scotland. The home of golf and business opportunities.

SCOTLAND. SUCCESS LIKES IT HERE.

To see what we can do for your business, visit www.sdi.co.uk

We’ve got quite a reputation for invention, innovation

and enjoying the good life. MRI scanning. Keyhole

surgery. The ATM. Golf. It’s a long list. And it’s still

growing. In every sector from renewable energy and

fi nance, to electronics and our pioneering work in life

sciences, we strive to set standards. We have a world-

class education system, several thriving economic

sectors and we’re the number one location for research

and development. So wouldn’t setting up in Scotland

be a shrewd investment? You’ll fi nd few better places

to develop new products and expand your business.


Question: With companies increasingly seeing outsourcing as a way of gaining a better, more efficient service, what does this mean for talent management?Answer: Executives at both the client and outsourcer need to improve service provision and customer relationship management skills, the NOA’s HR specialist, Yvonne Williams, believes

Just five or six years ago neither cli-ents nor service providers had a viable means of identifying the top talent they required in an industry which had a clear lack of formal qualifications.

As Chair of the HR Special Interest Group at the NOA, and Managing Di-rector of MDA, a niche executive re-cruitment company within outsourc-ing, Yvonne Williams was instrumen-tal in bringing in qualifications for the industry which allow top talent to show they know their field, as cer-tified through a diploma administered by Middlesex University.

This now means that both client companies and service providers have a standardised qualification they can look out for when hiring new staff, as well as offer their existing employees as part of a talent management pro-gramme.

Williams believes this is now offering people within the industry an accolade to aim for as well as taking some of the guess work out of weighing up the main claims made on curriculum vitae.

“You never really used to know wheth-er someone who claimed to be part of a big successful outsourcing deal was as instrumental in it as they claimed or whether they just happened to be with-in a larger team and were there for the ride,” explains Williams.

“Now we have diplomas, and soon we’ll have fellows, so people can show that they not only know their industry well but they have also taken out the time to invest in their own personal development within the industry.”

Aligning skillsThe diploma programme taps into a major current theme in the outsourc-ing industry which Williams believes is leading to a gap between the skills clients and service providers have, and those the changing market requires them to develop.

“When a client outsources a func-tion the skills their people need change,” she points out.

“I’ve been noticing that a lot of com-panies don’t always get this. They think they can carry on as normal, with their former employees now working for

the service provider, but they don’t al-ways realise they need to realign their own skills. Their talent management people need to ensure that the execu-tives in the company have moved on from being good at what they used to do, which may have been the process that is now outsourced, to being good at running the relationship with the outsource provider, they need to be-come better managers.

“It’s a similar story at the service providers. There are many very good providers but not every company re-alises that they need to improve their skill set and get people in who are good vendor managers who can work with the client’s managers.”

Williams reveals that she is now see-ing greater demand for these manage-rial roles and believes it is a trend that will continue.

RPOWhere Williams’ experience urg-es caution among HR teams, though, is recruitment process outsourcing (RPO). While it can be a very effective means of cutting down internally on

the time required to place adverts, vetcurriculum vitae, carry out interviewsand then accept or decline candidates,there is a risk it can be done badly.

“Recruitment is like any part of out-sourcing, you have be very careful thatyou contract with a company which shares your values,” she says.

“Like with any deal, some providers may sub contract the work, so that’s something you really need to watchout for. My experience is that there aresometimes issues when companiestake the ‘pile ‘em high’ approach and deal with people like they’re a processrather than a human being who de-serves respect. It can be damaging tothe employer when people have a badexperience.”

While the majority of providers within RPO can be expected to repre-sent a brand’s values well, it is the onearea where Williams advises compa-nies take extra care to ensure recruit-ment work is not outsourced to a thirdparty they have not vetted.

Talent management key to better services

SEAN HARGRAVE

[email protected]

LEADER TO LEADER “When a client outsources a function the skills their people need change”Yvonne Williams, Chair, HR Special Interest Group, NOA

INSPIRATION

NOVEMBER 2010 · 9AN INDEPENDENT SUPPLEMENT DISTRIBUTED WITHIN THE DAILY TELEGRAPH

THE SAME VISIONYvonne Williams presses the importance of ensuring your recruitment company shares your valuesPHOTO: NAME SURNAME

www.cerebra.co.uk

YVONNE’S BEST TIPS

4Get qualified

1If you work in outsourcing, investigate the NOA’s diplo-

ma scheme and if you are an em-ployer in outsourcing you should consider investing in it as part of your talent management process.

Look to Europe

2The UK has been at the fore-front of outsourcing and now

other EU countries are following suit, British skills are very much in demand, particularly for those who can speak another language.

Look after your brand identityr

3If you are considering recruit-ment process outsourcing

(RPO), keep an eye on your out-sourcer to make sure they do not further outsource the contract to another provider.

Always give respect

4Every potential employee de-serves to be treated properly

so never allow an outsourcer to treat candidates badly as it will re-flect badly on you. Failing to write the necessary letters and missing interview appointments, for ex-ample, are inexcusable.


Outsourced IT gets greener credentials

Enterprises rely on outsourcing their hosting needs to data centre operators yet, until just a handful of years ago, they had no way of knowing whether their corporate social values were be-ing served by the people looking after their servers.

Data centres consume huge amounts of power which should be a central part of a company’s commit-ment to carbon reduction and so one outsourcing’s greatest triumphs in re-cent years are a set of ‘Green Grid’ prin-ciples and standards against which op-erators can be checked and compared, Ali Moinuddin believes.

He is co-chair of the Green Grid’s European Communications Commit-tee, a pan-industry group of compa-nies committed to greener outsourced IT, as well as Marketing Director at data centre provider, Interxion. Al-though he believes there is still room for improvement in providing poten-tial clients with a standard, transpar-ent measure of a outsourcer’s green credentials, he points out that today’s

landscape is unrecognisable from the situation just four or fi ve years ago.

“Just fi ve years ago the main focus was on providing 24/7 availability to clients; that, and the price, were the main conversation points,” he says.

“Now it’s totally diff erent. Those are still fundamental points but now for-ward thinking clients who are trying to reduce their impact on the environ-ment are expecting data centres to be proactive in explaining how effi cient-

ly they run, what they’re doing to im-prove on that effi ciency and where the power comes from.”

Better coolingAlthough there is insuffi cient green electricity available in the City of Lon-don for companies to off er servers run totally on renewable energy, Moinud-din does point out that Interxion, for one, supplies ‘carbon free’ hosting deals throughout Scandinavia and

The Netherlands where there is a greater abundance of green energy be-ing fed in to the local grid. As renewa-bles, particularly off shore wind farms, gain traction in the UK, though, this is likely to improve.

This means that in the City of Lon-don, the main advances a data centre can promote to potential clients are the steps being taken to reduce the to-tal amount of power required because this not only lowers the overall cost of ownership but also reduces the associ-ated carbon footprint.

“We use free to air cooling, which is a very clever way of using outside air to cool the rows of cabinets where you only use air conditioning systems when the temperature gets above a certain level,” he says.

“There are also practical steps we can take, such as advising clients to keep servers turned off if they’re not running and to space them out in a rack, with a minimum of wiring at the back, so there’s the maximum amount of air fl ow for cooling.”

Having such discussions would have seemed odd just fi ve years ago but Moinuddin believes the work of the Green Grid, in communicating the importance of more effi cient da-ta centres, has helped to promote en-vironmental issues and given clients a new means of comparing compet-ing IT outsourcing providers.

“There are also practical steps we can take, such as advising clients to keep servers turned off if they’re not running”Ali MoinuddinCo-chair of the Green Grid’s European Communications Committee

SEAN HARGRAVE

[email protected]

Question: How has the IT outsourcing industry reacted to a need for clients to consider the environment?

Answer: Outsourcers are now demonstrating how power consumption reduction is helping clients reduce cost and their carbon footprint.

GO GREENOutsourcing your IT could help save power and therefore contribute to a lower carbon footprintPHOTO: FRANCESCO RIDOLFI/

SHUTTERSTOCK

INSPIRATION

FACTS

Data Centres now have a Power

Usage Effi ciency (PUE) score which,

as the name suggests, reveals how ef-

fi ciently they use power

PUE measures how much energy

goes in and how much is used and so

a score of 1 (one in, equals one out) is

the impossible maximum score, giv-

en all systems lose energy through re-

sistance and heat. A score of 2 would

mean only half of the electricity fed in

is used and so most scores will be be-

tween 1.0 to 2.0

The best advice for companies

looking to outsource their IT to a da-

ta centre is to ask them how the pro-

posed system will be designed to re-

main cool with minimal power con-

sumption

Responsible data centres are now

producing power strategies to show

potential and existing clients they take

the issue of reducing power consump-

tion as well as seeking greener forms

of power seriously

HOW WE MADE IT

What should companies look out for from an outsourced IT provider in terms of more environmentally friendly IT?

! Reducing the energy used in your IT operation comes

with the dual advantage of being more environmentally friendly and saving your organisation money. Companies should be looking for a provider that will consider the issues of both the en-ergy used to power the equipment and that used to keep it cool.

Also crucial is looking at how the facilities and IT departments interact; more often than not, the facilities department are respon-sible for the energy bills when it’s the IT department that is the main contributor to consumption.

Who have you noticed becoming interested in greener IT outsourced providers?

! Local authorities are under great pressure to fi nd £300m

per year of savings in improved IT infrastructure and are on the re-ceiving end of 25 per cent cuts in funding from central government. This makes them particularly in-terested in more effi cient data centres and pooling resources through shared services.

We’ve been doing a lot of work with local authorities on these is-sues; a good example is Bull’s joint venture with Barnsley Metropoli-tan Borough Council which used a partnership model in the building of a new data centre.

Is there a technology those interested in greener IT outsourcing should have front of mind during discussions with providers?

!Yes, virtualisation is a key topic. In the past, individual

servers would be allotted dedicat-ed tasks and could sit idle while other servers were overrun with their particular task. Virtualisa-tion sets up virtual servers which work across a reduced number of physical servers so you have less equipment which reduces power consumption and requires less cooling. We have enabled councils to replace as many as 70 servers with just six more efficient blades.

QUESTION & ANSWER

Simon Engwell Business Transformation Consultant, Bull

THINK GREEN

3TIP

www.sage.co.uk/outsource tel: 0845 111 99 88email: [email protected]

Sage Outsource Services can help you save 30% on the running cost of your monthly payroll. How can we help you?


In the past, when most people con-sidered offshoring an IT project, India would probably have been top of the list. While it still re-mains a good choice, several new locations closer to home have been refining their offering over the past few years.

The boom in nearshoring has been popular with companies that want to cut down on the expense of flights to distant locations and, as they see it, reduce the risk of placing sensitive IT projects be-yond Europe.

Hence the trend has led to com-panies working with outsourcers throughout Eastern Europe where lower wage rates and a similar time zone are seen as major ad-vantages. Malta is also growing in stature in IT outsourcing thanks to a national programme to gen-erate more than a thousand IT graduates every year as well as the reputation it has earned as an on-line gaming centre. Claudio Grech, Chairman of the Malta Informa-tion Technology Agency, reveals that the islands’ government real-ised this put it in a good position to become a primary IT outsourc-ing location.

“As you’d imagine, the online gaming companies that have set up in Malta need a very robust IT infrastructure so they can keep running 24/7,” he says.

“So we have developed a very good infrastructure and realised that we could extend this to offer international clients IT outsourc-ing. To make sure we were ready for this, we boosted our invest-ment in IT in schools, further ed-ucation colleges and our universi-ty to ensure we keep on producing the bright graduates the IT out-sourcing industry requires.”

EU law appliesWhen considering nearshoring IT projects the advice from con-sultants will generally be to en-sure that a location’s legal system is robust and, preferably, that the country is an EU member where labour and contract laws will be standardised.

Grech further adds that, certainly in Malta’s relationship with Britain, a shared culture can be of benefi t.

“English is an offi cial govern-

ment language here, after Maltese, and it’s the language of business throughout the islands,” he says.

“We think a shared language

is helpful but also we used to be a British colony and so there are very strong links with the British. It’s placed us in a good position because it meant that our laws and fi nan-cial systems were built on the Brit-ish model and although they’ve now had to alter slightly to fi t in with our EU membership, there’s still that similarity and common heritage.”

Data protection rules are another major driver in companies choos-ing to nearshore IT projects with-in the EU because by keeping sensi-tive data within the common mar-ket, enterprises can avoid potential privacy problems.

EU options grow for IT outsourcing

SEAN HARGRAVE

[email protected]

Question: Are there complementary or alternative locations to offshoring IT projects?

Answer: Nearshoring is proving popular for clients wanting projects to remain within the EU

NEWS

LOOK CLOSETO HOME

4TIP

FACTS

Public sector cuts looks set to

encourage shared services. Bed-

fordshire and Hertfordshire police

forces are leading the way by com-

bining IT teams to save £350,000 per

year and possibly as much as £1.7m

over the next five years.

The AT Kearney Global Serv-

ices Location Index for 2009 found

that the Czech Republic, Poland and

Hungary had all slipped down its

rankings due to higher costs. How-

ever, the legal attraction of keeping

EU work within the EU was not con-

sidered within the judging criteria

which named India, China and Ma-

laysia as the top three countries.

A survey by accountants, BDO,

makes grim reading for outsources

hoping to attract inward investment.

Only 5 per cent of executives from

10 countries said the UK would be

a target for international expansion,

compared to 32 per cent for China

and 20per cent for India.

Look at all costs

1There is often too much focus on day rates rather than the

overall cost of outsourcing. The hidden costs associated with trav-elling to sites and management time out the offi ce dealing with project complications, as far afi eld as India and China, can often ne-gate the perceived original cost savings.

Consider times zones

2Many businesses are fi nding that outsourcing to a diff er-

ent time zone is disruptive. If mis-takes are made it can take 24 hours to rectify them. Nearshoring closer to home means that any problems can be dealt with face-to-face or over the phone on the day, if re-quired.

Think ahead

3India has lost its shine due to rising attrition, wage in-

flation and skills shortages. This has resulted in a dip in quality because of staff churn, less sen-iority and difficulties in commu-nication. Businesses need to en-sure that whatever region they outsource to, does offer them the quality and scalability they require.

Review labour flexibility

4Nearshoring within the EU means there are no delays in

waiting for visas for staff mem-bers to work in EU countries.

MY BEST TIPS

5

Daniel Naoum co-founder of Valueshore

NOT JUST A BEAUTIFUL PLACEMalta is growing in stature in IT outsourcing thanks to it’s programme to generate more IT graduatesPHOTO: ANYAIVANOVA/

SHUTTERSTOCK

The National Outsourcing Association’s 8th Annual

The Sourcing Summit16th & 17th November 2010, Grange St Paul’s Hotel, Londonwww.marketforce.eu.com/sourcing

“The Sourcing Summit is oneevent which mixes

informative, forward thinkingpresentations, with

interactive discussions, thatreally engage both

outsourcing organisationsand suppliers. I have foundthe summit enlightening,

thought provoking andhelpful.”

Tel: +44 (0)20 7760 8699 | Email: [email protected] | Web: www.marketforce.eu.com

Marketforce and the IEA’s

Operations and the Customer ExperienceMarch 2011, Londonwww.marketforce.eu.com/opfs


Operational Efficiency in Financial ServicesJune 2011, Londonwww.marketforce.eu.com/operations

Marketforce’s

Efficiency in the Public SectorMay 2011, Londonwww.marketforce.eu.com/pubsec


Outsourcing in the Public Sector Webinar9th December 2010www.marketforce.eu.com/pubsecwebinar

Forthcoming Sourcing and Efficiency Events

Broadcast live at 12pm from the London Stock Exchange

David SmithCommercial DirectorDepartment for Workand Pensions

Tim SnowHead of Sourcing, Category ManagementHome Office

Speakers to be included:

FREEHear your peers discuss

issues at Operational Efficiency 2010.

www.marketforce.eu.com/operations


The pressure to improve financial per-formance increases in a down economy, while the reasons to outsource expand. A number of business imperatives surge to the forefront – reducing operational costs, improving finan-cial management and strengthening custom-er relationships. It’s easy to begin with quick wins such as lowering capital equipment costs and labour expenses and when compa-nies pass these on to an outsourcer, they can free up capital and human resources to focus on their organisation’s core competencies.

More than ever, clients are looking for a better return on customer investment. Al-though price is always an important factor, organisations are looking more holistically at their investment in customer care, tech-nical support or sales and are prepared to invest more if it will result in an increased return, through for example, improved op-erational effectiveness, faster speed to mar-ket, increased wallet-share or enhanced customer experience (leading to higher Net Promoter Scores (NPS) / C-Sat levels).

Emerging social media channels are opening up new opportunities for contact centres to engage with customers in more meaningful ways. Sitel is creating a web en-gagement framework, using tools such as email, Twitter and online interactive chats, to capture the voice of the customer, engage in a convenient way while creating value and optimising the return on customer in-vestment. Also, as globalisation expands, the footprint for IT, contact centre and other of-ten outsourced services needs are moving into emerging hubs.

Financial services companies are extend-ing the range of outsourcing to include not on-ly customer services and back office process-ing but also areas such as underwriting, risk management and dispute resolution. In tele-coms, mobile device complexity and mobile data have driven an increased need for cus-tomer support. Online customer engagement through webchat is also seeing huge growth, as well as customer communication through social media channels.

It’s not just enough to provide outsourced services to a wide range of vertical markets, our clients now expect service providers to have an in-depth understanding of their busi-ness and markets. As a result, we have special-ised on key sectors of financial services and telecoms and have established centres of ex-cellence for our vertical segments, to consoli-date our expertise. Clients expect a range of lo-cation options and we have therefore adopted a rightshore delivery model.

In constrained economic environments, outsourcing makes economic and operation-al sense as it can not only provide cost saving benefits, but also operational agility and ef-ficiency for companies that work in strate-gic partnership with outsourcers. Outsourc-ing can bring scale and best practices to es-tablished business processes that need to be adapted. Outsourcers are starting to take ad-vantage of different channels of communica-tion such as webchat, web forums and social media.

We are seeing the emergence of the global service delivery model being picked up rapid-ly by BPO players. There is now an acceptance amongst BPO operators that India cannot de-liver certain voice and added value services to clients from that geography. Consequently, BPO companies are looking to forge alliances and partnerships with specialist providers in hemispheres where some of their clients are based and can therefore deliver a “local” serv-ice, offering a culturally compatible offering.

As the global economy climbs out of reces-sion, outsourcing has and will continue to be a key tool for private and public sector bod-ies as they seek to develop alternative busi-ness models to drive process and perform-ance improvement and achieve sustainable efficiencies and savings over the medium and long term. Scotland has an experienced pool of nearly 100,000 people involved in custom-er service delivery, with specialist outsource providers making up nearly 30% per cent of job numbers.

With the impacts of recession likely to be felt over the medium term globally, and outsourcing continuing to play a key role in achieving savings, efficiencies and process improvement, we expect to see some of the more traditional organisations embracing outsourcing and shared services. Scotland is well placed to support these new ways of working, with a customer service culture go-ing back to 1989, when Direct Line set up their telephone only customer service centre in Glasgow.

Question 1:What is currently driving growth in your field of outsourcing?

Question 2:How have clients’ expectation or requirements changed over the last year or so?

Question 3:How will current developments affect the future of outsourcing?

Joe DoyleMarketing Director, Sitel

Sean Canning VP UK Operations,

Firstsource Solutions

Mark McMullenHead of Financial Services,

Scottish Development

International

PANEL OF EXPERTS

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195 Marsh Wall London E14 9SG, UK, Phone: +44(0)20 7033 5900

[email protected]

With innovations and customised solutions, we added

value to our Client’s business. Our transparent and

flexible systems help them attain new heights.

Business Transformation Awards won by some of our

clients are a testimony to this.

Our focus makes us the preferred partner for our

clients. As an IT and BPO Solutions provider, we

believe in nothing but excellence.

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For more information please call 0845 345 2282 email [email protected] www. catalystconsulting.co.uk

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