Posts Tagged ‘Outsourcing’

Gloucester City Council extends Civica IT outsourcing deal

October 9th, 2015

The council’s outsourcing deal with Civica will not end until October 2021, as it signs a three-year extension contractOutsourcing45

Gloucester City Council has extended its IT outsourcing contract with Civica for a further three years.

The council originally signed a seven-year deal with Civica in 2011, outsourcing its revenues and benefits services. In 2014, it extended the scope of the agreement that saw operations outsourced to Civica, with plans to reform the back office, transactional and corporate support services.

Gloucester hopes the extension to October 2021 will improve services and create jobs in the city.

David Norman, cabinet member for performance and resources at the council, said the partnership has been a success so far.

“It demonstrates how a public-private partnership can help local authorities achieve savings while continuing to deliver an excellent service to the residents of Gloucester. I am pleased we will be continuing this partnership arrangement,” said Norman.

The partnership has saved the council around £200,000 a year, as well as increased the collection of council tax and improved efficiency in processing benefits claims. The council hopes the three-year extension will deliver an additional £100,000 in savings.

In September 2015, Civica called for a shake-up of public sector IT to deliver the savings needed. In a report, the public sector IT services provider called for an increase in “data IQ” for public sector through better use of data and systems integration.

Civica increased its revenues by 13% to £170.5m in 2014, mainly due to local government sector and business process services.


Euro IT Group Enters European Nearshore IT Outsourcing Market with a 600-strong base of IT professionals

October 8th, 2015

Euro IT Group today announced the launch of its operations within the UK and Western Europe. Euro IT Group is a premier technology consulting firm with a unique group structure and a holistic perspective across technologies and industry verticals.Outsourcing43

Euro IT Group has access to a diversified range of IT application technological skills and the know how of more than 600 IT professionals, in both established and cutting edge technologies. 1000+ projects endorse Euro IT Group, all being delivered by its Central and Eastern European member companies’ to international customers.

“While leading my previous company to a successful Exit, I understood the extraordinary benefits clients can extract from a mix of CEE-based technical knowledge and broad business acumen of Western industry experts. We have now decided to match the booming demand of IT services in Western Europe and the growing market of IT companies in Central and Eastern Europe (CEE).” stated Ian Tidder, Founder and CEO.

The Euro IT Group team has a proven track record in integrating various technologies and industry specific competences into single solutions. Euro IT Group can deploy mixed teams from different locations, without compromising on quality.

In the last year Euro IT Group has evaluated various IT companies from the CEE region. The Group now incorporates several CEE companies that share the group’s values.

Each Euro IT Group company has high quality and security standards, performance driven teams, year-on-year growth, experience with leading edge technologies and a focus on fast-growing sectors.

“Euro IT Group possesses proficient technological skills, resources and references in its CEE nearshore delivery centers to match the demand. Customers now require agile, accelerated product development and high quality IT services. Using the skill set within our group, we focus on latest technology trends such as cloud services, IoT, sophisticated mobile applications and big data . Furthermore, on the basis of the certifications and experience we achieved in leading solutions from Microsoft, SAP, IBM or Oracle we build international strategic partnerships, thus delivering value oriented services and state of the art solutions in international markets,” Ian Tidder added.

Euro IT Group is an international technology provider with delivery centers in selected Central and Eastern European locations. Euro IT Group focuses on accelerating software development through a blend of first-rate people and technologies, acknowledged processes and methodologies and forward-thinking employee development programs, all combined to deliver value for customers. Euro IT starts from a base of 600+ IT professionals who have successfully executed 1000+ software projects worldwide to customers of various sizes from a range of industry sectors such as such as banking, insurance, ecommerce, telecom, media, travel or healthcare.


What to consider when IT outsourcing contracts come up for renewal

October 7th, 2015

Outsourcing contracts worth billions of pounds come up for renewal over the next few years – but unprecedented industry change complicates the CIO’s decisionMagnifying Glass Over Contract Papers

According to figures from ISG, if you just take into account IT outsourcing contracts worth over $5m a year, globally there are nearly 3,000, worth over $270bn (£175bn), coming up for renewal around the world in the next three years.

ISG figures show there are 1,400 deals in the Europe, Middle East and Africa (Emea) region, worth over $14bn, coming to an end before 2019.

In 2016 alone there are over 1,100 contracts – worth about $20bn – coming up for renewal around the world.

According to ISG, the likes of Accenture, Atos, BT, Capgemini, HP, IBM and TCS all have significant numbers of contracts coming to the end of term.

But what should a CIO or business leader be thinking about as a contract nears its conclusion? It is a great opportunity to shake things up and learn from past mistakes – but there is a lot of choice out there, which can make decisions more difficult.

A recent example of an organisation that shook up its IT outsourcing strategy when its contract came to an end is the Driver & Vehicle Licensing Agency (DVLA).

When its major “Partners Achieving Change Together” (Pact) IT outsourcing contract with IBM, Fujitsu and Concentrix – which had been running for 13 years – came up for renewal, the DVLA weighed up its options after outsourcing IT for about 30 years.

Newly appointed CEO Oliver Morley and his team looked at the fashionable tower and service integration and management (Siam) models, both increasingly common in the public sector. But in a matter of weeks he had decided to bring IT in house. The two-year move to in-house completed on 12 September 2015.

There are a lot more options available today than when many of the contracts coming up for renewal were signed, and a lot to consider. The DVLA case shows that nothing – including bringing IT back in-house – should be ruled out.

Technologies, models and consultants

As well as different models and contracts to consider, technology has shaken things up. Today increasing numbers of IT services are based in the cloud, which changes the nature of contracts and delivery. Then there is the automation software and artificial intelligence (AI) shaking up the IT outsourcing sector

The increased pace of technology change and the speed at which consumers are changing their habits could also be a calling for business consultancy. Businesses today are re-inventing their businesses to fit the habits of the digital age. Choosing the right technology and services contracts to fit with a transforming business might be something CIOs will need support with: Business and IT consultancies might have to enter the renewal equation.

Then there is globalisation to consider. Today CIOs have a number of choices in where to have services delivered from. It is no longer the case that India is the first choice, as there are locations throughout the world offering their own advantages.

When renewal time arrives

“When a contract comes to an end, the client firm gets an opportunity to do things differently,” said Ilan Oshri at the Centre for Global Sourcing and Services at Loughborough University’s School of Business and Economics.

Oshri said there are two questions organisations should ask themselves: “Are we going to renew and, if so, what will change in the new arrangement? And are we going to bring work back in house – and, if so, how are we going to do that?”

For the first question, he said the opportunity is to examine the latest models and technologies in the market.

“For the second question, bringing work back has become a real option for many firms, but there are still obstacles,” said Oshri.

“Firms should regularly assess their ability to re-integrate the service, be in a sound financial position to bear additional costs involved in bringing back the operations and an exit plan that ensures the transfer of knowledge from the supplier.”

Unprecedented change

Outsourcing consultant Jean-Louis Bravard – who was a CIO at JP Morgan and headed global financial services at IT services giant EDS in the past – said CIOs should think about outsourcing agreements all the time, and not just when they are coming to an end.

He said planning for change now might be more complicated than last time around, due to the level of change in the last five or 10 years. “The world has changed dramatically. So any contract signed even five years ago is fundamentally obsolete. And, to make matters worse, I think the rate of change is not about to drop in the next five years.”

Bravard said CIOs should organise their thoughts around certain themes.

He said the big US suppliers such as Hewlett-Packard (HP) and IBM are all trying to protect their business from in-sourcing and Indian players in IT, as well as more international suppliers in business process outsourcing (BPO).

Meanwhile, the advent of software robots will force major changes to IT and business process outsourcing. “The human consequence on employment is obvious but increasingly the CIO will have to become responsible for all production and interactions. Glitches will longer be tolerated and fault tolerance and redundancy will be absolutely critical for all,” he said.

Bravard added that another major change in the last few years is how pay-as-you-go services have transformed. CIOs as well as suppliers must understand what this means to their businesses, he said. “Even internal solutions must be priced ‘by the drink’ and most often with a downward slope. This presents a huge challenge on pricing and funding for both users and suppliers.”

Mark Lewis, head of outsourcing at law firm Berwin Leighton Paisner, said that, as revewals approach, CIOs should be thinking strategically rather than tactically.

“First, strategically, how they can benefit from either renewing the current contract or going to the market potentially for a new provider or providers. The stress here is on strategic, rather than tactical, decision making,” he said. “It has been tempting for many CIOs to consider at a tactical level the disruption and cost of retendering, as well as taking the approach of ‘better the devil you know’.”

He said logic and market forces dictate a retendering exercise, and there is no reason not to include the incumbent. “There is the task of persuading the rest of the market that this is genuinely an open process and that the outcome isn’t a foregone conclusion.” Otherwise, he said, the most promising potential providers will be deterred from bidding.

Support your decision with action

He urges CIOs ensure they have the right exit plans in place. “When outsourcing contracts near the end of term or are coming up to termination for whatever reason, one of the big – and more often than not – painful and too-late lessons learned by CIOs and their operational and contractual colleagues is that their exit plans and processes are not fit for purpose,” said Lewis.

If existing plans are not sufficient, the CIO will be forced into a corner, he said. “If plans are not fit for purpose, there is an understandable desire by CIOs and their other colleagues not to endure the pain of separation from the incumbent provider – unless the pain of separation is going to hurt less than staying with the incumbent.”

He said a robust exit plan should address the hardware and software assets used to provide the services at the time of transfer, and similarly third-party assets and contracts, people, operations libraries and manuals: “In other words, all the people, tangible and intangible assets and know-how necessary for an incoming provider to make sense of the services before or at transition.”

Then, he said, the exit plan needs to contain the necessary processes and actions for a a smooth handover to an incoming provider.

HP and IBM rated top IT outsourcing service providers

October 7th, 2015

HP and IBM have received the highest industry Net Promotor Scores, meaning IT outsourcing customers are much more likely to recommend them than other service providers.Outsourcing40

A company’s NPS is considered a measure of customer loyalty and has been proven by some to be a leading indicator of corporate growth. Customers are asked to rank the likelihood they would recommend a brand to a friend or colleague on a scale of 1-10. Those who answer 9 or 10 are considered promoters: loyal enthusiasts who will keep buying and refer others to the company, thereby fueling growth. Respondents who answer 7 or 8 are considered passive customers: satisfied, but unenthusiastic and vulnerable to competitive offerings. Those who answer between 0 and 6 are detractors: unhappy customers who can damage a brand and impede growth with their negative word of mouth. The NPS is a straightforward calculation achieved by subtracting the percentage of detractors from the percentage of promoters, ranging range from -100 (all detractors) to 100 (all promoters).

HP Outsourcing had a score of 52, according to the Temkin Group, which has been evaluating NPS results for 62 vendors for the past four years. The top IT vendor overall was SAS Institute, which scored a 57. Other outperforming IT service providers were IBM Global Services, Oracle Outsourcing, and Dell Outsourcing, all of which scored at least five points above the IT vendor average.

HP, particularly the company’s legacy EDS outsourcing unit (which HP acquired in 2008), and IBM Global Services have had consistently high NPS results relative to their peers for some time, says Bruce Temkin, managing partner of the Temkin Group.

Accenture finishes at the bottom

Accenture Consulting had the lowest NPS score, not just among IT service providers but among all the technology vendors in the report, with a score of just one. In fact, the other four lowest scoring vendors were also IT service providers: CA Technologies, Hitachi, Wipro and Deloitte all had NPS scores below 10.

While the scores for IT vendors overall improved to an average of 31.8 in 2015—an increase of more than eight points after two straight years of declining scores—many IT service providers (including Unisys, Capgemini, CSC, Cognizant, Infosys, ACS and Tata Consultancy Services) ended up on the bottom half of the list, according to Temkin.

The Temkin group also surveyed 800 IT decision-makers from large North American firms to learn about their relationships with their technology providers in order to determine the link between NPS and customer loyalty, customer satisfaction and other aspects of a good customer experience. “We often find a strong correlation between NPS and satisfaction if the satisfaction score is calculated in a similar manner to the NPS score. What’s a more telling question is whether or not NPS correlates to customer loyalty,” says Temkin.

The research revealed that promoters are much more likely than detractors to spend more money with tech vendors, try new products and services when they are announced, and forgive their tech vendors after a bad experience. The report also revealed that SAS Institute and Cognizant were the top companies for purchase momentum and customers of HP outsourcing and Intel were most likely to forgive them for mistakes.

“If tech vendors use NPS to identify and do less of what causes detractors and identify and more of what causes promoters, then they should see a lift in both NPS and sales,” Temkin says.


Breather for Indian IT cos: US Cong lets ‘discriminatory’ outsourcing H-1B fee lapse

October 2nd, 2015

In a breather for Indian IT firms, the “discriminatory” USD 2,000 H-1B fee mostly imposed on them has now lapsed in a Republican-majority US Congress.
The charges, often called outsourcing fee, had forced Indian IT companies in the last few years to pay millions of dollars towards protecting the US-Mexican border from illegal immigration.

Indian firms had described the fee on highly-qualified IT professionals coming to the US on a H-1B visa as “discriminatory.”

The legislation with regard to a USD 2,000 fee on H-1B visas for companies having more than 50 per cent of its employees oversees was adopted by the US Congress in 2010 mainly at the instance of a group of lawmakers led by Senator Charles Schumer.

Passed on August 10, the law contains provision to hike H-1B and L-1 Visa fee per application by USD 2,000 and USD 2,250 respectively for qualifying firm; which mainly targeted Indian IT companies.

The duration of law was extended from four to five years under James Zadroga 9/11 Health and Compensation Act of 2010 to provide healthcare and financial compensation for the firefighters and other ‘First Responders’ who helped out in the aftermath of the 9/11 attack.

In a report released last month, NASSCOM said Indian tech industry contributed an estimated over USD 375 million during this period to the US Treasury including helping America secure its borders.

In a recent interview, NASSCOM president R Chandrashekhar described the fee as unjustified.

“It had nothing to do with the IT industry. It was applied in an inequitable way, which specifically targeted Indian companies,” he said, adding that he would welcome any move to eliminate the fee.

The Congress can still come up with a legislation to reinstall the discriminatory H-1B fee, which lapsed yesterday night, Congressional sources said.

However, Institute of Electrical and Electronics Engineers (IEEE-USA) in a statement criticised the US Congress for the lapse of the H-1B fee.


DVLA plan to bring tech back in-house reveals IT outsourcing flaws

October 2nd, 2015

This month, the Driver Vehicle and Licensing Agency ended three decades of IT outsourcing and started to take back control over its technology estate. Here are some of the lessons they learned – and tips for other organisations who want to wrest back control over their IT.Outsourcing37

Last week the Driver Vehicle and Licensing Agency announced (with some fanfare) it had ended three decades of IT outsourcing and started to take back control over its technology estate.

The agency’s 13-year, £1.5 billion contract with IBM, Fujitsu and other partners has finished and the DVLA has now transferred 302 people in-house from Fujitsu, doubling the size of its IT department.

It expects to save at least £225 million over the next 10 years, chief executive Oliver Morley told ComputerworldUK.

It is now directly responsible for managing the 300-odd companies that provide various different components of its IT estate.

First priorities
The first priority is to stabilise its legacy VME systems and separate out the various layers of its technology stack to improve visibility, the DVLA’s chief technology officer Iain Patterson explained.

The agency will gradually move to an “open standards landscape” and become “as infrastructure free as possible” by moving much of it to the cloud, Patterson told ComputerworldUK.

“This is not just because cloud is cool. Our infrastructure needs to handle billions of transactions. A lot of what we do is very ‘peaky’ – we don’t need all of the capacity all the time – and cloud will give us more transparency over costs,” he explained.

Patterson will now return to the Government Digital Service after a two-year stint on secondment to help bring the agency’s IT back in-house, with the DVLA due to recruit a replacement imminently.

Meantime, the DVLA is pursuing an ambitious digital transformation project. It has increased digital uptake of its services from 66 percent to 90 percent over the last two years, according to Morley.

It has launched new online services that let you view and update your driving record, personalise your registration number and pay your car tax, replacing paper discs and driving licences.

Despite mixed initial success with some of these launches (the website has crashed repeatedly on major deadline days), the DVLA plans to expand the range of services online in the coming years.

Now it has control over its IT, of course, the DVLA will no longer be able to blame its opaque supply chain for technical glitches (as it did over the website crashes).

IT outsourcing model broken
DVLA is now a testbed for the rest of government, as departments and agencies move on from 10-year, single-supplier deals and wrest back control over their technology and digital services. It’s a policy they have talked about since 2010 that finally seems to be coming to fruition.

The agency’s case shows how badly broken this old IT outsourcing model seems to be, especially within the public sector – but also how it can ultimately be fixed.

Although Morley said “it may have been cost effective to outsource IT in the old world”, he conceded it is decreasingly defunct in a fast-changing world where the price of technology is plummeting.

The agency was paying for far more than it needed, he admitted. Many departments, especially those that handle the big traffic peaks and troughs due to deadlines, have suffered this issue.

HM Revenue & Customs pays full whack yet its average compute power utilisation is a tiny 6.7 percent, just to ensure it can handle busier times of year, its CIO Mark Dearnley has admitted – a problem it hopes it can solve by moving more of its infrastructure to cloud.

The DVLA IBM contract’s costs soared from an original estimate of £287 million to £1.5 billion – a common characteristic of these sorts of deals across Whitehall, it seems.

Even worse – the DVLA sometimes did not know what it was paying (very expensively) for, due to the lack of transparency over spending, Patterson hinted.

“We’re undergoing a stabilisation period where we review what we’ve been sold versus what we were charged,” he said.

Another problem with these sorts of IT deals is the lack of investment in keeping technology up-to-date: something suppliers are not incentivised to do.

Some very basic things have not been invested in. In these situations [outsourcing deals] people won’t make those sorts of big changes,” Morley admitted.

Where the client decides they want to order changes to the contract they have to endure “a long change management process and inevitable uplifts on quotes,” he added, euphemistically.

The Home Office, HMRC and the Department for Work and Pensions are just three of the departments supposed to be working to move away from monolithic big supplier contracts right now – but it is a common story across all of Whitehall and the wider public sector.

Thankfully, it seems the government has woken up in recently years and is starting to take action to end this damaging, expensive over-reliance on a handful of outsourcers. So what tips do Morley and Patterson have for others due to cut themselves loose?

What lessons we learn from the DVLA’s experience?
If you are trying to wrest back control over your IT estate, make sure you and you alone are in charge, Morley said.

“If you are bringing parts of your tech estate back in-house, you have to do that project yourself. It has been DVLA led and run throughout. We had to deliver it on our own to our own standards.”

You should try to “build in governance from the start” – make sure you engage with staff, suppliers and have strong oversight over the project, he added. It’s also important to do the job one bit at a time, not try to rush at it or do too many things at once.

“Keep it simple. Transform, stop, transition, then carry on transforming,” Morley said.

You need to make sure you fully understand what technology you own or use, and the skills of the people working for you, according to Patterson.

“Work to understand your tech estate, the capability within your teams and your commercial positions and arrangements,” he said.

He suggested to use SMEs “wherever possible” as they are generally far more flexible than large multinationals, and constantly check back on costs to ensure they stay under control.

“Look at your supply chain and crucially look at their future strategy, products and their direction of travel,” he added.


Business outsourcing: Indian investor challenges Nigeria

October 2nd, 2015

CHAIRMAN of technology company, iSON BPO, Mr. Ramesh Awtaney, has challenged Nigeria to encourage business outsourcing because of its great potential to develop the Nigerian economy.Outsourcing36

Speaking in Lagos, he said outsourcing had been tested in India for decades and found to be a sure economic enabler.

Awtaney said, “what will not work in the Nigerian economy is offshoring. Taking a job from Nigeria to execute in India, which is offshoring, is not a good business plan. Staying in Nigeria to operate support service business, which is outsourcing, is of course a business model that will work in Nigeria, just the way it is working well in India.

What we do at iSON is to develop intellectual property and bring it to the job place and we do not take the job to places where there is already developed intellectual property. What we are saying is that we train local skills and allow them to do the job, rather than taking the job out of Nigeria to places where there are developed skilled manpower.

When we started operations in Nigeria in 2011, we said to ourselves that the combination of outsourcing and offshoring will not work for us in Nigeria because we do not see it as a good business model. We believe in the transformation that outsourcing brings, hence our business in Nigeria is all about outsourcing alone, where we train local skills to do the job in Nigeria. What we are doing is to bring the skills and knowledge of outsourcing from India and develop it in Nigeria, in order to replicate India’s growth in business outsourcing in Nigeria. In doing so, we need to create an outsourcing industry for Nigerians. In our business model, offshoring is completely out of it because we want to give Nigeria the best of service that will impact positively on the country’s economy and on her citizens” he added.

Explaining his company’s contributions in the country’s economy, Awtaney noted that in the last four years iSON has trained Nigerians to do the job in addition to opening call centres in different cities of the country.”

He also said that the company had employed over 4,000 Nigerians with plans to increase the number to over 5,000 by the end of the year.


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