Immigration cap – is it really business friendly?

It’s been another busy week in the halls of power at Westminster, with the government’s decision to slash the number of migrant workers allowed to come to the UK causing a great deal of consternation.

David Cameron recently claimed that the immigration cap would be introduced in a way which would be ‘friendly’ to businesses – but it still seems that It seems that for many businesses, there is a fear that they will now not be able to bring in the skilled staff that they need. So what does this mean for the outsourcing community?

Read the full post here on ComputerWorldUK.com

UK’s Silicon Valley – growing onshoring

We’ve recently seen Prime Minister David Cameron announce plans to redevelop London’s East End into a ‘Tech City’, with the construction of a £200 million network of technology and innovation centres to rival Silicon Valley.

The thinking behind this is clearly that a technology hub of this sort will help to encourage foreign investment and give the economy a boost.

It seems that research and development is one area which will act as a key driver to helping the private sector pick up new contracts and create new jobs in the months and years ahead, especially important in the wake of the recent public sector cuts.

The full post continues here in Martyn Hart’s  ComputerworldUK.com blog.

Cameron admits mistakes over immigration cap. Or does he?

Sometimes there can be no greater show of strength for a man than admitting you simply got it wrong. If the Prime Minister’s recent hints that he will listen to the protests from major international firms and look to water down the planned immigration cap tell us anything, it’s that he’s not afraid to reconsider his policies. Or do they?

For the full post, continue reading here on Computerworld.uk.com

Are public sector cuts good news for the private sector?

Wednesday’s announcement of the government’s Spending Review was greeted in some quarters with howls of derision by critics who argue that the cost-cutting measures are leading Britain into a new age of uncertainty. But how fair is this view?

It seems to me that the government has approached the review in the same manner as any organisation would do at the outset of a successful outsourcing deal. By reviewing performance as a whole, and then identifying non-core competencies in each department, the Chancellor has found where fewer resources need to be committed, and has trimmed the fat accordingly.

For the full post click here.

Outsourcing and subcontracting: same difference?

Since the explosion onboard Transocean’s Deepwater Horizon drilling rig in the U.S. Gulf of Mexico on the 20th of April 2010, we have been witness to daily reports of the far-reaching catastrophic effects that the disaster is having, both environmental and economic.

It seems that the immediate reaction of the three parties involved, BP, Transocean and Halliburton, was to point the finger of blame, instead of accepting responsibility and immediately leaping into action to gain control of the situation and, therefore, attempt to mitigate the effects of the disaster, as much as possible.

The presence of multiple players has raised the issue of accountability. Should BP be solely responsible? Transocean? Halliburton? Should all parties accept some of the responsibility and, if so, to what degree should each party be liable?

To answer these questions, we need to understand the relationships between the three parties. Unfortunately, it has been due to a lack of understanding of these relationships which has unjustly dragged our industry’s name and its reputation through the mud during this tragedy.

Shortly after the Deepwater explosion, many hailed the incident as not only an environmental disaster, but also an outsourcing one. However, ‘outsourcing’ did not play any role in the equation.

According to BP, its relationship with Transocean and Halliburton which operated and maintained the offshore rig was of a subcontractual nature – not an outsourcing one. When subcontracting, the end user, so BP in this instance, provides the details and exact specifications of the service (or product) that it needs delivered, including the quality standards, pricing, timeframe, etc. that the subcontractor needs to adhere to. These are often called ‘input contracts’, because every detail is specified.

It may be easier to understand subcontracting in relation to the car industry which uses many subcontractors. For example, a body panel, say a wing, might be constructed by a subcontractor but its specification (once agreed) will be detailed to the smallest degree because that wing not only has to fit in with the rest of the car, but it also has to meet the requirements of the manufacturer’s automation systems. If the car manufacturer decides to outsource car production, then it would give the supplier a specification of what the car should look like, its performance levels and cost, relying on the supplier’s expertise to construct and fit the wing in line with the overall requirement.

Meanwhile, in an outsourcing arrangement, the end user looks to the supplier to deliver an output or outcome and is not normally concerned about how this is done exactly, provided the specified output or outcome is delivered. So, there is a significant and clear distinction between outsourcing and sub-contracting.

Though the BP case was not even one of outsourcing, I find it frustrating that the wider public almost never hears about the numerous examples where outsourcing is positively affecting industry, and instead we hear only about isolated instances where it has not gone smoothly. I suspect that good news doesn’t sell…

Remember, the key to any successful relationship is clearly defining and agreeing the desired outcomes at the outset and having a clear understanding of the roles of each party.

However, this is not enough. Whether a business partnership involves subcontracting or outsourcing, it is also necessary to have contingency plans in place. As we’ve seen most with BP, should the unforeseen arise, as it inevitably does, an established crisis procedure should help limit the repercussions when things do go wrong, with all parties knowing their exact roles and responsibilities. This can only help to improve outsourcing partnerships and the reputation of our industry.

Talent Management Key to Future Salvation

By Martyn Hart

11 June 2010 / It seems somewhat surreal that, little more than 20 years ago, Russia was a communist state within the former USSR, and nations such as India and China were competing in the third tier of industry prior to the digital revolution. How times have changed.

Two decades on, Russia is no longer pigeon-holed for just producing top gymnasts, but a leading provider for outsourcing software development. Meanwhile, the Asian market finds itself battling it out for global outsourcing supremacy as the talent pool migrates away from the UK to more vibrant offshore markets.

We were once considered the hub of innovation in the UK, yet now, are we finding ourselves playing second fiddle to more competitive Asian markets? The row is no longer about unit cost, but the knowledge-gap developing between those educated in the UK and those up-skilled overseas. This complacency has not only seen offshore providers compete with the UK, but surpass it in the outsourcing equation.

For end users looking to offshore their operations, service providers are no longer only faced with winning business, but also with obtaining and retaining the best staff. Just look at last week’s Bloomberg Businessweek; with the recession over, wages are shooting up and workers are starting to job-hop for better packages. The revolving door shows no signs of slowing down, in fact, quite the contrary. All this means that the relationship between service providers and end users is at risk which could lead to increasingly poor levels of customer service, severely damaging the industry’s reputation.

So, while the customer is king, continuity is key. More than ever, service providers need to invest in their staff and reassure end users that the migration of skills is kept to a minimum, and relationships are not jeopardised. Undoubtedly, one of the main drivers for companies to look favourably at outsourcing their operations to India, China and Eastern Europe is the meteoric rise in the number of university graduates with more relevant BPO qualifications.

We should, therefore, be indebted to the English language and GMT (Greenwich Meantime), which continues to keep the UK at least in arms reach of its superiors, but for how long will these factors alone help us stave off the competition? We cannot afford to be complacent any longer and must do something about it now.

The NOA is already addressing this issue, holding a number of Talent Management workshops throughout the year, run by NOA board member and Talent Management specialist Yvonne Williams.

In addition, we have invested in and are running the only accredited qualifications in Outsourcing, Shared Services and In-sourcing. We’ll continue to do our bit, but so can you, by taking part!

For more information, please visit the NOA website at www.noa.co.uk

Green Grass of Outsourcing

Every cloud has a silver lining. Stripping away the bureaucracy that so often blights the decision-making process will empower more companies to take a holistic view on the environmental impact they have on outsourcing.

Outsourcing, in its broader sense, has become one of the buzzwords of 2010. Despite popular belief – often perpetuated by the media, its value-added impact is a lot more than just cost-saving. Risk mitigation and reducing carbon emissions also have a key role to play. As we see the green shoots of recovery, green, which has been on the backburner for many companies, is now firmly back on the agenda. With a new government also comes a new competitive landscape – and a commitment to green issues.

Exploring the green challenges facing the outsourcing community is increasing. And despite the turbulence surrounding any cost-cutting exercise from No. 10, David Cameron and Nick Clegg’s new coalition stance on outsourcing it’s likely to shape Britain’s economy over the next four years. Green procurement can deliver significant benefits while addressing climate change, and, for this reason, I would invite more people to look beyond the glass ceiling of conventional business practices. Reducing wastage, increasing efficiency and simplifying compliance all marinade well to helping companies bolster their bottom-line, as well as stimulating their corporate social responsibility (CSR).

I’m pleased that more companies are looking beyond the taboo and prepared to go ‘green’ by offsetting their overheads in favour of something more honorable and tax efficient. Admittedly, the Government’s stance to reduce carbon emissions by 34 per cent by 2020 (source CRC EES) is certainly ambitious, but, in truth, it will require nearly every company in the British Isles to engage is some form of outsourcing. Therefore, the green agenda is more important than ever.

Clearly there needs to be an additional layer of transparency thrown on the issue of greensourcing, and helping to define the incentive surrounding it. Uniformity is paramount to enable companies to make informed decisions about how to go about their business and the impact they have on the environment. Once a standard has been determined, it would serve to create a safer and greener market for more companies to engage in. Suffice to say, companies need to explore the supply chain in greater depth.

The NOA’s Greensourcing Steering Committee aims to explore the green challenges facing the outsourcing community. If you’re looking for greensourcing information and advice, the NOA can help. Visit us at www.noa.co.uk

Surge in Public Sector Outsourcing Likely as Coalition Government Takes the Reigns

Number 10 has a new face, a new government for Anglo-prosperity, and it’s going to get things done! It’s exciting times for the UK’s workforce, or is it?

In my last blog, I drew attention to the post-recession financial black hole and the widely touted prospects of the UK’s public sector potentially saving £25 billion, achievable apparently, largely, through outsourcing. If we allowed ourselves to believe everything we heard, is this really possible without being detrimental to the UK workforce?

Results from our recently published Q1 Outsourcing Reputation Index revealed that the UK is expecting a significant uptake in public sector outsourcing and offshoring in order to cut the public sector deficit. The research points the finger at an increasing number of UK public sector organisations, which have actually become less conservative in their actions by outsourcing; most notably when it comes to both increasing productivity and reducing bottom line deficit.

Already, we are seeing signs that this is indeed the direction we’re heading. Last week, outsourcing firm Capita Group (CPI.L) became the biggest mover and shaker in Wednesday’s FTSE 100 rankings, rising 4.3 per cent. The company has clearly benefited from the fiscal uncertainty and ratification of the new coalition Government.

Our Reputation Index analysed over 1,600 unique external communications centred on outsourcing, revealing that 43 per cent of all commentary on outsourcing was focused on the public sector. Even more significantly, nearly three quarters (70%) of all commentary on offshoring related to the public sector.

For many, still reeling from redundancies, the prospect of offshoring is an unsettling one. Our Reputation Index cited nearly 43 per cent of commentary on offshoring pertained to concerns over job losses and security. According to our definitive studies conducted during the mid-2000s (another period of outsourcing concern), the actual effects of service offshoring on UK employment levels have been negligible and, in fact, those studies suggested that for every £1.00 that the UK invests in offshoring, £1.13 or so returns to the UK economy. Those were relatively good years compared to the current climate. Maybe now there isn’t the capacity to generate new jobs? But if we don’t generate wealth and cut debt we will never recover, so is this a catch 22 situation?

As a new Liberal Democrat-Conservative coalition Government prepares for urgent action to curb the national debt, I would urge it to tread carefully. The Government needs to fully understand the processes and ramifications of outsourcing to optimise its benefits and reap the rewards that it can bring. Outsourcing is just one part of the ‘holy trinity’. Organisations have the option to keep a function in-house or share the service with others. The most important question for any public sector organisation and its workforce to consider is which option to choose.

It is for this reason that the NOA supports a Public Sector Transformation special interest group. Not only must a public sector organisation consider the ‘trinity’, but it must also think about the possibility of re-organising itself to get the best value. The group is looking to establish best practice guidelines to support the public sector in moving forward in a beneficial and equitable manner. It’s vital that outsourcing does not produce illusory short term gains and risk making the long term worse.

Whether you’re working in either the public or private sector, if you’re looking for outsourcing information and advice, the NOA can help. Visit us at www.noa.co.uk

Gershon drives Tory efficiency plans

So the Tories have snapped up Sir Peter Gershon – exciting times! Sir Gershon, not one to beat about the bush, has already started doing what most have been too afraid to do – actually looking at where public sector savings will be made.

This could be a dangerous move for the Tories just weeks before the election, especially as the headline most media outlets have gone with concerns the 40,000 jobs that could be ‘at risk’ in Tory hands. But pragmatism is vital if we’re going to get out of this ever-deepening debt hole, so talking turkey is an important move and may win-over business brains. Gershon’s comments also bring outsourcing and shared services back to the fore, which is a debate that needs to take place.

Why should we be talking about outsourcing? On a macro-level, the continued increase job taxes has heaped pressure on UK companies and public sector organisations alike. Cutting costs has become a major priority, and outsourcing is an efficient and effective way of doing this. In order to survive and compete in global market, it is clear outsourcing must now move up the agenda.

We will have to wait and see whether the Tories get in before we can see the extent of efficiencies that can be driven from the sector and whether their £12bn target is realistic. However, potential savings through outsourcing do range from 12.5 and 20 per cent depending on what is being outsourced, so there is much potential.

If government departments do consider outsourcing, they can potentially benefit at both ends of the spectrum. Firstly outsourcing will not only reduce costs but could provide progressive career paths and experienced workers if adopted correctly. Previously outsourced work has been done sparingly and, often without consideration of whether these were core tasks or not, so there has been no clear career path for workers, leading to inconsistencies and limited experience. Outsourcing best practice must be followed for this to work.

By commissioning work rather than trying to do it all itself, the public sector would see an increase in focus and quality of work outsourced, no initial rise in UK unemployment and an increase in the amount of cost savings made. One true benefit of outsourcing is its transparency; every stage can be evaluated and improved upon if necessary and informed decisions can be made and the public can see what’s going on.

It is difficult to predict whether the apparent 44,000 public sector job losses will be actual jobs going or they are simply vacancies yet to be filled and retirements. We understand that currently we have the largest public sector the UK has ever seen, which will in itself have an effect on the number of real job losses. Other countries manage to survive with many less public sector workers – so we should be able to, outsourcing and shared services can help to reduce the public sector burden without significant job losses, perhaps a happy medium?

£25bn inefficiencies in public sector procurement

According to the IOD the public sector could save up to £25bn by overhauling its procurement and outsourcing. It says procurement is currently far too siloed leading to mass wastage and duplication of work. While £25bn is obviously a top-end figure, it’s great to see someone with the IOD’s profile doing the numbers on this.

We’ve been pushing the message on public sector sourcing for some time now and more recently, gathering together expert guidance on the issue through our public sector steering committee. The IOD adding its voice to the roster marks the latest in a long line of organisations that believe there is real money to be saved through public sector outsourcing.

As always though, dissenting voices abound on this subject; from the Unions to those who simply think private sector involvement in public service delivery simply doesn’t work. They certainly have ammunition and will readily roll out the figures spent on ill-conceived and badly managed IT projects.

But this is why the IOD’s report is a breath of fresh air to the debate. The public sector already outsources a lot of work and advocating much more in the same way would be a mistake. It is mismanagement and lack of knowledge-sharing where things come unstuck and savings are not realised. Learning from mistakes is not currently fed into a body of knowledge on which to base future decisions; errors are instead made again and again. Centralisation, or grouping at least, would be a clear step in the right direction as would further tools for sharing success and failure.

While the government has tried this before through OGC it hasn’t really been a great success. For this reason it’s important the government doesn’t try to do it in one ‘bite’. Rather they should try the ‘eat an elephant‘ approach and encourage units to get together that have common issues. They could also use the Treasury’s budgetary controls to ensure that organisations that band together and make savings then get the “saved” money back for further positive projects.

Another good effect of this approach is that it would give suppliers larger potential contracts creating a monetary balance against the bids they lose. They would also be able to afford the development contracts. On the other hand, small businesses may lose out though because they wouldn’t have the breath to take on these bids. But there again there is no indication that small businesses do well from government contracts because of their often Byzantine complexity and lengthy time-scales.

As the election draws near, possible savings of £25bn are clearly going likely to catch the eye of all political parties. That mountain of debt isn’t going anywhere fast, so we continue to expect much more interest in outsourcing post-election. We can only hope that the new government, whoever wins, takes note of bodies like the IOD and the NOA and takes a more logical and coherent approach going forwards.

For those that are interested in sharing their experiences we’ve organised a Public Sector Forum on the 27th of April where practitioners can do just that. The event is free for members and those working in the public sector and interested parties can sign up here.