No. 4/ November 2009 OUTSOURCINGdoc.mediaplanet.com/all_projects/4009.pdf · try’s agenda is innovation, both for the environment and business en-hancement. During the recession’s

Ask the experts Your outsourcing queries answered

Proactive solutions Learn what to outsource at to whom

Artificial intelligence? How outsourcing is helping the IT sector

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OUTSOURCING

No. 4/ November 2009

High Achiever: Andrew de Cleyn on productivity and successigh Ach everiggh Achieverigh AcAcchiieeveieveveverer: Anddrew dde Clleyn on prodductiiviity andd success: AnAndnddrdrerewew ddede CllClleleyeynyn onon prproroodduducuctctitiivviity and suiviviitityty anandndd suuccesucuccccecessessss

IMPROVE YOUR EFFICIENCY

On the way up How outsourcing is benefitting from the recession

Secret to success How to outsource and keep your staff happy

5TIPS FOR

IMPROVING YOUR BUSINESS

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Cautious optimism surrounds outsourcing

As the global economy appears to be emerging from recession, the outsourcing market is gearing up for growth once more as companies seek to cut cost, get best-in-breed services and drive efficiencies.

T -alk of ‘green shoots’ has buoyed the industry and given hope that in areas we may be seeing the very early signals of an economic recovery

in the UK. But there is still disagree-ment on this point and it seems the industry is still some way from be-ing entirely out of the woods. Even so, there has been a definite change in sentiment in business in general and the outsourcing industry itself. It seems businesses are beginning to look beyond the crises and starting to think about how they want their businesses to work when prosperity does return.

The outsourcing industry has sensed this change and continues to adapt its pitch to the current busi-ness mood.

Know the issues

1One area neglected by many during these difficult times has

been the environment. Green is top of the agenda for the UK’s 5,000 larg-est companies as the government’s

ambitious CRC initiative comes into view. April 2010 has been marked as the first deadline for reporting on these company’s carbon emissions. Outsourcers have not been idle in this climate and continue to develop new innovative offerings helping to cut customer’s carbon emissions through the supply chain.

The NOA has also recognised the importance of pushing the environ-mental agenda through the launch of its Green Steering Committee, de-signed to help end-users and out-sourcers understand how to deliver environmental benefits in sourcing.

Another area high on the indus-try’s agenda is innovation, both for the environment and business en-hancement. During the recession’s depths, customers were asking their providers to innovate in further cut-ting their costs, now competitive ad-vantage post-recession is back on the agenda. Seeking innovation through outsourcing is a constant topic for discussion in the industry and it al-so looks set to grow in interest dur-ing 2010.

Understand the potential factors

2But it’s not all rosy. For many, the struggle will continue for

the foreseeable future. If, as predicted, the Tories gain

power in the inevitable general elec-tion next year, the public sector will have some tough decisions ahead. Both parties have admitted there will be significant budget cuts on top of existing financial pressures across the public sector. This is going to spark a renaissance in public sector outsourcing as local governments to police forces seek to drive down costs. Depending on how severe the budg-et pressures become, they may even force the sector to reconsider its com-plete no-go stance on offshoring.

To use a cliché, 2010 does really ap-pear to be a game of two halves; of op-timism and pessimism, cost cutting and innovation. Either way, all those working in outsourcing need all the information and guidance at hand to make those decisions with the great-est chance of success in 2010.

“There are a lot of good deals out there for companies due to the recession.”

Light at the end of the tunnelHow outsourcing has been forced to evolve following the global financial crisis

WE RECOMMEND

PAGE 04

Advice from the experts p. 101. Insight into how the professionals out-source and help their companies flourish.

An upgrade for IT market p. 122. How outsourcing to technical specialists could dramatically help your business.

OUTSOURCING 4TH EDITION, NOVEMBER 2009

Editorial Manager: Katherine WoodleySub-editor: Danielle Stagg

Responsible for this issueProject Manager: Christopher EmbersonPhone: 02076654410E-mail: [email protected]

Distributed with: The Daily Telegraph, November 2009Print: Telegraph Media Group

Mediaplanet contact information: Phone: 02076654400Fax: 02076654419E-mail: [email protected]

We make our readers succeed!

Martyn Hart Chairman, National Outsourcing Association

Clarity and capability

1Be absolutely clear about what you want and what you will be

getting. Does the supplier have the capability to do what you want and do you have the capability to work with the supplier?

Communication

2Make sure you are engaged with your stakeholders and

the suppliers, especially their top management – relationships are key. Throughout the entire process en-sure you communicate as much as possible.

MY BEST TIPS

CHALLENGES

“Seeking to regain momentum in the downturn? Outsourcing can help”, says Sergei Levteev, president of IBA Group, a Prague-based IT service provider with clients in more than 30 countries.

Forced to reduce spending, putting IT projects on hold... These are the complaints that many senior executives express in the today’s tough times. It is not surprising because the IT industry is highly responsive to global changes and IT budgets are among the first to undergo cuts in crisis situations.

Many organisations find themselves looking for the ways to regain stability and resume growth. Outsourcing can

offer an alternative to cutting services, suspending projects and raising fees.

An experienced provider of IT outsourcing services, IBA Group boasts numerous successful projects and clients in more than 30 countries. IBA Group employs 2,300 professionals and has offices in the Czech Republic, Belarus, the United States, Germany, Russia, Cyprus and Bulgaria.

The company offers a comprehensive suite of services with focus on mainframe software, SAP solutions, business intelligence, distributed systems and new technologies (Java, .Net, SOA).

The current economic downturn fuelled the interest to outsourcing to lower-cost areas. Eastern Europe offers European culture, geographic proximity and engineering talent complemented by competitive prices. IT providers in Eastern Europe like IBA Group are recognised for being reliable partners with skilled resources and low employee turnover.

IBA Group lays special emphasis on long-term relations with its clients, which instils trust and fosters better understanding of client business needs.

Come to us and we will help your business adapt to tough economic challenges.

Sergei Levteev President of IBA Group

Contact: IBA Group, 2583/13 Petrzilkova St., Prague 5, 158 00, Czech Republic

Outsourcing vs. UncertaintyPROMOTIONAL FEATURE

Scotland continues to grow as a nearshore and onshore outsourcing location for British and European companies because of a rare combination of complementary factors.

Arguably at the top of the list comes the country’s very highly regarded secondary school and university system, which constantly boosts its talent pool. This, combined with the high quality of living, means the location offers a highly talented work force with far lower attrition rates than other (typically offshore) locations. It means companies have the rare luxury of being able to both attract and, crucially, retain the skills necessary to grow their business.

Heritage and skillsAt the core of Scotland’s appeal to companies considering outsourcing is that its long heritage in outsourcing, offering clients the reassurance that the facilities and talent are on hand to meet their requirements. In fact, more than 86,000 people are employed

in Scotland’s 400 Contact centre and BPO centres. Much of the work comes through financial services, in which Scotland is second only to London as the UK’s prime financial centre. In fact, the country’s financial services sector employs more than 90,000 people and supports a further 71,000 associated jobs.The outsourcing sector in Scotland is buoyed

by two major factors. On the one hand there are, at any one time, more than 300,000 students in higher education in Scotland and each year the country’s universities produce nearly 18,000 graduates with business administration or language degrees. Additionally, according to Mark McMullen, International Senior Manager, Financial Services at Scottish Development International, employees in Scotland have grown up around a tradition of outsourcing and see a position within the industry as a valued career opportunity.“We have a very strong outsourcing industry in

Scotland and so it’s an area that’s looked on by our work force as a career, not just a stepping stone,” he says.“The talent pool in Scotland has a proven

record in understanding the ethos of good performance and great customer service. They understand that their jobs are based on giving excellent service to their client’s customers and so clients can rest assured their back office or customer facing functions are being carried out with great service in mind.“There’s also the advantage that top talent

can understand a client’s customers so well that

they spot and act on upselling and cross-selling opportunities, rather than only ever remain passive and reactive.”Also, the country’s top level rail, road, and air

transport links makes it an easy location to reach and travel around.

Quality and low risk However, a crucial point which Scottish Development International is very keen to make is that this availability of a talented labour force within a highly developed transport and telecommunications infrastructure means Scotland is not a low cost location, but rather a combination of a lower cost but high value location.“We make no bones about not being able to

compete with some offshore locations on wage

rates,” explains McMullen.“We are, of course, a lower cost location

compared to many others. Just consider the cost of having staff in London compared to Scotland, the UK’s second largest financial centre.“What we can also definitely say is that we’re

a high quality and low risk location. There are many reasons where companies choose to outsource and they’re not only about cost. They want to know that their business is in safe hands, that the location can provide the right people and infrastructure to allow them to service their customers to the high level they expect.

Success showsIt is this combination of lower cost and lower risk that lies behind many household names in the finance, telecommunications, energy and technology (among many others) choosing to set up customer service or administration facilities in Scotland. What’s more, McMullen is keen to stress that just as the company names and industries

are varied, so are the job roles.“We obviously have a huge heritage in

customer support centres and business process outsourcing but Scotland also is a very strong player in high value technical support,” he says.“Dell has a support centre here and JP Morgan

has almost 900 software developers supporting its European operations in Glasgow and it’s no surprise that the new Tesco bank decided to headquarter itself in Edinburgh where it will have 450 staff and an additional 800 support roles in Glasgow.”The appeal of Scotland as an outsourcing

location is not just drawing in well known brands but also the top outsourcing companies who realise they need a presence in the country to be able to offer their clients the option of high quality, low risk location. Capita, for example, has recently announced an expansion of a further 300 staff in Stirling involved in back office pension administration work for one of its key clients, AXA.

Helping handIn fact, Scottish Development International can go a step further than pointing to the many reasons why the country is the ideal location for many outsourcing deals. The government body also offers a free service through which it can actually demonstrate to potential clients what the country has to offer. “We don’t just tell potential clients there’s

property available, we can ask them what their criteria is and go out and find it for them,” he says.“They might require a city centre or out of

town business park. We can help find the office which best fits their needs.“We also work with independent recruitment

consultancies so it’s not just us telling a company that they will be able to find the calibre of staff they’re after, it’s professionals working in the field who will demonstrate who they will be able to find the best talent and give an accurate picture of the market rate for salaries.”Being a government body means that Scottish

Development International can also offer financial incentives to clients to set up in the country. In fact, McMullen sees the organisation as being able to offer a rare combination of helping clients to research their options and then helping them to launch operations as soon as possible.“We have access to grants schemes which are

particularly useful in training,” he explains.“We want companies coming to Scotland to be

up and running as smoothly and effectively as possible so we can provide assistance to meet the costs of training staff to perform their new roles.”Ultimately, Scottish Development International

believes this service combined with the many attributes the country has to offer will mean the country will continue to attract growth as the world emerges from a global recession.

Mark McMullen

“The talent pool in Scotland has a proven record in understanding the ethos of good performance and great customer service.”

The Aurora Building, Glasgow

OUTSOURCING SUCCESS IN SCOTLANDPROMOTIONAL FEATURE 3

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Experts are predicting a return to growth for the outsourcing market over the next 12 months as the global recession ends.

Given the tough year or two most companies will have had to endure, it will come as little surprise that the major driver behind this anticipated growth is cost savings.

However, this may not be the on-ly consideration. Mark Beaton, head of the business process outsourcing (BPO) team at Accenture reveals the current year has witnessed deals be-ing considered in greater detail than before.

This, he believes, means that not only are companies nervous they make the right decision but also outsourcing may be a stake in the ground for greater, company-wide changes in strategy as businesses prepare for growth.

“There’s a definite trend for there to be a far longer time lag between a company considering outsourcing and actually concluding a deal,” he says.

“There’s been a lot of talk this year about deals but companies are generally focusing far more close-ly on what they want to achieve and if what’s being proposed is exactly right for them.

“There’s also a real focus on how outsourcing can take cost out of the business and how maybe this can be achieved through restructuring a business around outsourcing. So there’s a lot of really deep questions and people are obviously very con-cerned about the economy.

“Things are taking longer than be-fore, but it’s understandable.”

This cautious approach is also see-ing the development of more ‘multi-sourced’ deals.

This has been a recent trend where-by companies are splitting up the roles they are outsourcing and plac-ing them with experts in that field to achieve best-of-breed services from a variety of suppliers.

Just a couple of years ago it was far more common for the entire set of tasks to be moved to an outsourcer in a single, huge deal.

“There are a lot of good deals out there for companies, due to the re-cession, and so through multisourc-ing businesses are looking to com-bine different expert services rath-er than have on huge contract,” says Steve Sutton, Vice President of Retail, Manufacturing and Distribution at CapGemini.

“We’re also seeing that businesses are looking to outsourcers to manage peaks and troughs.

“Companies know they need to be flexible as the economy recovers and so they are looking to outsourcers because they can quickly scale up or down an operation, according to var-ying demand.

“An outsourcer can respond far quicker to a peak in demand and save a client having to expand an office or open up a new one and hire a bunch of new staff.”

So, Sutton predicts that as growth returns the move to multisourcing for flexibility and access to best-of-breed services will show no sign of abating.

Mark Beaton Head of business process outsourcing (BPO) team at Accenture.

THE FUTURE OF OUTSOURCING

SEAN HARGRAVE

[email protected]

NEWS

It is very normal for companies to be concerned about part of their admin-istrative function being carried out hundreds or thousand miles away. However, so long as out of sight does not mean out of mind, most clients reveal their initial concerns are soon placated.

Whitbread CIO, Ben Wishart cer-tainly admits the restaurant and pub chain was concerned about its finan-cial administration going offshore, via outsourcer Steria, but reveals the cost savings have not met with any major problems.

“It’s completely natural to be con-cerned about something like your fi-nance function going over to India, or wherever,” he says.

“It’s not at your finger tips any-more but there are major providers out there, it’s a big, mature market now. We can say it’s certainly paid off. Our move to outsource the invoicing part of our finance function was all about the cost saving, which we’ve received. We basically sat down and

thought we’re a pub, hotel and restau-rant chain, that’s what we do, having a good finance function doesn’t make us any better in our core area of busi-ness.

“The other way offshoring has worked for us is it’s freed up man-agers’ time so they’re not having to worry about most of our finance function any more. They can focus on something more strategic, which is a big saving for us.”

Protected gainsFrom a legal point of view David Isaac, a partner with legal firm Pin-sent Mason, points out that costs sav-ings achieved through offshoring do not come with unacceptable risk be-cause deals are still protected by, typ-ically, English and Welsh law.

“We’re noticing the pressure to cut cost as we come out of recession is definitely prompting interest in off-shoring, particularly multisourcing with different providers,” he says.

“The main point to bear in mind that many of the large offshore pro-viders actually have offices in the UK and also the vast majority of deals we do are in English and Welsh law, rath-er than the country where the work is being done, so the client has full le-gal protection.”

Ben Wishart CIO of restaurant chain Whitbread

EXAMPLE

PROFESSIONAL HELPDespite the recession many businesses are finding outsourcing is helping their businessPHOTO: STEVE COLE

Offshoring: paying for itself or just inviting risk?

SEAN HARGRAVE

[email protected]

NEWS IN BRIEF

India

Eastern EuropeEast Europe is experiencing

large growth in ‘nearshoring’ be-cause of the excellent universi-ties in Poland, the Czech Republic, Hungary and Romania and low-er wages. Outsourcers are finding East Europe placates clients’ fears of work going too far off shore and, in most cases, keeps the work within the EU.

India is still the dominant re-gion for offshoring due to rela-tively low labour costs, high edu-cation standards and English be-ing widely spoken. Key issues with the region are areas, such as Mom-bai, ‘hotting up’ as demand push-es up wages for the best staff. This growth is seeing new towns grow-ing fast to take the heat off the out-sourcing centres.

UTILISE OPPORTUNITIES

UTUTUTTUTUTILILILILILILILISISISISISISISEEEEEE OPPORRTUTUNINITIES

1TIP

Question: Is now a good time to be considering outsourcing?

Answer: Recessionary pressures mean the need for efficiency is coinciding with some good deals.

The AmericasSouth America is another area

in huge demand, particularly Ar-gentina and Mexico, fuelled main-ly by the American and Spanish markets. It provides a relatively low cost labour force who are, nat-urally, fluent in Spanish and so can offer cover for European mar-kets outside of office hours as well as services for Spanish speakers in America. The Philippines offers the same flexibility for both Eng-lish and French speaking markets.

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Understand what is being outsourced, and why

The basis of outsourcing has, and will remain, contracting third par-ties to perform roles which a compa-ny feels are not key to their skill set.

In essence the process is very simi-lar to why people choose to get a dec-orator in to spruce up the spare bed-room; you get to do what you are good at and employ somebody to help out with a task they are an expert at.

So, when companies are decid-ing what they may or may not want to outsource, this is always the first question; what does the company do, what does it need to do this and what non-core activities could be done more efficiently by an outsourcer?

Admin leadsThis is normally where Duncan Aitchison, a Partner at TPI, is nor-mally called in to give guidance.

As a vendor-neutral consultant who advises companies on what they might wish to outsource and to whom, he finds that most clients are looking at familiar areas of IT and business process outsourcing (BPO).

With IT it is normally a case of a company not having the full time staff itself to roll out upgrades or re-place systems, whereas with busi-ness administration companies are looking for efficiency and flexibility.

“The really big areas are around HR and finance, basically reducing the administrative burden on the com-pany itself,” he says.

“Businesses realise that there are

companies that are dedicated to tak-ing on their admin and doing it at least as well, and perhaps better, for a cost saving. Within HR, payroll and benefits are the largest areas and staff recruitment and development are pretty big too. Within finance the major areas are around getting mon-ey in and accounting for it, so around accounts receivable and ledger work are very popular.”

Strategic gainThere is normally a cost reduction through outsourcing as well as a ben-efit of turning a fixed overhead in to a variable ‘tap’ which can be turned on or off to cope with demand.

However, many companies find that outsourcing helps them to achieve new strategies without hav-ing to concentrate unduly on the mi-nutia of administrative tasks.

“If you look at one of the big pro-grammes by P&G they outsourced a lot of their HR, finance and IT not so much to save money but to allow themselves to concentrate on pro-moting and developing their brand,” points out Aitchison.

“In the current economic climate it’s no surprise we’re noticing short-term cost gains are proving impor-tant to companies. But once these savings are achieved outsourcing is far more about longer term gains of having apartner who can free you of some of your functions so you can concentrate on growing your busi-ness.”

To ensure efficiencies contin-ue in the long term the best advice Aitchison offers it to ‘multi source’ from different suppliers so there is a ‘natural competition’ among part-ners to continue doing well.

“In the current economic climate it’s no surprise we’re noticing short-term cost gains are proving important to companies.”

Duncan AitchinsonPartner at TPI

SEAN HARGRAVE

[email protected]

Question:How do companies know which function they should outsource, and to whom?

Answer: Focusing on core skills and appointing more than one outsourcer to carry out non-core activity is one solution.

2

1

3

PROACTIVE SOLUTIONS1 & 2. Companies can cut costs by outsourcing their IT.3. Administration is a popular outsourced function.PHOTOS: ISTOCKPHOTO

SHOWCASE

NEWS

DO YOUR RESEARCH

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DDDDDOOOOOO YOYOYOYOYOYOYOUURURURURURUR RESSEEAARCRCH

2TIP

FACTS

Business Process Outsourcing - provision of a bundle of business proc-

esses by a third party service provider

Captive - where the offshore unit re-

mains a part of the company offshore

and onshore employees work for the

same company

Contracting out - term often used

in the public sector to describe an out-

sourcing arrangement.

Co-sourcing - where a business

function is performed both by internal

staff and external resources

Nearshoring- the transfer of busi-

ness functions to a country relatively

close to the organisation

Offshoring - working with an off-

shore partner for service delivery

Multishoring - the transfer of busi-

ness functions to different countries both

close by and distant from the organisa-

tion

Novation - the process of legally

transferring ownership of existing con-

tracts from their current owner to the

new outsource service provider

TOP OUTSOURCING TIPS

Implement a structure

Define who is driving the rela-tionship so the vendor under-

stands who the client is – ie custom-er services, IT, an outsourcing team. Introduce all key people involved in the project and establish lines of communication.

CommunicateEnsure there are clear lines of demarcation and reporting

structure on both client and vendor side. Share organisation charts so that everyone knows each individu-al’s responsibility.

Set goalsAgree objectives, scope and scale of contract/project. State

the clear objectives and ensure they are agreed by both sides. Agree base-line data and set realistic expecta-tions in order to achieve the objec-tives.

Offer guidelinesEstablish governance structure for the project/contract – in-

cluding communication guidelines, regularity of reviews, escalation process etc. Include options for ex-tending or terminating the con-tract.

ForecastAgree exact costs, to include set up costs, training, IT, as

well as the ongoing service costs.

Plan aheadAgree risk & reward arrange-ments, to incentivise service

providers and penalise for non-achievement .

Outsourcers agree that the best partnerships are forged through careful thinking at the start of the project. Businesses need to de-cide their objectives for outsourc-ing projects – are they are based on cost savings, efficiency improve-ments or providing a better serv-ice, or a combination of several objectives. Before signing, com-panies should review different outsourcers and decide not only which vendor offers the most ap-propriate service but which com-pany has the best cultural fit.

7

It may sound obvious but the best advice a successful outsourcing company, such as Firstsource, can pass on to those

considering outsourcing is that the best deals always need to be built on solid foundations. For this to happen both the client and

outsourcer need to know exactly which business processes, or which part of wider processes, are proposed to be outsourced. It is important that the business process, and its relative state of health, is well understood by the outsourcer. “To get it right you have to do a lot of

ground work with the client,” says Matthew Vallance, Firstsource’s Managing Director for Europe.“We always review the work to understand

and fully map out the processes involved. It means we get to the nuts and bolts of what’s involved so we know in great detail what we’re being asked to do. We can also use this mapping exercise to establish where we can make efficiencies so we offer a more streamlined, faster and more cost-effective service.”

Measure and prepareOnce both client and outsourcer are in agreement about what is being outsourced, the two parties can then begin work on cementing those solid foundations with a contract built around robust service level agreements (SLA) and key performance indicators (KPIs). This agreement needs to evolve over time as circumstances change.

“For an agreement to work well, both sides need to have in black and white exactly what level of service is required,” says Vallance. “We also need to be able to measure

how well we are performing those tasks. There need to be clear rules outlining a risk and reward structure where better than expected service is rewarded and penalties are put in place if standards slip.“The metrics for administration work

can be for accuracy, speed and work flow volumes but for customer service centres the client will typically conduct customer satisfaction surveys and measures such as first call resolution.”Another huge issue which can help

outsourcing deals run smoothly is putting in place business continuity planning (BCP). Preparing for the worst allows administrative and customer service work to continue despite setbacks, such as natural disasters, staff illness, terrorist atrocities and power or telecoms outages. Hence Firstsource advises clients in

some cases to have dedicated teams split between two or more of its offices to cut down on the risk of an unforeseen event wreaking havoc.

Manage strategyOnce all these steps have been taken to reduce risk and set up an efficient, measurable service for a client, attention needs to switch to managing the

relationship. With any outsourcing project, the best value comes through a long term, evolving relationship and so it is vital that both sides ensure that the relationship is working at its best. “We have monthly reviews to assess

how the processes are performing and every quarter we’ll look more at strategy to see if the work we are doing fits in with the overall strategy of the client,” says Matthew Vallance.“Then every year we’ll have a very senior

level review to make sure everything is on track for where we want to be in six months and six years time and if we need to make any alterations to the contract. “The key to these regular reviews is not

to maintain a strong relationship but to also see how we as an outsourcer can be flexible, to fit in with clients’ strategies because businesses have to change strategy to remain competitive and so it’s only fitting that we, as an outsourcer, should be adaptable.”While this means that a relationship

will develop and change over time, the most important factor is to ensure there is always a strong relationship that is kept healthy enough to remain flexible. This can only be possible if the partnership is built on solid grounds from the first engagement so each side knows what is expected and metrics are in place to ensure this is delivered as the relationship deepens.

Success is built on solid foundations

Matthew Vallance Managing Director for Europe,Firstsource

“For an agreement to work well, both sides need to have in black and white exactly what level of service is required.”

Firstsource Solutions Ltd Space One, 1 Beadon Road, London W6 0EA, UK. Tel +44(0)208 237 4500 www.firstsource.com

PROMOTIONAL FEATURE

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Question: Is cost the main benefit of outsourcing some of your HR function? Answer: Maybe, but according to Richard Bishop-Laggett, time to focus on strategy and reducing risk are the key ‘wins’.

There is no getting away from it; payroll is a complex job which many companies would like to have done by someone else.Just imagine, though, the complications of being the country’s fourth largest pri-vate sector employer (42,000 employees in the UK, nearly half a million global-ly) with a wide variety of facilities man-agement staff, such as cleaners, caterers, administrators and security officers, all working varied shift patterns under more than 500 different sets of terms and con-ditions.

For HR Services and Development Di-rector at ISS, Richard Bishop-Laggett, this complication was a major reason for seek-ing a payroll and recruitment process outsource deal with Ceridian. However, it may surprise some to hear it was not a move designed to bring a financial saving because, he insists, ISS was already carry-ing out the role at low cost.

In fact, his advice to other HR directors is to look beyond the allure of potential cost savings of outsourcing HR admin-

istration and instead concentrate on the other gains, such as reduced risk and the freeing up of time to devote to strategy.

Reducing risk“One of our key drivers in outsourcing, particularly payroll, was risk,” he ex-plains.

“It’s so incredibly complex that we were having to invest an awful lot to keep on improving software. The biggest prob-lem was business continuity; what would happen if we had a major problem? That was one of the main drivers for going for a professional company that do payroll for thousands of companies. It’s what they do, so they are constantly investing the latest, best software and, crucially, they’ve got state of the art communica-tions systems and back up plans so they don’t have an outage.”

In fact, just as Bishop-Laggett was about to present his plans for outsourc-ing to the board nearly a year ago, there was an explosion at the Bouncefield oil depot near Hemel Hempstead which un-derlined the need for the function to be

carried out by a provider with far more ro-bust business continuity plans.

The move has come with the added bo-nus that because part of the outsourced team is offshored in Mauritius, ISS staff, who will typically work a mixture of night and early morning shifts, can sub-mit payroll questions outside of typical UK office hours.

Staying legalRisk was again a major factor for Bishop-Laggett deciding to outsource the busi-ness processes behind recruitment at ISS. On the one hand the system takes a lot of the strain off the HR department by auto-matically placing job adverts on the web as well as initially vetting applicants for suitability. It can also handle the paper-work around arranging interviews and letting down unsuccessful applicants.

However, the real benefit that Bishop-Laggett believes companies should con-sider for their recruitment processes, is the way the system is constantly updated to incorporate the latest legislation.

“Keeping a recruitment software suite

up to date with the latest statutes is real-ly tough because they’re changing con-stantly and criminals are getting ever-better at getting around them,” he says.

“You only have to look at the press sur-rounding cases of illegal workers be-ing caught to find that in most cases the company has been duped with false doc-uments, they’ve not actually intended to break the law. That’s why we consider it a huge decrease in our risk profile to use a system that goes way beyond the mini-mum steps the law suggests when we as-sess whether people can legally work in the country.”

Ultimately, Bishop-Laggett assures other HR executives, outsourcing frees up time to concentrate on strategy. He, for example, has used his extra time to help set up a central recruitment team to give a national lead for executive recruitment at ISS, replacing the previous ‘ad hoc’ ap-proach.

Outsource for less risk and more strategy

SEAN HARGRAVE

[email protected]

LEADER TO LEADER

“We were having to invest an awful lot to keep on improving software”Richard Bishop-Laggett HR Services and Development Director at ISS

INSPIRATION

POSITIVE APPROACHAn ISS employee operating under a new system.PHOTO: ISS

RICHARD’S BEST TIPS

3

Select wisely

1What do you want to get from the relationship? Be flexible

and open to ideas so that the op-portunity can be maximised. Vali-date and reference suppliers claims about their solution and mobilisation methodology, it is key to get beneath the “sales ve-neer” and discover the reality and learn from others experiences.

Manage Proactively

2Work in partnership to devel-op key performance indica-

tors (KPIs) that will add value to the relationship and keep quality constantly in focus. Things will go wrong, make sure your supplier knows when they have and puts mechanisms in place to stop it happening again.

Review Often

3How will you measure suc-cess? - Ensure there is a

framework for reviewing and de-veloping the outsourced service and planning for the future.

DEVELOP STRATEGIES

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AN INDEPENDENT SUPPLEMENT DISTRIBUTED WITHIN THE DAILY TELEGRAPH10 · NOVEMBER 2009

Allow the experts to focus on excellence

When two financial services provid-ers merged in 2003 to form F&C, the new company realised that while it wanted excellent customer services, its core skills lay in looking after cus-tomers’ money.

The board of the new, enlarged company also believed that customer services is best provided by dedicat-ed teams which specialise in partic-ular areas, rather than a huge group of staff who try to handle a vast array of roles.

Like many companies F&C wanted to get the benefit of outsourced call centre staff and administrators but wanted them to feel like they were a part of the company rather than re-mote workers answering calls for their brand one moment and anoth-er company the next.

Hence the company’s Retail Client Services Director, Cheryl Robertson, explains F&C took the slightly unu-sual route of splitting its customers services in to three distinct call cen-tres provided by three separate out-sourcers.

“We have three teams which are built around giving the best service to our customers at different stages,” she explains.

“We have a team which handle our prospects calling in for information on our products and then we have a team who take calls on customers’ investments who can make adjust-

ments to accounts and then we have a team that handle the administra-tion.

“We realised that our prospect-fac-ing team needed to be very different from those interfacing with exist-ing customers. We needed them not to be salesy, because we cannot give financial advice but we need them

to be very knowledgeable about very important financial investments.”

This obviously raises a very large question mark over how F&C can manage three separate, outsourced teams and provide quality custom-er services. For Robertson, the an-swer is in picking the right people, with the right attitude who want to be working with F&C as well as, of course, a contract which details the level of service the outsourced teams are expected to provide.

“We think of our teams as exten-sions of us, they’re not remote, we help hire people, we lead their train-ing,” she says.

“It means they feel they work for us and we definitely see them as part of our enlarged team. Our company strapline is ‘expect excellence’ and so we have clear guidelines on the level of service we expect. Ultimately good customer services isn’t about mon-ey, it’s about your staff wanting to be there and wanting to be helpful.”

Robertson suggests the compa-ny coming out top in the country in a recent GfK NOP ‘mystery shopper’ survey of customer services proves the plan to use specialist teams from three providers is most definitely working.

“We think of our teams as extensions of us, they’re not remote, we help hire people, we lead their training”

Cheryl Robinson Retail Client Services Director of F&C

SEAN HARGRAVE

[email protected]

Question: How can we implement outsourcing without it having a negative effect?

Answer: Employing people with the right attitude is key to success, says Cheryl Robinson

A WINNING TEAMCheryl (fourth from left) and her co-workers receive their Top 50 awardPHOTO: F&C

INSPIRATION

PROFILE

Cherly RobinsonName: Cheryl Robertson

Position: Retail Client Services Di-

rector. F&C in Edinburgh, managing

three outsourced customer services

teams

Place of birth: Glasgow

Previoius experience: Has

worked in financial services for more

than 20 years, originally from a com-

pliance and operational background,

she has been managing customer fac-

ing operations for the last 10 years.

Achievements: Cheryl names F&C

winning first place in a recent, nation-

al survey of the Top 50 Call Centres

as her proudest professional achieve-

ment

Formal qualifications: Recently

completed the University of Warwick

Diploma in Service Leadership

Interests: Beyond work and family

life, Cheryl loves food and wine

HOW WE MADE IT

1. What factors have dominated the past year? 2. Who or what will be driving growth?

QUESTIONNAIRE

1. Our research shows compa-nies are intending to nearly dou-ble the overall number of jobs that they currently have in low-cost lo-cations during the next 2 years. By 2010, 1 in 4 corporate jobs in IT overall will be offshore, along with more than 1 in 5 transactional jobs in corporate finance.2. Our latest research is point-ing towards a jobless recovery in the short term. Where companies do hire back, they’ll do so with a heavy bias towards hiring in low-cost labor markets, to maintain global competitiveness.

Michael Janssen Chief Research Officer, The Hackett Group

1. The recession, the steps by vari-ous governments to stabilise capi-tal markets and focus on reducing the cost of operations.2. Increasing business confidence with the impact of the recession easing and the limited success of cost cutting measures by driving down investment will focus ener-gies on efficiency and renovation of business models.

The renewed focus on sustaina-bility and climate change will also drive investment in new products and global supply chains.

Roger NewmanHead of UK Manufacturing and Digital Convergence Relationship Management at Mahindra Satyam

1. We have seen growth from an increased focus on customer serv-ice and, of course, the need to cut costs during the recession. Compa-nies have also started to look more closely at social media as a channel for customer service. 2. In 2010, increased confidence will drive outsourcing growth for innovating and business enhance-ment alongside cost cutting. Like-wise, customer service interaction over social networks will also be-come more and more important for outsourcers.

Nicholas Nesbitt Founder and CEO of Kenyan call centre and BPO pro-vider, KenCall

1. Lower operational costs: By outsourcing, you don’t need to go through the costly and time-consuming process of recruiting and training personnel, managing attrition and maintaining technology. A specialist outsourcer such as Garlands can take all that expense off your hands.

2. Reduce capital costs: Outsourcing can relieve you of the burden of buying and equipping buildings, buying technology etc. - freeing monies to increase working capital.

3. Concentrate on key strengths: By bringing on board expertise in areas such as customer service, telesales, collections and back office, outsourcing will free your managers’ time to concentrate on what they do best.

4. Enhance service quality: Through more efficient contact handling processes, better trained and more experienced Advisors, better technology and a heightened focus on understanding and meeting customer needs, outsourcing can help you boost service levels.

5. Improve performance: Regardless of whether your Key Performance Indicators relate to customer satisfaction, sales, first call resolution or customer retention, we can help you exceed targets and boost customer loyalty.

6. Meet short term project requirements: Outsourcing customer service and telemarketing is perfect for tactical marketing campaigns and for meeting unexpected or seasonal peaks in contact volumes.

7. Faster time to market for new products: Outsourcing is the perfect solution when you need to rapidly set up support for new product and service launches.

8. Access to new skills: An outsourcer can provide expertise that often can’t easily be accessed using in house resources - such as retention, telesales, customer lifecycle management, upselling, cross-selling and collections skills.

9. Access to new technologies: Garlands can provide cutting-edge technology resources - such as

unified communications, speech analytics and advanced performance optimisation - together with the experience of knowing how to deploy these resources in a customer contact setting.

10. Improve your contact handling processes: Finally, outsourcing can help you improve processes in order to serve customers more efficiently, faster and more cost-effectively.

How do you prove that you really value your customers? By delivering a positive experience each and every time you are in contact with them. Not just when you meet face-to-face, but each time you respond to a service email, and every time you make a telesales or debt collection call.

Few organisations would disagree with this statement. Yet it’s evident that many companies have, to date, placed a much greater emphasis on the listening and empathy skills of their customer service staff, than on the equivalent skills of their sales and other customer contact staff. It’s a curious situation - especially when it’s widely recognised that years of hard work spent developing a customer relationship can be undone in a few seconds, for example by an overly aggressive debt collector.

The good news is that organisations are now waking up to this anomaly and recognising the importance of delivering more consistent ‘end-to-end’ customer experiences. They are also starting to invest in the specialist resources and technologies required to get the best out of each area of their customer contact operation – and this includes the greater use of local outsourced specialists.

The growth in local specialists

While the increased use of low wage offshore centres has often grabbed the media headlines in recent times, it’s the growth in local customer contact outsourcers that is more

spectacular. In 2007, over 1.8m call centre agent positions in Europe, the Middle East and Africa were outsourced to specialist customer contact providers – and according to contact centre research firm ContactBabel that number is set to skyrocket.

While it expects the number of UK in house contact centre agent positions to rise 16% by 2011, ContactBabel predicts that the number of outsourced agent positions in the UK will rise by a massive 37% with the telecoms, financial services, technology, public sector, manufacturing and utility sectors leading the way.

Clearly, different organisations have different reasons for investing in specialist local customer contact resources. For a few, it has been a response to customer complaints and public criticism over their use of poorly trained and inadequately skilled operatives in areas such as telesales and technical support. For the majority however, it’s more likely to be a recognition that ‘quality’ is every bit as important as ‘cost’ when it comes to running an efficient customer contact operation. And that can only be good news for more specialist customer contact outsourcers in areas such as sales, service and collections – as well as for the general public.

The transition from ‘traditional debt collection’ to ‘credit management’ outsourcing is a good example of modern local specialisation. Today, the objective of credit control is more than just collecting outstanding monies - it is to meet the needs of both the business and its customers through the use of fair collection policies and strategies to educate and rehabilitate individuals who were previously in arrears into motivated customers who pay on time.

Which outsourcer is right for you?

When it comes to selecting the outsourced partner to best meets your business needs, reputation, areas of expertise, breadth of services and cost are all important factors. However, in many respects, the most important factor is trust. If you are entrusting care of your most important assets to another company you need to be 100% sure they will take care of them. So ensure you speak to other customers of the outsourcers you are considering, find out as much as you can about how they operate, about their people, assess whether you feel your managers could work well with the people at those companies, assess how they measure and reward performance etc. These ‘soft’ factors can be every bit as important as financial considerations.

www.cjgarland.co.uk

Chey Garland Chief ExecutiveGarlands Call Centres 01429 283000 [email protected]

10 reasons why local specialist outsourcing makes sense in the current economic climate

CALLING IN THE SPECIALISTSPROMOTIONAL FEATURE 11

Contact Steve Norman, Business Development Director for further information on:steve.norman @cjgarland.com01429 405767

It is an area where it is very easy to see why so many companies go down the outsourcing route. With so much technical knowledge required to in-stall and maintain the latest infra-structure, software and applica-tions, many businesses prefer to let outside experts take on the role.

Traditionally the area has seen huge headline-grabbing deals for household names to set up and main-tain vast networks through which a plethora of power tools are embed-

ded. While this will continue to true of blue chip companies, many busi-nesses are taking a far more prudent, cautious approach. Rather than ‘rip and replace’ many companies are in-stead tasking outsourcers to improve and upgrade their infrastructure so staff have access to the latest tools at reasonable cost and with as little disruption to normal service as pos-sible.

Less replacingMatt Havens, Director for Europe at outsourcer Cognizant, believes many companies are being driven by the need to offer staff the most effi-cient software but, at the same time, not wanting to risk any costly inter-ruptions.

“It’s a little like a bathroom, it takes a lot of work and effort to rip the whole thing out and start again,” he says. “So wherever possible we’re finding that clients are wanting to upgrade what they have. They need a smooth transition to the latest ap-plications and that, more often than not, is driving them down the up-grade path.”

Access expertsThis trend is also developing be-cause, according to Neil Meddick, Services Director at IT services pro-vider Computacenter, many busi-nesses are now reverting to using outsourcing to seek out experts rather than just to cut cost.

“During the recession it’s all been about cost, as you might imagine,” he says.

“We’re definitely seeing that cli-ents are now increasingly going back to the days before when they were more motivated by access to experts.

“Interestingly, this is lead-ing to multiple outsourc-ers working for the same company. Instead of a single mega deal, com-panies are picking best-of-breed provid-ers and getting them

to work together.”Hence, Meddick predicts the main

change in IT outsourcing will not just be for upgrading to become more prevalent than ‘rip and replace’ but there will also be far fewer ‘mega’ deals with a single supplier and more reliance on specialist outsourcers working together.

AN INDEPENDENT SUPPLEMENT DISTIBUTED WITHIN THE DAILY TELEGRAPH12 · NOVEMBER 2009

More upgrading than replacing in the IT market

SEAN HARGRAVE

[email protected]

Question: How is outsourcing benefitting the IT industry?

Answer: By utilising external technical experts companies can upgrade their current systems, thus boosting efficiency.

NEWS

LISTEN TO THE EXPERTS

E DADD ILY TELEGRAPH

LLLLISSSISISTETETETETETETENNNNNNN TTOTOTOTOTO THE EXEXPEPERRTS

4TIP

FACTS

40% have cut back on outsourcing

over the last year; 78% cite unclear value

for money with 51% citing high vendor

management costs

Less than half of CIOs and CFOs have

ever tried to quantify the financial contri-

bution of outsourcing to their businesses

More than a third do not bother and

one fifth (20%) cannot remember if they

have ever have tried

CIOs get vote of no-confidence from

Finance: Only 37% of CFO respondents

rate their CIO’s ability to communicate

outsourcing’s benefits to the business

37% believe that the business value of

outsourcing cannot be assessed beyond

the one-time cost saving

51% want to see ROI from outsourcing

arrangements within the first year; 13% in

6 months or less

61% plan to either maintain or in-

crease their outsourcing investments in

the coming months

Continuity in longer software dealsLonger term relationships are returning to software partnerships, according to outsourcing experts, and the benefit for clients is better continuity through a dedicated expert or team of programmers.

After what most in the software outsourcing sector agree on as a “challenge 12 months” the lat-est trend would appear to be go-ing back to the pre-recession days, according to Cleve Gibbon, CTO of Cognifide, this is a return to the pre-recession software market.

“For the past year or so we, and other software outsourcers, were noticing how clients were mainly interested, or could only fund, one-off short term projects where the outsourcing decision was all about cost,” he says.

“Thinking long term is so much better for both parties because qui-et periods can be covered by a min-imal retainer but then when the company needs a lot of support, an outsourcer will have the staff on board who have worked with the client before, so it gives both sides a lot of continuity.”

For clients, of course, there are also discounts to be had by extend-ing deals and so, in many instanc-es outsourcers insist, a long term deal can work out more cost effec-tive than a string of short-term en-gagements.

ey have. They need ion to the latest ap-at, more often than hem down the up-

sso developing be-

to Neil Meddick, at IT services pro-

enter, many busi-reverting to usingseek out expertso cut cost.cession it’s all beenu might imagine,”

ely seeing that cli-ncreasingly going

before when they ated by access

this is lead-outsourc-he samed of acom-

kingvid-

hem

there will also be far fewer mega deals with a single supplier and morereliance on specialist outsourcersworking together.

SEAN HARGRAVE

[email protected]

MAKING CHANGES Many companies are now choosing to outsource for techincal upgrades rather than replacing their cur-rent systems PHOTO: ISTOCKPHOTO

1 32 33333333333333333

NOVEMBER 2009 · 13AN INDEPENDENT SUPPLEMENT DISTRIBUTED WITHIN THE DAILY TELEGRAPH

BUSINESS PARTNERS1. India is a natural option for those needing English speakers2. A wide range of languages and differing office hours to the UK makes South America a popular choice3. Outsourcing to Eastern Europe allows companies to keep all their business in the EUPHOTOS: ISTOCK PHOTO

While for some offshoring may be a daunting option,

many UK-based companies have seen their business flourish after outsourcing abroad. A wide range of locations across the globe have proven an excellent choice for many, including hubs in Argentina and the Phillipines.

ALTERNATIVE OPTIONS

A continentalapproach

TIPS

INSPIRATION

1 3

AN INDEPENDENT SUPPLEMENT DISTRIBUTED WITHIN THE DAILY TELEGRAPH14 · NOVEMBER 2009

Success is multi-layered

There is a lot more to outsourcing than companies getting somebody else’s staff to take on their administration or IT work, says Andrew de Cleyn, Managing Director of Outsourced Services at Logica. By changing processes and providing the best technology to the best talent, outsourcing can be truly transformational for a company.

It may comes as little sur-prise that the managing di-rector of an outsourcer with a rich history in technology and telecoms should suggest

that IT is going to be a central part of outsourcing growth, but Andrew de Cleyn is adamant that, as the sec-tor emerges from recession, it will no longer be just about people.

As the IT and business process out-sourcing (BPO) sectors have matured, he believes the strategy of simply moving jobs from one area to another to cut cost is not as alluring as it may have once seemed, particularly as ar-eas ‘hot up’ and wages increase.

“People are only one part of the outsourcing mix,” he argues. “There is only so much cost saving on labour and offi ces you can achieve, the real saving comes from having the right people, wherever they’re based, do-ing the right process with the right technology. If you were to say to a company would you rather a process were done by 100 people in London or Bangalore or by a very smart piece of technology, they’d always go for the latter.”

Transforming focus De Cleyn maintains that although cost is always important, particu-larly as the industry emerges from

a global recession, it must never be forgotten that people outsource for a number of reasons and so the indus-try must move the debate on to point out the extra opportunities outsourc-ing off ers.

“Cost is always important, of course it is, but there is so much more to outsourcing,” he says. “We need to draw attention to how out-sourcing is used to allow companies to transform themselves. Most pro-grammes are about businesses de-ciding how they can best serve their customers and reorganising them-selves around that goal. It can lead to fundamental change.”

Although he sees growth coming for outsourcers across the various channels, one of the big areas that is exciting de Cleyn right now is the ev-olution in IT to new ways of storing and accessing data.

“I must say I thought after the Y2K problem was over IT might get a bit dull but it’s still one of the fastest moving areas of outsourcing.”

“With software and with infra-structure there are new exciting ways of working around virtualisa-tion, storing data in the Cloud and consuming software as a service. So it’s exciting times in IT and this progress is not only leading to cost savings, it’s allowing people to work

much smarter, and on the move too.”

Watching localDe Cleyn is also predicting renewed growth in HR and BPO contracts over the next few months but believes it will be a case of more of the same. The type of work outsourced and the combination of reasons, including cost savings, will remain unchanged.

However, the public sector, he be-lieves is going to be a very interesting area to watch. Five years on from the groundswell of interest in outsourc-ing created by the Gershon, which suggested local and national gov-ernment bodies could make savings through outsourcing, de Cleyn is pre-dicting renewed interest as agencies try to make savings to make up for potential funding short-falls.

“It’s not a huge surprise that a lot of government bodies, particularly in local government, are going to be looking to outsourcing to save mon-ey due to the public funding diffi cul-ties following the recession and bail-ing out the banks,” he says.

“I think a lot are already involved in outsourcing, perhaps through shared services, and so I think there’s going to be a lot of scope in IT as many bod-ies look to the sector to make them more effi cient and help plug any po-tential budget defi cits.”

“There is only so much cost saving on labour and offi ces you can achieve, the real saving comes from having the right people.”

Andrew de CleynManaging director of outsourcers, Logica

GROWTH

PROFESSIONAL INSIGHT

Improve relations

1 Outsourcing arrangements with well-managed relation-

ships are more likely to be success-ful. Relationship management can create the ‘trust dividend’, a 20% to 40% diff erence on service, quality, cost and other performance indi-cators.

Earn your position

2There is no such thing as an instant relationship. Trust is

earned and relationships built through performance; day by day.

Know the business

3Outsourcing relationships account for 20% or more of

the IT or business process budget are themselves strategic assets and demand on-going senior executive investment and attention.

Think ahead

4Proactive management is re-quired to sow the seeds for a

successful relationship before the start of the deal and cultivate it thereafter at three levels - execu-tive, managerial and operational.

Aim high

5In outsourcing relationships, you mainly hit what you aim

at. Using measures like relation-ship values charters, regular rela-tionship health checks and con-tract scorecards sets and aligns tar-gets and encourages superior per-formance.

ANDREW’S BEST TIPS

5STRIVE FOR PERFECTION

5TIP

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