The Buffalo Blog

Communicating outsourcing

Amid strikes and predicted mass industrial action there has never been a worse time to be outsourcing work abroad in the public eye. The old Labour slogan of 'British jobs for British people' is rearing it's head again and it won't be long until the media spotlight falls on upon an unsuspecting company. Sending jobs abroad when the UK's workers are marching in the street is highly dangerous reputation-wise. But if a company's simply has to cut costs in this way to survive, they should be prepared.

Buffalo's MD, Kerry Hallard, discusses the ins and outs of communicating when conducting outsourcing deals.

MEDIA ALERT – Satyam Chairman resigns over inflated profits

Story: The head of India's embattled Satyam Computer Services resigned on Wednesday after stating that the firm's profits had been inflated, sending the stock down more than 80 percent and roiling investor confidence.

Buffalo Communications MD, Kerry Hallard, comments:

“This is a massive media crisis for Satyam that is en route to completely destroy its reputation. Investor confidence is already gone and customers are also going to be very worried. Derogatory online comment abounds and is growing by the second with some branding it the ‘Enron of India’. Yet comment from the company is scarce and its website largely lacking comment. A press conference in 24hrs simply isn’t quick enough when one’s reputation is falling apart by the minute.

“It’s clear that Satyam must act decisively if it is to salvage its tattered reputation, allay customer fears and ultimately rebuild its once impressive reputation. Effective and rapid communication during a crisis such as this is absolutely paramount especially when the online conversation is passing judgement on a second-by second basis. Silence now will only help to fuel rumours and detrimental speculation.

“Satyam should take the following steps to make sure that all stakeholders get the information they need as quickly as possible:

• A clear action must be taken, such as an external investigation. This concrete action must be conveyed, directly and indirectly, to audiences through the website, press, blog, YouTube and other available routes.
• The PR team should be assembled and appropriately briefed with FAQs for every possible question. PR teams should be aiming to effectively communicate what went wrong, why it happened and how the problem is being rectified. The FAQ should also be released as above.
• The most appropriate spokesperson should have his or her diary cleared, be briefed on what the company is doing to resolve the situation, and be made available for comment through all major news channels.
• The company should not let an information void occur. The internet is rife with speculation and lack of company comment is quickly replaced with derogatory conjecture. The company should ensure a constant stream of communication, even when there is nothing new to say, creating transparency is key.
• Internal communications should also be taking place. Resignations and possible fraudulent activity will cause concern amongst the workforce. Briefing and reassuring employees is vital to maintain morale. PR crises will get worse if disgruntled employees give damaging statements to the press. Making sure that they understand what the company is doing about the situation and the effect it has on them will mean that they feel valued and in safe hands.”

The outsourcing weekly round up

As a new feature for all our outsourcing clients we will be highlighting some of the top industry stories each week.

Comments are always welcome

sourcingfocus.com
The financial crisis will boost outsourcing as a strategic business tool, says EquaTerra.
http://www.sourcingfocus.com/index.php/site/newsitem/1101/

Computing
NHS IT programme costs London hospital £7.2m
http://feeds.computing.co.uk/c/554/f/7121/s/253460c/l/0L0Scomputing0O0Ccomputing0Cnews0C2230A0A980Ccare0Erecords0Esystem0Ecosts/story01.htm

Outlook for NHS IT is far from healthy
http://feeds.computing.co.uk/c/554/f/7121/s/25c2356/l/0L0Scomputing0O0Ccomputing0Ccomment0C2230A4260Coutlook0Enhs0Efar0Ehealthy0E4334629/story01.htm

ZDnet
Obama and team set to make their mark on tech
http://news.zdnet.co.uk/itmanagement/0,1000000308,39544374,00.htm

Analyst firm cuts IT-spending outlook for 2009
http://news.zdnet.co.uk/itmanagement/0,1000000308,39550712,00.htm

Computer weekly
Public sector shared services market worth £4bn over five years
http://www.computerweekly.com/Articles/2008/11/11/233310/public-sector-shared-services-market-worth-4bn-over-five.htm

Personnel Today
BBC HR chief Stephen Kelly leaves to join Logica
http://www.personneltoday.com/articles/2008/11/13/48358/bbc-hr-chief-stephen-kelly-leaves-to-join-logica.html

Computerworld UK
Sheffield confirms Capita for £200m deal
http://www.computerworlduk.com/management/it-business/services-sourcing/news/index.cfm?RSS&newsid=11967

IT Outsourcing could be key for ABN AMRO

The merger between Barclays (or RBS) and ABN Amro is set to cost hundreds of jobs in the UK. When banks grow by acquisition, the pace of change frequently leaves a legacy of systems that do much the same thing but don’t interconnect and of people who perform essentially the same business processes but in incompatibly different ways.  As a result, management teams often find it harder to consolidate and summarise everything that is going on in the bank, leading to duplication of costs, which makes it harder to flush out risks and increases the chance that there will be a failure of internal controls. The result may be a reduction in profit, share price and brand value, the complete opposite of what was intended.                                                                                          

                                                                                           

The time of a merger or acquisition can be the perfect time to introduce an outsourcing model – establishing a relationship with an ITO outsourcing partner can definitely help at such a juncture. They will be in a position to provide an independent perspective i.e. they will not favour the system of one company over the other and will be able to select the best features from both. As part of a standard outsourcing contract, the supplier will also be prepared to sign up to cost reduction targets and business case benefits. Often in the case of a merger or acquisition the infrastructures are so different that it will require a completely fresh start.

Humour and outsourcing go hand in hand!

I'd like to congratulate BPOTiger for doing what many thought was impossible - combining humour and outsourcing - well done! 

Nearshoring - a global strategy will pay dividens

I read with interest the article by Silicon and the Offshore Outsourcing World Blog (re-printed) on Deutsche Bank's global sourcing strategy - if I hadn't read it with interest it would have been quite worrying, given that Luxoft (Deutsche Bank's Russian ITO supplier) are my client!

It is good to see that large companies in the financial services space are acting in a way that has been long-anticipated (as predicted by another client of mine - the National Outsourcing Association in 2006). A global sourcing strategy, maximising the various specialities that different countries can provide, is the natural solution for large companies with global wants and needs.

Is your job under threat by outsourcing?

There is nothing wrong with a healthy dose of self-interest - where would Darwinism be without it?!

America's protectionist economic policies, and hesitancy towards free trade, have been well documented.

The 'threat' posed by outsourcing has been similarly well-documented. Which is why there is now a substancial literature available to educate about the effects that it will have. Enlightened self-interest?  Or just a marketing ploy. The debate will rage.

Here's the full document. Download Outsourcing_survival_guide.pdf

Wipro leading the charge

Popular conciousness dictates that outsourcing is all about British job losses and work done cheaply overseas. It's Daily Mail heaven.

However, news this week shows that the trend is actually being reversed, and outsourcing is creating jobs here in the UK.

Tied in cannily to the Chancellor's visit to India, Wipro announced huge job creation in the UK.

Will this appease Daily Mail readers- unlikely.

As a liberal free-market economist, my view is that this proves the UK is a fantastic location for certain types of work and not for others.  Luckily Wipro has the resource to manage multiple sites and to allocate client work to best suited locations.