As tipped last week by the excellent Paul Kunert at Microscope, support services group Phoenix confirmed it is taking over break/fix support at comms services player, KCOM through a reciprocal outsourcing and acquisition arrangement. Phoenix is to pay £1.8m cash for the break/fix contracts and take on 142 KCOM staff. Phoenix management advise that the “multiyear” outsourcing deal will be profitable from day one though declined to put a value on it. The broker estimates that I have seen suggest the contracts are worth £6m p.a. to Phoenix. Seems very fair to me. And it’s just another great example of ‘sticking to the knitting’ - KCOM want to be providing telecom services, not fixing broken boxes – which is of course Phoenix’s strong suit (well, one of them, anyway!). Good stuff – for both companies.
Articles tagged: outsourcing
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Wednesday 3rd February 2010
Phoenix sorts out KCOM’s knitting
Posted by Anthony Miller at 15:06 - 0 comments -
Wednesday 9th December 2009
Outsourcing – just an Intellectual debate?
I spent a couple of hours this morning at industry association Intellect’s ‘Outsourcing challenge 2009 round-table’ and I still find myself looking for the ‘challenge’. The session was conducted under Chatham House rules, though frankly I’m not sure there was much to worry about on that score. Maybe the event worked well as a sort of ‘group therapy’ discussion among the couple of dozen participants – mainly suppliers, but with a scattering of legal folk – and if so, all well and good. But I can’t help feeling it did little to move the ball forward for the UK outsourcing industry (oh dear – I suppose I won’t be invited back again!).
I will pick up on one point, though. One participant expressed concern over the reducing duration of outsourcing contracts. He thought that even five-year deals were too short – ten or more years should be the order of the day.
For major government infrastructure projects, maybe. But for IT outsourcing, surely not.
We live in a volatile economic and business climate; technology is changing even faster and the IT industry itself is rapidly consolidating. It’s foolish to think that any supplier – and ‘solution’ – that seems a perfect fit today will be so even five years out, let alone longer. In my view, any IT outsourcing contract signed for longer than three years represents questionable judgement on behalf of the customer and alarming naivety – or supreme overconfidence – on the part of the supplier.
Customers now demand same-year ROI. IT outsourcing suppliers need to find a way to make the same return themselves. That’s the real challenge!
Posted by Anthony Miller at 13:11 - 1 comment -
Wednesday 18th November 2009
Defence sector looks to increase outsourcing
There was an interesting article in the FT this morning, which claimed the UK’s Ministry of Defence is considering dramatically increasing the support work that it outsources to the private sector. The MoD is evaluating the findings of the Defence Support Review, which recommends passing more responsibility for logistics and equipment support to industry and setting stringent efficiency targets. According to the FT, the report’s authors expect the MoD’s cost base to continue to migrate to the private sector and believe their recommendations could save almost £3b over ten years.The defence sector is known for its back office inefficiencies and, whether or not the DSR’s recommendations are fully implemented, we expect an increase in the use of outsourcing in the defence sector (and indeed across the UK public sector) as government departments look to reduce costs. Of course, this increase is likely to be more significant if there is a Conservative government come next summer (see UK Public Sector 2010: Spotting the Opportunities).
The majority of the opportunities in defence may well fall outside the core IT space where the Defence Information Infrastructure (DII) is already well established. The trend should nevertheless be welcome news for defence contractors such as Qinetiq, BAE Systems, Lockheed Martin and Raytheon; as well as more traditional IT services suppliers with a track record in the sector (such as HP (EDS), Fujitsu, BT). But arguably those with the most to gain are business process outsourcers such as Serco, VT Group and Capita (see also Capita – Looking behind the window dressing on UKHotViewsExtra).
Posted by Tola Sargeant at 16:37 - 0 comments
