Pru sparks outsourcing backlash

Pru sparks outsourcing backlashBusinesses have begun to rethink the value of
outsourced operations, following Prudential’s move towards insourcing some of
its business processes.

The financial services provider is bringing part of its outsourced IT
operations back in-house, having recently completed a benchmarking exercise to
determine the level of service and value for money offered by a Capgemini
datacentre outsourcing deal.
Richard Punt, head of strategy practice at consultant Deloitte, said more
businesses were considering their sourcing options.

‘Many companies are realising they should not have done deals in the first
place, and we will see companies insourcing IT on a regular basis,’ said Punt.

When Prudential announced in March that it was considering whether to extend
its outsourcing deal, Neil Barton, vice-president of benchmarking and
measurement at analyst Meta Group, told Accountancy Age’s sister
magazine Computing that he expected more companies to start considering
the value they receive from outsourcing contracts.

‘The services you’re getting after three years are often nothing like what
you expected at the start of the deal,’ he said.

But there are still benefits associated with outsourcing, according to Martyn
Hart, chairman of the National Outsourcing Association.

‘There is not a very big trend towards insourcing,’ said Hart. ‘Outsourcing
works because of economies of scale.’

Prudential chief information officer John Worth said: ‘We have enjoyed a
strong working relationship with Capgemini over the past four years, but feel
now it is the right time to bring the management of our mid-range systems
in-house. This demonstrates our confidence in managing our own IT arrangements.’

The offshoring industry attempted to head off fears that the recent security
breach in an Indian call centre, which saw UK customer details offered for sale,
was anything more than just a ‘rare’ occurrence ­ and would be avoided through
good project and data security management (Accountancy Age, 31 June).

Following reports that City of London Police were investigating claims that
an Indian call centre sold information on 1,000 UK bank accounts, observers
suggested that lax security in Indian offshore operations could cause UK
companies to rethink plans to outsource business processes and call centres
abroad.

Hart said that such a breach ‘could happen anywhere’. ‘You can never
outsource the risk, but you can try and understand it and take mitigation
against it,’ he said.