UK may 'share' $3 bn IT jobs with India
Date: 14-Jun-2010
BANGALORE : UK's government departments struggling to cope with fiscal deficit and seeking to cut costs without having to send jobs overseas, are set to flesh out shared service centres, which means new business for top back office and outsourcing firms.
The new political leadership with Conservative David Cameron at the helm has to deal with high unemployment rate of around 8% by creating more local jobs and, at the same time, cut government spending by almost $9 billion this year.
While outsourcing and off-shoring of non-core back-office activities can help the government achieve this goal, some officials and experts say, the government is more inclined to establish shared service centres in order to avoid any mass-offshoring fears.
“The current government’s focus on giving greater autonomy to agencies is likely to mean that we see a range of public sector bodies within a local area working together towards common goals of reduced costs and economies of scale,” said Jessica Hawkins and Ian Brown, analysts at UK-based research firm Ovum.
For India’s outsourcing and back office firms including EXL Services, Tata Consultancy Services (TCS) and others, shared service centre opportunity could be worth $2-$3 billion over next few years,experts,tracking the sector said.
“I suggest this is one of the routes they will have to evaluate to meet imposed target spending reductions, however reluctant they may be to look at giving their processes to third parties,” said Bob McDowall, research director at TowerGroup.
“They (the BPO vendors) should be preparing to approach government departments over Q3 this year as government departments have to seek spending cuts. If they can absorb some of the civil servants impacted by the cuts, the proposition becomes more inviting to government ministers.
Initially, non-core functions, including anything that’s based on common off-the-shelf software, email and office applications could be brought under a shared service centre that can support multiple government departments. “Among local authorities this can include processes such as revenue and benefit, payroll and HR functions,” the Ovum analysts added.
Already, departments including HMRC, Department of Work and Pensions and National Health Services (NHS) have piloted this concept in some form. Local authorities such as Liverpool and Birmingham City Council have also started this journey.
Several UK government departments have already started sending IT jobs overseas in order to lower their cost of operations and cope with unavailability of skills locally. The UK’s tax authority, HM Revenue & Customs, is beginning an offshore outsourcing pilot in India with Capgemini.
Posted By : Mohan Khanna
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