By Alan Rodger

British companies are investing huge amounts of money in making changes to their traditional business practices. The main aims behind this investment are to increase the quality of services provided, while reducing prices.

The demand for available and skilled IT resources in the UK is so great that many customer services companies have decided to outsource contracts to low-cost countries, such as India, in order to meet this demand.

So, what are the challenges and opportunities that outsourcing presents? There have been many newspaper stories of failed projects and broken-down relationships between customers and the service companies who have outsourced contracts. Probably the most famous of these stories was LS, who had agreed a ten-year deal to provide services for Tilkin. This ended earlier this year, when LS was replaced by Calcot. However, it was not all bad news and LS behaved professionally and helped to ensure the successful takeover of the service by its rival, so the only problems reported were minor ones.

The main goal of investing in outsourcing is to improve the quality of customer services, and to lower the cost of operations at the same time. One example of a successful outsourcing partnership is Bilton’s. Almost two years ago the company started outsourcing services to a consortium of companies. The deal with the consortium is for five years. Payments are made to the consortium if it reaches its targets – it has to deliver a two percent improvement in customer satisfaction annually.

There are huge opportunities for small and medium-sized businesses to make savings by using shared services. For instance, organisations with similar requirements can negotiate to use the same service provider. This would mean that the costs for each company would be reduced through savings of scale. This is the model behind a deal recently announced for a joint venture between Parts-2-go and Delkon.

Partnerships are great opportunities to show what can be achieved with open minds, shared interests, and a commitment to better and cheaper services. Perhaps the experience of the past can actually help make changes for the future.

From the Financial Times