How UK CIOs are using outsourcing

The UK's private sector outsourcing market hit a three-year high of £5.8 billion in 2018, according to the Arvato UK Outsourcing Index, but many CIOs feel the model no longer offers value for money. The changing views on outsourcing led 75% of the 2018 CIO 100 to say that they were planning to increase their internal headcount or bring skills back in-house.

Here, we spoke to some of the top IT business leaders in the UK about their outsourcing strategies.

Read next: IT outsourcing: When to outsource and when to keep in-house

HMRC Chief Digital and Information Officer Jacky Wright

HMRC Chief Digital and Information Officer Jacky Wright

HMRC Chief Digital and Information Officer Jacky Wright has completed the insourcing of the tax collection department's lengthy, £10 billion Aspire contract, to give the organisation greater command of its remit.

"It's a lot of work to insource a large, multi-year, multi-million pound contract and organisation," she says. "To insource that, to be able to now effectively run your organisation, you own it, and you run it - you determine what gets done in a way that you didn't before. "It takes a different capability, a different focus, a different organisational structure, a different interaction with our suppliers and partners. Frankly, just a different mindset."

Most of the IT companies involved in the outsourcing contract still work with HMRC, but the agreement is now focused on partnership and collaboration rather than a transactional relationship based on delivering to a contract.

"It's completely broken up," says Wright. "However, the majority of the suppliers who provided the service are still in play. They do still provide a great deal of our services that they did before.

"But before they owned it and ran it for us, and today we're looking at something different; we're looking for them to really partner with us and help us understand what we need to do to reduce our operating cost, to become more agile. It's becoming a true partnership, versus an order-taking relationship, which I think has been historically, for the most part, the way our partners have worked with us."

Read next: HMRC Chief Digital and Information Officer Jacky Wright interview - Developing a new operating model and culture for the digital era

Heathrow Airport CIO Stuart Birrell

Heathrow Airport CIO Stuart Birrell

Heathrow Airport CIO Stuart Birrell has broken up a large outsourcing agreement with Capita into service towers. The move has saved money and added flexibility.

"The thinking behind it was to move from a monolith outsourcing model to more agility, more focus, and more internal ownership of the services we provide across the organisation," he says.

"We still outsource but we've broken up the contact itself into service towers with an orchestration layer and a security layer sitting over that, and are rebuilding some technical capability in-house as well.

"The operational side is still all done through outsourced partners but having the ownership and the leadership internally was important to me. It took two years to lift off and get settled in, and build an internal organisation and restructure the supply chain to complement it. It's been a tough process. It's not something you do overnight."

Read next: Heathrow Airport CIO Stuart Birrell's new IT operating model delivering digital workplace and business innovation

JLL CIO Chris Zissis

JLL CIO Chris Zissis

JLL CIO Chris Zissis has been developing in-house capability at the real estate investment management company to support a shift away from the long outsourcing contracts of the past and towards a more agile delivery function.

The move has allowed the business to focus more on user needs in its product development. This approach enabled Zissis' team to bake security into their products from the outset rather than tagging it on at the end.

"Every solution has got a very focused outcome. And the outcome is the client journey, the people journey, the growth journey," says Zissis. "But that focused outcome has got security in the centre of it's design from the outset."

Read next: JLL's EMEA CIO Chris Zissis and CTO Andy Crow interview - Skills, data science, and ensuring IT is a value generator

Global Radio Director of Technology and Operations David Henderson

Global Radio Director of Technology and Operations David Henderson

Global Radio Director of Technology and Operations David Henderson believes the outsourcing market has transitioned from long deals with big vendors to deeper, short-term partnerships.

"The whole supplier management thing is quite interesting because the days of the 10-year outsourcing deal are long gone," he says. "We do very little outsourcing here; we're trying to go much more deep into partnerships, risk-reward models where we share some of the gain.

"In a way you've got these shorter term, more ephemeral relationships that need to be deeper so there's some real paradoxes in how you manage that because you're not managing a five-year outsource deal anymore. Very few CIOs in the media space are signing those deals."

Read next: Global Radio Director of Technology & Operations David Henderson interview - Putting the team at the heart of smooth technology transformation

Unilever CIO Jane Moran

Unilever CIO Jane Moran

Unilever CIO Jane Moran says that when she joined the consumer goods company in June 2014, the technology capability has been "significantly outsourced". She chose to bring around a third of it in-house to shift the unit's focus from projects to platforms, which are oriented around business capabilities such as supply-chain, digital marketing and HR.

"We've introduced new roles such as enterprise architecture and solutions architecture experts, and senior software engineers," says Moran. "This has enabled us to be more responsive to the needs of the business, and quicker at designing new solutions.

"We've also had a fundamental shift in how we work, from simultaneously running a large portfolio of projects, to focusing on about 30 key strategic technology platforms."

Read next: Unilever CIO Jane Moran interview - Developing an Agile platform for growth and innovation

Tata Steel Europe IT Director Nick Reeks

Tata Steel Europe IT Director Nick Reeks

Tata Steel Europe went through a major outsourcing process in 2016 involving IBM, TCS, Capgemini and Vodafone across all areas of infrastructure, network, workplace, application support, service management and application development.

IT Director Nick Reeks promoted collaboration between the different partners to make the transition by emphasising the mutual benefits of working together.

"Central to the approach was the ability for the partners to work with each other and understand their roles and responsibilities within this new ecosystem," he says. "We introduced governance for operational, service and contract review meetings which provided the central backbone to manage cost and service."

Read next: Tata Steel Europe IT Director Nick Reeks Q&A - Digital transformation, IT skills and emerging technologies at steel manufacturer

Birmingham City Council CIO Peter Bishop

Birmingham City Council CIO Peter Bishop

Birmingham City Council CIO Peter Bishop was put in charge of bringing IT services back in-house when the authority was winding up its contract with outsourcing giant Capita.

"It means that I've got to redesign everything that we do, because the Capita contract is the best part of 12 years old and your internal capacity and capability needs to be completely rethought to cope with that alone, let alone deliver any of the other stuff," says Bishop.

"We're applying the principles of simplify, standardise and share across everything we do in the IT services. Every set of services that we buy are going to be looked at in terms of can we test the market and different service delivery options, and can we take advantage of technology that comes with those new service models."

Read next: Birmingham City Council CIO Peter Bishop on bringing IT back in-house

AstraZeneca CIO David Smoley

AstraZeneca CIO David Smoley

AstraZeneca CIO David Smoley has expanded the talent pool at the pharmaceutical and biopharmaceutical company by bringing an outsourced IT function back in-house.

"That insourcing represented a fairly meaningful skill-shift and culture-shift," he says. "From one of overseeing service providers to one of actually owning and therefore having to have the technology, leadership, operational excellence skills and customer-focused mentality."

Read next: AstraZeneca CIO David Smoley interview - From transformation to innovation agenda

DVSA Director of Digital Services and Technology James Munson

DVSA Director of Digital Services and Technology James Munson

James Munsonis another IT business leader bringing services back in-house after the expiration of long-term contracts with external suppliers at the Driver and Vehicle Standards Agency (DVSA).

This allowed him to replace the outsourced MOT test with an internal platform that the IT team can adapt to changing needs and improve by adding new features such as MOT expiration service and vehicle test history checker.

"It's really enabled us to work in a different way," says the Director of Digital Services and Technology. "We started to work in a more agile and more iterative way. We went live back then with an MVP, a minimum viable product, and then we've added more services on there to continue to drive road safety."

Read next: James Munson explains new digital strategy at the DVSA

Copyright © 2019 IDG Communications, Inc.

Related Slideshows