I’ve recently been blogging about globalisation and young people for the British government Department for Children, Schools, and Families, because of their FutureStory project.

Yesterday this took me down to Southampton, where I met Catherine Gilmour, assistant headteacher of Westgate School in Slough. Catherine has recently visited Brazil to see how young people are facing up to a future where jobs can whizz all over the world because of the internet and outsourcing.

Catherine explained to me: “I was amazed by the can-do attitude of the people in Brazil and in particular the business people who are focused on constantly learning new skills.”

Then she went on to explain about the difference in attitude between many young people in the UK and Brazil: “The young people have very high aspirations there. It doesn’t matter where they live; there is no limit to their aspirations. Our young people just don’t work hard enough. It’s not that the labour is cheaper over there, the skills and the talent and the willingness to learn is there.”

Catherine was painting with a broad brush of course. I’m sure there are many young people at her school who think that they are working pretty hard, but her point was that the Brazilians can see beyond their own border, they are already awake to the fact that they will need to compete with others to grasp at future jobs.

It was particularly interesting for me as I was talking today to the man who promotes the Brazilian hi-tech industry to the world, Robert Janssen, of government agency Brazil IT and advisory firm Outsource Brazil.

I asked Robert for his views on young people and their attitudes to work, particularly in the hi-tech sector. He told me: “I’m half American and half Brazilian so I have experienced life in a rich country and also life in a country that was really considered third world until perhaps 20 years ago. That’s really the reason for the hunger you can see in those young people.”

Robert went on to talk about a very famous globalisation book – not one of mine though: “The Thomas Friedman book ‘The World is Flat’ mentions the reasons why this is happening. Firstly there is globalisation and secondly there is the internet. Both of these are levelling the playing field. Many British people may just be going about their business day after day without ever changing, but the Brazilians have the same information and the same access – anytime and anywhere. They are going to jump on this and use these tools to achieve their personal goals.”

What’s the moral of this tale? Well, both the business leader and the school teacher can see that globalisation is not just a question of sending off services to the cheapest possible location. If the people in countries such as Brazil are studying harder and are hungrier for new opportunities, then where will British teenagers be a decade from now?

Click here to hear the full conversation with Robert Janssen in the Talking Outsourcing podcast.

I was sitting in the Frontline club  - a media club next to Paddington station - yesterday morning with an acquaintance from the sourcing industry who specialises in outsourcing to Mexico. We were kicking around some ideas about how to find the best vendor in a particular skill in a particular area.

Sure, if you are big you can hire a consultant to do it. If you are really small then you might not be interested in outsourcing anyway.

But you would assume that a search engine like Google would help. Try it though. Type in something like ‘Brazil outsourcing SAP vendor’ and you get a long list of information, but nothing like a list of the best SAP systems integrators in Brazil.

Trade associations might help a little more, but they are usually biased to their own geography. So unless you have the cash to pay a consultant or analyst, what’s the answer?

The lobby of the Metropolitan hotel in Mayfair is packed full of impossibly beautiful people, even early in the morning. I know this because I sat drinking coffee yesterday morning with PV Kannan, CEO of 24/7 Customer, the India-based business process outsourcing firm.

PV was talking to me about the iLab – a team 24/7 Customer has focused on innovation. Now, this is something that many service suppliers talk about – the endless need for innovation and even the labs they have set up all over the world. Though in this case, it does seem rather different because the team has been asked to develop products and they are not restricted to the present focus of the company. It sounds more like a genuine skunkworks full of boffins.

I first noticed this because they have developed a tool called ‘247tweetview’, which is freely available (freemium pricing model) and helps companies to analyse the online debate about their brand in Twitter.

PV explained to me that for more than a year, his team has been archiving tweets about several hundred companies. Now, when they go in to pitch for some business that has absolutely nothing to do with social media, they can show the potential client what the online community has been saying about that firm in great detail and for more than the past year. That sounds like a very powerful sales tool.

And given that 24/7 Customer comes at this from the angle of trying to improve customer services, it’s only right that they are exploring these new areas of customer interaction.

How long are we going to keep talking about ‘call centres’ when a lot of customer interaction is becoming automated of going online? Customer services is getting more complex, so innovations that make it easier to analyse the soup of online debate are most welcome.

Holy Communion!

News reached the Guardian today that French churches are outsourcing the production of the holy wafers used in communion. Traditionally produced by nuns in religious communities then sold across the nation, some authorities have started sourcing cheaper wafers from Poland.

And even worse, the Polish workforce is secular.

This sounds like a silly season story of the kind that fills the newspapers all summer, but underneath the good humour (the outsourcing decision was reversed – thank God) there is an important message.

If you are only considering the cost of production or service, then there may be many options around where or how you outsource. But if you need to consider both cost and value (or values in this case) then your options may be more restricted.

It’s always worth considering how different outsourcing is to procurement. When you procure a product, suppliers can always be compared on price once a basic level of quality is agreed. When you outsource, the supplier is going to become a part of your supply chain, you are including that supplier within whatever it is that your company does. Therefore, while cost is important, it’s not worth driving the price so low that the service is no longer reliable. That wouldn’t be very much value to anyone.

Indian technology giant Tata Consultancy Services (TCS) has won another British government contract. This time it’s to build and service the next generation government pension scheme, formally titled the National Employment Savings Trust (NEST).

Most of the online comment today seems to be little more than the information on the press release, so I thought I would ask TCS for a comment – only to find that they are keeping quiet for the moment and letting the client do the talking. So I got in touch with Tim Jones, Chief Executive of the Personal Accounts Delivery Authority (PADA) – the government agency charged with making NEST a reality.

What’s interesting about this contract win is that TCS stuck it out, even after all other players decided the margins on the new government pensions would be too slim to make any decent returns. Additionally, this is a central government project that is commissioning offshore IT, admin, and processing.

I met government CIO John Suffolk last month and one point he made was that the British government will not shy away from offshoring, they will take each tender and supplier on their merits.

Clearly that’s the case with this hybrid delivery model planned for the new pension scheme.

This blog is a bit longer than usual, because I want to ensure I quote all of Tim’s answers to my questions:

MKH: Could you briefly introduce NEST? What is it and why do we need a new pension system?

TJ: The Government is implementing an integrated package of reforms to help millions more people save for retirement, in particular those on low-to-moderate incomes. The package includes changes to the state pension to make it fairer, and increases to state retirement age.

But it’s not just the state pension that is changing. The Government is also reforming workplace pensions. Under the Pensions Act 2008, employers will be required to enrol workers into a workplace pension scheme that meets certain criteria and make a minimum contribution to their workers’ retirement pots.

Currently around 750,000 employers in the UK’s private sector offer no pension to their workers. While a further 280,000 offer some provision, these employers’ contributions to their workers’ pensions are less than 3 per cent. The government estimates that approximately 7 million people are not saving enough for their retirement – in particular those on low to moderate incomes. For example, more than half of workers earning between £5,000 and £25,000 do not contribute to a pension at all.

The introduction of auto-enrolment means workers can eventually expect a total minimum pension contribution of 8 per cent on qualifying earnings. This will be made up of a minimum 3 per cent employer contribution added to tax relief and the worker’s own contribution. Both employers and workers can contribute more than the minimum if they wish.

An essential part of these reforms is the introduction of NEST (National Employment Savings Trust) - an occupational pension scheme being designed specifically for people on low-to-moderate earnings who currently don’t have access to a workplace pension.

Importantly, NEST will have a public service obligation to be open to any employer that wants to use it to meet their new duties for any of their jobholders.  This is significant because there are groups of employers and workers that the existing pensions industry struggles to service. Business that can be less attractive to private pension providers includes small and micro employers, particularly where workers are transient and on low-to-moderate incomes.

NEST is being introduced alongside existing provision to meet the needs of just these types of employers and their workers, complementing the existing provision.  Which qualifying workplace pension scheme or combination of schemes they use will be their choice. Providing the scheme they choose meets the criteria set out by the government, employers can fulfil their new duties either by using their existing workplace pension scheme, setting up a new private provider scheme or by using NEST.

MKH: What were the attributes that meant TCS won the contract?

TJ: This has been a complex procurement so we are very pleased to be able to report that this has been completed ahead of schedule and we have found a great supplier that can deliver the services we need at a good price.

All of the bidders involved with this exercise have been impressive – we enjoyed working with them over the past year and benefited from their input throughout the dialogue process. TCS progressively demonstrated its ability to meet PADA’s requirements and emerged as a very strong bidder. This has been confirmed by a rigorous evaluation of its final bid.

MKH: Many in the industry have said that every possible supplier dropped out of the tender leaving TCS as the only bidder.

TJ: Competitive dialogue is an expensive process – it’s only right that we should give feedback to bidders throughout the process so they can take appropriate decisions, and to enable us to run an efficient process.

In a complex procurement such as this it is not unusual for bidders to re-assess their position as competitive dialogue continues. TCS final bid has been formally evaluated against PADA’s evaluation criteria. 

As with any competition where a strong single remaining bidder emerges, there may be concerns about whether the final bid still offers value for money.  TCS’s final offer showed little variance with their bid from the early stages of the competition, so we can be sure that the contract does provide value for money.

MKH: Is this for onshore/offshore/mixed delivery (noting that TCS is an Indian supplier)?

TJ: The public-facing elements of service provision – such as call centres and all data storage – will be in the UK.  Resources in India will be used to deliver the IT solution and to perform back office administration and processing functions.

MKH: The government is clearly no longer afraid of the Indian hi-tech sector. Is there an official policy to widen the net beyond the more traditional suppliers?

TJ: This is not a question for us. Best to contact the DWP [Department for Work & Pensions, the government department where PADA is located].

"Private company to answer ‘999’ emergency calls". I can’t say I’m shocked to see this story in the Guardian today about Cleveland police, who are proposing to outsource their emergency call service.

The police in Cleveland need to save money, so they have put together a proposal that should save about £20m over the life of the contract. The Police Federation are arguing that this is the thin end of the wedge – a move towards private companies having control over services like policing. Can you picture your local bobby on the beat with a logo on his uniform like a footballer's shirt?

But take a look at what Ben Priestley of the union Unison had to say. He claimed that the public would find the idea of a private company answering the phone ‘extremely disturbing’.

Is that really true? The general public is not stupid. They know that the public sector faces some tough choices because the government spent so much just trying to save us from economic ruin.

The public won’t tolerate huge cuts in spending on schools and hospitals, so that means organisations such as the police service are going to have to get smarter about how they operate. This doesn’t mean we need a contracted-out police force sporting logos on their vest, but it stands to reason that some services could be performed better and cheaper by the private sector.

Cleveland police should be commended for exploring some new options. They might also want to consider joining together with other police forces and exploring shared services. They all need similar support services. How about getting together and striking a bigger and better deal with the suppliers?

I had a chat with Pramod Bhasin this morning. Pramod is the Chairman and CEO of Genpact, the largest business process outsourcing (BPO) firm in India and he is also the present chair of Indian high-tech trade association NASSCOM.

You can listen to the entire call on the Talking Outsourcing podcast, but I want to highlight two specific points where Pramod gave some interesting replies to my questions.

I asked him first about the confidence in India. I was over there in Mumbai a couple of weeks ago for the NASSCOM India Leadership Forum and some IT and BPO executives were like Cheshire cats, after being more like drowned moggies last year. I asked Pramod if this renewed confidence was a little premature. He said: “This is a long-cycle business. We can calibrate what the issues are and what the next few quarters look like so I think the company estimates of revenue are fairly accurate – and this includes captives too. Of course, all the estimates do depend on the slow recovery actually happening.”

It’s a sensible response. Most of the companies reporting future estimates are publicly traded, so they need to offer realistic future earnings estimates. If they are speaking positively then it’s not just out of a sense of relief, it’s because their order book is growing.

I also asked Pramod about the changing nature of services. We are seeing clients wanting to talk about the cloud, wanting to pay only as they use services, even talking of outsourced services sitting in a kind of ‘app store’. Where is this taking the service sector? Pramod said: “Everyone is exploring gainsharing, output-based pricing, and taking on more risk. There are large trends in pricing and beyond. How do you change fixed costs into variable costs? Customers want to push capital expenditure to the supplier. We are seeing all these things happening in a variety of ways.”

So the changes that the services market in India has to undertake to mature and move beyond the raft of new countries aiming to steal its business are all really happening. It’s still more common to charge for services in terms of headcount actually used, and infrastructure required, but if clients are pushing their suppliers to start offering more logical pricing then it will happen. And about time too.

Arvind Thakur, CEO of NIIT Technologies, has some interesting ideas on where IT service companies need to look in future. He believes that there are many new markets the IT services industry is not considering in the constant drive to consider ‘when will banking or retail recover from the recession?’

These are the new global mega trends of the twenty-first century and they will fundamentally reshape where services can be sold.

Arvind explained the concept to me: “The ageing population in many developed nations means more healthcare, and more healthcare means the fragmented healthcare systems have to be improved. Second, anything and everything we now do has to focus on energy efficiency. Third, global unrest will continue, which means there will be increased investment in security systems.”

These three key trends will clearly shape IT services in future, but how many service sector CEOs have a strategy planned out for taking advantage of long-term trends such as this?

When I was in India recently for the NASSCOM conference I noticed a lot of other countries being represented at the show. In fact, over twenty different countries had delegations there in Mumbai.

One of the most prominent was Brazil. Possibly because of the sheer size of the industry there, but also because they have some different views on what makes outsourcing work.

I called up Flavio Grynszpan today to ask him about the Brazil approach. Flavio is well known as one of the leading outsourcing advisors in Brazil and he formerly spent a decade running Motorola there. I asked Flavio first about the lack of recognisable Brazilian IT brands. He said: “It’s important for Brazilian firms to develop their brand internationally, but they should not try to compete in the low cost area. We are not so competitive at the low cost game. We are competing on value added.”

I asked Flavio to elaborate on this point. It’s something that a lot of regional representatives talk about without ever really defining. He said: “We have a lot of advantages and experience in the financial services sector. There are other specific verticals like oil & gas and manufacturing where we have a large number of global participants. Brazil is also becoming a strong open source software solution centre. In this area we are becoming real experts and there is not so much interest from some other regions, such as India and China.”

But Flavio’s final point, when I asked him about the agenda for a forthcoming conference he is organising in Brazil, was really the one I noticed most of all: “Outsourcing is really changing. There is a new wave of delivery models that will be built around the concept of the app store – and that really emphasises the need for collaboration.”

This is an important point. There were some leading thinkers in India considering how the services market is changing, but the majority were still just talking about a return to the good times as growth returns – business as usual. The intelligent players will be thinking about the future of how services are going to be sold and it seems that the Brazilians are stepping straight to the new ways of thinking without ever trying to win the low-cost offshoring argument.

Listen to the Talking Outsourcing podcast for the full conversation with Flavio Grynzspan by searching for ‘Talking Outsourcing’ on iTunes or by clicking here

I was participating – as a blogger – at the launch of a new government initiative yesterday. I was in Durham at the Northeast Economic Forum where the Talent and Enterprise Task Force were promoting their FutureStory project.

FutureStory is all about connecting young people to business and for both to consider how work will look and function in future. It’s phenomenally important for anyone involved in outsourcing because we are all at the cutting edge of changing how companies do business.

I’ve been writing for years about the connection between outsourcing and how it changes company structures, education and how young people need to be ready for a different world of globalised work, and migration and how skilled people are more footloose and ready to search the world for work. These trends are interconnected and are changing the way we all are going to work in future.

I wrote about all this in some depth in a book I did for the British Computer Society, called Global Services, but for those of you with a shorter attention span my book Who Moved My Job? also connects the dots in a light-hearted and approachable way.

But rather than just plugging stuff I wrote in the past, what was the government saying in Durham yesterday? The government minister for economic development and coordination, Rosie Winterton, got up on stage to explain what FutureStory is all about. She said: “…we [the government] wanted to look at where the jobs and industries of the future will come from. How can we encourage people to take advantage of new business sectors to create more employment and flourishing industries? We will create opportunities here in the northeast in green innovations and this will power the world in future.”

The minister explained how car manufacturer Nissan has started developed the next generation of electric car batteries in the northeast region of the UK – when they could have gone anywhere in the world to perform this research and development work. She went on to say: “What do these things really mean? If it is about getting investment from people like Nissan then it is easier to grasp what globalisation really means. It’s no good to say the government has a cunning plan for the future if nobody buys into it - and especially if young people don’t believe it. We want to intervene in order to assist you to access the opportunities – we want to explore how the economy will be in 20 years from now. Crucially it is all about shaping the story – the future story.”

It’s exciting news to see that the government is genuinely interested in exploring how jobs might look and function in future. Teachers and young people have been sent to countries such as Brazil, India, and China to explore the differences and commonalities. I even met two students who were shocked to find they were doing work experience in India at the offices of companies such as KPMG and Tesco, particularly Tesco as people from the northeast of England were calling the customer information line and getting answered in Bangalore!

There is still a lot of resistance. Young people are often not the best at thinking where they might be ten years in the future, and now smaller companies are adopting many of the global outsourcing strategies larger firms have used for years it looks like a real decade of change is ahead of us. But if there are more British kids out there like Jonny McGuigan from Prudhoe Community High School  then who wouldn’t feel confident about the future of British talent and competitiveness?

Mark Kobayashi-Hillary