UK: London, 30 June 2009

Organisations frequently focus on the wrong part of the outsourcing equation, believes Steve Turpie, CEO of Aviva Global Services. Speaking at the latest Fujitsu Executive Discussion Evening (EDE) in London, the head of the business process outsourcing (BPO) arm of global insurance giant Aviva suggested that too much emphasis is often placed on the selection of a service provider and not enough on identifying the most suitable outsourcing model for the business's evolving requirements.

Last year, Aviva - one of the pioneers of BPO in its sector - decided its business would be better served by a move away from a four-year-long strategy to create an India-based "captive" under a build-operate-transfer model it had pursued with three outsourcing partners. After considering all variants of outsourcing - including establishing a joint venture, a "staff-augmentation" captive model and a consortium of multi-sourcing providers - Aviva chose to sell its BPO operation to one of its partners, WNS, and buy back services from the Mumbai-based company. The contract, under which 5,800 staff in India and Sri Lanka were transferred to WNS, was valued at the time at around $1 billion over its eight-year term, making it one of the largest BPO contracts in the insurance industry.

"Deciding on what model to go with was a lot harder than deciding on which service provider to use," Turpie told the EDE audience of CIOs, IT directors and other senior IT decision-makers. "The lion's share of the time was spent deciding on the model."

A new crossroads in IT sourcing

While most large organisations have been through that kind of outsourcing decision-making process, they now find themselves at a new - and equally profound - crossroads in IT sourcing, according to another keynote speaker at the London EDE, Dr Richard Sykes, vice-chairman of the Outsourcing and Offshore Group and board member at IT industry group, Intellect. Sykes, the former vice-president for IT at ICI Group, suggested that "this is a transformational moment for our industry".

"There is a whole generation of services [emerging] that are standalone, highly automated, highly commoditised and which are becoming increasingly relevant to the enterprise," he said. In the current economic climate, he argued, technology services such as Google Apps, Salesforce.com and Amazon EC2, with their combination of low capital outlay and simple, flexible procurement, will be increasingly compelling options for companies of all sizes. "This is a very key development because it allows you to build in flexibility and speed of change that has not been possible in the past," he added.

About Fujitsu Executive Discussion Evenings

EDEs are executive forums featuring leading industry speakers and tackling board-level issues. Over 30 EDEs ran in 2008 across the UK, France, Germany, Netherlands, Sweden, Finland, Denmark, Ireland and Spain.