TCS public sector win shows that offshoring is not about labour arbitrage, but service innovation

I met up with the UK head at Tata Consultancy Services (TCS), Shankar Narayanan last week. It was good to catch up on TCS, it being the biggest of the Indian IT services firms, which UK businesses have become so reliant on.

Shankar has worked for TCS for over 20 years, starting off as a mainframe developer.
I asked him about the significance of TCS’s deal with the Home Office to run the Disclosure and Barring Service (DBS), which was created when the Criminal Records Bureau and the Independent Safeguarding Authority came together.

This is an interesting deal because government has always seemed reluctant to award contracts to companies based offshore. Public opinion will inevitable go against a government that awards a contract to a company that will offshore work.

But here is the interesting part. When TCS takes over the contract there will be fewer of the delivery staff working offshore than there was under the previous supplier Capita. This is because TCS is increasing the amount of automation and digitization, which requires less people.

This will see TCS automate internal processes and offer citizens new digital channels for services.

Shankar says the Home Office did not chose TCS to get a lower cost but for service to be updated and improved.

As part of this TCS has opened a delivery centre in Liverpool to ensure it complies with government rules on security as part of a contract with the Home Office. The centre will have more than 300 staff when the contract is fully up and running by the end of June.

On the subject of public sector offshoring we also talked about the increased level of acceptance of offshoring. Shankar agreed that there is an “increased level of acceptance of global delivery.” I think almost all big suppliers these days deliver services from offshore so it makes little difference where the company is listed. But when companies are listed in countries such as India they do come in for more criticism.

Whenever an offshore firm is liked to a government deal there are always concerns about security. The thought of information about citizens being used offshore scares people. But the data stays in the UK.

Shankar told me about the incredibly strict security TCs has in its Indian offices. Sophisticated technology is used to ensure staff only have access to and use the information that they need, and this is heavily monitored. “This security is much higher than in the UK.”

On the cloud Shankar told me that TCS in the UK is currently building a private cloud which will be available soon but in the true spirit of cloud computing he believes that most cloud requirements for TCS customers can be fulfilled by partners. This includes Amazon. He said a lot of TCS’s customers are happy to use Amazon for many things. TCS even recommends it to them.

In UK business terms, while the public sector is an emerging opportunity, Shankar said financial services is strong as banks attempt to meet regulations and insurance firms try to move away from legacy IT systems. He also said the retail and consumer goods sectors are demonstrating strong demand.

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Don't be silly. "Labour arbitrage" is what TCS does and is the main driver behind its success in eliminating UK-based jobs and moving work offshore. The only reason that's not happening on this deal (allegedly) is that Capita already did the dirty work for them. But the strategic issue still remains the same i.e. the UK taxpayer is subsidising the de-skilling of our own IT industry and handing responsibility for providing and maintaining key systems over to foreign companies half a world away. As RBS discovered last year this is a false short term economy that can have serious and costly consequences in the long term.

Another example of resident workers jobs and skills lost to Indian IT workers onshored into the UK. With the rules around intra company transfers so slack you cannot blame companies taking advantage of them.

It’s a 5 year contract so that is going to take some creative thinking on those 12 month visa applications especially after the first year. How about knowledge transfer from an onshored ICT worker to their replacement onshored ICT worker?

If only the resident IT service industry and workers were afforded by the UKBA the same protection they specifically give to chefs

(immigration rules Appendix K: Shortage Occupation List Chefs, cooks (5434)

Unfortunately when it comes to intra company transfers the UKBA is an example of regulatory capture if ever there was one