back to article North Tyneside: Mega-outsourcing deal will SAVE jobs

North Tyneside council is to outsource all its ICT services, along with finance, procurement, revenues and benefits, customer services and human resources to mega-services provider Balfour Beatty. The company has been named preferred bidder for a contract which is intended to help the north east council to cut its costs. North …

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Meh

Within less than a year all the jobs will be in India, there are never any safeguards on jobs that prevent an outsourcer from moving jobs once they have been outsourced.

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Anonymous Coward

Till the next time.

Thought Balfour Beatty has expertise in construction?

The government promise at the last election was to give small firms the opportunity to bid for contracts, this would help immensely on a local basis.

Instead it always goes to the usual suspects, G4S, Balfour, Carrillion etc etc etc.

The employee, after a year will be butt **** ed and lose out to another outsource move.

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Re: Till the next time.

Most of the major construction companies have "facilities management" arms - started out with the typical roads and buildings maintenance tasks and then evolved from there. Keeps them busy during the inevitable construction downturns,

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Anonymous Coward

Will the jobs be from any of the following categories?

Climate change officers, diversity officers, political advisers, and European officers? No? Thought not, I bet they're still considered essential to the running of the local community.

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Windows

Re: Will the jobs be from any of the following categories?

The European officers if they exist are probably needed.

Euro money is useful and can extend the reach of UK taxpayers' money and the UK does rather well out of the EU as it happens, especially areas outside of London and the South East.

There are distortions however (e.g. ERDF would never fund refurbishment, only newbuild => large scale demolition of actually quite nice housing).

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Windows

Spreading it about

"Balfour Beatty agreed to take our staff, but the company can use those staff for other projects, and they may be working for other councils, or the health service, for example."

And thus cutting jobs or reducing the recruitment in other parts of the public sector. Any way you measure it, there is a net loss of employment in a part of the country with relatively few opportunities.

As a voter, I'm wondering what effect voting for councillors is going to actually have once everything is outsourced and regulated by contracts with lifetimes longer than the council term.

@LarsG: they have 2 years; TUPE lasts that long, and then the 'reorganisations' will start. Been there, and I have the video.

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Re: Spreading it about

Exactly. TUPE just means we 'outsource' firing them so we don't look bad.

I understand the logic behind outsourcing and pooling, but companies (and public bodies) only look at their own immediate situation i.e. we can save x% if we do this. Ignoring the fact it is an admission that they are shit managers and cannot run an effective organisation, the issue comes not with 1 company outsourcing but 1000 companies doing it. Nobody counterbalances to gain from outsourcing against the loss of jobs on the whole economy. Those employees buy your products (or pay tax in the case of councils) as well as products from other companies. If lots of companies outsource, thats lots less money to spend, slowing the economy and constraining growth in these companies. At which point some halfwit with a pie chart has the bright idea to outsource everything else because that has to be the answer.

In limited instances, where there is high employment levels and high living costs, it makes sense to outsource some work. In areas that already have high unemployment and where the economy is stagnating it makes little sense, if anything it makes things worse.

I wonder if any other the higher level managers will be taking a pay cut now they have less work to do?

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Paris Hilton

Re: Spreading it about

TUPE = Tupped

(Paris 'cos she ought to know)

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Hahahaha

Another one fell for it.

The 420 TUPE'd will be gradually lost to natural wastage* and offshored or replaced by job experience twonks. Meanwhile BB will be putting in bills for change requests and making a mint.

The simple fact is it costs X to run the IT to a certain standard. Whoever does it. The economies of scale and re-use of resources is a myth. Either it takes 420 people to run the IT to a given standard or it doesn't. If it doesn't thin out some of the dead wood yourself and avoid putting in another layer of management.

I'll be happy to eat my words when the council tax is reduced next year to reflect the savings.

*treated like shit until they resign.

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Terminator

Re: Hahahaha

Yep, when the TUPE deal for Nokia S60 staff came in a very cheerful man from Accenture trumpeted all the exciting opportunities that Accenture faced, how the staff would transition from S60 work onto brave new things, etc. One year later about 2/3 of the old S60 UK staff have been shed (politely enough though; mixture of voluntary & forced redundancies, cynics had expected more of a St Valentine's Day)

Odd thing is that the old S60 gang report that nobody has ever seen Mr Cheerful since then. Perhaps he's up in Tyneside, describing the "Very Beautiful Farm" with the "Very Kind People" that the IT staffers will soon be "living on" ?

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Re: Hahahaha

But then it costs Y to keep 1 X employed, and this Y, like it or not, isn't a constant value, as the costs of living are different from place to place. What may be a pittance in one nation may turn out to be daily bread and change for another. So 420Y in England may be so much more than 420Y in India that, even with another management layer, you still come out ahead.

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Re: Hahahaha

If I lived in that area of the country, this is one thing that would finally get me to go out and protest. This is insanity on a massive scale. Not to mention pure b*llsh1t. We've seen this in every area of life in this country where this has happened. The big oursourcing companies will be raking it in and in a couple of years, the council will have terrible services costing them a fortune and tons of people will have lost their jobs.

What chance somebody got wined and dined to make this happen?

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Re: Hahahaha

I've experienced those kind of meetings.

Outsourcing Bod: "Hello incumbent staff. I'm from SuperOutsourceCorp. You will be TUPE'd to our wonderful organisation, look how great we are! Benefits! Opportunities! Huge company! Look at the lovely slides! Oh, and 40% of you will be out of a job by next Xmas. Sorry 'bout that."

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Terminator

Re: Hahahaha

Mostly true. Economies of scale generally don't happen, but there are some economies in standardised procedures (which is nothing to do with people) and management software. You could thin out the dead wood yourself, but it can be quite hard if you aren't an annoying oik typically found in outsource management.

Generally there is a 6-month-to-1-year flexibility period where the outsources eats a great deal of cost and will pretty much do anything you ask in the name of "transition". Then that flips over and they do nothing outside the poorly defined contract without charging up the whazoo. By year 3 they are in profit and rake it in for the next 7.

I've seen maintenance being charged on a laptop docking station. I've seen maintenance charged on a laptop while the out-sourcer had it in a workshop, trying to repair it (instead of shipping it back to the vendor). Nice way to double-dip, as the client had a temporary one too.

My advice - if you don't have skills for expensive and difficult things (mainframe, load-balancing, HA, security etc), get some independent contractors in and perhaps arrange to share them with other Councils. Even if you overpay them, it'll be cheaper than an outsourcing deal.

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@ Charles 9 - Re: Hahahaha

Wrote :- "So 420Y in England may be so much more than 420Y in India that, even with another management layer, you still come out ahead"

That depends on who "you" is. If "you" are the guy in England who was sacked, or the English tax payer who must pay him dole money, you do not come out "ahead". OTOH, if "you" are a Balfour Beatty manager or shareholder, then maybe you do.

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TUPE

TUPE doesn't really give you any protection whatsoever, there are loads of ways around it, and there's nothing to stop BB making anyone it wants to redundant on day 1, it just has to bear the costs.

I wonder who BB got to front their IT, not something they are known for.

In general these Mega-deals are stupid, they only look good to the accountants. It puts you in hock to a single provider, at what look like attractive terms, but actually aren't. BB will probably be using smaller suppliers to provide the services, rather than do it themselves. A better deal for tyneside would have been to look at the local suppliers and to sign them up to a bidding framework. That way the jobs and money stays local, this way you have one price forever.

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Unhappy

"initial ten year term"

Oh dear.

I'm glad I don't have to rely on North Tyneside for any useful services, because they're going to be haemorrhaging money into service contracts and none of its IT infrastructure is going to work.

Is anyone aware of any big outsourcing deal that has ever actually worked? Genuinely curious here.

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FAIL

Re: "initial ten year term"

"Is anyone aware of any big outsourcing deal that has ever actually worked? Genuinely curious here."

I'm not aware of one and I've been in IT for 25 years.

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Re: "initial ten year term"

"Is anyone aware of any big outsourcing deal that has ever actually worked? Genuinely curious here."

Yes, my continued employment pretty much proves that.

Some work to the short-term benefit of the client

* Client feels ripped off anyway and is determined to eke out an even better deal at renewal

* Supplier doesn't make enough money, staff are overworked, miserable and unmotivated, management not even keen on retaining the work

Some work to the short-term benefit of the supplier

* Client feels *really* ripped off and is desperate to cut ties at contract break time

* Supplier staff still overworked, miserable and unmotivated, but at least the directors are making a fortune, right?

And sometimes, yes it does happen, the due diligence was performed, err, diligently and both parties actually get a pretty good deal out of the arrangement. Doesn't stop them trying to screw each other come renewal time though, or some other party steaming in with a 'too good to be true' proposal that means Supplier A is dropped, only to watch the wheels fall off about 7 years of good work when Supplier B takes over and can't make the numbers add up.

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Re: "initial ten year term"

Depends on what you mean worked.

Met some dodgy business case that talks of 'savings' with no quantifiable success criteria. Yes they have.

Made the outsourcing company a mint. Yes loads.

I've been in IT in various guises since the DHSS started moving its paper records to tape in the 70's.

I got out of my last public sector contract by calling the project manager a useless knob. Only looking for commercial now. Or client side public sector so I can beat up outsourcers on daily basis.

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I dont understand how this works.

Bidding for services.

I am not an economist or accountant. So is it wrong for me not to understand how a private company that is motivated by profit margins can submit a bid that is cheaper than what the council can manage themselves who are not seeking a profit margin?

How does this work? How can Balfour Beatty provide the same service for a cheaper rate and yet still make enough money for it to be worthwhile?

And before you all answer, I mean honestlyu, without someones pockets getting lined, someone being lined up for a directorship after their stint in public service, getting the extensions on their home being done for free, et etc, and also include the council tax payer getting what they paid for, not having shoddy work done, not watching there taxes go on lawyers fighting over minutae of the service level agreements, etc etc.

"Balfour Beatty agreed to take our staff, but the company can use those staff for other projects, and they may be working for other councils, or the health service, for example."

So you can say to those staff, work on this contract its two hours from where you live, or something else similair we can think up to make it completly unpleasant for you to do and then when we sack (sorry I mean regretfully let you go) you for not being able to fulfill your new role we wont replace you.

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Re: I dont understand how this works.

I'm guessing "private sector all your life"? Amirite?

If so you probably have no idea how wasteful, inefficient and downright incompetent many public bodies have been and, in some cases, continue to be.

Some of the stories of public body waste and incompetentce I've been told or been a party to are simply staggering, and to someone who lives in the 'real' world it is almost inconceivable that organisations can still operate like this.

The profit imperative that drives out cost in the private sector can't simply be replaced by 'targets' in public bodies that lack the same punative consequences. This allows even grasping, disjointed corps like our favourite outsource providers to demostrate huge savings over the status quo.

I'm not saying that public bodies can't and aren't capable of being joined up, efficient organisations, or that all private enterprises are lean and productive - far from it - but that poor process, implementation and, yes, downright laziness is far more common than in the private sector.

There are therefore huge gains that can be made (and even more publicised - good for both parties!) by almost any semi-competent outsource provider when a deal like this is first struck.

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Pint

Re: I dont understand how this works.

Indeed. Though I don't live in North Tyneside, I live close enough by to know people that work for the local authority and people who get services from them.

I realise that it tends to be the exceptional events that get talked about the most, but the number of stories I've heard about employees taking out grievances against other employees or being on long-term sickness because of colleagie-induced stress (and thereby causing more work for other colleagues who then go sick in turn) gives the impression that the organisation (and I use the word loosely as it seems to be in a permanent state of upheval) is functioning more as a nursery than a service provider. All the "strategic" talk I hear is of which manager is in favour and taking over responsibility for more staff and which is being disfavoured and having responsibility removed - office politics rather than any concern with office function.

In short, it seems they're too absorbed with their own internal squabbling to focus on the job they're supposed to be doing. And of course budget cuts and a rolling programme of redundancies only makes that worse.

Realistically, authorities like North Tyneside are really just too small either for economies of scale or to really attract people to work there who want anything more than a quiet life with a pension at the end of it. But that was a political choice to stifle the power of the Metropolitan Authorities - divide and rule.

Not quite sure how Balfour Beatty's contract is supposed to take into account future political changes in North Tyneside - I suspect this kind of deal will tie the hands of future councillors and further undermine local democratic accountability. But that, too, has been central government policy for a long time.

Until that changes, get used to BigBrother plc being the convenient piggy in the middle - absolving both central and local government from any responsbility for the quality of local services in return for a slice of the pie.

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FAIL

@ Lunatik - Re: I dont understand how this works.

Wrote :- "you probably have no idea how wasteful, inefficient and downright incompetent many public bodies have been and, in some cases, continue to be.... Some of the stories of public body waste and incompetentce I've been told or been a party to are simply staggering"

Then do not believe everything you hear. It is a favourite British pastime to embroider stories of public sector inefficiencies. I have worked in both areas, and some of the inefficiencies in the private sector are staggering. Those with contracts with the public sector were sometimes only surviving by being carried along by the public sector acting as their crutch.

I have worked in the public sector with contractors from large private contractors sitting in the same office doing nothing. When I have asked my manager why they were not shown the door I was told that without our support the contractor would collapse, and we seemed to be under government pressure not to let this happen as it would show that Thatcherism (specifically public-private partnerships) was not working as it was supposed to.

Thus the public sector was being made inefficient by having to support inefficient private contractors.

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Big Brother

...meanwhile, a few years in the future.

...and we no longer have local councils except in name, the country is divided into commercial regions owned and operated by Carrillon, G4S, Capita and Balfor Beatty who continually "lose" and "gain" contracts to run local areas, each offering the same poor levels of service but with slightly different powerpoint presentations, dropping the standard of living each time a "new" contract is "negotiated" to "save the public purse". Record profits are recorded every year.

The local peasants have no recourse other than the legal right to complain to the local Baron who will either ignore or "disappear" the complainant"

Welcome to the new millenium. 1000AD.

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Unhappy

Re: "initial ten year term"

"Is anyone aware of any big outsourcing deal that has ever actually worked? Genuinely curious here."

I work for one of the big outsourcing companies, and no - I've never seen one that worked either. Beaurocracy that puts the public sector to shame, internal charging & so many different departments involved to do a simple job that it's ridiculous. It's no wonder insurance premiums are so high....

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@ Lunatick Re: I dont understand how this works.

Apologies in advance for the rant.

Actually you are wrong. I spent a few summers doing various roles for the council and a couple of years ago I worked for them for a year and a half as a temp after being made unemployed.

I didnt get a permanent position as I did not have the right attitude, apprently turning round to your superiors and commenting that after working there and seeing how its done you resent paying council tax is not considered the right attitude for a council officer. (This comment was made after a OAP suffering Alzheimers who was missing both legs from WWII, was left with a leaking roof for a week, and dodgy electrics from said leaking roof because even though I had taken time to stay behind and talk to a manager about getting it sorted on the first day).

Funninly enough I apparently had a terrible attitude but even so help the aged, the local fire service, one newly widowed woman and a long term unemployment claimant all bothered to write letters in complimenting me. I also ended up training staff who had been there for years on subjects they should have known.

The one thing I can say from working in public service is that if I really want to serve the public I'd be better of not trying it by working for the council.

Generally speaking the good staff are to hampered by red tape and politics to do anything, or end up to ground down to care. The rest are there for the easy ride. uppoer management seems to treat the money as just free money as they are not going to end justifying there job to a shareholder or employer saying "why have you pissed my money up the wall?"

I have seen the council repair boilers 3 times in a night with the same engineer getting a call out fee each time (making a half hour visit and then it breaking an hour later), (on top of shift allowance etc), not just one boiler but loads (helped book housing repairs) over the space of a couple of weeks you end up with boilers that cost say 4-500 quid having a couple of grand spent on them in the space of a fortnight. Not once has this been questioned.

Project managers from the companies selling the goods running the project and raking it in from scope creep. Would you say lets make the car salesman the one who decides what we need for our fleet of vehicles?

You see my previous post was a bit rhetorical I understand why private companies can manage to make savings.

I just dont understand why we as the tax payer should put up with this shit.

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Re: @ Lunatick I dont understand how this works.

Apologies for making the assumption and for answering literally. Sounds like you've been at the sharp end.

The other end of the scale is ~40U-worth of SAN & app servers sitting whirring away for the term of a five year contract, 24/7 on-site support, patched, waiting for a deployment that was never going to come.

We all paid for that one too.

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course they can save money

1. fire council staff with associated pensions and benefits

2. hire same staff to private firm doing the same job with no benefits/pension/union

3. do it for a year

4. send jobs to india to get the stock price up

5.wait 5 years, send jobs to <insert third world nation> as indians want things like pensions, healthcare etc

rinse and repeat

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Expect your council tax to double !

History dictates that ICT outsourcing is so catastrophic that disaster after disaster will occur with costing the council millions.

Putting ICT in the same sphere as 'emptying the bins' hardly ever works. So those making the decisions are likely to be fat cat bonus chasing tech dunces.

This is an extremely high risk manoeuvre that is likely to cost the people of Newcastle very dear..

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@Lunatick I dont undertsand how this works.

No worries mate, wasn't ranting at you, just knew it would turn into a rant when thinking back on it. :)

Apart from burning of Karma working for the council. I have also had dealings with some very large IT firms that are tied in with lots of gov contracts.

One of the big bosses (board level of UK division), basically told us (to papraphrase) "We tell the goverment what they want and then sell it to them".

I have seen the same company and another large one and there ways of running projects seems to be get the job and then tie the client legally whilst you perform the financial equivalent of rape and pillage through cost variations etc etc.

In a team building exercise at the council we had to build a bridge out of paper straws that could support something over a box of a certain height.

Using the same materials and taking the same time one lot of us produce a really nice bridge that thing was going to stay up and be useable for ages. The other team produced 'something' it held the object although over the upright and could not manage it over the span, and fell apart a few moments later.

Both were deemed equally good. Technically they had both held an object at the right height for the set time, and the council worked to a "good enough" policy.

Yes that is correct an official policy for people dealing with council projects and objectives.

The engineering equivalent of fettling a quick bit of duct tape and hoping it will hold out long enough as a fix, is actually what they plan for.

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Anonymous Coward

How could this possibly fail?

Look at how successful SouthWest One has been for for Somerset...

Expert staff flown in by IBM from India to assist in replacing effective solutions.

Supportable infrastructure moved out and replaced by IBM proprietary solutions.

“staggering losses” of £31million and “failures to hit modest savings targets”.

Still waiting for my council tax rebate on all the great cost savings!

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Anonymous Coward

So people hate the private sector because they're cheap, and people hate the public sector because they're lazy. And both are savvy enough to be able to weasel their away around terms and conditions without getting in any real trouble. Any got any other bright ideas?

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outsourcing doesn't work

The staff will end up demotivated, poorly paid and not having the right skills to get the job done resulting in high staff turnover. This will reflect poorly on the client who will have to pay a large amount to get the issue resolved to the profit of the supplier.

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Trollface

Bah

Bouncing Betty will have offloaded all of the "transferred" employees and will be ripping off the people who pay the taxes in no time at all. This is how all outsourcing sellouts like this have gone.

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Anonymous Coward

All together now!

What could possibly go wrong?

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Yikes!

North Tyneside council are already worse than useless, but I've got a sneaking suspicion this is going to make it miles worse for those of us that have to put up with them :o(

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