..were haemorrhaging customers, get rid of more front line staff!
Insurer Aviva and energy supplier Centrica are the latest big customers to indicate plans to ditch outsourcing giant DXC Technologies, The Register can reveal. DXC, which is hell-bent on eking out $1bn in cost savings in its fiscal 2017, recently bemoaned contract run-offs after the UK Department for Work and Pensions refused …
get rid of more front line staff!
Having outsourced years ago to the scalpers and offshorers of EDS/HP/DXC there won't be much if any headcount reduction, and whoever wins the contract will be ensuring that all delivery is firmly offshore.
Can't speak for Aviva, but I've a fair clue what's happening at British Gas, and it is exactly as you say, haemorrhaging customers, as are most of the Big 6 energy suppliers. Put simply, the Big 6 make most of their money from legacy customers who have never switched suppliers, and that can be a £200+ difference each year against the best deals in the market. Why put up a loss making "customer acquisition" tariff when it is much more profitable just to exploit those who won't move, and tolerate the fall in total customer numbers? But with the government moving very slowly to cap those standard variable tariffs, the Big 6 are in a tailspin, all desperately trying to cut costs left right and centre, because their ancient systems and sclerotic processes are simply too expensive to compete with the new entrants, who haven't built vast bureaucratic empires, don't pay their directors millions. and have (relatively) clean customer databases, and modern, lightweight IT.
I can't see this helping British Gas much. Npower tried to outsource and offshore everything they could, and it still hasn't worked out, so as you may have seen, Npower's parent company RWE are in discussions about banging Npower together with SSE, possibly as a joint venture.
DXC will never be able to compete at the bottom end of the market, because we* just can't get cheap and efficient enough. Our ability to compete at the top end is being (maybe has been) ruined by a deliberate policy of getting rid of the most expensive (and usually the best) staff.
Nick Wilson et al. are doing nothing more than liquidating the company in slow motion. It's basically insider trading as a long con.
just can't get cheap and efficient enough
The problem DXC and others have got is that they have made ITO a commodity. In any commodity market, even if you are the cheapest today, that will never last. If you sell on price, your client buys on price, and will move for small savings. There's always somebody able and willing to cut another corner, so you need to ADD SOME VALUE for your corporate clients. Trouble is they don't know how.
And of course, having slashed their costs by sacking too many of the most capable, people like DXC offer poor service. Poor service AND not being the cheapest, when your client buys on promises of blue chip service at the lowest cost - well, hardly a recipe for success.
Another DXC insider here (for my sins).
Most teams in the UK now seem to be understaffed, not enough people left, especially the experienced ones, to cope with existing work loads.
I've been here since transitioning across from a major outsourcing deal over 10 years ago. There are few of us long-timers left now, offices with lots of young people now, interns etc. Most of which have no idea what they are doing (not their fault, just inexperienced) and no one around to teach them, as DXC pushed those people out the door before knowledge could be passed on.
Those of us that are left, are only still here for the most part as accounts marked us as critical. There is no meat left to scrape of the bone!
And seems DXC are planning a further 20% or so reduction before the new year! If this is true, I can't see how the company could fulfil its contractual obligations anymore, as we are barely managing now!
I can't see how the company could fulfil its contractual obligations anymore
I worked for a company that outsourced to HP>DXC.
I doubt they can fulfil contractual obligations now, but their lawyers and commercial people who ink the deal that the client signs, they are (were) well resourced and well paid, and adept at writing SLAs with get out clauses for those things that the client might otherwise be able to hold against DXC.
It's such a pity - I've had great, helpful, experienced colleagues TUPE'd into HP, and then thrown down the chute into DXC. Along the way, many have been TUPE'd again to Manpower and are now on "flexible" contracts.
EDS, HP, HPE, DXC, all of them ghastly dogf*ckers of the first order, companies who in recent years have seen shitting on employees as the only possible driver of shareholder returns. I hate them all, and I haven't been on the receiving end, although I've experienced the shitty service, and seen the outlandish rip-offs.
"I can't see how the company could fulfil its contractual obligations anymore"
Based on comments from people closer to DXC contracts, they can't deliver either existing contractual requirements or new customer requirements. The best they can manage is bogging a company down in process long enough to avoid delivering anything.
And DXC are surprised customers are leaving...
Whilst some organisations, having realised that oursourcing was not the panacea or cost saving they were dreaming of (as they get bitten ever harder), and then made positive changes to the way they work to get the best out of people and their IT (resistance to change notwithstanding), others still conclude that the best option is to go swim with different sharks.
They are going to get bitten again - it just takes a while until they smell the blood.
Eh? How could a CIO even think that? They're both data centres, only I guess one's all for them and the other isn't.
DXC or Azure + HCL staff. Not much to choose between them, apart from the staff. I'd have gone with DXC.
HPE signed many contracts and agreements over the last 6 years or so with no intent to deliver on the obligations of those contracts, senior managers completely out of their depth and unable to think of any response to changing markets other than cut costs. Those managers presiding over the cost cutting - primarily in the ITO arena - received very, very handsome bonuses for their efforts. Essentially HPE became 2 organisations - the sales and account teams tasked with winning and delivering business and the business units who owned the resource ( people ) tasked with only cutting cost and no responsibility for the client experience. I don't think it takes a Harvard MBA to see how that might pan out......
DXC employee here, I can confirm there are no staff left to cut, none. If they do manage to find more people to get rid of, it'll be Mavis the cleaner working on IT projects in between mucking out the toilets.
There are no plans in place to recruit, no plans in place to deal with the current shortfall of people who actually know what they're doing.
But if you read Nick Wilson's internal emails you'd think we were never in a better position.
Utterly clueless CEO + rudderless company = a recipe for disaster.
I agree about the quality of leadership but DXC is in no danger of imminent collapse. It remains a large corporate, with 170,000 employees, $25bn / year revenue and it's made $438m net profit so far this FY - hardly a company on its uppers.
DXC's demise will be more medium term with further revenue decline, more cost cutting then a sale of what's left to one of the Indian outsourcing outfits, but that's a few years away.
Don't hold your breath. Yes, nobody in their right mind will sign up with them now (or prolong a contract), but they still have a massive amount of hard to escape government and corporate contracts left that will expire one by one, and they still have 170000 (increasingly bad) staff left to cut. It will be a slow burn with plenty of drama and at the Register we have front row seats.
"We missed a trick with them," our DXC insider said. "They basically worked out they could do something better with Microsoft Azure and HCL. They came in with a better proposition and [Centrica's] CIO wanted to do something more cloud-based and sexier."
There lies the answer, Microsoft have been in targeting the C level offices and have promised the earth with Azure. It will, of course end in tears and be all down to the technical staff being anti-cloud etc. Based on my experience, this is a common pattern with MS, the resulting mess, usually linked with Agile, would be totally unacceptable if it occurred on-prem. I just find it totally baffling that because something is in the cloud, working practices are accepted that would result in staff being disciplined if they did it on-prem.
...ITO doesn't make good returns...
The legacy ES contracts are being reviewed in the same way Mikey did with CSC. If your account isn't good business for whatever reason, its actually no crying shame if its let go.
Quite clearly ES collected a lot of revenue, but what were the profits? From looking at the failing mess that is HPE, presumably in a lot of cases none whatsoever...
I'd guess and assume that the future of DXC is substantially less that $25bn in revenue (in fact with USPS gone its already $5bn less) but with a significantly higher profit margin on whatever it is that is left.
I *think* that's the plan.
On an individual level, at least if your account goes away from DXC you might end up working for someone better under TUPE...
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