Robotics: an alternative view – Intelligent Sourcing

It has a lot of good points. Unemployment is down, so if the robots want to take our jobs they’re being uncharacteristically inefficient about it; it also points out that automation has always forced jobs to evolve and the current wave of automation is no exception. There is a perception of employment vanishing because of deserted high streets and closed shops in malls, but the service industry, languages and soforth have never been more fruitful.

Well…yes. All of this is correct, but it doesn’t make life any easier if you’re in the middle of it.

Call for retraining

Let’s say you were working in a big chain of shops. Your people skills are excellent, you’re a little more senior than some so you can do stuff like mental arithmetic. You don’t have to rely on the till to add things up – customers can see you know what you’re doing. And you made best salesperson of the month just about every month last year.

The store, meanwhile, is on the hit list of stores to close. You’re offered an alternative position in Arkensas; unfortunately you’re in California and that’s quite a commute. It’s OK though, because the company is growing so there will be back office positions and web marketing opportunities and the overall head count will be larger than it was before.

You have none of those skills and your store is closing.

Intelligent Sourcing is not saying these changes shouldn’t happen. We’re not saying they should be resisted, they are inevitable. The point we’d make, though, is that it’s glib for media, analysts and academics to point to growth in overall jobs and to take no account of the people on the ground who find their job is growing in a direction that no longer works for them. This is, in part, how you get to the resentment felt by a lot of working people worldwide when they get told that their economy is booming and it’s all wonderful when they don’t know how they’re going to afford to eat in the longer term.

The substance of the NYT article is correct. Change is inevitable and after a period of settling down, it’s almost always pretty neutral for the total amount of jobs available. However, for the people in the jobs that are fading away, we’d urge sensitivity – and better than that, we’d call for an active effort to invest in retraining and redeployment. At the moment a lot of them feel fobbed off with statistics and figures they don’t recognise from their experience, and that’s no good for anyone.

Source: an alternative view – Intelligent Sourcing

European companies look to Philippines for outsourcing

European companies are looking to outsource operations in the Philippines to capitalize on a young workforce, whose skills need to be upgraded to meet demand, officials said.

The Nordic Chamber of Commerce considers the Philippines as “outsourcing destination” for information technology, accounting and graphic design jobs, said its president, Bo Lundqvist.

“The opportunities are amazing, there are so many opportunities, there’s not just enough talent,” Lundqvist told ABS-CBN News.

As Europe taps Filipino workers, the Philippines can benefit from technology transfers, said EU Ambassador to the Philippines Franz Jessen, who also chairs the EU-Philippines Business Network committee.

“Europe does not have a young workforce so we focus very much on technology,” Jessen said.

European Chamber of Commerce of the the Philippines president Guenter Taus cited Austria as example, wherein the government offers graduates free courses to give them skills that meet job demand.

The European Union is home to some 800,000 Filipino workers and the bloc is the second largest source of remittances. Seafarers alone account for 30,000 of the total, he said.

Source: companies look to Philippines for outsourcing

Fintech outsourcing is a hurdle race?

The growth of fintech shall deal with stringent banking outsourcing regulations which might put burdensome obligations on providers in Italy.

Given the potential impact of outsourcing services in the banking sector, the Bank of Italy issued very specific rules on the contents of outsourcing agreements and obligations that are both on banks and suppliers. These obligations together other general obligations might create a demanding environment for providers. And this happens at the time when Fintech is rapidly growing.

I already discussed about the interactions between Fintech and Internet of Things technologies also in the light of the upcoming implementation of the so called PSD2 European Directive, about the liability regime applicable to blockchain technologies, the most relevant issues in negotiating an outsourcing agreementand insurance outsourcing. But when it comes to banking outsourcing also relating to Fintech technologies, the following shall be taken into account:

Scope of banking outsourcing regulations

The regulations apply only to the outsourcing of ‘important company functions‘ which are those that have a relevant impact on the business of a bank and include the outsourcing of for instance the back office and the information system.

Compulsory contents of Fintech outsourcing agreements

The Bank of Italy regulations provide for minimum clauses that need to be addressed in outsourcing agreements relating to information systems and those include

  1. the obligation on the bank to
    1. prove that the supplier is a ‘qualified outsourcer’ which might create issues in case of Fintech start ups;
    2. keep control and responsabiliy on outsourced activities; and
    3. keep internal technical and managerial competences to be able to insource the outsourced activity if necessary;
  2. the obligation on the supplier to
    1. comply with the security policy of the bank and with privacy laws;
    2. ensure that at all times it is able to provide the required service and to notify the bank if it is no longer able to do so; and
    3. be subject to the notification obligations towards banking authoritiies and their potential audits; and
  3. the obligation to regulate within the contract
    1. data, software and technical documentation ownership with the obligation on the supplier to destroy in any case the bank’s customer data in case of termination of the agreement;
    2. management of security breaches;
    3. service levels;
    4. termination events in case of supplier’s inability to provide the requested service or breach of the service levels;
    5. disaster recovery and back up systems, including continuity plans; and
    6. migration obligations in case of termination of the agreement.

Privacy related obligations

I have already discussed about the impact of the new EU Data Protection Regulation on technology suppliers. But, when it comes to banking outsourcing, the additional tracking and alert obligations that I had addressed in this blog postbecome also relevant.

Sanctions against outsourcers

In addition to the privacy related sanctions that under the new EU Data Protection Regulation will be also against outsourcers, banking regulations introduce sanctions from EUR 30,000 up to 10% of the turnover of the outsourcer. This is a peculiarity as no direct sanctions against outsourcers were provided in the past.

It will be interesting to see the impact of these regulations on Fintech deals.

Source: -Fintech outsourcing is a hurdle race?

What’s The Difference Between “Partnering” And “Outsourcing”?

The terms “partnering” and “outsourcing” are thrown about so frequently …. and in so many contexts …. that it’s hard to nail down an exact definition for either.

These two practices are becoming ever so common among the business community, and although the distinction between them is becoming increasingly blurred, they do have distinguishing traits, which bear consequential benefits and risks.

It has been said that the practice of outsourcing should be looked upon not as a simple customer-vendor relationship, but rather as a partnership where the engaging parties mutually benefit from their agreement. While this may be a sound management practice, and while outsourcing shares many of the same characteristics with strategic alliances, outsourcing should be recognized as its own distinctive tactic.

Outsourcing is the contracting of services via monetary means in order to minimize or limit the resources that would normally be required to perform business functions internally, thus reducing costs.

A partnership, on the other hand, does not necessarily involve monetary payment from one firm to another, or a binding contractual agreement between two companies.

Rather, it is a partnership in which business entities collaborate with one another in order to bring about mutual benefits. This partnership can range from a loose and informal one, to more formal joint ventures, which involve legal measures to set parameters. Such alliances might include practices such as the partnering of manufacturers and retailers in order to reduce logistics costs, or the engagement of hardware and software development firms to create competitive advantage through synergy. Indeed, there are almost infinite ways in which strategic alliances can be formed.

The point here is that outsourcing and the formation of strategic alliances, while similar in some ways, are normally used to achieve different outcomes and involve different methods of binding between the participants.

Partnering will be used more and more in these hard times. If I outsource a job to you, then you are paid a fee to complete your services regardless of the outcome of the project under which your services were rendered. If on the other hand we partner on a project, while you are not a partner per se, I would expect you to provide your services contingent upon the success of our project. If the project failed, you would not get a fee, but if the project were a success, you would expect a much larger fee for your services than if you’d been hired as an outsource.

Source:’s The Difference Between “Partnering” And “Outsourcing”?

The fatal flaw of outsourcing

Outsourcing strategic value streams, process or resources is a bad idea. You lose flexibility and responsiveness. As soon as you move from a collegial all-in-this-together relationship to a contractual you-serve-me relationship, you promote a blame culture. That’s the fatal flaw of the whole idea.

Why outsourcing important stuff sucks:

1) Suppliers have always been scapegoats. That’s the fatal flaw of outsourcing: it is inherently a blame relationship. When things go wrong, accountability pressure flows out any holes in the perimeter of the organisation. Providers are on the defensive.

2) Outsourcing drives us from a collegial internal relationship to a contractual external relationship for the same resources. Providers have to protect themselves. There is no way in God’s green earth that this is going to be as flexible and responsive as sourcing the resource internally.

3) It might be cheaper but only because you get a commoditised product: one size fits all, lowest bidder, lowest common denominator. The moment you want customisation, the cost is back where you started, or more. The high-value bespoke service providers all play that game: bid low to get the business then make a killing on changes.

4) The higher-value your system, the more locked-in you are to your provider: it becomes exponentially harder to switch.

5) A service provider will always act in their own interest, whatever bull they spout about partnering and common interest. If it comes to the crunch, when times get hard, you lose.

Therefore it only makes sense to outsource commoditised resources such as hardware, networks, telecoms, storage, and servers.
You can outsource a call centre but you shouldn’t outsource a high value service desk.
You can outsource your server cloud but you shouldn’t outsource your continuous delivery pipeline automation.
You can outsource basic programming but you can’t outsource design or development.
You can outsource systems of record but if they hold your systems of differentiation they have you by the balls.

It is the elephant in the room of most DevOps discussions that DevOps inherently assumes internal control of high value resources and activities. Does DevOps work when you have outsourced control of your key value streams? I’m investigating and learning. I welcome comments.

Source: fatal flaw of outsourcing 

6 Reasons for Outsourcing Your IT Support

More and more businesses are deciding to outsource their IT support instead of maintaining an in-house IT support team. There are quite a few advantages to doing this, including the six listed here.


Outsourcing your IT support will save you a lot of money

On average, an IT support manager commands a salary of £35,000 to £40,000 a year, every year. Then there’s the costs of finding a new manager if and when your current one leaves, then finding and hiring other team members, as well as keeping their training current.

For small or medium-sized businesses, a salary of such a size is too much, but the costs of having a part-time IT manager, or of relying on untrained or less-experienced staff can far outweigh this once things go wrong.

If you decide to outsource, you need to look at getting your IT support from or a similar company. This means you’ll be paying a fixed monthly fee, which is easy to control and budget for.

An outsourced service can act as a back-up for your existing team

If you do rely on a small or part-time team, then using an outsourced support service can help them – and ultimately you. If you have a small team, or just one guy, then what do you do in a serious situation or when he or she’s on holiday? Having a widely-experienced crew on the end of the phone adds an extra layer of security to you; plus, the outsourced team can spot problems brewing.

You’ll save money on recruitment fees

We all know how expensive recruitment can be. It’s also very time-consuming and stressful, especially if you have no idea about IT and your main question is “…so, you know all about computers, then?”

Outsourcing bypasses all of this – you’ll be guaranteed an experienced team who don’t need to show you their CVs and tell you about their hobbies.


It frees you up to concentrate on your business

Every business knows how much time is lost to IT problems – very often trivial problems, too – and these glitches mean you miss phone calls, meetings, your accountant and, of course, your customers. Constant small hassles cost time and money, and that’s before the big ones hit!

Outsourcing your IT support makes you more productive

You may think that asking your staff members to look after their own IT hygiene and after each other’s saves money, but it really doesn’t. Everyone will lose a few minutes a day sorting out error messages, showing new hires how to handle that printer and saying “…turn it off and on again…”

Once you outsource, you’ll just have to make a call and someone will be there to make it all go away (as it were). This means that only one person is held up, rather than two!

Outsourcing means your IT support always has the latest training

IT teams need to keep their training current and up-to-date and this costs money. If you’re bearing these costs year after year, it racks up and it never ends. IT support services benefit from training partnerships with big developers, as well as better economies of scale, so you’ll feel these benefits as well.


Source: Reasons for Outsourcing Your IT Support

How Start-up Businesses Can Take Advantage of Outsourcing

The first few phases of any startup are very time and management sensitive, so does outsourcing even deserve a seat at the table? Simply put, there are so many things to be done that outsourcing is indeed a viable option during these phases. It helps by taking the load off personnel and projects.

Outsourcing some projects doesn’t only free up time, but it also leaves you with more energy and in-house resources to use and assign to core business tasks. This is how startup businesses can take advantage of outsourcing.

Outsourcing and Risk Management

Running a startup includes a lot of risks. The markets are oversaturated and volatile as it is, and taking on projects you don’t have any experience with puts your young and fragile establishment at more risk. By finding an experienced and reliable outsourcing partner, you will put risk management in their hands. Avoiding risks depends on having knowledge and experience in certain aspects of the market, and this is exactly what outsourcing providers have.

Become More Competitive

Competition and Outsourcing

There is also one more important advantage of outsourcing. This one will help you level the playing field and stay competitive in your market niche, especially if there are big players offering the same or similar products or services. For instance, you can outsource customer support to a trustworthy company that handles it on a professional level. Your startup can reap the benefits of all those perks big corporations have in-house by smartly outsourcing projects to experts.

Marketing via Outsourcing

Today in the digital age of marketing, strategies have to be devised carefully, and they have to target specific audiences. They also have to be subtle. They are meant to educate the audience, but also to nurture a relationship with them. Very rarely will a startup have the kind of money needed for hiring a team of professional digital marketing experts.

This especially applies to content marketing. Instead of hiring an expensive workforce, you can outsource production and distribution. As long as you clearly communicate the message you want to send to the audience, marketing professionals will be able to help you build better relationships and generate more leads.

Speeding Things Up

While starting a new project in-house may take up to a few weeks, outsourcing it means that it will start right away. This is simply because some of the tasks may require your workers to have specific skills and knowledge that they don’t have at that moment. Instead of investing in their training and waiting for it to be completed, you can outsource the project to a respectable outsourcing firm.

Reduce Costs with Outsourcing

Hiring a new employee just because you don’t have anyone on your staff that can finish a one-time task can prove to be a very bad investment. The best practice for handling peripheral projects is to outsource them. Your hires will be able to focus on core business tasks while the outsourcing partner handles less-important projects for you.

These are just some of the outsourcing advantages startup businesses can gain. In the end, if you are unsure whether to outsource or not, just compare the expense of outsourcing versus a full-time hire, and write down how much money you will save. This may be just the incentive you need for making the right decision.

Source:  rocksdigital-How Start-up Businesses Can Take Advantage of Outsourcing

Software robots act more like humans than expected

Benevolent bots’ or software robots designed to improve articles on Wikipedia sometimes have online ‘fights’ over content that can continue for years, say scientists who warn that artificial intelligence systems may behave more like humans than expected.

‘Benevolent bots’ or software robots designed to improve articles on Wikipedia sometimes have online ‘fights’ over content that can continue for years, say scientists who warn that artificial intelligence systems may behave more like humans than expected. Editing bots on Wikipedia undo vandalism, enforce bans, check spelling, create links and import content automatically, whereas other bots (which are non-editing) can mine data, identify data or identify copyright infringements.

Researchers from the University of Oxford and the Alan Turing Institute in the UK analysed how much they disrupted Wikipedia, observing how they interacted on 13 different language editions over ten years (from 2001 to 2010). They found that bots interacted with one another, whether or not this was by design, and it led to unpredictable consequences.

Researchers said that bots are more like humans than you might expect. Bots appear to behave differently in culturally distinct online environments. The findings are a warning to those using artificial intelligence for building autonomous vehicles, cyber security systems or for managing social media.

We may have to devote more attention to bots’ diverse social life and their different cultures, researchers said.

The research found that although the online world has become an ecosystem of bots, our knowledge of how they interact with each other is still rather poor. Although bots are automatons that do not have the capacity for emotions, bot to bot interactions are unpredictable and act in distinctive ways.

Researchers found that German editions of Wikipedia had fewest conflicts between bots, with each undoing another’s edits 24 times, on average, over ten years. This shows relative efficiency, when compared with bots on the Portuguese Wikipedia edition, which undid another bot’s edits 185 times, on average, over ten years, researchers said.

Bots on English Wikipedia undid another bot’s work 105 times, on average, over ten years, three times the rate of human reverts, they said. The findings show that even simple autonomous algorithms can produce complex interactions that result in unintended consequences – ‘sterile fights’ that may continue for years, or reach deadlock in some cases.

While bots constitute a tiny proportion (0.1 per cent) of Wikipedia editors, they stand behind a significant proportion of all edits. Although such conflicts represent a small proportion of bots’ overall editorial activity, the findings are significant in highlighting their unpredictability and complexity.

“We find that bots behave differently in different cultural environments and their conflicts are also very different to the ones between human editors,” said Milena Tsvetkova, from the Oxford Internet Institute.

“This has implications not only for how we design artificial agents but also for how we study them. We need more research into the sociology of bots,” said Tsvetkova.

Source: robots act more like humans than expected

In Defense Of Outsourcing: The Commonplace Business Practice Has Improved Our Lives

Often, when a business faces a crisis, critics are quick to point to outsourcing as the cause. But does this commonplace practice deserve such negative press? Here are some reasons to think more positively about outsourcing.

The British Airways episode recently cast in sharp relief contrasting views on outsourcing. Over the weekend, one of the airline’s data-centers was overwhelmed by a power surge. The systems were overloaded and technicians took days to rebuild the database. Meanwhile, thousands of flights were cancelled, 75,000 passengers were stranded and the company’s CEO was desperately firefighting before the world’s media.

The press was quick to condemn BA’s cost-cutting and specifically it outsourcing as the chief contributory factor The GMB union attacked the airline’s history of sending British jobs overseas and denounced the senior management as “just plan greedy”.

This evokes the widely-held belief that outsourcing equates evil. The notion, within the press, is rarely challenged.

Some years ago, Procurement Leaders conducted consumer research on public attitudes towards supply chain management.

In a survey of 300 consumers, based in Australia, UK and US, 62% agreed with the statement that “I think it is wrong when the branded company is not the manufacturer.”

This perspective is sharply at odds with the current structure of global trade.

I found only one voice in the sample that expressed a morally neutral attitude towards outsourcing: “Modern businesses sometimes are forced to outsource to save on cost and availability in order to sustain operation and that is understandable,” said one US-based respondent.

Throughout the study, we found a surprisingly low tolerance for any sniff of outsourcing within production.

This reflects the negatively that prevails in the press. Few positive outsourcing stories are reported in the media, but failures are splashed across the business pages. Even the Economist (among the most pro-business newspapers in print) has wondered whether outsourcing has gone too far.

Business generally ignores this discussion and continues to outsource more functions. In the Arvato Outsourcing Index, for instance, Q1 2017 showed the strongest quarter of growth in the UK outsourcing market in five years.

There are two problems with the word ‘outsource’. Firstly, it is often confused with ‘offshore’(and that is subject to a different conversation). Of course aspects of spend can be shipped to a third-party that is based overseas . We find that this is highly effective in cutting short-term costs. But this is not a necessity. There are number examples of companies outsourcing to a local provider. This is more of a function of the management seeking to shift focus on core activities.

A second problem with the O-word is that is often seen as management-speak for ‘job cuts’. The practice is seen as a rapid means to shed costs under the guise of a third-party that has supposed ‘expertise’ in the area. Opportunists have used the tool to generate short-term wins, and winning a personal bonus on the success, and then moving on to the next contract before problems materialise.

These failures seem to highlight poor implementation. Doing anything badly will result in a bad output. This speaks more of execution than the underlying idea. As with any business decision, managers must weigh pro against con. Outsourcing disrupts operations, can result in lost knowledge and can undermine the morale of staff. But there are significant benefits to be wrought as well.

Outsourcing has dramatically transformed the global economy. Our jobs, consumption patterns and entire lifestyles are partly shaped by the rippling effects of past outsourcing deals. The low costs offered by outsourced contracts – vilified by the press at the time –streamlines the structuring of the economy.

Apple, for instance, does not make any of its own products. It has outsourced production to companies based in China. This has allowed the California-based company to focus on enhancing its competitive advantage: design and user experience. Outsourcing also allows the firm to sell consumers high quality design at relatively low prices. Worrying about production lines, operational issues and logistical bottlenecks will detract from the creative atmosphere that the tech company currently enjoys. To convert it back into manufacturing will likely kill off Apple’s entrepreneurial and artistic spirit.

It would be imprudent to attribute Apple’s success solely to outsourcing, but it has had a positive impact. In fact, if we look at any established company, its operating model has been fundamentally recast. 100 years ago, Irish brewer Guinness owned its own farms and made its own barrels. Now the global beer behemoth is considering outsourcing its brewery in Dublin as its brands enters more markets.

The greater focus that outsourcing affords many companies can unburden them of operational drudgery and catapult them to international and enduring success.

The benefits accrue to shareholders, but also to the workers who possess high-value jobs in companies in which they feel proud. Consumers can in addition enjoy lower prices.

Moreover, the fragmented supply chain that necessarily results from outsourcing provides supporting jobs across the world from a workforce that is increasingly specialised and more productive. Outsourcing can cut jobs in one part of the economy, but it also generates work elsewhere that can create more value.

Undeniably, there are examples of failure. This is true of any business practice. There is bad accounting, HR or team leadership, but project failures are not an indication to suggest that accounting itself is to blame. Rather, it’s the people that misapplied it.

Similarly, with outsourcing, there are plenty of examples of success that we simply take for granted. But there are many reasons to defend its practice within business and some arguments to feel grateful as to the way it has enriched the lives of many.

Source: forbes-In Defense Of Outsourcing: The Commonplace Business Practice Has Improved Our Lives

Did outsourcing cause the British Airways IT meltdown?

It’s been a rough few days for British Airways. On Saturday, the iconic British flag carrier experienced a serious IT meltdown, which resulted in planes being unable to take off, and passengers unable to check into their flights.

This global outage is bad news for British Airways. The airline is expected to be on the hook for £150 million (roughly $192 million) in compensation to passengers who had their bank holiday weekend plans disrupted.

So, what caused it?

British Airways CEO Alex Cruz confirmed to the Guardian that the issue was with a power surge at one of its UK-based data centers. This problem was compounded by the fact that back-up systems that should have automatically stepped in, didn’t.

But significant criticism has been leveled at the airline due to the fact that in recent years, UK-based IT staff have been laid off and replaced with Indian replacements from Tata Consultancy Services, a major outsourcing company.

In 2016, British Airways slashed 700 jobs in the UK. According to Mick Rix, a representative of trade union GMB, five of these worked in the equipment and facilities team at the facility that experienced the power surge.

For what it’s worth, British Airways has strenuously denied that outsourcing was responsible for the outage. Speaking to The Guardian, Alex Cruz said:

“I can confirm that all the parties involved around this particular event have not been involved in any type of outsourcing in any foreign country. They have all been local issues around a local data centre who has been managed and fixed by local resources.”

This denial has been responded with derision by Rix, who said Cruz was “talking out of his hat.”

Whatever narrative is true, the fact is Saturday’s outage has reignited the debate around outsourcing and the IT industry.

Over the past year, British Airways has been on a cost-cutting binge, as it tries to reduce its overheads in order to compete with the ubiquitous low-cost carriers. On certain long-haul routes, the airline has axed the second meal service in economy. Within Europe, it’s ditched free food and drink entirely, replacing it with a buy-on-board service.

And yes, it’s fired a significant number of techies.

Perhaps the mistake British Airways made was confusing an IT worker — with their years of expertise in the complex computer systems, both legacy and new, that make up BA’s technology infrastructure — with a prawn sandwich.

One is easily replaceable. The other is an IT worker.

Source: outsourcing cause the British Airways IT meltdown?