At the NASSCOM conference in Mumbai in February, Peter Coates, deputy director of finance at the UK’s Department of Health, dropped a bombshell. He announced that he had recently given permission for the offshoring of up to 60% of the NHS’ finance positions to India, where it already works through IT services company Xansa’s NHS Business Shared Services centre in Pune. “It could go higher,” he said. “The constraint is that we cannot move jobs to India at the expense of shedding jobs in the UK. Politics will be an important factor.”
For Xansa, the watershed has already occurred. After its latest burst of expansion in India, the UK company announced that the majority (54%) of its global workforce is now based on the sub-continent. With that headcount of 4,661 divided between its centres in Delhi, Chennai, Noida and Pune, not only does Xansa now have the largest Indian footprint of its UK-based peers, but its distribution of employees between onshore and offshore strikes as equal a balance as any IT services company of its size or larger can boast.
“This is a new outsourcing model and people are still working out the political sensitivities.”
David Leigh, Xansa
The company is by no means a UK head on an Indian body: the leaders of its insurance, business continuity and quality assurance practices – a sizeable chunk of the company’s internal power – are all Indians working in India.
This symmetry is significant to Xansa. The company derived approximately a third of its £188 million revenues in the first half of the financial year from the public sector. That represents a 91% jump from the previous year. And the public sector, it appears, is warming to the offshore outsourcing model. However, as Coates’ comments reveal, politics is still an issue.
“The blended nature of our company is important,” says Xansa’s strategy director, David Leigh. “If a customer was to enter a services deal with Wipro, for example, the fear would be that suddenly all the jobs would be whisked away to India. With us, there are more options available.”
A case in point is Xansa’s most trumpeted win of recent times, its ten-year, £85 million finance, accounting and payroll outsourcing contract with the BBC.
“The BBC was very unsure about sending jobs offshore to begin with,” explains Leigh. Xansa’s reach allowed it to tender three alternative models; all onshore, all offshore or a blend. Having visited Xansa’s Indian sites, the management at the BBC eventually plumped for an offshore model, but the organisation now has the option to bring jobs back to the UK without changing supplier.
“This is a new model and people are still working out the sensitivities, especially in the public sector,” say Leigh.
Although Xansa seems to be catering to the climate of caution, Leigh believes attitudes towards offshore outsourcing will continue to improve. Offshoring developed a bad name, he says, because call centre services were (counter-intuitively) among the first to be sent abroad and had a negative impact on customer satisfaction.
“I think it is ironic that front office work went first,” says Leigh. “Normally, the idea is to outsource what is not core to your business. Speaking to your customers is core to every business.”
But organisations of all kinds are now realising the benefits of outsourcing non-core business processes, he says. The company’s Indian sites perform a broad variety of work, ranging from medical underwriting, boosted by the availability of trained doctors to do clerical work, through to processing loyalty card applications for high street pharmacist Boots.
This work has kept Xansa financially healthy during a time in which some its IT services peers have suffered. In the past year, the company’s revenues grew by 7% to reach £352 million.
Leigh believes Xansa’s track record of providing shared services centres is its principle selling point to the public sector, and if Peter Coates is to be believed, there stands to be a lot more work coming its way. As Coates said in Mumbai: “I firmly believe this model will be used elsewhere in the Government to deliver services.”