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Although the concept of IT outsourcing (and indeed business process outsourcing) has been around for many years now, it is easy to forget that it often happens within a very complex context – market developments, technological change, cultural changes to the use of technology and sharing of data as well as economic and political trends, all play their part.
Given the economic climate of the last few years, the ever-growing clamour for better quality and more integrated service provision and the demographic changes that are reshaping thoughts around provision of healthcare in the UK, it is perhaps surprising that the NHS has taken so long to come to the realisation that it really must focus back in on its core business and, for non-core tasks and activities, join the ranks of other organisations that have long since seen the sense in using outsourcing as a means of maintaining flexibility and responsiveness to change whilst maximising the opportunities to benefit from economies of scale.
So, as a relative newcomer to the field, what are the basics that an NHS organisation should be thinking about if the idea of IT outsourcing appeals?
Taking the obvious potential upsides first, IT outsourcing presents an ideal opportunity to turn fixed costs into variable costs and at a more granular level than might have hitherto been the case. It can result in the replacement of legacy systems with far more efficient technology, provide significant service improvements, the chance to use new tools, new skills and new know-how as well as avoiding the need for upfront capital investment.
However, although all of those things may be deliverable, none of those things will be measurable unless there is some way of working out what the current service actually looks like and what it currently costs. (There may even be a happy surprise if it turns out that the existing internal service provision is both cost-effective and efficient!) This is where a lack of internal visibility and failure to plan properly can cause the unwary to very quickly become unstuck, similarly, failing to appreciate that this great new opportunity will almost certainly be perceived as a threat, by some within the organisation, can easily derail a project.
It is for this reason that considerable time and effort must be invested in bringing together a suitably skilled team for the project; preferably with board level sponsorship, and certainly consisting of financial, legal, technical and HR professionals. Ideally they will be released from their "day jobs" to focus on the issues at hand, which means that some element of back-filling will also need to be considered. The use of specialist consultants with new skills or to plug gaps in resource can be high beneficial; just as long as the organisation remembers that this is its project and the consultant will likely move on at some stage, so it cannot simply delegate responsibility and then forget about it.
That team will need to thoroughly understand the current internal service provision (both "as is" and desired future state) and its cost (the so-called "base-case") before engaging with the market to find a suitable provider. Suppliers will then use that information, whether provided in writing or presented through access to a data room, to work up their pricing. The scope of the services, transfer of existing assets and third party contracts, quality of the base case, required service levels, transferred and other risks, contract duration etc will all then inform that pricing. The importance of the quality and accuracy of the information that is provided to the supplier cannot, therefore, be overstated (in terms of ensuring that any premium that the supplier adds to its pricing to guard is as low as possible).
Of course, in the NHS there are the public procurement rules to also consider (competitive dialogue lends itself well to any outsourcing project, allowing exploration of solutions that might not otherwise have been immediately apparent) as well as potentially complex pensions issues, if staff are also transferring to the new supplier.
So, in a nutshell, what are the most likely conditions for success? In our view, having clear objectives, a sound business case, realistic expectations in terms of time, effort and resources, understanding supplier drivers, having a fair and balanced contract and investing in effective management are the most important determinants of that.
In addition to those covered in our Alert last week for Health employers on the UK Shortage Occupation List changes and the new NHS surcharge, a number of key changes to the immigration rules came into effect on 6 April 2015.
Happy New Year to all our readers. We hope you enjoyed the festive break. 2015 is likely to be a busy year for HR professionals and employment lawyers: shared parental leave and pay becomes available on 5 April and a range of employment issues will be debated in the run up to the general election.
DAC Beachcroft's Banking & Finance Disputes Journal focuses on events occurring within the banking, financial, city business and general regulatory sectors that give rise to or concern contentious matters, civil or regulatory.
In May there were a lot of interesting developments in employment law. We've already alerted you to one of these: the British Gas case concerning commission and holiday pay. There are lots of discrimination cases covered in this alert, as well as a helpful case where the EAT found the dismissal of an employee, who tested positive for cannabis, was fair and it was not necessary for her employer to carry out any further investigation.
In-scope authorities must comply with new minimum standards for products and services which are purchased, or buildings which are purchased or rented, on or after 5 June 2014. A new Procurement Policy Note (Action Note 07/14) requires compliance with set energy efficiency standards when purchasing products and services, and purchasing or renting buildings to ensure government compliance with the Energy Efficiency Directive 2012/27/EU. The PPN issued 3 June comes only just in time to meet the implementation date required by the Directive of 5 June 2014.
The PPN notes that the Directive requires the government to encourage other public bodies to follow the Central Government example but goes no further in terms of requiring steps to be taken.
For an aggrieved unsuccessful bidder, bringing a procurement challenge requires fast action in circumstances where the bidder may not be able to point to each and every breach of the Public Contracts Regulations 2006, and is often acting with little more than a feeling that something was not quite right with the process.
The Supreme Court has ruled that a solicitor who was a member of a limited liability partnership was also a "worker" for the purposes of protection against detriment and dismissal under the Employment Rights Act 1996.
This month we've had a couple of helpful judgments concerning whistleblowing. Both look at the topic of whether an employee had been subjected to a detriment because they had blown the whistle. Both of the cases highlight that employment tribunals can and should make distinctions between alleged protected disclosures themselves and the steps taken by the employer to deal with the disclosures and/or to manage the employee who has made them.
Welcome to the May edition of the International Employment Law newsletter.
For this edition, we adopt a different format from previous issues. Over recent months, we have worked with our global partner law firms on numerous multi-jurisdictional projects, and many of those firms have contributed articles to our recent newsletters. Drawing on our experience in this field and the input from our partner firms, we bring together some of the key issues for employers to consider when contemplating changing terms and conditions of employees in the EMEA region. This is a hot topic for many international employers, particularly where post-transactional harmonisation is required. We hope our guide to some of the issues, and our top practical tips, will provide ample food for thought.
On the immigration side, Jacob Sand of our partner firm Gorrissen Federspiel provides a helpful and concise guide to business immigration requirements in Denmark.
Voluntary ex-ante transparency (VEAT) notices can offer a big reduction in the timing of risk exposure in procurements, however a recent Advocate General's opinion on their use of to avoid the remedy of ineffectiveness has clarified the circumstances in which they will and will not have their intended effect.
We are pleased to introduce our second TMT Info Law Adviser Newsletter. This is a monthly review of information law updates and industry related news specific to the Telecoms, Media and Technology sector which we hope will be a valuable resource for your organisation.
This has been produced for you by our specialist TMT Information Law Team who understand the increasingly challenging and rapidly evolving environment you operate in and recognise the broad spectrum of legal and governance issues you face.
Should you have anything in particular which you would like us to include in future editions or would like further information, please contact a member of our team. In the meantime, keep a look out for our next issue in April!
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