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IT Outsourcing at BBC

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BBCTL SELL OFF BY BBC LTD
21
IT Outsourcing at BBC Sugandha Pasricha Anil Varma Nishant Pratap Gauri P.Ghatge Chandann P.Mohyal Presented By:-
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Page 1: IT Outsourcing at BBC

IT Outsourcing at BBC

•Sugandha Pasricha•Anil Varma•Nishant Pratap•Gauri P.Ghatge•Chandann P.Mohyal

Presented By:-

Page 2: IT Outsourcing at BBC

2

Introduction BBC at a glance

Group Of British & American electrical company Granted Royal Charter in 1927 Earnings from Licenses Radio Broadcasting on 14th Nov,1922 TV Broadcasting in 1936

Competition after 1955 Advent of ITV , Channel 4

Role Of BECTU

Page 3: IT Outsourcing at BBC

Division of BBC BBC Broadcast BBC Production

Division of BBC Technology Group BBC Technology Direction BBCTL

BBCTL SBSMH Outsource the IT to SBS

Why Outsourcing ? Need for outsourcing Requirement for BBC

Page 4: IT Outsourcing at BBC

Reasons for outsourcing at BBC

1. 20- 30 million pounds could be saved every year.

2. 350 employees could be saved from loosing their

jobs.

3. UK government’s pressure for increasing

revenues.

4. Change in the global broadcasting industry, the

digital factor.

Page 5: IT Outsourcing at BBC

Benefits of OUTSOURCING

1. The economies of scale.

2. Danger of management being over stretched.

3. Gains could be used for investing in other areas of BBC.

4. Development and innovation could be accelerated.

5. Transfer of risk.

Page 6: IT Outsourcing at BBC

Selling BBCTL• 20 - 30 million pounds could be saved every

year.• 800 servers & networks of BBC were distributed

across UK.• Cost of 30k desktops would be reduced when

outsourced to a third party.• Planned to cut costs internally, but it required the

Co. to lay-off 350 employees. The BBC board did not agree to this.

Page 7: IT Outsourcing at BBC

BBCTL had developed some award-winning technologies like Colledia.

UK govt.’s pressure for increasing revenues Change in the global broadcasting industry, the

digital factor. BBCTL delivered technology services to BBC

under the TSA.

Page 8: IT Outsourcing at BBC

Selecting Supplier DEAL:- Acquire BBCTL with staff of UK and USA and

access to BBCTL contracts with various clients(£20 million).

Terms of Contract:-

1. Provide Tech support and services to BBC for 10 yrs

2. Manage PC’s across BBC’s global operations.

3. Manage BBC ‘s websites and broadcast feeds(1.7 billion visitors/day)

4. Procure broadcasting technologies and channels of BBC( 128 channels) and move towards digital TV.

Page 9: IT Outsourcing at BBC

BBCTL employee union was not convinced with the deal and feared the loss of jobs of more than 300 employees.

BBC appointed an evaluating team of 26 core members for the deal.

Phase1: 80 bidding companies was sent a pre qualifying questionnaire to evaluate their market position, financial strength and their knowledge of broadcast business ( Evaluation by Finance, Procurement and Technology dept)

Page 10: IT Outsourcing at BBC

Phase2: Shortlisted 9 suppliers based on phase1

( e.g Accenture, IBM, SBS, HP etc). More info was asked about their strategy for transformation of BBC based on the changes in the broadcasting business. Evaluation Included:

1. Cultural Fit

2. Best Value for Money in technology procurement and commitment to technology innovation.

3. Resource Allocation, Scale of Operations and Funding to help BBC realize its vision.

Page 11: IT Outsourcing at BBC

Phase3: finalists were Accenture, SBS and CSC.

Negotiations were carried out involving over 100 people from various departments of BBC.

CSC pulled out in Halfway and SBS and Accenture were given a time to submit their proposals as per the rules from BBC and heads of Govt.

Issues with Outsourcing Of IT Contracts:-

1. E- Governance

2. Intellectual Property Rights

3. Cannibalization in IT Contracts

Page 12: IT Outsourcing at BBC

THE WINNER Project Leo- a coded project: For cost reduction by

layoff BBCTL handed over ‘Project Leo’ to Siemens &

Accenture on June 14, 2004 (The finalists) The labor union dilemma- BBC made promise that

employees would remain with BBCTL but bidder were indecisive.

The ballot test by BECTU-verdict against sell-off Union demanded-Job guarantee, pensions, three

year pay deal,5% increase in wages BBC management agreed on 2.5% wage increment

and bonus of £ 800 only

Page 13: IT Outsourcing at BBC

8th July,2004,BBC declared SBS as single preferred bidder and signed TFC(Tech framework contract)

Scoring system was used

Reasons for SBS selection Cultural know how(company and Britain both) Better understanding of public service

organization Hardcore engineering background Vast resources available Its scale of operation

Page 14: IT Outsourcing at BBC

Contd…..

SBS-BECTU Meeting for discussion

-Agreed to retain all staffs for next one year but gave nothing in written

Deployment of some staffs out of BBCTL horizon

Promised to introduce pension plans similar to BBC

Page 15: IT Outsourcing at BBC

Meeting result Union still unsatisfied BECTU planned strikes to delay sell off as BBC

management refused to disclose the agreement clauses

Ballot results-84% In favor of industrial action

Page 16: IT Outsourcing at BBC

SBS new offerFirst round of action on July 30-31, got a call off retain some of BBC’s terms up to next 3 years Improved pension benefits to 45+ employees No transfer outside city Offer was put on to a vote - On advice of BECTU

lawyers Legal threatening by BBC Union submitted list of secondary issues and

wanted to be communicated to SBS

Page 17: IT Outsourcing at BBC

GOVERNMENT APPROVAL Sept 01 2004, BBC failed to meet the deadline for

sell off British minister of culture (Mrs. Tessa Jowell)

accepted the contract approved by executive council and denied to fulfill any further demands of union politely

“I have no legitimate reason to withhold my approval for the sale”- Tessa Jowell

Page 18: IT Outsourcing at BBC

BBCTL UNDER SBS MANAGEMENT October 1st ,2004 –SBS was handled charge

over BBCTL

First six months BBCTL worked under TSA between BBCTL – BBC

Erstwhile BBCTL employees were not required to change their work place

SBS constituted new boards for:

• Governance • Partnership (Chaired by Varney)• Innovation & Contract.

Page 19: IT Outsourcing at BBC

General Elections 2005, UK – A litmus test for SBS SBS allotted £ 100,000 for IT infrastructure 200 computers were interlinked with 3 Kms of cables Installed 3 separate graphic systems & 60 broad cast

vans Rehearsed Developed contingency plans for failures (Two other

studios were kept as back-up) Upgraded website (BBC) Centralized information center was developed for

gathering information (election result & for sharing by other BBC units)

Separate arrangement for system monitoring

Page 20: IT Outsourcing at BBC

FUTURE OF SBS SBS created a center for global competency for

future projects Global market between £ 25 billon to £ 100

billion…………………Varney BBC planned creative archives project for sports

coverage using broadband & modernized production facilities

Analyst views (+)Trend setter (-)Lost some very potent IPR’s Similar deals between Vodafone & Accenture; Discovery channel & Ascent media

Page 21: IT Outsourcing at BBC

REFERENCES Espiner, T., “BBC Hits Outsourcing Costs Snag”,

http://services.silicon.com/itoutsourcing/0,3800004871,39160280,00.htm, accessed 24 November 2007

Klepper & Jones, “Outsourcing IT Systems and Services”, www.businessforum.com/woj01.html, accessed 19 November 2007

Kumar, M., “Information Technology Outsourcing at BBC”, 2006 IAOP, 2007 Overby, S., “ABC: An Introduction to IT Outsourcing”, 2007,

www.cio.com, accessed 20 November 2007 Pinsent Masons, “An Introduction to IT Outsouring”,

www.out-law.com/page-501, 2004, accessed 20 November 2007


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