BBC Outsourcing Case Study

“Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider.” (http://en.wikipedia.org/wiki/Outsourcing) A high proportion of companies now use outsourcing as a way to increase efficiency and performance in a certain area of their business. This may seem a novel technique to some, however outsourcing is not a new concept; it has been a growing trend among businesses for a number of years and continues to expand across business sectors today. For the BBC, the decision was a brave one as it was unprecedented in their sector. Although controversial at the time, the decision seems to have been a success, which is in part thanks to the process employed by the BBC to select a supplier. This process had many positive and negative aspects which had a substantial effect on the overall outcome of the project.


One positive aspect of the selection process was the fact that it was done over a relatively long period of time. It took the BBC eight months to actually select Siemens Business Services and a further three months to complete the whole process. This would have been of great benefit to the BBC, “investing effort in the early stages of the outsourcing can help to prevent an outsourcing disaster.” (http://www.out-law.com/page-501) This ensured that due time and consideration was given to the actual process itself, not simply the planning and preparation of the project, enabling the BBC to make the best choice possible. Further to this, the number of man hours spent on the project would have only aided the selection process.


Another positive aspect of the selection process is the way the BBC evaluated the bidding companies. It is extremely important to “technically, know and understand your existing IT operation and what you seek by way of external IT services from the service provider.” (http://www.out-law.com/page-501) Despite having no comparison to use, the BBC was able to establish certain criteria on which to judge the companies. The criteria mainly focused on the size of the bidding firm, their cultural fit with the BBC, their value for money, their understanding of the BBC business, and their commitment to the project. These factors were extremely effective in aiding the selection process, as it enabled the BBC to differentiate between companies based on specific factors which were important to them. In addition, it meant that the companies were judged on a variety of factors and not simply on their IT skills and knowledge meaning that an overall scope of the bidding companies was established before making any decisions.


Expanding on this, another positive aspect of the selection process was the fact that the evaluating team did not consist solely of experts from the BBC’s IT department. Initially there was an evaluating team of twenty six “core members” which may seem excessive, however they were to evaluate eighty bidding companies. After these companies were whittled down to thirty one, the BBC created an evaluating team of only eight members. This was a highly effective move by the BBC as they selected experts from different fields such as finance, procurement and technology, meaning the individual bids could be judged from different view points within the BBC, giving them a complete overview of each company.


Despite these more positive features, there were still some negative aspects which could be improved upon in the future. Firstly, the fact that over one hundred people located in different departments within the BBC carried out negotiations with bidding companies was a basic error. This could result in a severe lack of co-ordination between departments and employees, resulting in the wrong company being chosen. Although the BBC seem to have been lucky this time, future negotiations should be left to a smaller team of dedicated staff, working in close proximity with each other to ensure any decisions are completely correct.


The most notable error on the part of the BBC was the lack of communication between management and the employees. The choice to outsource would inevitably have a detrimental effect on the workforce, “it is difficult to dispute that outsourcing has a detrimental effect on individuals who face job disruption and employment insecurity.” (http://en.wikipedia.org/wiki/Outsourcing) When the implementation of the project began, the employees did not know anything about it, “This was completely unexpected”. This showed poor management skills by the BBC, as it implies there was no respect given to employees, and as a result, the employees were against the project from the word go. This initial lack of respect shown to the employees created a huge problem for the BBC. During the selection process BECTU, the union, ran a series of ballots because the BBC failed to conduct negotiations regarding the employees’ future. This then led to the threat of a strike which was thwarted by the BBC threatening BECTU with legal action. This was yet another mistake made by the BBC as it seemed like a desperate attempt to regain control of the situation, however the result was further alienation of their workforce.


Overall, the decision to outsource seems to have been a great success for the BBC. The process the BBC employed to select a supplier was undoubtedly going to be extremely difficult as this move was completely unprecedented. The management team were effectively going in blind as they had no comparison to give them direction or ideas. All things considered it was a relatively successful implementation and a very wise decision by the BBC, with only a few errors along the way. However, like most new projects, “Once an outsourcing deal has been concluded, committed management of the outsourcing relationship is critical to its success.” (http://www.out-law.com/page-501) Of course the first major test was the broadcasting of the general elections, which SBS and the BBC passed with flying colours. Overall it seems as though the BBC have reaped the rewards for their initial bravery, however only time will tell if it is a sustainable operation for the BBC.


References

CIO Insight, ‘IT Outsourcing: Expect the Unexpected’, 2007, http://www.cioinsight.com/article2/0,1397,2104842,00.asp, [accessed 20/11/07]


Outlaw, ‘An Introduction to IT Outsourcing’, 2004, http://www.out-law.com/page-501, [accessed 20/11/07]


Wikipedia, ‘Outsourcing’, 2007, http://en.wikipedia.org/wiki/Outsourcing,
[accessed 22/11/07]