Outsourcing Excellence Award – Best Global Services: Carillion PLC and Accenture
Carillion PLC is a leading support services company. It operates in a highly competitive industry where achieving its margin targets demands a rigorous approach to controlling costs and delivering profitable growth. Carillion’s disparate processes and underlying systems were a potential obstacle to that growth.
Carillion, which last year had annual revenues totaling £5.1 billion, has been on a major business transformation journey with a number of significant acquisitions and major contract wins over the last five years. The company had an internal onshore shared services center that ran multiple legacy HR and finance systems. Craig Brebner, eXcel program director for Carillion, says that as part of our transformation program the initial thinking was to implement an ERP system to enable the business strategy and achieve three goals:
- Reduce cost
- Provide greater transparency
- Enable rapid growth
But during the business case development, it became clear the best way of achieving those goals was through outsourcing, according to Brebner. “In addition to enabling us to streamline and standardize our processes, the outsourcing cost savings also allowed us to invest in the new ERP system. The business case was compelling,” he says.
On the BPO side, Carillion outsources both HR (from recruiting through learning) and F&A using Oracle as its preferred ERP platform. Also, under a separate agreement, Carillion outsources application and infrastructure management. Accenture provides these services globally from the UK, India and the Czech Republic.
After Carillion signed the contract in 2005, it more than tripled its size through organic growth and acquisitions, which Accenture helped Carillion rapidly integrate. The majority of the UK Carillion organization now operates on an integrated Oracle ERP solution.
Moving the work offshore
Accenture and Carillion worked together to optimize the process for offshoring roles. For example, the two companies adapted their model to incubate work in India until fully stabilized. Brebner says Carillion “managed the offshoring process closely and the two companies worked together on the change management aspects of the deal. We only committed to offshoring roles and releasing people when we were confident that we could maintain our service levels.”
Like any outsourcing contract, this has been a journey. “The Carillion and Accenture teams have worked well together. Over the course of the contract we have taken on higher-value activities such as financial accounting. This is a reflection of the work Accenture delivered and the confidence in the teams,” says Steve Marsh, Accenture’s outsourcing account deliver manager for the Carillion BPO contract.
Marsh, based in the UK, is the primary Accenture executive with whom Brebner interfaces. And then Marsh and his team of service leads handle all interactions with the offshore delivery centers. Each center has a specialty; for example, Mumbai is the center of excellence for HR, Chennai is the expert in F&A and Bangalore is the technology center. “Delivering from multiple sites allows us to provide a high level of expertise,” says Marsh.
Accenture uses the time zone difference to its advantage. For example, the Mumbai office receives the time sheets and starts the payroll. When they leave, the UK center is ready to finish the work.
The Mumbai contact center answers a large majority of the calls on the first contact, according to Marsh. But if the caller has a more complex situation, the call goes to the UK team. “There’s no language barrier and they have great knowledge of Carillion’s corporate terminology,” the Accenture executive continues.
Ease of integration as a result of the outsourcing arrangement has been fundamental to Carillion’s successful growth. When Carillion acquired Alfred McAlpine plc in 2008, it asked Accenture to integrate the business on a tight timeline. “Getting this completed on time was a key milestone in developing confidence in Accenture’s people and their approach to offshoring,” says Brebner.
Today, Brebner says “all our offshoring locations are invisible to users. Most people at Carillion really don’t care where the service is coming from as long as it is on time and right the first time.”
- Generates more than 350,000 paychecks annually. The service provider runs five different pay frequencies that include 15 different payrolls
- Administers 45,000 HR transactions annually across recruitment, benefits and employee lifecycle services
- Processes more than 360,000 supplier invoices, fuel cards and employee expense claims annually
- Completed 26,000 balance sheet reconciliations across 60 legal entities last year
The outsourcing agreement also has financial incentives. The two companies have a 50-50 gain/pain sharing arrangement depending on whether the actual costs fall above or below the baseline targets.
Carillion found Accenture’s value proposition “compelling.” Leadership liked the fact that Accenture “was willing to put skin in the game.” Brebner says Carillion executives felt they “could work effectively with the people we met and that the two organizations could work well culturally.”
Business results include:
- Produced a standardized set of processes and underlying systems. “Standardization allows us to more rapidly integrate new acquisitions, mobilize new contracts, transform business processes and reduce back office costs,” says Brebner. “This is an imperative to support Carillion’s growth agenda.”
- Provided a cost-effective means to finance the business transformation.
- Reduced cost by an average of 30 percent thanks to offshoring.
- Helped executives make better business decisions because of better knowledge. “We now have the ability to see rapidly across the company,” says Brebner.
“Outsourcing our finance and HR together with the implementation of an Oracle ERP platform has been an enabler of our business strategy. This allowed us to concentrate on what we are good at while Accenture focuses on running and optimizing these processes. We now are much closer to one version of the HR truth. It is debatable whether we would have been able to grow and change as rapidly without making this outsourcing work,” concludes Brebner.