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Accenture's BC 'Cornerstone' Looks to Be Crumbling
Favourite private outsourcer for Campbell government takes series of hits.
Jobs went to Philippines, U.S., other provinces.
-
Outsourcing BC
Telus employees aren't the only ones fighting a complex, sometimes brutal battle. First in our four-part series.
-
Former Accenture Execs Score Big in BC Hydro Clean Power Call
Struggling penny stock firm with light cash reserves lands major wind power agreements.
-
A Province for Sale?
As B.C. assets shift into foreign hands, some see a big cost: Ability to chart our own economic future.
Just seven years ago, Accenture touted British Columbia as the "cornerstone" upon which it would build an outsourcing juggernaut capable of providing back office operations for utility companies across North America.
Today, that cornerstone looks to be crumbling.
Many of Accenture's senior managers in our province, including those most integral to the landmark outsourcing deal signed in 2003 with BC Hydro and Power Authority, have left for greener (or, at least, different) pastures.
As was reported earlier by The Tyee, Peter Leighton and John Icke, two of the firm's highest-profile executives in B.C., quit to join penny-stock companies trading on the TSX Venture Exchange.
More importantly, documents filed with the British Columbia Utilities Commission (BCUC) reveal that all three of Accenture's biggest clients in this province -- BC Hydro, BC Transmission Corporation, and Terasen Gas Inc. -- have "repatriated" operations previously outsourced to the firm.
It all leads to an intriguing question: are Accenture's outsourcing operations in British Columbia doomed?
Privatization after broken promises
Formerly known as Anderson Consulting, a management-consulting adjunct of the accounting giant, Arthur Anderson, Accenture was born on Jan. 1, 2001. By mid-summer of that year, on July 19, 2001, a stand-alone Accenture began trading on the New York Stock Exchange.
Eight weeks earlier, Gordon Campbell's BC Liberals had won B.C.'s 37th general election. The party's election platform, A New Era for British Columbia, listed an extensive array of promises, including a pair (on page nine on the document) to protect two of the province's Crown corporations.
The first was "Not sell or privatize BC Rail." Within 24 months of the election, however, Campbell announced that all of the shares of BC Rail had been sold to CN Rail, and the latter company given a 990-year lease to operate over the publicly-owned railway's tracks.
The second pledge was to "Protect BC Hydro and all of its core assets, including dams, reservoirs and power lines under public ownership."
Within weeks of winning power, in August 2001, the BC Liberals appointed Larry Bell -- a provincial deputy finance minister in the early 1980s, BC Hydro's chair in the late 1980s, and a prominent BC Liberal strategist in the 1990s -- as both chair and CEO of the publicly-owned utility.
And two short months later, Bell's Hydro issued a "request for expressions of interest" (RFEI) asking private-sector operators for proposals to outsource many of the Crown's functions and services. By the spring of 2002, 19 different proposals had been whittled down to just one: Accenture.
Hundreds of employees transferred
After nearly a year of negotiations, the historic contracting out agreement between BC Hydro and Accenture was signed on Feb. 28, 2003. It required the former to pay the latter a total of $1.45 billion over a 10-year period, with Accenture taking over responsibility for running a number of the utility's "back-office" operations.
Those operations fell into six main categories, also known as "towers" -- (1) customer care, (2) information technology, (3) finance, including payroll and accounts payable services (4) human resources, (5) building and office services, and (6) purchasing.
In all, nearly 1,600 BC Hydro employees -- the majority of whom worked at administrative or clerical tasks -- were transferred to a newly-created entity, Accenture Business Services of B.C. (ABS).
Shortly, the Campbell Liberals pushed further ahead with their unique plan to "protect" BC Hydro by hiving-off one of the utility's three main functions, transmission (the others being generation and distribution) by creating a new Crown entity.
Initially, another 276 BC Hydro employees were transferred to the newly-established BC Transmission Corporation, their ranks bolstered by an unknown number of ex-Hydro staffers, now employed by Accenture.
These developments seemed to portend wonderful things in B.C. for Accenture. Indeed, Dave Seibel, the then-country managing director for Accenture Canada, vowed that his firm was "committed to building a world class operation in British Columbia."
Going further was Mary Tolan, a senior executive at the consulting behemoth. "Utilities throughout North America are under pressure to reduce costs," she declared. "Accenture Business Services of B.C. will become the cornerstone of our ability to offer clients an immediate opportunity to reduce costs and receive a higher quality of services in a number of important areas of their business."
Trends slow
The first hint of trouble for Accenture appeared in 2007, in a B.C. Utilities Commission order dated June 12. The matter at hand was a Transmission Corporation application that included a financial filing for fiscal 2008.
That financial filing explained that BCTC intended to hire 40 new employees in the coming fiscal period. However, that number did not include "10 positions added due to the repatriation of functions from the Accenture Business Services of British Columbia Limited Partnership."
No further information was provided in the order.
A second sign of distress was seen a year later, on Sept. 29, 2008, when Joanna Sofield, BC Hydro's chief regulatory officer, wrote a letter to the BCUC in response to questions posed by the Canadian Office and Professional Employees Union (COPE), Local 378.
"BC Hydro has terminated most of the purchasing tower," Sofield's letter admitted. "Since the purchasing services were outsourced to ABSBC [Accenture], BC Hydro became aware that significant benefits could potentially be realized by redesigning its internal procurement processes."
That redesign involved BC Hydro's creation of an Office of the Chief Procurement Officer, and in August 2008 the publicly-owned utility sent a "termination notice" to Accenture. As many as 27 jobs were transferred -- or, "insourced" -- away from the firm, back to the Crown corporation.
Some measure of BC Hydro's dissatisfaction with Accenture's handling of procurement may be gleaned from the fact Sofield did not attempt to convince the BCUC that the Crown corporation would realize any financial savings from the move. Indeed, she explained in her letter that BC Hydro would see a "net annual increase in costs" of $165,000.
In just a little more than a year, from the summer of 2007 to the summer of 2008, Accenture lost 37 jobs previously outsourced from BCTC and BC Hydro.
Worse was to come.
Terasen's shift to outsourcing
Terasen Gas Inc. was the third utility giant in Accenture's B.C. "cornerstone." The story goes back to 1988, when Bill Vander Zalm's Social Credit government privatized BC Hydro's Mainland Gas division by selling it to Inland Natural Gas Company, a utility based in the province's Interior.
Renamed BC Gas Inc., the private company retained BC Hydro to continue providing a number of services -- including meter-reading and billing -- in the Lower Mainland.
Then, in 2001, BC Gas teamed up with Ontario-based Enbridge Inc. (previously Consumers Gas Co. Ltd.) to form CustomerWorks Limited Partnership. The latter entity would provide customer-oriented and back-office services to Enbridge customers in Ontario, and B.C. Gas clients in the Interior. About 135 BC Gas employees were transferred to CustomerWorks LP.
The following year, BC Gas moved nearly all of its in-house administrative operations over to CustomerWorks -- except meter-reading in the Lower Mainland, which remained contracted-out to BC Hydro.
Not long thereafter, Enbridge and BC Gas -- now renamed Terasen Gas Inc. -- decided to outsource the management of CustomerWorks to Accenture.
Jobs fly away
According to filings with the BCUC, Accenture's administration of CustomerWorks resulted in the transfer of hundreds of B.C. jobs outside of the province.
For example, billing, payment processing and collections were sent to the Philippines and New Brunswick; customer contact went to New Brunswick, Oregon and Ontario; and customer information system support and maintenance was shipped to the Philippines, New Brunswick and Ontario.
At first, Terasen had few concerns with Accenture's administration. But that changed as the gas utility began to document a "declining state of customer service," and grew increasingly concerned over "long-term risks to the Company and its customers."
For starters, Terasen was hit with 26 complaints from the Better Business Bureau in 2008 and the first few months of 2009. Moreover, all of those complaints involved issues the company felt "should have been handled by [Accenture's] call centre staff," but were not.
Even worse, the gas utility twice suffered a public black eye when a CTV news program in Vancouver, Olsen on Your Side, aired grievances from dissatisfied Terasen customers. One program detailed the plight of an elderly person who had been hit with an incorrect, $11,000 bill.
A turn to 'insourcing'
Two reasons were provided by Terasen to the BCUC to explain how things got so out of hand.
First, "the majority of the management workforce [at Terasen] who historically had responsibility for staff training and overseeing the day to day business processes were transferred to the outsourcer [Accenture]."
Consequently, the "decision by the outsourcer to move the majority of work out of province has not only resulted in the replacement of the original Terasen Gas management staff, it has also impacted the Company's ability to exert more direct control."
Simply, Terasen managers who had been transferred to Accenture at the beginning of the decade lost their jobs when the outsourcing giant moved its operations out of British Columbia. As a result, staff working in the Philippines and elsewhere did not have experienced management overseeing them, and the quality of customer service deteriorated significantly.
Second, outsourced call-centre operations apparently have a huge turn-over in employees. According to Terasen's submission to the BCUC, the average outsourced call-centre sees an annual average turn-over of 38.6 per cent; the comparable figure at Terasen itself was a mere 4.5 per cent per year.
In light of these growing and potentially-damaging problems with its customer relations, Terasen asked the BCUC to approve a reversal of its outsourcing arrangement with Accenture, in two parts.
The first would see an "insourcing" initiative whereby Terasen pledged to establish two new call centres in B.C. Located in Prince George and Surrey, they would create more than 100 and 200 new local jobs respectively.
The second initiative involved "strategic sourcing," as the gas utility will contract with local suppliers for tasks such as statement printing, mailing and collections.
In February 2010, the BCUC approved Terasen's application.
Forecast didn't pan out
In the next few months, the BC Transmission Corporation will be re-merged with BC Hydro, from whence it originated six years ago.
And that means Accenture, instead of providing outsourcing services to three large B.C. utilities, will be working with just one -- BC Hydro.
And what does the future hold at B.C.'s largest Crown corporation, where Accenture's 10-year contract is set to expire in 2013?
It is interesting to examine Terasen's submission to the BC Utilities Commission, especially the evidence on recent trends in outsourcing. Consider the following: "Although Business Process Outsourcing continues in the utility industry, it has not experienced the rapid adoption that was forecast five or ten years ago," Terasen wrote in one submission.
And: "The broad Business Process Outsourcing model, while attractive in the early 2000s, is no longer a leading choice for utilities."
In fact, call-centre outsourcing by utilities peaked in 2006 at 22 per cent, according to Terasen. But by 2009, that figure had collapsed to just 12 per cent.
Events in Calgary offer an ominous portent. There, in 2008, ENMAX Corporation, the city-owned utility -- also a big, independent power producer in British Columbia -- abruptly cancelled a 10-year contract with Accenture barely at the half-way point.
Again, Accenture's transfer of jobs out-of-province resulted in a growing number of complaints from ENMAX customers.
The evidence to date seems to offer little reason for BC Hydro to retain Accenture's services after 2013. The British Columbia "cornerstone" once envisioned by the outsourcing giant seems to have crumbled. ![[Tyee]](http://thetyee.cachefly.net/ui/img/ico_fishie.png){kind=small}
- BC snuffs out AirCare test program
- AFN national chief Shawn Atleo to launch re-election bid
- Citizens group releases video to fight undead Bill C-30
- Conservative MP says he might vote against budget, then 'clarifies' his position
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- Hundreds at Vancouver rally to support Quebec students
- Could Fort Mac become an eco-tourist hotspot?
- Rick Hansen's Man in Motion anniversary tour concludes in Vancouver
- The Gem of Canadian Science that Harper Killed
- Who Mowed Down the Premier?
- Canada's Economy, Deconstructed (by a 12 year-old)
- Death in Remand: a Tyee Inquiry
- Now Is the Time to Talk up Big Ideas
- Bill C-38: the Environmental Destruction Act
- Sexism Tinges Criticism of Teachers' Job Action
- 'A Gut Feeling'
- Bias in BC's Pesticide Decision? Follow the Bouncing Verbs
- Why Blackberry's Embrace of HTML5 Is Good Karma
- The Gem of Canadian Science that Harper Killed
- Sexism Tinges Criticism of Teachers' Job Action
- Now Is the Time to Talk up Big Ideas
- The Ethics of Addiction Studies
- Bill C-38: the Environmental Destruction Act
- Alberta Fills Pipes with Corrosive Denial
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- BC biotech company seeks approval for GM apple
- What's Behind BC's Doors?
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- Now Is the Time to Talk up Big Ideas
- Why Blackberry's Embrace of HTML5 Is Good Karma
- Bias in BC's Pesticide Decision? Follow the Bouncing Verbs
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- The Gem of Canadian Science that Harper Killed
- Double lung recipient dances on Ellen show
- ISS astronauts grab DragonX space capsule by the tail with Canada Arm
- Metro Vancouver gas prices peak at record levels
- Ottawa posts $9-billion deficit in March despite pledge to avoid spending spree
- BC phases out AirCare to focus on fighting bigger vehicle emissions
- Tsunami senors to be dropped into deep sea off of Vancouver Island
- Student groups file court challenge against Quebec protest law
- ...while on the streets, pirates and ninjas put aside mutual animosity to join student protests
26
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Norman Farrell
1 year ago
More about the 2001 New Era Document
They said they could work wonders. They didn't say they would.
http://northerninsights.blogspot.com/2010/06/we-can-work-but-we-wont.html
Grumpy
1 year ago
Humpty Dumpty
Quote: "The British Columbia "cornerstone" .........., like Gordon Campbell's Empire of corruption, "seems to have crumbled."
BC Mary
1 year ago
From Norman Farrell's "Northern Insights" blog
[ ... a fresh look at how Gordon Campbell makes promises. Here's the list from the BC "Liberal" 2001 election campaign, as published on "Northern Insights".
Note that each "promise" is crippled beyond meaningful interpretation. E.g., what the heck does "Not sell or privatize BC Rail" mean? It's a promise? No, it isn't.]
* It’s time for a New Era of Accountability. Our plan will deliver real transparent, accountable government.
* Establish workable initiative legislation, to make it feasible for British Columbians to call for a referendum on issues of province-wide concern that fall within the provincial government’s jurisdiction.
* Establish workable recall legislation, to make it easier for citizens to hold MLAs accountable.
* Give all MLAs and citizens a better voice in government through active legislative committees.
* Hold open Cabinet meetings at least once a month that are televised and broadcast live on the Internet.
* Give all government MLAs a meaningful new role in policy development and service planning through a new system of Cabinet decision-making.
* Introduce free votes in the Legislature, to allow all MLAs to vote freely on behalf of their constituents on all matters not specifically identified as a vote of confidence.
* Not sell or privatize BC Rail.
* Vigorously defend the Crown's ownership of provincial land and resources.
* Protect BC Hydro and all of core assets, including dams, reservoirs and power lines under public ownership.
* Restore an independent BC Utilities Commission, to re-regulate BC Hydro’s electricity rates.
* Pass a Living Rivers Act to protect and improve BC’s river systems with scientifically-based standards for watershed management, enhancements to fish habitat, and a 10-year program to correct past damage.
* Push for provincial control over the management and revenues of BC’s offshore fisheries, to improve fisheries management and protect fishery jobs.
* Adopt a scientifically-based, principled approach to environmental management that ensures sustainability, accountability and responsibility.
* You shouldn’t have to pay higher than necessary electricity or auto insurance rates, because government wants to play politics with BC Hydro or ICBC.
* Give school boards multi-year funding envelopes, to improve long-term education planning and budgeting.
* Ensure that music, arts and physical education curriculums are fully funded in BC’s public schools.
* Hold the line on court fees, to ensure that everyone has affordable access to our justice system.
* Establish regional transportation authorities that are accountable to local taxpayers and give local communities more control over their transportation needs and planning.
* Require taxpayer approval by regional referendums prior to authorization of any new type of TransLink tax or levy.
shepsil
1 year ago
BC Liberals Privatization of Public Assets another Shell Game!
Just like they are now trying to do with our public schools, health care, etc. etc. Privatization is simply another way to legalize the privatization of profits and the socialization of any debt to us.
The right wing BC Liberal agenda is starting to crumble, because it came from a failed political model that British Columbians had to see to believe. Now we can all believe it.
Excellent article!
sunshine coast girl
1 year ago
I'm not at all surprised...
EVERY SINGLE THING the Libs have inflicted on us during their reign of terror is crumbling and/or destroying our province. They need to go NOW!
Van Isle
1 year ago
Gordon Campbell is our
Gordon Campbell is our Maggie Thatcher. They still have problems in Great Britian because of what she did (water and the rail service). And oh by the way, how come nobody has asked Campbell about his meeting in Spain last week?
Skywalker
1 year ago
Another excellent work, Will.
It was all about giving his friends in business access to the business opportunities in privatization. Also BC Mary, thanks for that. I had almost forgotten just how prolific the liars were. The tragedy is they have not changed since they promised a "new era" for their friends.
Bonnie M
1 year ago
Very well written
Thank you for bringing forth the history and the flavour of the concerns of approx 1500 employees transferred out of the service of BC Hydro,a crown corporation, to an American company.
RossK
1 year ago
So...
....Now that the BCUC has been neutered, will invaluable reports such as those cited by Mr. McMartin to build his thesis still be available to the public of British Columbia?
.
dave49
1 year ago
Call center work
Have you ever talked to people who work in call centres? It is NOT stimulating work with long-term appeal and your job satisfaction is very dependent on the management style.
Not at all surprised to hear outsourcing outside of BC lees to customer satisfaction problems.
So, another pillar of right wing political philosophy fails in light of the really significant gap between the theory and the real-world practice.
John Carten
1 year ago
BC Hydro & Water Exports
It appears that Premier Gordon Campbell is set to announce changes to the British Columbia water export policy.
According to a media advisory issued by the Premier's office, "water policy" and "Canada US Relations" are on the agenda at the western Premier's conference to be held in Vancouver June 15 and 16.
In the meantime, Conflict of Interest Commissioner Paul Fraser has temporarily dodged opening an inquiry EDITED FOR LEGAL CONCERNS -- TYEE MODERATOR
damngrumpy
1 year ago
Accenture
This is only fitting that the Campbell Government would hire Accenture, a company that was once part of the Enron family of companies. Not only is the government dishonest, it has been engaging in a game of smoke and mirrors for a long time. It is a third term government without direction, a plan or anymore integrity and it won't last another three years. I believe recall season will overshadow the
hunting season this year come November.
As for Accenture, they are another failed experiment and one that is responsible for the BC government racking up even more debt than they thought possible. The government also wants them back so they can hide their incompetence withing the binders of the resource companies where it is easy to hide and difficult to find
Composite
1 year ago
Does Hydro have a choice?
I suspect if Hydro had a choice they would join other utilities and dump Accenture. Instead they are forced by their political masters in Victoria to continue defending the ineffective outsourcer.
loriw
1 year ago
2013
I sure hope the BC government wises up before 2013, the date when the contract with Accenture expires and the condition to keep jobs in BC no longer exists. If not the voices and helpful people answering phones could now be in Manila or India.
eileenmay
1 year ago
deceitful
I always thought the contract with Accenture and other outsourcers were deceitful. For example: When you call BC Hydro, they answer the phone "BC Hydro" but the workers do not work for BC Hydro or enjoy the same benefits. The same for the meter readers who wear BC Hydro uniforms and come read your meter. They work for Accenture but the average person does not know this. And speaking of meter readers, what is their fate once the BC government forces us all to take smart meters?
circle A
1 year ago
If only
there were some way to get will`s posts into the hands of a majority of bc electorate? I don`t have a lot of money but i`d contribute more than i should.
Norman Farrell
1 year ago
If only this
OK Tyee, why not make pdf files available of major articles. Allow readers who contribute $x a year to your journalism projects to download. Frankly, a collection of Will McMartins columns could spread the real stories that are not consistently told elsewhere.
the kaptain
1 year ago
Maximus
If you want another horror story on outsourcing, the BC Med outsourcing to Maximus is in the same league with BC Hydro and Accenture. I do payroll the staff at BC Med when it was still run by the province was always overworked but very professional and helpful. Ever since they outsourced the contract it is nothing but a nightmare. They constantly bill employees who have been signed up with our group plan. You can never get a hold of anyone, and if you do they are extremely unhelpful unless you are extra persistent with them.
At any time one of our employees calls them to ask about their coverage they are automatically told that Maximus has not received the employee's application. We write down the date we send it to them because we are aware of that problem and excuse they use every time. They apparently image every document they receive but can never locate them. I don't know if they are just too lazy to look or if they are encouraged to get rid of the client, but their customer service is at an all time low. The only documents they process quickly are the cancellation forms. So employees call us freaking out because Revenue Services is threatening them with collection even though their coverage and application has been in the hands of Maximus for months.
I have taken to telling employees to contact the provincial ombudsman because that is the only way to get results. I had an employee the other day call them and asked him to get a name and number so I could fax his application (we had sent it 2 years ago) to them to prove he had coverage. The customer service person was going to give them a number and their manager told them they couldn't and we'd have to use the general line. They had claimed we had sent in a cancellation form on his account, and when he phoned them the third time and asked them for a copy they admitted their was no cancellation form and it was their mistake. They then said they wouldn't initiate his coverage until we faxed in the application that was sent to them 2 years previous (interestingly enough they had no problems with his account during those two years.
So if you are having trouble with BC Med then I have two pieces of advice for you. Be very persistent with them on the phone and don't take no for an answer. When they finally frustrate you to no end call the ombudsman's office and you will see results. One client of ours had a problem with them for 8 months and as soon as he called the ombudsman it was solved within 2 days. They finally let us know they had the wrong form.
I really wish BC Med was still provincially run. The employees were always friendly and helpful and great to work with. I felt for them because they were chronically understaffed but they seemed to get the work done in a timely fashion. I can't say the same for Maximus.
myworld2
1 year ago
Too Bad
Too bad Vander Zalm privatized Hydro in 1988. Imagine the hydro rates we could offer new clean/green industries if we could manage the resources in our own interest.
dave49
1 year ago
At arm's length?
In theory, a Crown corporation SHOULD be at arm's length. In reality, Hydro is on a short leash and has little control over what direction master decides to walk...
This of course assumes, that master even knows where he is going. Maybe he is drunk and lost. Maybe suffering from Alzheimer's and confused. We suffer.
A while back one commenter made the following astute comment:
"Governments, like diapers, should be changed regularly for obvious reasons."
MGS
1 year ago
Campbell
When Gordo's name comes up in the news I envision him being a donkey(ass)that is pulling a plow across a field that has a beutiful crop on it and where he has passed weeds are growing up out of the ground at an alarming rate. Fall is coming and people are starting to wonder what the hell is he doing and what will they eat next year.
damngrumpy
1 year ago
We Need a BC Policy for Jobs
Jobs for British Columbian first that is my belief.
We pay to keep government companies, and they are
there to serve the interest of our citizens.
Lately we see the whole world taking a share of our
pie and its time we stood up and said no more.
The WTO takes a higher position than our own government and this has to stop and the sooner the
better
toddo
1 year ago
Slow learners
It's a shame that his administration allowed their philosophical postition to lead in spite of the evidence before them at the time. Other jurisdiction had learned many of these lessons by the early 2000's yet these fellas were arrogant enough to think they could do it better. While I'm not fundamentally opposed to outsourcing some services when it makes sense i.e. money is saved and service quality is assured, this is accomplished by retainining controls and accountabilities not by jettisoning them.
Des
1 year ago
Privatisation
always works on paper, but it never works in practice.
The civil servant always gets a reputation for non-work and un-civil behaviour, but in my 77 years I have encountered only one government employee whose ass I would have liked to kick into action, while private enterprise has always seemed more interested in my money than in me. Too many governments fall hook, line and sinker for the bait of companies like Accenture, but the poor fish who gets reeled in is usually the public.
morechatter
1 year ago
Little wonder
As the province is run by Ministers who have hired provincial employees that are as dum as dirt and about as competent as there is not a Ministry who dosen't adhere to BC's Libeals model of how not to supply government services and turn people away.
David Beers
1 year ago
great ideas circleA and Norman Farrell, thanks
We'll look at making PDF collections of some Tyee stories. thanks for the suggestion