Some quite highly skilled, highly paid services, such as information technology, are also contracted out. When Barclays Bank decided, three years ago, that each of its 30 businesses should be allowed to decide on purely commercial grounds where to go for its computer services, it instructed the bank's computer department to prepare internal bids for the work. The department was to take its chances in the market place against external information technology providers. It fought and won against commercial IT providers. But there was another, unanticipated, result.
Having examined its operations to see whether it could make itself so competitive that its internal customers - the various divisions of the bank - would not want to go elsewhere, the computer department realised that it could go a step further. It could enter the outsourcing business itself, market its expertise and its facilities (which included 11 large mainframe computers and four data centres) to external customers.
The bank's operations were so technology-driven, says John Alissi, deputy director of computer operations at Barclays Bank, that it very soon became clear that IT was actually a core activity rather than a peripheral one - and that others might want to buy what it had to sell. Barclays now provides IT services for a range of blue-chip clients, from the privatised electricity generator, PowerGen, to City institutions such as Barings and Dun & Bradstreet.
Becoming an outsourcer doesn't just provide the IT department with revenue that can be used to cut the bank's costs, says Alissi, it also ensures that Barclays gets technical feedback on IT that it wouldn't have got before. 'It provides us with alternative views on providing IT, experience that was perhaps not inherent within the group.'.