Co-op Group adds nearshore engineering resources

The Co-op Group is giving its software engineering team additional capacity through an expanded outsourcing agreement as demand for its services from different business units increases as they keep pace with digital transformation.

Demand for support from Co-op’s internal team of just more than 100 engineers, emanating from 18 different business teams has increased 30% this year alone, according to the organisations head of engineering, Gary Wardley.

The group is tapping into the engineering resources of Zühlke UK through an outsourcing deal worth £8m over three years. The companies have an existing relationship focused on onshore resources, but the new agreement will add 25 engineers based nearshore in Zühlke's delivery centres in Portugal, Serbia, and Bulgaria.

Wardley said that in a challenging market for recruiting UK engineers, the business looked for a way to reduce pressure on engineers, while retaining its business goals: “The engineering team is a large part of the overall IT team and demand on its services is only growing.”

Co-op has around 600 IT staff in total, supporting its retail, financial services, legal and funeral businesses. These are split into customer-facing and employee-facing operational IT teams with supporting teams around them, including enterprise architecture, security, infrastructure services and the engineering team.

The engineering team does the development of in-house technology and supports legacy systems, commodity off-the-shelf platforms and enterprise systems. Wardley said as a long-established business with multiple operations, Co-op has a large software estate.

He said the Co-op is going through a growth period at a time when the recruitment market is highly competitive in the UK and still feeling the aftereffects of the Covid-19 pandemic, which he said, “condensed 10 years of digital growth into two years”.

“I still think we are all feeling the effects of that to some extent, and we are all competing in a relatively small pool for digital talent across the UK,” added Wardley.

The deal with Zühlke will add “more strings to our bow in terms of sourcing options”, said Wardley.

“Zühlke offers onshore and nearshore services and have used its onshore services for about 18 months. This introduced us to them in terms of whether they are a cultural fit, if we can work with them without friction and if we share the same standards and principles. This period has driven us to take nearshore services with them.

“The businesses that we operate are in competitive markets and the faster we respond makes a competitive difference. We can now grow out engineering team by 30% quickly.”

But increasing access to resources through outsourcing will not reduce Co-op’s commitment to local talent, according to Wardley. “It is important that we invest in our own people to make sure we are retaining them, which is just as important to attracting talent in the first place,” he said.