Contracts renewed on price, not performance

8 August 2001
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09 August 2001 | David Arminas

Finance directors in the UK might not renew contracts for outsourced services, even though they are very satisfied with their suppliers, according to a new survey.

Three-quarters of the 71 respondents rated their outsourcing suppliers as either good or extremely good.

However, 53 per cent said they might not renew the contract, preferring to go for the best price. In the past five years, 62 per cent of finance directors have changed outsourcing suppliers.

Tim Couldrick, a partner at Tarlo Lyons, which carried out the survey in June, was surprised at the figures. "I think there is a degree of finance directors playing their cards close to their chest," he said.

More than half of respondents said the main reason for outsourcing was to save money, with 44 per cent citing lack of internal expertise as the main reason.

Couldrick added that, as there were different reasons for outsourcing such as cost cuts or lack of internal expertise, purchasers and finance directors could be working to a common model.

SMaug2001

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