Failed outsourcing deals brought back in-house

27 April 2006
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28 April 2006 | Anusha Bradley

Nearly a quarter of the UK's biggest firms have brought an outsourced function back in-house following failed expectations, a study by outsourcing advisory firm Orbys has found.

According to interviews with 82 UK-based manufacturing, financial services and retail firms - including Kellogg's, Selfridges, Dixons, Boots and Citibank - 43 per cent said their outsourcing supplier failed to meet expectations. A total of 23 per cent of all respondents said they have brought work back into their own business as a result.

The research, Managing Outsourcing for Maximum Value, found 40 per cent experienced problems during the life of an outsourcing deal, 35 per cent said the deal failed to meet their needs and 59 per cent said they had to renegotiate contracts.

Mark Sukiennik, director of Orbys, and a former procurement professional, said firms considering outsourcing should focus on preventing problems because it was better than remedial work once a deal had gone sour.

Simon Lindley, principal consultant at Orbys, told supplymanagement.com: "Traditionally procurement focuses on the middle bit - the procurement process - rather than planning and post-contract management, which is where real benefits and value can be identified."

Sukiennik added: "Most organisations don't really do sufficient work at the planning and strategy stage to identify the benefits or problems outsourcing can deliver."

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