Buyers must benchmark outsourcing providers

5 June 2007
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06 June 2007 | Paul Snell

Purchasers are being urged to ensure they have baselines in place ahead of outsourcing deals to measure the success of providers.

Speaking at yesterday's CIPS Premier Conference in London, Jim Robinson, procurement director for shared services at BAE Systems, also told delegates: "You need to have a regular and structured performance review process, otherwise the process will be so new you will trip up."

BAE outsource about £200 million of indirect spend to business process outsourcing (BPO) firm Xchanging, from a total purchasing spend of approximately £1.2 billion. Robinson said the outsourcing deal had contributed £18 million of savings per year since 2001.

He added it was incorrect to think outsourcing could mean disowning particular spend areas. "Don't assume you can let go, BPO needs to be managed."

He said outsourcing procurement was often about the extra expertise a third party could offer. For example, he said, Xchanging could employ a travel manager with a higher salary and 15-20 years' experience to manage this spend area. "We never would have invested in their level of experience."

SMjun2007

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