01 November 2007 | Antony Barton
UK buyers have only themselves to blame if outsourced deals are not effective, according to the former director-general of the CBI.
Lord Digby Jones told an audience of lawyers and company directors in London last month: "We as a nation start ahead of the game because we've done the hard yards on this. If we fail we have only ourselves to blame."
He added outsourcing is never a threat to business but always an opportunity, as it enables firms to focus on what they do best, without wasting resources on processes that could be performed by someone else.
"It's not about people taking other people's jobs - it's about freeing them up to maximise their potential."
Lord Jones, now minister for trade and investment, said manufacturing is having a "fantastic time" in the UK.
Firms are focusing on how to add value to their products and services, with more general activities, such as back-office functions, increasingly being outsourced.
"Brand it, work it, drive it here. Keep the clever stuff here in the UK where you maximise your margin, and outsource the rest," he added.
He stressed it was important that businesses secure the best price while honouring the value they promise to customers. To illustrate, he recalled phoning for a cab while in London: "A Mumbai call centre was answering calls from UK customers. That could be a great destroyer of value."
Panellist Peter Ridsdale, chairman of Cardiff City Football Club, agreed: "Don't do it just for cost and lose customers in the process."
Lord Jones admitted it can be difficult to prevent the leakage of intellectual property (IP) when outsourcing. He suggested firms offer their outsourcing partner rewards linked to profits, to ensure IP retention.
Phillip Rees, head of law firm Hugh James' London office, said it was important to ensure a concrete IP agreement was in place. "Level it from the outset - once it's gone, it's gone."