22 December 2009 | Jake Kanter
Telefónica O2 is to end its £350 million procurement outsourcing (PO) deal with 4C Associates (4CA).
The telecoms company would not confirm plans to take the spend back in-house, but said it had “no announcement to make” about replacing the supplier.
The arrangement with 4CA, announced in August 2008, will be wound down next year. The decision follows an O2 review of its supplier contracts.
Under the deal, 4CA managed £350 million of O2’s indirect spend for categories including IT, HR services, property and facilities management.
An O2 spokesman told SM: “We can confirm that our relationship with 4CA will be coming to an end in the next few months. We are working closely with 4CA to ensure a successful transition period and we would like to thank them for their work with us over the last 18 months.”
Researchers Ovum said this month that growth in PO will be slow in the coming years despite “excessive hype” and optimism. Analyst Ed Thomas said companies have been reluctant to surrender control of purchasing in the current climate.
4CA did not respond to a request for comment. The company has suffered a number of setbacks this year, including the resignation of managing partner Andrew Loken and reports that parent company Deutsche Post has been in discussions to sell its majority stake in the firm.
Earlier this month United Biscuits expanded its PO deal with 4CA, increasing its outsourced spend 171 per cent to more than £170 million.