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18 August 2011 | Adam Leach
Business process and technology outsourcer Xchanging will manage $800 million (£483
million) of indirect spend for the US arm of BAE Systems (BAE).
The deal, which was announced yesterday, means
it will provide the defence and aerospace company with sourcing and supply
management support across indirect spend categories including IT,
telecommunications, transport, contract labour, industrial supplies and
utilities. Through the arrangement, which runs until July 2018 with an option
to extend for a further three years, Xchanging will also provide support with
supplier and contract management.
Dennis Bent, vice-president strategic
sourcing, BAE Systems, said: “We consistently seek opportunities to reduce cost,
improve efficiency and increase speed to market. Outsourcing indirect
procurement to Xchanging enables us to access top procurement talent supported
by a proven approach to sourcing that will provide value to our business.”
The deal marks the latest development in a
long relationship between the two companies. In 2001, they entered into a joint venture whereby Xchanging provided HR and some procurement services – mainly back office, fleet and stationery. By providing the same
services to other companies the venture made profits, which were then split
between the two parent companies. However, in March 2007, Xchanging bought BAE
out of the venture and absorbed it into the company.
Xchanging has also been working with the Australian arm of BAE since 2006, handling indirect spend on travel, facilities management,
learning development and marketing. In April, this year, the deal was extended
for a further three years, concluding at the end of 2013.