Outsourcing on the rise? No worries, say purchasers

1 March 2010

2 March 2010 | Jake Kanter

Buyers are not concerned that a rise in procurement outsourcing (PO) will lead to job losses in the profession, SM has found.

The latest SM100 poll showed that 91 per cent of purchasers are confident they will remain in employment if outsourcing increases this year. Only 9 per cent did not share this optimism, expressing concern for their jobs.

PO experts have forecast an active year for the market. The Everest Research Institute has suggested outsourced purchasing spend may rise as much as 25 per cent in 2010.

A handful of buyers were sceptical about these predictions, but most said they would not be affected even if PO deals did increase.

“If the business truly understands the value that purchasing brings then we do not need to worry,” said David Harrison, director of sourcing and contracting at pharmaceutical firm UCB Celltech.

He said that PO enables buyers to focus on more strategic activities, including stakeholder engagement and supplier relationship management. Many other respondents shared his view.

“Most organisations are looking for procurement outsourcers to cover areas which previously were not covered, or not covered as well as they might have been,” said Guy Strafford, client services director at PO company buyingTeam. “As a result we are an addition to the procurement resource available to the organisation as opposed to an exchange.”

A number of buyers said they had been handed responsibility for managing an outsourcing project and in doing so, cemented their job security. Tim Weston, procurement and contracts manager at the London Borough of Camden, said: “I have a track record in managing outsourcing deals so I can work as a procurement professional delivering service or as a supplier management professional ensuring the smooth running and value of the outsourced deal.”

This is a vital role, according to Martin Blake, head of corporate procurement at London Probation. “Any outsourced partner needs to be effectively managed and procurement functions should ensure that the team develops its capability and capacity and refocuses its resources on managing the contract,” he said.

Other purchasers said their roles would be protected by UK Transfer of Undertakings (Protection of Employment) Regulations, which preserve employees’ contracts when a business or undertaking is transferred to a new organisation.

Of the respondents that did express concerns about a rise in PO, a number worked in the UK public sector. They said the government was likely to increase outsourcing in an effort to reduce costs and mitigate cuts to frontline services.

“The increasing trend for larger public sector contracts and framework agreements does raise the prospect of a decline in workload, which could ultimately result in natural wastage, if not redundancy, within an organisation,” said one buyer, who wished to remain anonymous.

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