Slide 1

Outsourcing

"Outsourcing", "facilities management", "shared services", "bureau services" and "non-core services" are terms which attempt to express some of the fundamental restructuring which has occurred over the past few decades.  Many organisations question whether they need to perform all tasks internally.  Likewise, many organisations question whether essential internal tasks can be sold to outsiders.  The pressures which beg these two questions include the need to focus on core business, to purchase quality support, to control or reduce costs and to increase flexibility.  Many organisations now provide formerly internal services – information technology, property management, accounting, mechanical and electrical engineering, cleaning, catering, plant watering.  The market for outsourcing is fluid.  Estimates of the UK market for outsourcing range from the current market of £47 billion to the potential market (if everyone let specialists do the work) of £160 billion.

Z/Yen’s risk/reward approach to outsourcing has been used by many of the participants involved in selling and purchasing outsourcing services.  Z/Yen has helped:

  • spin-out internal support services organisations into separate trading companies;

  • specify statements of requirements, identify suppliers, select suppliers, negotiate the purchasing of external support services and monitor ongoing performance;

  • analyze the market for support services and outsourcing for both purchasers and competitors, as well as benchmarking performance;

  • re-negotiate outsourcing contracts with existing suppliers;

  • initiate and conclude mergers and acquisitions within the outsourcing sector.

Z/Yen has worked in the public and private sectors.  For public sector spin-outs the focus is on the viability of support organisations as they move to the private sector and the realisation of the value inherent in the support services through privatisation.  For public sector purchasers the focus is on the structuring of contracts and value for money.  In the private sector the emphasis is moving from cost reduction to partnership with a key supplier, albeit for non-core services.

Z/Yen’s work has been within some of the most active outsourcing sectors – information technology, property maintenance, building services, support services (cleaning, catering, reprographics, security, travel, car hire, stationery) and telecommunications.  For example, Z/Yen staff worked with one large UK company to sell-off their internal catering organisation, with another to re-negotiate a tele-communications contract which had been too hastily arranged.  In the public sector, we have worked intimately in privatising one now £200 million support services organisation, with another in structuring their purchase of information technology services.

Some of the most exciting developments in outsourcing have included the development of risk/reward contracts where we have worked successfully on pioneering contracts based on combinations of cost reduction, key performance measures and customer satisfaction `at the desk’. For outsourcing providers, internet, intranet and extranet capabilities has led to new ways of doing business and developing intimate relationships with clients, e.g.  purchasing stationery over the intranet and delivery to the desk using security staff.  Z/Yen enjoys working with both purchasers and providers on strategies, systems, people and organisation in one of the most important areas of corporate structure – how we manage our infrastructure.

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