dsmith

Unashamedly kicked off by the BA/GG stuff.

Never understood the drive to outsource things that are sooo key to a business. e.g.

My understanding is that although originally it was all ground acitivty that was outsourced - its worked out that GG does 90% of its business with BA and from BA's perspective they are the sole supplier for BA @ heathrow.

So BA isn't gaining by using a company that understands "airline catering" and leverages multiple contracts to cut costs...its simply created an organisation dedicated to supplying itself. So it *must* have to pay them a profit margin to exist. If it was in-house, it would be at cost (with a few less lawyers to pay for!)

Seen it with IT aswell. Large companies outsourcing *vital* IT services, hoping to gain cost reductions..but actually you need so many extra lawyers, commercial and "customer engagement" people to service the contract on both sides that the actual cost savings would need to be massive in order to simply fund them. The time needed to push through changes etc is invariably increased by huge amounts. If the MD decides in-house systems should be changed they can almost always be done quicker internally than re-negotiating contracts etc with a seperate company.

It clearly works in some areas. I.e. if you;re a small company with national logisitics needs, one of the major logisitics companies can undoubtedly do that job cheaper than you.

So is out-sourcing over-hyped and just another fad that will decline...?

KiwiGTI

You've got it all wrong.

At the simplest level they'll estimate that it costs them £50 million a year to keep something in house. They'll then outsource that work to a company that will do it for £45 million. (whether that company is already established or is formed specifically)

mart360

I worked for a company that did that as its main business...

it enabled the md to transfer all his business assets/ money from one continent to another..

basically its just taking another compnys manufacturing and doing it for them, but its subbed out to the cheapest tender,

the risk is if the subbed out portion goes **** up then you are in the poo,

a notable cosmetics compny went down this route, they do all the R&D and all the manufacturing is done by an outsourced company onsite, they own / the manufacturing arm, bit operate on the main companys premisies

its complex to say the least

M

ChrisB

Maybe at the start but re-evaluate that saving part way through the contract. Or, in the case of BA, after this mess is all sorted out...

ChrisB

I'll add that personally I think it's a bean counters' wet dream. They get to draw up some nice looking spreadsheets that claim to save the company £x over Y years.

Then you get stat's like these from the IT sector:

Must work a treat then...

David Lock

I was involved in selling outsourcing - non-core activities - in quite a big way some time back. I hated nearly every minute of it. Mostly because it involved the client getting rid of loyal staff and people rather than £££ have always seemed more important to me. There are some obvious areas to consider outsourcing depending on the business but it has to be done properly. Cleaning for the NHS might be a good example of how not to do it sometimes. dl

dsmith

Speaking from the side that gets the out-sourcing deals. Its a nightmare. Customer loves the rigid contract in the early days whent hey can beat you up for not delivering on time and get a short term benefit from penalty clauses. 18 months later and they start to want to develop/change the solution and you start asking for Contract Changes etc that can be properly costed etc, and they get all hurt, and want you to do it "for mutual benefit"....

KiwiGTI

The theory is fine and it should work, but certainly in IT the problem is they usually accept the lowest bidder and then the lowest bidder will try to employ the cheapest labour resulting in a level of service that borders on just or barely acceptable.

ALi-B

iTrader: (1)

Applying the above logic would also explain why airplane food is so crap

mart360

Just had a prime example of outsourcing...

Anna from **** bank phoned for a chat....

A. good evening mr mart360 how are you
Me fine
A. Im calling about your card xxxxx and news of an offer that may be of interest to you

Me go on
A. how much do you have outstaning on your card
Me nothing
A. thats very good, how about a personal loan any balance outstanding
Me no no personal loans.
A. good, well mr mart 360 we can transfer to your bank account a cash sum
Me why do i need it i dont owe anything...
A. ahh

Me. goodbye

wtf

dont these people who do the outsourcing ever check on the service they are getting??

these people are reading from cards, they dont even understand there target customer ffs its like trying so sell sand to the eskimos!!!


M

dsmith

I got called "Mr Dean" the other day. Phone was down withn .2 secs . Now Dean may be a valid surname but *Very* few people have the misfortune to have "smith" as a first name

KiwiGTI

So she makes 30 cold calls an hour - bound to be at least a couple of people in need or desperate enough. Just signing one up will be enough to pay for her time and more.

Financial institutions know their customers very well - they keep making record profits.