Diary of an outsourcing deal

Outsourcing aspects of their business is now a common strategy. But how closely does the theory match up to the reality? We followed the progress of a recruitment process outsourcing deal to find out.

The deal

IT services company Steria acquired outsourcing firm, Xansa, in October 2007. Both had outsourced recruitment and the new management team wanted to bring everything under one supplier.

"Both arms of the new organisation had legacy suppliers that had been in place for some time," says Noel Scotford, resourcing, recruitment and HR manager for Steria UK and India. "It simply didn't make commercial sense to keep both of them on and I faced with the task of choosing which one would be best for the business we were becoming."

Invitation to tender

After discussion, Steria decided to go through exactly the same rigorous vetting process it had used to select the providers in the first place.

"By making the process as thorough and demanding as possible we would show all stakeholders that there was no room for favouritism on either side, and the final decision would be based purely on the needs of the new business."

Steria drew up a detailed invitation to tender, based closely upon the original selection document. Replies were then received within the designated timetable and the responses evaluated. Since they were on-site and doing the job on a day-to-day basis, both bidders passed this stage and were invited in to present their proposal in the flesh.

"For me the supplier selection day is where it is all put into context," says Scotford.

Supplier selection day

Each of the contenders fielded a heavyweight team consisting of their managing director, a senior account manager and recruiters who had already worked within each business. Meeting the suppliers in the flesh helped Scotford get an idea of how he would manage a long-term relationship with either supplier.

"As with any important relationship, you want to be confident that the other party will work with
you to make it succeed."

Steria had hoped that the selection day would allow the company to move straight on to the next stage of negotiating with just one party. But Scotford needed the suppliers to come back with a more detailed proposal on how they would forecast their recruitment needs based on a shifting pattern of recruitment, which delayed the decision.

The big decision

Steria's management team decided to move forward with Ochre House, the organisation that had been handling Xansa's recruitment needs since 2005. According to Scotford, the other alternative - a return to handling their recruitment internally - was never seriously considered.

"Both of the original companies had debated the pros and cons of outsourcing in great detail first time around, but it was clear to us all that by now the case for it had not just been made, but also proven. Also, as an outsourcing provider ourselves we want experts to handle our recruitment. We are also an organisation where headcount requirement is heavily driven by the demands of our clients, which makes long-term planning challenging. We need the sort of support that will allow us to go from a demand for 10 people to 100 people almost overnight, and then back again soon after."

Moving forward

With the key decision made, it was then necessary to pin down exact contractual terms and to start winning hearts and minds within the business. "For an arrangement like this to work, both participants have to be completely clear about what is expected and how it is going to be evaluated," explains Scotford.

The team assembled empirical data from the two original suppliers to measure what had happened so far and to devise service level agreements and key performance indicators. The next job was to get the Ochre House team in front of as many relevant people as possible so they could understand the new arrangement.

"Steria put us through a very exacting procedure where we had to prove ourselves every bit as much as if we had come to the table without any previous history," says Ochre House director, Sue Brooks. "What marked their team out as experienced evaluators was the way they went beyond the formal process and technical data to really get to know us as people."

Source: Personnel Today

Posted by Personnel Today

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