Executive Briefings

Mid-Sized Firm Saves by Outsourcing Procurement

Brian Slobodow, chief operating officer at Neways, a mid-sized, multi-level sales organization, is the first to admit "I am very short-staffed. I don't have a lot of people with broad procurement skills." Running lean is the company's strategy, but it's also helpful in coping with a weak economy. So he challenges the qualified professionals on staff "to do more than place purchase orders. Ideally, they should be spending considerable time looking for suppliers and negotiating. Because of time constraints, it's impossible to be on the forefront of strategic sourcing," he says. He could hire new staff with skills that generally match his needs, but they would be a fixed cost of $75,000 to $100,000 a year per employee and he'd have to pay their benefits. Among other reasons, this is not the best option in a bad economy. Instead he chose another option: procurement outsourcing. With this strategy, he outsources parts of the procurement process to a business research and analysis firm in India, which he says saves him approximately 50 percent of the total cost of an onshore salaried analyst.
Source: Outsourcing Journal

Brian Slobodow, chief operating officer at Neways, a mid-sized, multi-level sales organization, is the first to admit "I am very short-staffed. I don't have a lot of people with broad procurement skills." Running lean is the company's strategy, but it's also helpful in coping with a weak economy. So he challenges the qualified professionals on staff "to do more than place purchase orders. Ideally, they should be spending considerable time looking for suppliers and negotiating. Because of time constraints, it's impossible to be on the forefront of strategic sourcing," he says. He could hire new staff with skills that generally match his needs, but they would be a fixed cost of $75,000 to $100,000 a year per employee and he'd have to pay their benefits. Among other reasons, this is not the best option in a bad economy. Instead he chose another option: procurement outsourcing. With this strategy, he outsources parts of the procurement process to a business research and analysis firm in India, which he says saves him approximately 50 percent of the total cost of an onshore salaried analyst.
Source: Outsourcing Journal