The FT carries an interview with Paul Pindar, the chief executive of Capita. I am surprised that his approach to outsourcing appears to be based entirely on bargain basement pricing. Most procurement exercises I have taken part in (for example the current waste and street cleaning contract procurement in Brent) have paid a great deal of attention to quality.
I doubt whether his apparent model of lowest cost no matter how poor the quality is going to work over the long term. The veneer may be coming off his desk, but at some point he really will need a new desk. More seriously, he doesn't mention redesigning services to be more efficient, which should be perfectly possible in some cases. More seriously still for his model, if your only offer is charging less than someone else, there will always be someone else willing to charge even less. At some point that pressure will start cutting into your profit margins.
In the meantime, the cheap as chips services you provide are likely to become notorious for their poor quality. Once that reputation reaches a certain point; it becomes very hard to turn it around.
I am glad I don't live in Barnet, where Mr Pindar's company is taking over most of the Council's services.
No comments:
Post a Comment