Having been awarded the Entrepreneur of the Year by The Economic Times back in 2010, Xchanging continues to provide leading solutions to a wide range of industries across the globe. Ed Cross, Xchanging’s Executive Director, takes us on a quick tour of the business outsourcing landscape discussing the trends, challenges, and opportunities facing the industry.
Sramana Mitra: So Ed, give us some background about yourself as well as Xchanging. What is your business? What do you do? What customer problems do you solve?
Ed Cross: I am the Executive Director for Xchanging ‘s Procurement Outsourcing business. I have worked in and around procurement for over 25 years. I started working as a procurement leader in an electronic business and worked through a number of professional services organizations including PricewaterhouseCoopers. Then 11 years ago, I joined Xchanging Procurement Services when it was at the very early days of procurement outsourcing here in the U.K.
Xchanging is a technology-led process outsourcing business. We focus on a number of sectors but, most notably, we provide leading solutions for the insurance sector and in particular, we work with Lloyd’s based in London. They are an insurance underwriting and syndicate body. We also work with Aon insurance. We have a financial services business and we work with a range of banks in Germany and Italy. We have significant operations in India where we employ around 4000-4500 people providing general business processing services. We work with people like CBRE, managing their Finance & Accounting (F&A) activities.
We operate in the technology services sector. We provide a range of services from data management, application services management, and other services around the world. Most notably, we work with the Malaysian Ministry of Education in providing YTL and 4G network to all the schools in Malaysia. We support the schools in utilizing what 4G brings into the school room and manage and help the real estate around the IT operational capability.
We are quite broad-based, operating across a range of business processing and IT outsourcing activities. We have revenues of about $1 billion. We are profitable and successful.
As far as the procurement services business is concerned, we are a global procurement outsourcing business. We offer sourced-to-pay services across the world and we operate across all of the European theater. We also provide services in Africa, across the center of Africa in Nigeria, Kenya, Tanzania, etc. We operate in the Middle East, Australia, and in North America. By revenue and scale in procurement outsourcing, a number of commentators would suggest that we are probably number three in the world.
Sramana Mitra: Can you explain what you mean by ‘procurement outsourcing’?
Ed Cross: Procurement outsourcing is all of the activities associated with the finding, the deal-making including agreeing to the price and contract terms, through to the placement of purchase orders and the fulfillment of that purchase order from third party suppliers. Our focus is predominantly on indirect goods and services. For example, we provide sourcing services to BAE Systems in North America across a range of indirect categories, like logistics, MRO, and other products that are used to help make a product but don’t actually go into the physical product, like IT and stationery.
We do the deals for those categories of spend on behalf of the customer and we seek to improve on the terms and conditions that they currently enjoy with their supply base. On the other end of the scale with National Australia Group, who is a second-tier bank in the United Kingdom, we built their peer-to-peer system. That’s the engine that allows them to raise requisitions, place purchase orders, and then, pay for goods received. We built the system, an instance of Oracle, to provide that service and we also managed all of the negotiation and strategic sourcing activities associated with all areas of spending in the bank.
Sramana Mitra: Large companies tell you what they want to procure and then you work with the purchasing departments, negotiate all the sourcing contracts, deals, and so forth, and manage that process of procurement.
Ed Cross: Exactly. There isn’t always a procurement department in these big blue-chip organizations. Sometimes, they don’t have many people or they don’t have a Chief Procurement Officer. But we certainly work with the leadership of the business, whether they are in Procurement or General Management – CEO or CFO – and we seek to manage that procurement process for them, whether it’s order fulfillment or delivering value from the existing deals with third party suppliers.