The early wave of ITO and BPO transactions generally involved companies transferring a steady-state operation to a third party provider who then used the same assets and staff to provide services back.  Although the major IT services providers made some changes and used their own service delivery models to improve efficiencies, the overall service provided back to the company was usually very similar in terms of scope, performance and even price.  However, with the rise of BPO and with companies looking for both substantial cost savings and improved performance, business transformation has become the new wave of sourcing.  This has made both the risks and rewards higher for both the customer and the supplier and has meant that many of the traditional approaches to sourcing need to be re-examined.  It has led to a re-alignment of the sourcing market in terms of the providers, service delivery models and sourcing advisers.

Lawyers from our Global Sourcing Group have advised clients on several business transformation deals in recent years, including:

• Equant on its business services agreement with SITA.
• Exult (now part of Hewitt Associates) on its contract to provide transformed HR functions and services to BP Amoco’s US and UK operations.
• Fujitsu in the restructuring of a joint venture with AMD for the development and production of flash memory technology and devices, together with related business processes related to the venture’s activities.
• Identrus LLC in the development of a joint venture among over a dozen global banks to develop and outsource digital certificate and related trust services.
• Prudential Insurance on its procurement of business transformation services.
• Royal & SunAlliance in outsourcing its general insurance claims handling and ADM IT support to Accenture India.

Case Study

Royal & SunAlliance

Lawyers in our sourcing group advised Royal & SunAlliance on a complex business transformation transaction.  This involved the company selecting Accenture to transform two key areas of business: application development and maintenance and general insurance claims handling.  The aim of the company was to save costs, improve profitability and to improve the performance of the company against its main insurance competitors. 

The first task involved the company and Accenture in re-designing a number of processes and then implementing a rolling program to move the process to Accenture India.  Our lawyers advised the company in developing a complex risk and reward mechanism to measure and reward the costs savings and improved performance.  We assisted in the scoping and measurement of each process as well as a number of issues including tax, corporate structure and regulatory issues, data protection and privacy, and the transfer of staff.