Outsourcing
Speciality Chemicals Magazine June 2009 27
www.specchemonline.com
levels. This adds up to more expensive measure-
ment. Responding from an in-house facility to this
rapidly changing world is time-consuming, capital-
intensive and costly. Once you are compliant, ongo-
ing stewardship is required.
Analytical service providers are going beyond
routine laboratory work to provide the consultancy
support required for these regulatory developments,
which go beyond the scope and capability of many
in-house functions. They have the advantages of a
much wider marketplace to justify the capital expen-
diture required for the next generation of expensive
instrumentation; much greater utilisation for the
return on assets; independence, to eliminate the
need for any secondary arbitration of data; and,
ongoing career development opportunities in the
measurement, testing and regulatory/advisory sec-
tor alone.
The demand for smarter products is driving the
need for increasingly complex materials and com-
ponents, which in turn calls for greater intellectual
dexterity and measurement resource that is readily
available to support development. Typical examples
include the development of new polymers, alloys
and composite nanomaterials, which are contribut-
ing to weight reduction and lower emissions as
required by legislation, or biotechnology for medi-
cines and therapeutic devices.
The measurement technology and many of the
associated quality standards required to support
such developments are already developed and avail-
able. However, the way these skills and services are
accessed and their availability at the location need-
ed at the time needed are not. Increasingly, this is
seen as the job of the expert analytical service
provider and a key part of the value of a global sup-
port in helping international companies to succeed
in their marketplaces.
Internal influencing factors
Organisations all over the world are seeking to
maintain a competitive edge in a tough market envi-
ronment by implementing innovation strategies rap-
idly, while at the same time cutting costs, consoli-
dating and increasing their focus on core business
activities. For the analytical function, this has led to a
mismatch between today's corporate requirement
for a multi-skilled, global and agile laboratory serv-
ice and the legacy `in-house' laboratory facility.
As the `in-house' analytical laboratories are
increasingly being considered as non-core, the
external international laboratory service providers
are investing in expanding their operations. After all,
the global, `virtual' laboratory is the core part of their
business.
In turn, this benefits the industry through
economies of scale that the laboratory service
providers can pass on through cost savings and
enhanced service delivery. Once the decision to out-
source has been made, other implications can delay
action if they are not followed up in the earliest phas-
es of diligence and contract negotiations.
Optimising people transfer is often mistaken as a
parent company legacy responsibility and a legal
requirement. The reality is that the attitude and
motivation of the transferring staff is probably the
single biggest critical success factor in laboratory
outsourcing. This is absolutely the responsibility of
the new employer, though, of necessity, the former
parent company must work alongside them to
ensure that the formula is right.
This transfer is, in many cases, the most sensitive
element of the outsourcing process. Contrary to the
popular myth, outsourcing does not always mean job
losses; with the right partner and under the right busi-
ness plan it should mean accelerated career develop-
ment and job creation. The very least it means in
today's economy is prolonged job preservation.
Many outsourcing agreements result in improved
career options for the staff. Whilst transferring the
people in scope may well mean the avoidance of
large redundancy payments and the loss of
enhanced pension schemes, their longer-term
career prospect with a company who considers
them core is far more appealing than the alternative.
Hand in hand with this come a parent organisa-
tion's fears of a loss of know-how and service inter-
ruption. These, however are mitigated by effective
control measures, such as clear service scopes and
contractual agreements that protect IP and robust
transition plans.
Trust and reputation are the vital decision drivers
in the selection criteria of the outsourcing partner.
Improved outsourcing contracts address these con-
cerns and are co-designed with the involvement of
all of the key stakeholders in the project.
Lessons learnt
Despite all of this progress, it is clear that some indus-
try is still holding back on non-imperative change and
investment/divestment plans whilst focusing on short-
er term budget cutting and cost control.
For the companies who have bucked that trend,
outsourcing is playing a big part by allowing them
to enhance their laboratory services, which in turn
frees up their valuable resources to allocate to core
activities. Getting the evaluation, scope and partner
selection process right is vital to the success of the
project and the commercial and technical returns
you can expect.
Detailed below are some of the key `lessons'
Intertek has learnt over its last ten years of imple-
menting over 30 successful international analytical
services outsourcing agreements with major corpo-
rations. This is not a checklist to guarantee success,
it merely highlights some of the more important
considerations:
� Clearly set your objectives at the outset, right
down to financial returns.
� Conduct first level risk analysis of the project with
senior stakeholders.
� Define the scope of services to be outsourced.
� Ensure that all stakeholders are involved in the
assessment of the project, including your cus-
tomers and internal service users
� Measure the cost-benefit balance of the decision,
conduct a gap analysis to measure the cost of
change and ensure that you measure the fully
burdened cost accurately
� Agree an early communication protocol with all
stakeholders involved, including staff, unions and
the media
� Establish a rigid selection qualification criteria and
`scorecard' on your service partner and be satis-
fied by their own strategic drivers and plans for
the facility or services
� Work together with the chosen partner to review
and adjust the outsource scope to deliver a recip-
rocal value-adding contract
� Be prepared to dedicate high level resources and
management time into the project; repairing a
faulty outsourcing contract is many times more
costly and time-consuming than the investment
costs of setting it up right in the first place.
� Ensure a representative, measurable and practical
contract is agreed
� Implement, measure the progress and review the
transition over the interim period
Conclusion
It is clear there are many challenges in today's eco-
nomic environment and the key to success will be a
flexible business model which adapts to the peaks
and troughs of current trading cycles. Analytical
service providers are providing such a model by
bringing key services to their customers where and
when they are needed, while guiding them through
complex regulations and standards that apply to
their products.
Across the globe, in the public and private sectors
alike, outsourcing is increasing in popularity, largely
due to the increased understanding of the benefits
it brings. Dedicated analytical service providers have
the benefit of the economy of scale and can pass
these benefits to their customers through innovative
services, cost savings and enhanced service delivery.
For more information, please contact:
Erik Holladay
Global Marketing Director
Intertek Divisions: Oil Chemical & Agri
Services, Analytical Services, Mineral Services
Tel: +1 713 407 3533
E-mail: erik.holladay@intertek.com
Website: www.intertek.com

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