P&G to outsource 80% of back-office functions

Consumer products giant Procter &Gamble (P&G) plans to hand over four-fifths of its back-office IT functions to outsourcers in a deal that could be worth as much as $1 billion (€1.1 billion) a year.

According to a report in The Wall Street Journal, P&G will outsource everything from the running of its telephone and computer networks to the processing of employee expenses, making it one of the largest outsourcing deals in history.

Two companies have made the shortlist to clench this lucrative contract — IT services giant Electronic Data Systems (EDS) and lesser known Affiliated Computer Services (ACS). P&G says it will make the final decision by the end of the year.

EDS signed a similar deal in 2001 with airline ticketing company Sabre Holdings, worth $676 million (€712.7m). P&G is likely to take a stake in whichever company wins the contract.

P&G made the decision to outsource its back-office business processes as part of an overall restructuring programme begun in 1999. Some 6,000 P&G employees are likely to transfer to the outsourcing company, although a “small number” will lose their jobs, according to P&G. The company’s decision to outsource follows a year-long study into managing back-office functions.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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