In the Front Office Box blog we recently wrote in Selling More for Less about ways the seller can do better deals more easily by fixing the price and negotiating the scope of a what will be delivered.
The outsourcing businesses are masters at this strategy – as evidenced by this article published by the BBC – see below.
There’s a vague suggestion in the article that whatever these companies are doing is somehow immoral. They’re ripping off the customer – in this case us.
But their behaviour isn’t immoral. The companies are simple exploiting a commercial advantage, gained as a result of the government procurement process.
The lesson for all sales professionals though is this.
Price sensitive prospects will always skimp on the scope in order to reduce cost. They expect to be able to take advantage of their customer relationship to add to deliverables for free later.
But the hard nosed commercial world of outsourcing doesn’t work like that, as the UK government can testify.
IT giants ‘ripping off Whitehall’
“Government departments have been ripped off by a “cartel” of big IT firms, a damning report by a committee of MPs has found.
Some were paying as much as 10 times the commercial rate for equipment and up to £3,500 for a single desktop PC.
The public administration committee said an “obscene amount of public money” was being wasted on IT.
The government said it was already making “significant improvements” to the way it bought computer equipment.
Prime Minister David Cameron vowed to end the era of vast government IT projects that he said had dominated Labour’s time in power.
The coalition has called a halt to schemes costing more than £100m as it looks to reduce the UK’s budget deficit.
In its report, the public administration committee recommends that departments across Whitehall use more small and medium-sized IT suppliers to increase competition and bring down prices.”
