Last Friday HP Germany announced that it has won a seven-year contract from German Schott AG for an undisclosed sum. As part of the agreement, HP will take on board all processes related to accounts payable and receivable, asset accounting, the controlling of operative investment as well as travel expense accounting. Except for the latter, which will be handled from HP's Polish BPO centre, all other transactions will be kept in Germany. Under the terms of the deal, 35 staff of Schott's sub-ledger division will transfer to HP and work from Schott's existing shared services centre in Mitterteich. This will be expanded to become HP's finance & accounting (F&A) BPO factory for Germany.
This deal is an important step for HP to further expand its BPO portfolio to the German market. So far, HP has been one of the leading providers of BPO services in payroll processing and travel expense accounting in Germany. Though it has been strong in BPO in the F&A field globally, it hasn't had any clients based in Germany. Its latest contract will change this: HP will take over Schott's shared services centre in Mitterteich and will optimise the underlying processes based on global standards and best practices in order to reduce costs.
In a second step, HP will start offering those services to (mainly) other German-based companies, targeting particularly those with 20 to 40 staff. These small and medium-sized companies are particularly sensitive to the fact that they need to focus on their core business whilst maintaining a high quality level regarding all aspects of customer-facing communication. Should they decide to outsource non-core functions such as sub-ledger, it is crucial for them that clients will be addressed in fluent German. This is especially true in the field of collection procedures where near- or offshoring has often failed to produce the desired proficiency level in oral communication; HP's concept of using highly qualified native German speakers who are locally based is seen as a differentiator. HP will only deliver those aspects that are not dependent on direct communication with the customers' clients from a near- or offshore location. HP sees the element of employing local, native speakers as the main differentiator alongside its technological expertise and its ability to shift the handling of processes to its multiple global service centres as and when needed.
Schott has managed to curb costs on its own by creating a shared services centre which initially resulted in cost savings of 15%. However, with rising prices for energy and materials, other avenues of cost savings have to be explored. Schott searched for a company which is more knowledgeable in the field of BPO and can drive expenses down further due to large scale effects. Having had HP already as a reliable, trustworthy IT outsourcing partner since 2004, it wasn't too difficult to sign an additional contract with the same company, though in a different field. Now it remains to be seen if and how fast HP can deliver the advertised costs savings of 20%.
