IBM and D&B Sign Substantial Outsourcing Agreement

Business research giant D&B has engaged IBM Business Consulting Services for a large, long-term business-process outsourcing arrangement that shifts significant amounts of customer care, data collection, and billing work outside the D&B organization. The deal, a seven-year arrangement worth $180 million, will eliminate 750 positions at D&B. Roughly one third of that workforce will be hired by IBM to continue their work under new management. "D&B expects our customers will benefit from improved quality and results from our partnering with IBM, [including] significantly improved turnaround time for delivery of our products and services, and improved accuracy, completeness, and timeliness of our data," says Yvette Rudich, D&B spokesperson. The scope of the deal and the fact that D&B is the client is a departure from many common outsourcing arrangements, which typically involve a contractor taking on a task not considered a core competency of the client organization. Yet research and data delivery are at the very center of the 163-year-old company. Rudich compared the outsourcing of the gathering and fulfillment portions of D&B's business to an auto builder bringing together subassemblies from contract manufacturers to build the finished product. "Our core business is our DUNSRight [methodology]: gathering, collecting, and enhancing business data and making it useful for our customers, so they can make confident business decisions." Convincing companies to outsource aspects of their business once considered internal strengths is all part of IBM's recent business-performance transformation effort. Earlier this year IBM made similar outsourcing arrangements with Sprint and Philips. "The majority of work in call center outsourcing we often refer to as 'your mess for less' or 'lift and shift'--it's just taking [work] and doing labor arbitrage, using a lower cost center and different people, it isn't about fundamentally transforming how the work is done," says Adam Klaber, global CRM leader at IBM BCS. "We will not only change the processes and underlying technologies, but have IBM employees doing the actual customer service for [D&B]." Clearly, D&B feels that the enhancement portion remains its core competency, while the data acquisition portion is no longer necessary or valuable to keep in-house. Rudich says, "It's still our process. IBM has the scale and we intend to leverage their call center technology. For us to do that ourselves would have taken considerable time and considerable investment." Related articles: Required Reading: Is There a Right Way to Outsource? Quality Care May Not Be Enough for Offshore Contact Centers The Week in Review: February 6, 2004 IBM and Sprint announce a five-year outsourcing arrangement.