Transforming a Human Resource Function Through Shared Services and Joint-Venture Outsourcing: The BAE Systems–Xchanging Enterprise Partnership 2001–2012

Abstract

The call for new types of collaboration in outsourcing saw the development of the enterprise partnership model by Xchanging in 2001. The case looks at the history of one such partnership with BAE Systems. History shows why the model was attractive to BAE Systems against several other models. In Part 1 of the case, we look at and ask students to assess the in-house, fee-for-service outsourcing and management consultancy options for transforming HR through shared services. In Part 2, the case details the distinctive features of a joint-venture model that was eventually adopted and of the supplier competencies needed. We follow the relationship through the phases of preparation, realignment, streamlining, and continuous improvement, initially up to 2003. Students are asked to assess the model, progress, and what the future holds. In the third part of the case, we follow subsequent developments, including the change in the nature of outsourcing with BAE Systems from March 2007, the launch of Xchanging on the stock market in April 2007, its continued expansion, and its troubled history from 2010 to 2012. The case gives insight into the conduct of a distinctly different form of outsourcing, into how the client and the supplier deal with outsourcing over a number of years, and how a supplier navigates through a highly dynamic 21st century global environment while trying to expand its market services and revenue growth.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

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