MCA Management Awards 2009: Outsourcing Consultancy Winner

DELOITTE WITH UNILEVER

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Last Updated: 09 Oct 2013

Innovation and outsourcing - not two words you expect to see in the same sentence. But that's what was required of Deloitte when Unilever explained that it wanted to sell, rather than set up, two shared service centres in Brazil and Chile. These centres and their 450 staff provided financial services to 20 countries in Latin America, but Unilever wanted to concentrate on growing revenue and profitability in the region from its core business activities.

Unilever we know as a £27bn giant with 179,000 employees in more than 100 countries. We know that it knows a lot about a lot of things, but the company knew it lacked in-depth knowledge of the shared-services or outsourcing market and wanted to make sure it got a fair price. So Unilever asked Deloitte to negotiate not only the sale itself, but also a deal with the new owner to continue providing it with financial services.

Unilever had recently carried out a similar exercise in its Asia-Pacific region that had taken six months. However, Deloitte's team of eight consultants in Santiago, Sao Paolo, New York and London was able to seal this deal in just 12 weeks.

From its experience with similar projects, Deloitte knew it needed to do as much preparation in advance as possible, and reach key commercial agreements before negotiations. Deciding that the best way to tackle the problem was with an integrated and experienced international team, its consultants in London focused on finance, while the New York office contributed experts in business-process outsourcing. Team members in Sao Paolo worked on due diligence and data-gathering, while the Santiago consultants developed the business case. Project management meetings were conducted virtually, but face-to-face meetings in each of the locations kept everyone informed and on track, including Unilever's lawyers, ensuring that agreement was reached early on key negotiation points.

To ensure Unilever got value for money from the new outsourcing contract without sacrificing the quality of service it received from the new owner, Deloitte worked closely with its client to figure out just how flexible the budget could be, which service elements were most important (and which were not) and what the company was willing to concede. It designed a governance model to support the management of the services contract.

It's not uncommon for annexes to remain incomplete even after a contract is signed, but Deloitte worked to ensure that all of them - that's 20 detailed annexes - would be completed on time. Contract negotiations were concluded in just one week, signed in Paris at 2.30am on a Saturday morning.

Able to talk shared services in English, Spanish and Portuguese, to translate cultural differences and work collaboratively across time-zones, Deloitte successfully negotiated a sale involving an immediate cash payment and long-term cost reductions over the life of a favourable seven-year service contract. The carefully crafted deal allowed Unilever the flexibility to increase the volume of services where necessary, and also the opportunity to exit from the contract.

'Their advice was always clear and helpful,' says Race Strauss, director of mergers and acquisitions at Unilever, of the Deloitte team. 'Life would easy if all our advisers and support teams were as focused as they were and of such quality.'

TAKE-HOME TIPS

Having decided to focus on core activities, Unilever wanted to dispose of two shared service centres in Brazil and Chile. A crack international team from Deloitte set about getting early agreement on key points with the new owner. The consultancy quickly hammered out a favourable sales contract that guaranteed Unilever the services it will need, while affording great flexibility in future transactions with the facilities.

- Frontload as much work as possible to buy more time at the negotiation stage;

- Organise face-to-face meetings - critical in ensuring that teams stay focused on clear goals;

- Integrate workstreams to keep everyone (and the project) up to speed.

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