Business

The Channel

DXC squeezes suppliers for extra margin, issues ultimatum

That is IT, stationery, toilet rolls, etc 'give us discounts' says outsourcing biz

By Paul Kunert

36 SHARE

The procurement team at DXC Technologies might consider giving courses on how not to win friends or influence people after sending suppliers an ultimatum: cough better financial terms or else.

In a global initiative to bulk out margins, the outsourcing firm wrote to its traders warning them that if they wanted to remain on the "approved supplier list", they would need to agree to a 15 per cent cut in contracted prices, sources told us.

The massive fishing expedition has gone down badly with those suppliers, which range from companies in the technology supply chain through to office stationery wholesalers through to marketing agencies.

“Imagine if all of DXC’s own clients wrote to the firm [to] demand the same discount!” one DXC supplier told us. (El Reg concurred and thought it might prove to be an interesting exercise - any takers?)

All big tech resellers from Capita to Computacenter to Dixons Carphone annually write to their trade suppliers to squeeze out better T&Cs from them, and DXC clearly thought it was an easy win.

But one source close to the situation claimed that the reputational damage caused by squeezing suppliers in already tight economic times could be “potentially significant”.

DXC, which on 3 April emerged from the union between CSC and HPE’s Enterprise Services organisation, forecast cost savings of $1bn in its first year and a run-rate of $1.5bn in year two.

Management will endeavour to achieve this through a mixture of real estate consolidation, redundancies, offshoring jobs and supply chain efficiencies – including getting increased support from “strategic partners,” the business revealed in its Investor Day document.

Hundreds of UK staff were put at risk of redundancy earlier in the summer, UK offices are being cut down in size, and now it is clear that DXC is trying to claw back extra profit from its channel.

DXC refused to comment. ®

Sign up to our NewsletterGet IT in your inbox daily

36 Comments

More from The Register

Now DXC yourself to the door: Another exec exits outsourcing giant

Frankenfirm waves bye to App Services boss: Time to canter Klaus

DXC will be damned if it lets cloud cannibalise the IT outsourcing biz before DXC does

Frankenfirm sets up 'integrated practice' with AWS to eat its lunch before others do

DXC CEO confirms boss of its field-based techies is OUT

Exclusive Steve Hilton exit suddenly confirmed on 21 July, new boss in situ on 23 July

DXC Technology asks field-based techies if they'd like to leave

Just when you thought it was safe to hang out at the water cooler

DXC UK chops more customer-facing service staff

Automation and offshoring to replace weak humans in the West

DXC Tech CEO continues to wash away HPE old guard

Just about getting closer to customers, says hard pressed outsourcing biz

Freelance techies moan about DXC billing snafu: No pay for three weeks

Unable to file time sheets

DXC execs to investors: It's say-on-pay time. Give us a bump, would you?

Just look at these beefy margins

DXC Technologies UK boss quits

Nick Wilson working six month notice

Former DXC UK chief Wilson lands at Micro Focus

From one burning deck to another