IT outsourcing study
Issue
The client is a large Cargo Airline that provides freight forwarders with unrivalled door-to-door freight transportation services for various categories of products and clients.
PricewaterhouseCoopers was asked to write a business case assessing the opportunity to spin off all/part of the client’s IT department. The study had to focus extensively on financial opportunities that would justify a spin-off, and, therefore, required the implementation of an Activity Based Costing (ABC) model.
Our Approach
The project was managed through the following activities:
- Assess current structure: products and services, customer segmentation, strategy in place
- Identify possible growth opportunities through a detailed market assessment
- Perform financial cost analysis: analyse actual cost structure, set up high level ABC, define cost and revenue drivers and allocation keys
- Forecast cost and revenue projections, calculate expected economic value, model financial statements (profit & loss, balance sheet, cash flows)
- Propose new business structure
- Identify and mitigate risks
Key Client Benefits
As a result, the client was able to obtain a thorough and detailed view on its activities and each cost associated. The ABC model allowed the client to quantify several possible IT outsourcing scenarios.
