An International Exchange of Innovative Outsourcing Ideas
Outsourcing operations themselves do not vary greatly across national borders. But multinational outsourcing efforts are often challenged by geographic distance and differences in national laws and customs. Sodexho Alliance, whose services range from Paris’s Seine River cruise catering to prison cafeteria staffing, has overcome those hurdles. The company finalized its merger with the former American hotel group Marriott on June 18th, 2001 to make Sodexho Alliance a global outsourcing model.
While the merger allows Sodexho Alliance to strengthen its grasp on North American outsourcing markets, it also allows Sodexho Marriott’s U.S. customers the benefits of further association with an ever-growing international company.
Sodexho Alliance has 286,000 employees and 22,000 sites in over 70 countries. Based in Paris, France, Sodexho boasted $9.5 billion in consolidated sales for the fiscal year 2000.
Founded in 1966, Sodexho Alliance began the Marriott transition in March of 1998, when it purchased 48 percent of Marriott’s shares. The resulting Sodexho Marriott Services, Inc. then became North America’s largest provider of food and facilities management services. Based in Gaithersburg, Maryland, Sodexho Marriott Services, Inc. hires 111,000 employees in over 5,000 locations, and has annual sales of $4.7 billion.
“They are in the same business as us, so it’s a nice fit,” says Kathy Boyle, Sodexho Marriott’s vice president of public relations. Sodexho Marriott outsourcing includes food service, housekeeping, grounds keeping, plant operations and maintenance, asset and materials management, vending, conference center management, and laundry services. Sodexho Marriott clients include businesses, hospitals, educational institutions, military installations, and remote site facilities.
“From our customers’ perspective, the transition will not change their services. It’s not like we’ll be suddenly operating like the French do. Our management and company structure in the U.S. won’t change,” says Ty Gagne, Sodexho Marriott’s senior vice president for military operations.
Sodexho Marriott’s progression from a spin-off to a merger allowed the French and American entities three years to get used to the transition. “The merger itself has even been easier than Sodexho’s half-purchase in 1998,” says Boyle.
Sodexho has a history of allowing acquired companies the freedom to maintain their previously established outsourcing relationships and managerial structures. The company recently acquired American Wood Dining Services using the same technique. The three-way acquisition also included a majority share of Sogeres, a French food service company.
Sodexho Alliance appoints native country managers whenever possible. Michel Landel, the French-born U.S. manager, has worked in the U.S. for over 10 years. “He very much understands the American way of doing business,” adds Gagne.
New Resources for Each Partner
Now that the merger is final, Sodexho Alliance has begun an internal multinational dialogue. The merger has opened up new resources for each partner. For example, Sodexho Marriott has military contracts “to improve the quality of daily life” for servicemen in remote locations like the Kwajalein Atoll Army Base in the Marshall Islands, Guam and Qatar. Sodexho Alliance already has the procurement chains in place.
“Can you imagine trying to set up a logistics chain to get wholesome food that would meet our standards of review in some of these foreign locations?” asks Gagne. “What better way to address a new location than by tapping into Sodexho’s already-established presence there? They have those logistics trails and distribution channels in place, which is a huge advantage.”
When Sodhexo Marriott won the Army contract, the company had to rely solely on U.S. managers. Gagne says the company can now hire from a diverse pool. For example, it now hires managers from Australia for its U.S. Navy contract in Guam, who are much closer to the site than stateside executives.
Although the merger is Sodexho Marriott’s greatest leap towards diversification, the company is no stranger to collaborating with other companies. Sodexho Marriott has worked together with both Raytheon and NANA Regional Corporation, Inc., an Alaskan Native Corporation providing preventative kitchen equipment maintenance. While Sodexho shares its excellence in hospitality services in this tri-part effort, Raytheon shares its logistics knowledge and infrastructure services. “We were also able to use procurement relationships in Perth, Australia for our NANA/U.S. Marine Corps contract in Antarctica,” says Gagne.
One of the greatest advantages of the global outsourcing model is a diverse exchange of ideas. “You really need to operate each country where Sodexho has a presence independently and allow them to maintain their own local flavor but really capitalize on and leverage the synergies that can be gained across an international company,” explains Gagne.
Sodexho introduced the idea of innovation forums to Marriott when they joined hands in 1998. Once every two years, senior executives invite clients and employees from all levels to submit new ideas and business strategies that are presented at biannual forums held at locations around the world. Employees are also allowed to submit their ideas on a regional level during off years.
Sodexho Alliance is now looking to adopt an idea throughout France developed by U.S. employees. I:Cuisine allows Sodexho Marriott customers to place catering orders online and have them immediately sent to Sodexho Marriott kitchens. The North American region was able to present this idea worldwide at last June’s innovation forum.
Paris Serving Washington?
When the U.S. government first began outsourcing to Marriott nearly 25 years ago, Sodexho was not yet in the picture. Does the government have any national conflicts of interest since they now outsource to a French-owned, Paris-based company? Gagne answers, “That’s going to be an interesting subject as the world moves forward: What is protectionism and what is global initiative?”
Lessons from the Outsourcing Primer:
- Merge with an international company whose philosophies and involvements match yours.
- Look at paths and interferences that a possible merger partner may have already cleared.
- Explore your merger partner’s global presence and understand how that may help you expand your capabilities in the worldwide marketplace.
- Keep in mind the benefits of exchanging new ways of conducting business across cultures.
- When beginning a new outsourcing relationship, plan ahead to include the possibility of a merger in the contract.
- As the acquirer in a merger, try to obtain as much information about your target operation’s involvements before the actual acquisition.
- Take advantage of the acquired company’s infrastructure. Similar objectives can result in effective collaboration of resources.
- If you are being acquired, move quickly to prove the value of previously established outsourcing relationships to acquiring executives.