Chevron - Case Study

“Beeline’s Managed Services program helped us to streamline and standardise our staffing processes, while significantly reducing consultant costs. The Beeline account team is highly professional, knowledgeable, and creative in responding to customer needs.”

— Alicia Watson, Strategic Sourcing, Chevron Information Technology Company

The Client

Chevron ranks among the world’s largest and most competitive global energy companies. Headquartered in San Ramon and active in more than 180 countries, it is engaged in every aspect of the oil and gas industry, including exploration and production; refining, marketing and transportation; chemicals manufacturing and sales; and power generation.

The Challenge

Reduce Contingent Labour Costs

Chevron sought to reduce the cost structure of IT contingent labour. The Company looked to centralise and automate their contingent labour acquirement practices and simultaneously reduce total costs by managing supplier fees and negotiating rate reductions with suppliers.

The Solution

Beeline for Managed Services

Beeline for Contingent Labour

Chevron’s Information Technology Company (ITC) adopted Beeline Managed Services and Beeline for Contingent labour in April 2003.

Measurable Results — Year 1:

Hard Dollar Cost Savings Via Lower Fees

Beeline was able to provide hard dollar cost savings via lower management fees and through aggressively negotiating rate reductions with suppliers. Beeline reduced management fees to participating suppliers by 50%. This reduction of the hourly management fee for existing contractors was passed on as a cost savings to Chevron. Beeline lowered Chevron’s existing bill rates by the amount of the management fee reduction, and suppliers continued to receive the same bill rate as before.

In the first nine months of utilising Beeline for Managed Services and Beeline for Contingent Labour, Chevron saved nearly $150,000 in management fees. (Hard dollar savings are based on the hourly reduction multiplied by the actual hours worked.) Beeline generated this portion of the cost savings without reducing the supplier rate.

In addition to the reduced management fee, Beeline negotiated substantial hourly bill rate reductions for more than 10% of the existing contractor population for a total hard dollar savings of approximately $275,000. (Actual hard dollar savings are based on the hourly rate reduction multiplied by actual hours worked.)

Total first-year savings: $420,000 (program in operation only 9 months)
Chevron’s total headcount with Beeline remains constant at approximately 275 - 350 contractors
Average estimated annual spend: $40 million
Pricing: Beeline utilises rate card methodology

Measurable Results — Year 2 and Beyond:

Beeline for Managed Services

Beeline negotiated rate reductions for more than 20% of Chevron’s Beeline contractor population. Through January of 2005, Beeline save the company over $1.2 million in rate reductions and nearly $300,000 in reduced management fees for a total estimated cost savings of $1.5 million.

Chevron Information Technology Company’s executive level management partnered with Beeline towards the success of negotiating lower bill rates. In December of 2003, there were 94 pre-existing ITC contractors over the Beeline rate card. Today, there are only 23 pre-existing ITC contractors over the rate card. Quarterly reports distributed within the ITC management team support the Beeline cost savings initiative.

Beeline continues to provide Chevron with low cost IT contract labour. As new contractors are sourced and engaged, candidate rates are controlled via a customised bill rate card.

Closing Remarks

“We selected Beeline based on its deep experience in Managed Services, proven HCM application, and commitment to cost competitiveness.”

— Alicia Watson, Strategic Sourcing,
Chevron Information Technology Company

Millennium Bridge House, 2 Lambeth Hill, London, EC4V 4BG.