Contents - AL-Tax

112 7 Performance of Intercompany Servicesprocess outsourcing services by means of the following keyword and industry segmentsearches:1. Keyword = Customer Care; Industry Segment = Business Services2. Keyword = Business Process Outsourcing; Industry Segment = BusinessServices3. Keyword = Liaise; Industry Segment = Business Services4. Keyword = Customer Relationship Management; Industry Segment = BusinessServicesUpon reviewing descriptions of business for all firms identified through the abovesearches, we screened out those that (a) received rather than rendered customerrelationship management services; (b) provided CRM services in combination witha host of other services, and did not provide segmented results; (c) were start-upcompanies whose results could not be taken as indicative of arm’s length resultsfor established services providers; or (d) reported losses in consecutive years. Followingthis process of elimination, eight companies remained in our CRM sample.While these firms deal with a much larger base of customers than USS, and in someinstances they perform a broader range of intermediary functions, their core role asliaison between end customers and manufacturers is effectively the same. Moreover,both USS and our comparable CRM services providers render back-office functionsas part of their role (e.g., order processing, tracking of shipments, the handling ofclaims and billing issues).The eight customer relationship management services providers included in oursample reported markups over total cost ranging from a high of 12.64% to a low of(5.54)% in 2007, a high of 16.24% to a low of (5.76)% in 2006 and a high of 14.84%to a low of (2.24)% in 2005. The median markup for this sample amounted to 5.89%in 2007, 3.82% in 2006 and 2.11% in 2005. Based on these results, USS shouldcharge FP a markup over total associated costs of 5.0%–6.0% for CRM servicesrendered.7.4.3 Application of Selected Method: R&D ServicesAs noted above, we establish arm’s length fees for USS’ R&D and engineeringservices by means of the comparable profits method as well. To the end of identifyingstandalone high-end engineering services providers, we undertook the followingkeyword and industry segment searches:1. Keyword = “Process Engineering”; Industry Segment = “Business Services”2. Keyword = “Mechanical Engineering”; Industry Segment = “Business Services”3. Keyword = “Engineering Services”; Industry Segment = “Business Services”4. Keywords = “Engineering” and “Materials”; Industry Segment = “BusinessServices”5. Keyword = “Magnetic”; Industry Segment = “Business Services”