4 Issues Impacting Your Outsourcing Strategy
“However beautiful the strategy, you should occasionally look at the results.” – Winston Churchill
Two types of organizations have typically viewed outsourcing as a viable strategy:
- Those in deep trouble, the proverbial ox in a ditch, that were forced to make tough decisions to get things moving again.
- Those with a visionary leader who believed in focusing on core activities and outsourcing the rest.
In the “New Normal”, the global business environment makes outsourcing a viable, perhaps even imperative, part of any successful business strategy - not just for those organizations on the two extremes but also the 80% in the middle. Why? Because four issues will make outsourcing some component of your business a virtual necessity: Technology, BRIC, Value Creation, and Holistic Solutions.
Over the coming weeks I’ll address each of these issues in more detail but for now let’s talk high level:
1. Technology – In the past, outsourcing has largely been positioned as either a technology play (ITO) or labor arbitrage play (BPO). In the New Normal, these distinctions will blur as rapid technology change, coupled with IT departments struggling to keep up with the workload, compel organizations to buy outsourced solutions delivered as a service - increasingly from a “Cloud” at Internet scale.
2. BRIC – Although you often hear Brazil, Russia, India, and China (BRIC) referred to as if they are a monolith, there is no such thing - it’s a big, diverse, complex set of geographies separated by a lot of miles, time zones, languages, and cultures with a mix of developed and emerging economies. How you view the BRIC markets is dependent upon if you’re thinking about selling into or servicing your business out of those countries. In the New Normal, your CEO is most likely thinking about both and outsourced solutions can help reduce the time, cost, and risk of getting there.
3. Value Creation - If you’re going to achieve business model transformation and improve business outcomes then you need an end-to-end process-centric approach to improvement. CFOs have discovered a process-centric focus helps lower costs and improve business outcomes. In the New Normal, buyers will find suppliers willing and able to price and deliver outsourcing services based upon achieving a business outcome for key processes.
4. Holistic Solutions – In light of these trends, sourcing models need to evolve. In a holistic solution, the supplier is responsible for providing everything (people, process, and technology) required to deliver a prescribed business outcome. In the New Normal, organizations need to rethink their approach to sourcing and shared services to engage a smaller number of more strategic outsourcing suppliers who have the IP, domain expertise, technology, global scale, and balance sheet to deliver improved business outcomes.
What’s your reason for considering outsourcing?