Outsourcing: Death Throes and Birth Pangs

HfS - The Industry With No Name

The existential crisis underway in the outsourcing industry makes for amusing reading. The industry has voted by a two-thirds majority to drop ‘the O word’, reports advisory group HfS, in an attempt to shed its apparently negative connotations. But there’s no industry consensus on a new name – and ‘outsourcing’ features in many of the most popular suggested alternatives.

Phil Fersht, HfS founder and industry thought leader, doesn’t mince his words:

“There is far too much “believe our own bullshit” going on and this industry needs to change how it is perceived before it can effectively “rebrand”.”

Phil maps out the four challenges he sees facing a stalled industry. But really they are all one – and summed up in his final challenge:

Challenge #4: How can buyers and providers really partner to foster innovations into business process outcomes?

I’m optimistic. Outsourcing service providers I know are investing heavily to up their game. They see the industry’s current convulsions as death throes for a simpler world of labor arbitrage and automation.  And the birth pangs of a world where outsourcing will continue to prosper but in new ways.

If you ask me, two developments will define this new world:

All Work Is Process. The opening sentence to the first-ever APQC report on Business Process Management, published back when Adam was a lad – but it remains broadly true, and it is set to become much more widely accepted. So we’ll drop, for example, the empty distinction between ‘business process outsourcing’ (which really means Finance and HR services) and the rest (such as IT, planning and analytics). All work will be seen as process. The process will always be owned by the enterprise but it may be delivered using in-house resources or be outsourced or, most often, through a hybrid of the two.

Platforms for Process Excellence. If all work is process then every organization needs an enterprise process workbench. Outsourcing providers will adopt them to enable more collaborative engagements with their clients across the service delivery lifecycle.  Outsourcing buyers will adopt them to orchestrate the delivery of end-to-end processes, delivered through a constantly-adapting blend of in-house and bought-in resources – and to engage all the process stakeholders in continuous improvement.

Arguably, the most interesting challenges are now on the buy side: Developing Global Business Services organizations with the capability to continually re-optimize multiple, complex and dynamic sourcing equations [which include, crucially, keeping IT aligned] to deliver value and innovation for the enterprise. No surprise that GBS is the career choice for some of the brightest people I know.

Related Posts

21 Aug 2012    How To Simplify Global Shared Services

08 Aug 2012    Death Of Outsourcing Greatly Exaggerated

© Text Michael Gammage 2012

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