{"id":1390,"date":"2012-03-29T09:21:00","date_gmt":"2012-03-29T09:21:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/outsourcing-sham-redux_032912\/"},"modified":"2012-03-29T09:21:00","modified_gmt":"2012-03-29T09:21:00","slug":"outsourcing-sham-redux_032912","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/outsourcing-sham-redux_032912\/","title":{"rendered":"The great outsourcing sham redux"},"content":{"rendered":"

So we managed to whip up a tidal wave of emotion and opinion when we made the call that the “outsourcing industry”, in its current state is, quite frankly, a sham<\/a>. \u00a0When over 30,000 people read something, there’s a reason why… so let’s drill down into what this all means.<\/em><\/p>\n

\"\"<\/em><\/p>\n

Outsourcing has an image problem, not a delivery problem.<\/strong>\u00a0The intent of the blog was to deplore the shoddy image of outsourcing in today’s economy and the discuss the lousy job the industry – as a whole – has done in defining itself. \u00a0It wasn’t to slam the premise behind outsourcing, or the performance of engagements: the “industry” produces wads of cash and healthy margins while saving buyers lots and lots of money (our own research emphatically supports this fact<\/a>).<\/p>\n

Buyers and providers are desperate to alter the perception of “outsourcing”, it’s the\u00a0intermediary\u00a0businesses profiting from vendor\u00a0marketing\u00a0dollars which are afraid of change. \u00a0<\/strong>I have never had so many \u201cThank God you called it\u201d emails from buyers and providers this week. \u00a0The only people we have upset are some of the events firms and advisors\/analysts who take money from service provider marketing people, as this paints their whole modus operandi in a bad light. I even got some hate mail from a couple of entities, whose entire businesses survive on extracting marketing dollars from services providers, because they claim they would lose their identity if we stopped lauding the “outsourcing” vernacular. \u00a0They are worried that if outsourcing gets submerged into the business “mainstream”, service providers will park their marketing dollars with entities who are marketing\/promoting\/analyzing real business services and not only “outsourcing”. \u00a0While many intermediaries constantly complain that buyers wary of outsourcing are afraid of change<\/em>, why don’t they practice what they preach and change their own philosophy – and then their clients will follow?<\/p>\n

Buyer networks need to be focused on the business end-game of outsourcing, not the “act” itself.<\/strong> \u00a0\u201cOutsourcing\u201d as we call it today, really is a component of a business function, not the business function itself. It is a means to an end, not the end itself. It\u2019s not dissimilar from the Cloud computing concept, except it\u2019s about externalizing services, not IT infrastructure. Regardless of business function, Cloud has relevance as an enabler<\/em> to achieve better things \u2013 and it\u2019s the same for \u201coutsourcing\u201d. I would prefer to see us creating broader communities around business objectives and have process-externalization and expertise augmentation as a key part of each discussion. For example, you can\u2019t go to a conference focused on creating better global finance operations, without discussing shared services and offshoring \/ BPO. However, the core focus of that network is about achieving more productive, relevant and global finance, where senior people can have rational and objective-led discussions on global operating models that can take better advantage of global talent and technology.<\/p>\n

“Outsourcing” common interests should be segmented into two “industries”: 1) Labor Arbitrage and 2) Business Services:<\/strong><\/p>\n

1) The Labor Arbitrage Industry.<\/strong> Let\u2019s face some home-truths here \u2013 \u00a0much of \u201coutsourcing\u201d as it exists today really is labor arbitrage<\/em> for most of the lower value work in IT, F&A, Procurement, CRM etc. The common thread among buyers is more how to manage LABOR ARBRITRAGE effectively, than anything else. So why doesn\u2019t that industry simply call itself the \u201clabor arbitrage industry\u201d and focus itself on how to improve processes once part (or all) of them have been moved offshore \u2013 essentially, \u201cwe\u2019ve done our lift and shift, now let\u2019s see how we can make it better, as opposed to running the same cr*p for less\u201d. For some buyers today, all they really care about (sadly) is labor\u00a0arbitrage\u00a0and making a few adjustments here and there to make the experience more bearable for themselves. \u00a0Hence, if achieving little more than operational efficiency and low-cost delivery is all they care really<\/em> about, then let’s have them\u00a0flourish\u00a0in their very own industry focused on this very\u00a0practice. \u00a0A spade is a spade, so let’s stop bullsh*tting around the bush here.<\/p>\n

2) The Business Services Industry.<\/strong>\u00a0Conversely, when we get into the new generation of expertise augmentation engagements, the focus is on a broader range of processes where \u2013 in many cases \u2013 labor arbitrage isn\u2019t really possible. For example, with pharmacovigilance, the chances are that \u201cbuyers\u201d need added help with compliance and quality measures that they simply do not have, and there really aren\u2019t any staff that can be laid off to offset the cost of the incremental services. Moreover, with even more commonly-used horizontal processes such as procurement and HR, most \u201cbuyers\u201d don\u2019t have excess fat to burn \u2013 they have\u00a0already\u00a0trimmed their inhouse teams to the bone (i.e. many firms have one HR rep to as many as 200 staff). They need new services and help, not a replacement of inhouse labor. So… for those of us who care about achieving new value and new productivity and feel we have a pretty strong handle on labor arbitrage these days, let’s focus on Business Services<\/em> and the process acumen, domain expertise, technology and global delivery required to make this all happen.<\/p>\n

The key is to bring the global services discussion to the real business table, and not create some oddball assortment of offshoring experts who are alienating themselves by creating their own little siloed network.<\/strong>The more the \u201coutsourcing\u201d industry (as we have been calling it) remains in its silo, the harder it\u2019s ever going to be to have the global business model discussion with the real business function leaders. \u00a0We have to move the needle on this issue, or we\u2019re going to become part of a dying breed. However, we need to start setting the new agenda on how business function leaders approach expertise augmentation. They\u2019re the people we have to be talking to. Join us in our cause!<\/p>\n

Too many people scan headlines and don’t absorb the real facts – you know who you are.<\/strong> \u00a0Yes, we sensationalized the headline to get the eyeballs this critical issue warrants. \u00a0However, if you actually read the bloody piece, you’d realize we were not debating the pros and cons of outsourcing itself, we were highlighting what the industry needs to do to become more relevant to the real business decision makers (i.e. less wedding-dress and more marriage).<\/p>\n","protected":false},"excerpt":{"rendered":"

So we managed to whip up a tidal wave of emotion and opinion when we made the call that the…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,50,51,53,81,86,87,830],"tags":[698],"organization":[],"ppma_author":[19],"class_list":["post-1390","post","type-post","status-publish","format-standard","hentry","category-business-process-outsourcing-bpo","category-captives-and-shared-services-strategies","category-cloud-computing","category-confusing-outsourcing-information","category-it-outsourcing-it-services","category-outsourcing-advisors","category-outsourcing-events","category-sourcing-change","tag-sham"],"yoast_head":"\nThe great outsourcing sham redux - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/outsourcing-sham-redux_032912\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The great outsourcing sham redux - 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