{"id":1750,"date":"2010-01-17T20:33:00","date_gmt":"2010-01-17T20:33:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/the-industry-speaks-part-i-its-not-all-about-cost-anymore-outsourcing-provides-a-powerful-change-agent\/"},"modified":"2010-01-17T20:33:00","modified_gmt":"2010-01-17T20:33:00","slug":"the-industry-speaks-part-i-its-not-all-about-cost-anymore-outsourcing-provides-a-powerful-change-agent","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/the-industry-speaks-part-i-its-not-all-about-cost-anymore-outsourcing-provides-a-powerful-change-agent\/","title":{"rendered":"The Industry Speaks, Part I: it’s not all about cost anymore, outsourcing provides a powerful change-agent"},"content":{"rendered":"

\"GlobalSo it’s time to drip-feed the\u00a0intentions and experiences\u00a0of 1055 buyers, intermediaries and vendors into the global sourcing industry.\u00a0 <\/strong><\/span>\u00a0<\/p>\n

We’ll be discussing the results from our “Seeking the New Normal in Outsourcing Delivery” <\/em>in full at the <\/strong><\/span>Global Services Conference<\/span><\/strong><\/span><\/a>\u00a0on 28th January, but the nuances behind why – and how – companies are exploring sourcing delivery models, as we come out of a painful recession into an uncertain climate, need to be aired and discussed.<\/strong><\/span>\u00a0\u00a0<\/p>\n

There’s been a lot of talk about a “New Normal”, or a “Reset Economy”, that things will never be quite the same as before<\/em>,\u00a0however, we really need to zone-in on reality to grasp what these new dynamics really entail, in order to\u00a0understand how we can address them.\u00a0\u00a0<\/p>\n

To cut to the chase, most industries are in a state of profound change, where businesses are having to\u00a0accomplish new levels\u00a0productivity and sources of revenue simply\u00a0to survive, let alone grow, in this climate.\u00a0 Whether you’re making cars, pharmaceutical products, providing consulting services, and so forth, the chances are there’s someone else in your industry vying to deliver what you do at lower cost, and potentially better quality.\u00a0 (Unless you’re in banking,\u00a0where it’s business as usual…).\u00a0\u00a0<\/p>\n

The big difference today is there aren’t really any major developments on the near-term\u00a0horizon to fuel a fresh wave of new economic growth, such as those provided by the\u00a0Internet, computing and telecoms revolutions of the last 20 years.\u00a0 This time, the name-of-the-game is to optimize the tools we have, and be smarter than our competitors.\u00a0 Eventually, we’ll see real progress being made in areas such as medical research, Cloud computing and Green tech that should fuel a new growth era, but it’s not going to be upon\u00a0us quite just yet.\u00a0<\/p>\n

In\u00a0today’s global economy, the options available to provide products and services leveraging global talent and\u00a0new technologies, are almost suffocating\u00a0for most firms.\u00a0 There’s never been a time more crucial than now <\/em>to find the right partners who can help you source global talent effectively.\u00a0<\/p>\n

When 209 enterprise buyers of outsourcing services were asked what\u00a0were the most important reasons\u00a0\u00a0driving them to evaluate outsourcing in 2010, we\u00a0received the following results across small (under $750m revenues), mid-sized ($750m-$3bn) and large ($3bn+) customers:\u00a0<\/p>\n

\u00a0<\/span><\/span><\/span><\/strong>Figure 1: Customers are looking to drive change into their operations to become more effective globally<\/strong><\/span><\/span><\/span><\/span>\"\"<\/strong><\/a>\u00a0<\/div>\n

You can clearly see the\u00a0contrasting motivations here between small, medium and large-scale enterprises when in comes to their motivations behind outsourcing.\u00a0 Let’s drill a bit deeper here…<\/em>\u00a0<\/p>\n

Cost-reduction dominates, but only\u00a0where there is significant scale to\u00a0exploit labor arbitrage opportunities.<\/strong>\u00a0 While the mid-large customers (90%) overwhelmingly look at cost-reduction as their prime driver, smaller firms do not have the same scale to enjoy such\u00a0immediate cost take-out potential, with only 60% citing reducing costs as a primary driver.\u00a0 They\u00a0actually regard accessing new process acumen, technical skills\u00a0and having support to operate more effectively at a global level, as similarly powerful motives.\u00a0 <\/span>\u00a0<\/p>\n

Empowering global operations and re-engineering processes are coming to the fore.<\/strong>\u00a0 When we ran a similar study <\/span>six months’ ago<\/span><\/a>, it was already becoming clear that customers, when looking at outsourcing,\u00a0are\u00a0anticipating more\u00a0business benefits\u00a0than merely driving our some initial cost.\u00a0 As we emerge from the recession, their desire to leverage global sourcing to help them operate more effectively as a global organization and re-wire their operations to support that process, is becoming even more apparent, with over half of all customers citing the need to globalize<\/em> and transform <\/em>processes as prime outsourcing motives.\u00a0 And this is across all size-classes of customer.\u00a0 The need to globalize is impacting all companies, and outsourcing is providing one vehicle firms are looking at to help them achieve it.\u00a0 <\/span>\u00a0<\/p>\n

The mid-market increasingly views outsourcing as a vehicle to force change into their business operations.<\/strong>\u00a0 As we’ve <\/span>discussed exhaustively<\/span><\/a>\u00a0during the downturn, many businesses are struggling to break out of the old way of running operations, and outsourcing is increasingly being viewed as a major change-agent, with close to two-thirds of mid-sized customers citing this as a very important driver for outsourcing this year.\u00a0 While mid-market customers clearly feel the need to combat fatigue from old business support models, large firms are less inclined to view outsourcing this way, as they are more used to using customized sourcing approaches and captive \/ shared services\u00a0models, that are harder to “change” solely with outsourcing engagements.\u00a0 Small firms tend to use outsourcing moreto augment the\u00a0value it brings from an added resource, talent and global standpoint, but because of the lack of scale will struggle to force real change into the business models with limited labor arbitrage opportunity.<\/span>\u00a0<\/p>\n

There’s much more to follow from this study in the coming days, but we can already conclude that\u00a0this unique\u00a0view across the\u00a0real <\/em>drivers behind outsourcing clearly compliments the profound and fundamental changes we are going through across most industry sectors.\u00a0 Global business is rapidly changing, and outsourcing provides a vehicle for many business to change with it.\u00a0 Love to hear your thoughts \/ comments.\u00a0 You can also email me at phil dot fersht at horsesforsources dot com.<\/span>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

So it’s time to drip-feed the\u00a0intentions and experiences\u00a0of 1055 buyers, intermediaries and vendors into the global sourcing industry.\u00a0 \u00a0 We’ll…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,51,849,81,93,837],"tags":[],"organization":[],"ppma_author":[19],"class_list":["post-1750","post","type-post","status-publish","format-standard","hentry","category-business-process-outsourcing-bpo","category-cloud-computing","category-hfs-industry-2010","category-it-outsourcing-it-services","category-social-networking","category-the-industry-speaks"],"yoast_head":"\nThe Industry Speaks, Part I: it's not all about cost anymore, outsourcing provides a powerful change-agent - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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