During the past 25 years, I’ve seen many evolutions in IT, outsourcing, and advisory services. And one thing I’ve learned about these industries is that changes are constant and to succeed one must adapt to the changes. Yet the landscape of service provider firms is large and continuing to expand with organizations that do not adapt, and only try to maintain status quo on their solutions and services.
The global services market has been especially fraught with rapid and complex changes over the last several years, and these changes are forcing organizations to adapt how they address next generation sourcing to achieve their objectives and goals. Today it’s far more complicated than simply how to execute an outsourcing RFP process; outsourcing is one option, but is it the right sourcing option for your enterprise? Organizations need to take a step back, assess the available sourcing opportunities, and solidify a sourcing strategy that will leverage one or multiple options to achieve their objectives.
Drivers impacting the requirement for change include:
- Maturing service recipient community – clients have Centers of Excellence (CoEs), better governance, more experience, etc.
- Commoditization of outsourced services, standard offerings, and lower prices
- Increasing service delivery location options
- More service provider options – Tier 1 providers, offshore providers, niche providers, etc.
- Increasing technology options – XaaS, VDI, private or public cloud environments, etc.
- Mature sourcing options – outsource, out-task, maintain in-house, shared services, captives, etc.
- 2nd and 3rd generation sourcing deals, which makes further savings more challenging
While facing these changes, organizations are still experiencing the same pressures and have the same requirements for cost savings, service improvements, access to skills, innovation, and best practices. As a result, organizations must now ask and address a very different set of questions than previously. It’s no longer, “What do I outsource, how do I do it, and how much can I save?” Instead, it’s, “What should I fully outsource/out-task/retain in-house, where can I leverage new technologies, what is the best blend of onshore/offshore, what is the ideal mix of Tier 1 and Tier 2 service providers, and what service delivery locations should I pursue/are required?”
Changes in the global services industry are not only impacting service recipients; advisors must also adapt their approach to appropriately serve their clients in the face of these new and more complex situations. It should no longer be about running a sourcing transition to determine what and how best to outsource, but about understanding all the potential strategies, how to optimize them, and how to operationalize the results. Advisors need to respect and appreciate their clients’ view of their environments, and should not encourage or try to force fit them into a standard or traditional solution. Taking this approach will allow for better decision making on how each individual client can best leverage the increasingly complex ecosystem of global services.
Here at Everest Group, next generation sourcing has become one of our key focuses. While we continue to assist with traditional outsourcing initiatives, we see the market changes quickly increasing the requirements for next generation sourcing. An organization’s approach to this must address the creation of strategies that allow it to take advantage of multiple sourcing opportunities, service providers’ capabilities, technologies, and service delivery locations.
How is your business adapting to address next generation sourcing requirements, and what new tricks have you learned?
