Today's blog on current affairs and sourcing comes from Peter Allen, Partner and Managing Director, TPI.
Generally, I've found that clients of outsourcing are either desperate or ambitious. In today's recessionary economic markets, there's decidedly a desperate tone among the buyer executive team driving the introduction of change. Can you blame 'em?
Look at the wide array of industry segments that are suffering from the economic spiral of 2008: mortgages, lending, transportation, hospitality, automotive, retail -the list goes on.
Many of the issues causing today's economic pressures are here to stay for a long time. The energy problem is not going away. Credit will be in short supply. Financial institutions are more risk averse. And inflation is a growing concern. When these pressures take flight, it's hard to catch up.
So it's no surprise there's a relentless focus on instilling operating disciplines that will weather the storms of uncertainty. In fact, if a sentiment index existed that conveyed the relative emphasis between those that are focused on immediately reducing operating costs versus those looking to outsourcing for new capability, we'd see the former outweigh the latter.
To cope, senior executives within consumer-oriented firms are figuring out the duration of this climate and its depth. And with this yardstick, they're assessing their organizations and asking a series of strategic questions:
- How do we maximize our contributions and value in relation to our enterprise strategy?
- What can we reasonably achieve for ourselves?
- What are the benefits and risks of leveraging external resources to a greater degree?
Most senior managers are focused on maintaining a strong balance sheet and being rigorous around headcount, inventory, and production. With only two major levers at their disposal - increase prices and cut costs - many are concluding that internal organizations cannot move far enough, and/or fast enough towards improvements without some external forcing function for change.
Surprised they're opening their minds to outsourcing?
