I recently shared a snapshot of the trends and topics we see influencing the client tendencies affecting outsourcing and offshoring. These are the high level directions we believe will play out during the next three years.
So, what about the provider side of the balance sheet?
It's actually much easier to gauge the changing areas of emphasis on the part of the companies that are applying outsourcing and offshoring than it is to get beneath the covers of the industry service providers. This is because, to a fair degree, one must make judgment of the level of perceptivity and management acumen that exists within the service provider firms to react to the changing buying habits.
So, what the following list points to are the characteristics we feel will epitomize the winners in the growing outsourcing and offshoring market. In essence, if I were directing a service provider today, I'd ...
- Adopt outcome-oriented and industry-aligned service models; depth matters. The time is right and the demand is there. Focus on services that are recognized by industry-oriented buyers (the folks chartered with winning in their specific segments) and commit to achieving meaningful results. That's not to say that there isn't still a market for lowest-cost commodity services, but during the next three years we'll be seeing much more demand for differentiation around industry specialties.
- Ensuring comprehensive infrastructure, Enterprise Resource Planning (ERP)/applications, and operations proficiency; maximum value potential. The era of integration is returning. Unify as much of the technology and operations scope as possible. Give clients the option of buying a turnkey solution. Sell this on the basis of ...
- Building resilience into all facets of the global delivery network; risk is real. Remove the concerns relating to access to capacity, business continuity, workforce unrest, and all of the other dirty issues that affect the ability of a business leader to rest at night. Notably ...
- Stepping up to the challenge of data privacy. This is the biggest paradox facing the industry. Is it a risk to the continued adoption of outsourcing and offshoring, or is it the reason to do so? The answer is yes. Today, it's a radioactive topic that is increasing in concentration. The winning service providers will manage a solution. It's the demarcation between ...
- Choosing between a narrow component orientation and business value creation proposition. It takes focus to win. The choices being made now are the ones that will define the landscape for 2010 and beyond. There will be those who compete on the basis of lowest unit costs, and they will be relegated to chasing talent in the farthest corners of the globe. Then, there will be the value-oriented providers – the ones we call the 3C Providers. They will balance cost/capability/capacity to create new value for their clients. The survivors will know which market they're in - and will be focused. As for the dance card ...
- Consider strategic combinations or acquisition of captive operations to fill out the portfolio. Fortune favors the bold. We'll see some remarkable deals in the coming years - deals that will create new and ambitious offerings. The venture funding is in position and the inherent belief is strong: standardization and automation of people-intensive work is common sense, and outsourcing and offshoring is the way to achieve this.
Providers will be positioned to win the deals of the future if they:
- Invest, organically and through acquisitions, in deep domain expertise for attractive market segments; most likely people-intensive work processes that leverage the benefits of automation, standardization and scale, or ...
- Elect to be the lowest-cost provider of "componentized" services.
