Today’s post on the declining use of the term "outsourcing" comes from Peter Allen, Partner & Managing Director, TPI.
After spending a day with a leading India-heritage service provider, an epiphany occurred to me: could it be that the term “outsourcing” is passé?
The purists among us will recall that outsourcing was borne in an era when companies were transitioning employees and certain operational assets such as systems and applications. The preface of “out” versus “in” conveys movement from internally-aligned to externally-provisioned services.
But we are seeing less and less transitioning of employees and assets from the balance sheets of clients to balance sheets of service providers. Why?
The previously-popular lift-and-shift sourcing is giving some ground to clients’ desire to contract for provider-defined services. One reason is that clients are less inclined to insist service providers take over existing systems and processes. This isn’t true for all processes and all situations, but the tendency for contracting for Services is certainly increasing.
One other contributing factor? Offshore delivery solutions aren’t labor movement conducive. Sure, there are some employees making the badge switch, but nowhere near the percentages of the past.
But don’t be fooled. The term “outsourcing” is not gone entirely; rather, “services contracting” is increasing in popularity for achieving new profiles of cost, capability and capacity.
To take advantage of this opportunity, a client must accept a greater degree of provider-defined services and insist less on imposing legacy systems and processes.
Might it be time to adopt the term “contracted services” to allow for this variant?
About the author
