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Outsource magazine: thought-leadership and outsourcing strategy | May 27, 2017

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Will 2017 bring a new era of partnership in outsourcing?

Will 2017 bring a new era of partnership in outsourcing?
Mark Hillary
  • On December 19, 2016
  • http://www.markhillary.com/

I was thinking of what I could say about the outsourcing market at the end of 2016. My initial thoughts were about how I feel that the term itself is dying out. Companies are much more likely to be exploring partnerships today. This view is generally supported by a look at Google Trends, where you can see a gradual decline in the use of the word “outsourcing” over the past five years.

However, a quick look at recent news tells a different story. In the USA there is a sudden interest in checking to see who has historically supported outsourcing because president-elect Trump has said that he is about to rein in trade deals and stop globalisation. Take a look at how CNN has trawled through the history of one of Trump’s new team members to ask how on earth he was appointed when he once said that outsourcing can be useful for American business and the NAFTA free trade agreement isn’t a bad thing.

Back in the UK, another government contract has collapsed with headlines that talk about a “catalogue of failures”. However, I went back to have a look at the Google Trend data from June 23rd to today, so the post-Brexit period and the Trump election would both be included and it’s difficult to see that anything has changed. Outsourcing did feature slightly more often online after the Brexit election, but there was no spike in interest after this event or the US election. It meandered up slightly and has recently started dropping again.

Despite the apparent business disasters that the popular press chooses to always focus on, there does seem to be a decline in the use of the term itself and this is a good thing. In years gone by the partnership idea was still quite flawed – it was always obvious where the power lay in any outsourcing relationship.

But as far back as the 1980s there were academics like Charles Handy suggesting that the fundamental structure of organisations is changing. The edges are becoming more porous, allowing for example teams to work alongside each other inside a single office, yet earn salaries from different organisations.

It’s taken a long time for some of these organisations to earn general respect, beyond just being considered to be hired hands – the supplier community – yet this is one of the themes that I have consistently heard throughout 2016. These companies are becoming valued partners and the relationships being created are about much more than a client just buying an agreed service from a supplier – there is co-creation taking place. Suppliers are helping the client companies to reformulate the way that they do business.

I could name some of the companies that I work with as examples of this changing dynamic, but that would be self-serving. I don’t work with IBM though and just look at how their Watson product is redefining several industries – especially medical diagnostics. Imagine taking the power of a supercomputer and a self-learning system and creating the best doctor in the world with the ability to keep learning constantly, no matter how many academic papers are published – the system can always keep up.

Companies engaged in cancer research aren’t going to IBM these days to install some servers and manage their IT desktop estate. They are thinking about how their own industry could be redefined if the power of a supercomputer could be aimed at enormous problems.

This is merely one example. There are many organisations within the pool that we might have called BPO or ITO suppliers a few years ago that have now developed products just like Watson – products that can in fact have a redefining effect on the industries where they are used.

Better delivery models for services, such as the cloud within the enterprise and the app store for mobile devices, have facilitated much of this. The customer is becoming the business leader rather than the IT executives, leading to many more opportunities for the tools to be applied to innovation that changes the business.

But there is also a growing confidence in the supplier community. Many of them can see how their skills are more valued and how they can achieve so much more by packaging up their expertise into easily purchased platform-based services. Seen this way, the old talk of partnership that faded after the outsourcing contract was signed is rather different. I think that as we enter 2017 partnership will be used far more synonymously with outsourcing than ever before.

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