What do you see on the horizon? – I asked in a recent article referring to people’s own career aspirations in the outsourcing industry, but I also stressed the importance of the company’s vision for the future. Now I ask….
What do we see on the horizon for the outsourcing industry?
According to KPMG research seven out of ten companies are planning to expand their outsourcing contracts. In addition, in PwC’s report (2015): “Anything, but business as usual” owners of private companies emphasize the importance of collaboration and innovation for seizing growth opportunities in the future. In the same, Alexey Repik, R- Pharm states:
“If you believe that the best and most genuine things can be generated only internally within the company, you may get lucky once or twice, but your lucky streak will end sooner or later.”
Furthermore, SSON Industry Study (2014) shows that companies are increasingly incorporating shared services business models or partnering with outsourcing providers (Figure 1).
Today, the “hot” debate is NOT whether to outsource or NOT, but WHERE and HOW?
The strategic game changers identified by the SSON far back in 2005 were: expansion beyond India, new service delivery locations and increase in talent and arbitrage opportunities. The latest Industry report recognizes CEE and Latin America as attractive locations for SSC (Figure 2).
We see that India dominants only among large corporations which we can say represent the first wave of SSC. However, more recent clients have turned towards more nearshore alternatives seeking for transformation and improved business performance. More importantly, the SSON has found that outsourcing providers from the CEE region are accepted as “part of the extended team” in contrast to being seen as external partners.
Stay in the game, follow the trends!
The technological advances have caused a shift in demand changing client expectations and the way services are delivered. Outsourcing is no longer only about cost reduction, although still major driver, there has been an increasing demand for standardization, digitization, automation and improved analytics (Figure 3).
In other words clients are expecting from providers to come up with innovative ways to improve operations reaching higher efficiency levels. One thing is for sure, the industry is experiencing major changes in technology, clients’ expectations and the scope of delivered services. Providers must foresee the transition, pick up new skills and improve processes to seize the opportunities! The SSON has identified the following mega trends disrupting service delivery:
Optimizing service delivery
Clients are shifting from single towards multifunctional service providers. To address this mega trend provider must expand their scope of services, their customer base and the geographic regions they serve.
Working towards improvement and development of self-service solutions and mobile applications are the most attractive strategies for driving digital business.
The principle of mining data from processes and systems is becoming the “new normal” for SSO operations. Adopting data management plan is one effective strategy to provide the requested insight.
According to hfs article 69%of providers cite the need to understand and deploy automation as crucial requirement. Process automation is also a key technology in bringing value beyond cost. Moreover, it reduces errors, enhances compliance and provides process analytical insight which is the next presented trend.
New and evolving skill sets
This trend is expected to be the solid ground for all the others mentioned above. Namely, more analytics and of higher quality is expected as a result of improved skills of employees. But, it seems like providers are still focusing on improving transactional measures like errors rates.
In following articles I will address each trend individually by providing insight and effective strategies for service providers to mitigate through the changing environment.