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Buyers increasingly are viewing outsourcing not as a commodity, but as a solution to be achieved in short order, say Gary Budzinski, President of Aon Consulting-HRO in Chicago. Buyers are becoming savvy, selective and sensitive to providers’ capabilities. People are trying to get to shorter cycle times on decision making with solid solutions that does more than just cover up the administrative processing. All the while, they’re looking at the total cost of an employee– which is more of the management of the human capital assets of a firm.
Smart providers are saying, ‘Just tell me what you’re trying to achieve in aligning your HR strategies to your business plans,” Budzinski says. “And we’ll come back with a solution that maximizes the best use of your human capital and achieves your economic objectives while also fitting your company culture.
GARY BUDZINSKI
President of Aon Consulting-HRO
Think of your outsourcing team as a “strike force”, which must be experienced and nimble, but must also have a well-defined mission. This mission or “statement work” is critical to the relationship as it states deliverables, milestones and specifics for how ongoing communications are handled. The key is to ensure a single point of accountability that maintains an ongoing relationship, communicating progress and updating requirements.
GLENN HOOGERWERF
Chief Operating Officer, VMC
When we talk about outsourcing, one critical topic that’s frequently overlooked is the criticality of the IT infrastructure to BPO. The strategic business applications that BPO optimizes are only as effective as the infrastructure they run on. Of course, the infrastructure itself must be constructed and managed to anticipate evolution in the client’s growth and business opportunities. So, when selecting an outsourcing partner, enterprises should consider one who can deliver the full spectrum of benefits from both infrastructure outsourcing and BPO. They need a partner who can drive improved operational efficiency, enhanced customer service, reduced costs and increased employee productivity, and at the same time provide domain expertise in their industry for an extra dimension of strategic business alignment and the opportunity to focus their own IT resources on initiatives that drive growth and profitability in their business.
PHIL SMITH
Vice President, Solutions Marketing, Unisys Global Outsourcing and Infrastructure Services
The buyer is the new king of the outsourcing marketplace. The negotiating process has shifted toward the buyer, The Global 1000 buyer has moved up the learning curve and now has the knowledge and contract buying power to demand service excellence and significant cost savings from service providers…
JOE VALES
Senior Partner Vales Consulting Group, LLC
To maintain or even build market share in this environment over the next 12 to 18 months, service providers will need to build robust value propositions that deliver economic, strategic, operational, and human resource benefits. The firms that deliver on these promises will aggressively capture market share and shape the growth of the overall outsourcing market.
JOE VALES
For many new to outsourcing, deals are considered one–off engagements – with little regard for true long-term rewards. Jane Siegel hopes to change that.
As director of the IT Services Qualification Center at Carnegie Mellon University, Siegel knows half of all sourcing deals are renegotiated in the first two years, and half again end up going to other providers. Associated costs, like transferring of people and technology and even litigation are high. “The loss in productivity has been fairly serious,” she says.
So the Center is helping set the standard for outsourcing’s future. The center is establishing best practice models, industry standards, and a provider certification program. For buyers, the focus is on relationship management, careful decision making and establishment of governance to ensure each deal’s long term survival. For providers, think of it as a Good Housekeeping Seal of Approval.“
We’re trying to create a de facto standard that will help both sides be more successful in the deals they shape and the relationships they carry out over long time periods,” Siegel says. The Center’s site (http://itsqc.cs.cmu.edu) includes information and instructional downloads. “This will help service providers differentiate themselves from their competitors, and give buying organizations an objective, publicly available way to know what a provider is likely to be able to do and to mitigate their risk in provider selection.”
JANE SIEGEL
Director of IT Services, Carnegie Mellon University
Imitation – or copying, depending on how one views it – can be the most sincere form of flattery. Apparently even in China. Asia outsourcing expert Alex Lam was walking down the street in Shanghai, when he happened across a book store. In it, he eyed a management book, translated to English to read, “The Masters Cannot Help the Management Style in China.” It not only panned such sought-after management gurus as Jack Welch and Peter Drucker, but it offered a chapter on outsourcing, and listed “The 10 Reasons Why People Outsource.”
“That’s a direct translation from The Outsourcing Institute,” Lam alternately enthuses and laments. The tips themselves weren’t too far off, either, he said. He hoped to bring it up with the publisher. “We have to make our voices known.”
ALEX LAM
Senior Advisor, The Outsourcing Institute Asia
Want the deal? Better be able to herd suppliers.
Suppliers facing the waning moments of extended contract negotiations are increasingly facing a common request: Manage all our other suppliers.
Third-party vendor management is becoming a frequent demand thrown into negotiations at the last minute. And rather than lose the deal, many suppliers will agree, says Danny Ertel, Founder of Vantage Partners LLC, a spin-off of the Harvard Negotiating Project. Companies could face the challenge of managing hundreds of small vendors. And while many don’t have the knowledge and discipline to handle such project management, they’ll agree so they don’t lose the deal.“
They’re kind of doing a pass through. They’ll throw some bodies at it to take care of it,” he says. Smart suppliers are keen to the trend – and are creating centers of excellence to manage the client’s demand.
DANNY ERTEL
Founder Vantage Partners LLC
Many Tier 1 suppliers are acting like Tier 3s, delivering sub–par performance, which leads to high–profile failed deals in the marketplace. Buyers are unaware, and are learning through failure. This is not good.
“You still have to take care of the basics – contracts, negotiations, service level agreements. Don’t trust Tier 1 companies to treat you like a Tier 1 customer and provide Tier 1 service.”
PAUL CERVELLONI
Senior Consultant, The Outsourcing Institute
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