Frank J. Casale Founder and CEO The Outsourcing Institute

A Message From Frank Casale
Why do companies choose to outsource? How can I tap into what the buyer wants in order to make the outsourcing partnership more successful? As the only neutral professional association dedicated solely to outsourcing, The Outsourcing Institute is committed to understanding what the buyer is looking for in an outsourcing relationship and tracking these results. We encourage you to use the information provided in this edition of the Outsourcing Minute to achieve a better understanding of what your buyers are looking for in an outsourcing partner.

Good Luck and Good Selling
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What the Buyer is Thinking

The “Outsourcing Minute: Service Provider Edition” is a series of quick and valuable tips for members of The Outsourcing Institute (OI). This edition of the Outsourcing Minute focuses on something every outsourcing service provider is interested in - what the buyer is thinking.
There was a clear shift in 2002 for buyers of outsourcing services. No longer is outsourcing just about saving money. It’s now about doing things quicker, more efficiently, getting to market faster than your competitors, having maximum flexibility with your workforce and gaining access to high quality employees. When asked what are the three primary reasons for outsourcing, more respondents singled out “improving their company ’s focus” (55%) than any other factor. The second most popular response —reducing and controlling operating costs - was cited 54% of the time. Simply stated, what buyers typically want includes a focus on core competencies, cost savings and high quality products and services.

It is important for a vendor to keep this key priority order in mind when working with a potential buyer. Understanding what motivates your buyer provides you with the tools to address their concerns with much more effectiveness. Another key factor driving buyers to seek outsourcing partnerships is the changing nature of business competition. Companies are being pulled in a multitude of directions. Executives cannot afford to be distracted when their plates are already overflowing. Concentrating on their core processes is crucial to their success and the health of the organization.

What can we learn from these outsourcing drivers? Buyers are looking for vendors who can become their strategic partners, as well as provide needed services. What else is on the mind of the buyer that drives outsourcing decisions? On an annual basis, OI surveys its members to benchmark, quantify and qualify outsourcing marketplace trends. Published annually in The Outsourcing Institute’s Buyer Index, these findings help outsourcing service providers know where to focus their marketing dollars and messages.

According to the 2002 survey, what follows is a sampling of current outsourcing trends:

Top outsourced functions:
1. Information Technology
2. Administration
3. Distribution & Logistics
4. Finance
5. Human Resources

The most common reasons for outsourcing include:
1. Improve company focus
2. Reduce and control operating costs
3. Free resources for other purposes
4. Gain access to world-class capabilities
5. Resources are not available internally

Market exposure and knowing what’s on the mind of the buyer are key elements to unlimited success in outsourcing sales. To gain valuable statistics and further outsourcing information, access The Outsourcing Institute Fifth Annual Outsourcing Index.