“Clients no longer want a supplier, they want a partner.”
On Where Outsourcing Is Heading
Outsourcing in the traditional sense — a way for companies to save money — is changing. The clients I talk with now view outsourcing, or some form of it, as a viable option to not only saving money, but to actually help them improve their competitiveness. In 1997, I think we’ll see an acceleration of the shift from traditional outsourcing (i.e., data centers and legacy systems support) to more functional outsourcing. Companies are facing increased competition in their own marketplace. They recognize the need to focus on core competencies and are looking to outsource entire processes that fall outside their core set of skills like billing systems, help desks and the whole customer relationship management process. I also see a dramatic increase in the demand for content hosting on the Internet and total systems management.
On Economic Trends
Companies are recognizing that certain processes in their business are commoditizing, and the more they invest in these processes in-house, the quicker they get to the point of diminishing returns. Changes in technology are happening so fast that companies are being forced to identify their core skills, and seek a partner to manage and improve the processes that fall outside this domain. Things like billing and payroll systems, accounts receivable, accounts payable, settlement and clearing systems are all fair game to be outsourced.
On Relationships Changing
Clients no longer want a supplier, they want a partner. They want a partner who can deliver along every phase of the services model, from business consulting to application development to systems integration to outsourcing in a seamless, cohesive way. A lot of IT suppliers claim to be a partner, but few really behave like one. A partnership assumes that there is a set of shared goals and that both parties have a substantial interest in achieving them. Most clients I talk to have been burned by the traditional outsourcing model where often success is measured by MIPs. Clients are looking for the next generation of the outsourcing model — a model that is open to creative partnerships. This could mean anything from working together to spin off in-house processes to form new businesses that are jointly managed, to risk/reward contracts where a portion of the compensation is tied to the client’s overall success.
On New Activities
I think this might be a little farther out than 1997, but the whole evolution of the call center is an interesting topic. Over 70% of a companies contact with a customer is over the phone. How companies interact and serve their customers is a pretty important process that companies need to understand and leverage. Right now, a lot of companies view this as a discrete function, but it’s really much more interdependent to the entire business. Companies are realizing the importance. They also understand that scale of building a world-class customer relationship management might require a partner who will help them improve their competitiveness.
On New Relationship Trends
I see a trend toward building contracts according to a shared set of goals and objectives. If this happens, the relationship between supplier and customer is fantastic. There is a sense of a true alliance. The notion of us versus them disappears and is replaced by teamwork.