Earlier this week, from December 2 – 4 in New York City, Horses for Sources brought together influencers – buyers, providers and advisors – in global business across all sectors. It was an intimate, no-holds-barred collaboration aimed at taking a long cold look at the state of the industry today (not just how marketing wants us to perceive it!), and exploring how it could be.
Sutherland was an event sponsor and I was there with our COO, David Poole. David spoke on Wednesday morning on a panel of C-suite providers, who tackled all the really tough talking points, covering how to go beyond the act of outsourcing, of creating processes and mechanisms to deliver that thing we all talk about – value beyond cost reduction.
As we listened to the various sessions six key themes emerged, time and time again. Here are some of the key takeaways from the HfS Blueprint Sessions 3.0, from my perspective.
1) The Global Business Services (GBS) model is growing. People are asking if outsourcing is dead. I don’t think so, outsourcing is still a core GBS portfolio component. But lots of firms are embracing a GBS model that combines shared services and outsourcing into one global framework that is tightly aligned to business strategy. The GBS goal is not only to source globally but to really leverage shared services and outsourcing efforts to significantly impact operating costs as well as productivity, quality, business strategy and innovation. This is an excellent segue to…
2) As providers, we have to be more “advisor” than “operator.” Here at Sutherland, this is nothing new. Our mantra is “partner, not provider.” Outsourcing must be viewed as a supporting component of a larger holistic solution. Yes, BPO providers must collaborate and be an extension of the buyer’s company. More importantly, however, as the subject matter expert, the provider partner must go beyond mechanics of outsourcing, to help change the way their clients do business. This means actively looking for ways that the company can improve processes, performance and insights. The future will be co-created.
3) More firms are trying to move away from the FTE model. The FTE pricing model has, historically, been the most prevalent in outsourcing deals. Yet, as outsourcing is not strictly a cost-cutting exercise – it’s a business-value creator– more firms are embracing a new pricing model based on delivered outcomes. In the new output based model, the effort and success is out in the open for everyone to see. It creates more transparency based on deliverables rather than input/FTE based pricing.
4) Automation adoption is growing FAST. Outsourcing is all about creating defined processes, and evaluating how much of that work can be automated. Robotics are on everyone’s mind. They are the next big wave and could have significant impact on the offshore sector as the technology has evolved and is far more accessible. The result will be a kind of technology arbitrage that could provide significant cost savings over offshore labor cost.
5) The new acronym de jour: SMAC – Social, Mobile, Analytics and Cloud. These four new technologies are transforming IT as we know it. In fact, yesterday’s PC and client/server models are becoming increasingly irrelevant as business becomes ever more virtualized and globalized. Social media has enabled businesses to reach a large number of consumers quickly and efficiently. Mobile technology and its subsequent use at both the enterprise and consumer level is now ubiquitous. Making sense of the vast amounts of metadata being generated in record amounts at every customer touch-point is critical. And, the cloud has allowed us to move almost every aspect of business into an “as a Service” model, for greater cost savings but also operational agility and flexibility. Bringing the SMAC elements together as an iterative process will be a game changer. Expect to hear more “SMAC talk” in 2014.
6) China is pushing into India’s outsourcing domination. While it won’t be anytime soon, China could overtake India as delivery center. The sheer number of its IT talent and strong economic growth is impressive. However, as the business adage goes, “You can buy in any language, but you can only sell in the customer’s.” Realizing that English competency was holding them back, China has taken active steps and will have 300 million English learners by 2020. This is one to watch over the next few years.
If you are looking to transform your F&A operations, we’d be happy to show you what we can do for you. Schedule a free assessment of your current practices. Comments? Questions? I’d be happy to answer.