If I was paid a £ for every time “reduce cost” was the answer to my question, “Why do you want to outsource?,” I think I could be sunning myself on a yacht rather than writing this post! Therefore, it came as a big surprise that in a recent survey of over 500 executives from across the globe, cost reduction was not in the top five business drivers for the outsourcing of business services. Now, I’m not sure who these 500-plus executives were, but it got me considering this: What is the role of outsourcing in today’s business strategy? And has the outsourcing sector sufficiently evolved, to remain a competitive and valuable part of these strategies? Both are complex questions, but let’s first look at some data to give a little context to the arguments.
The Deloitte 2018 Global Outsourcing Survey that I referenced above explores the international outsourcing market based on interviews with key executives across various global industries. Their views that cost reduction is not the primary driver for outsourcing business is a significant deviation from previous market studies. In fact, even as recently as 2016, Deloitte was reporting that these issues were still part of the five most common drivers.
Clearly, this data further reinforces the fact that corporate attitudes are changing quickly and the importance of customer experience (CX) is truly becoming a boardroom priority. In my career, I have seen this fundamental mind shift firsthand. There was a time when executives would issue an RFP just to compare the various supplier prices. It was really an exercise designed to drive down cost, with the customer being treated like a commodity (and not a very valuable one). I’m pleased to say that, in most cases, this approach has changed significantly. It is my opinion that brands are now reaching out to organisations like HGS to deliver more complex and business critical solutions, due to the following reasons:
- Transformation and innovation are paramount. Many outsourcing projects are now actively launched because they force change. Service providers can serve as innovation hubs, to allow the client partner to design new solutions and services in a different way. This is essential for companies that want to explore innovation and transformation in the way they deliver services.
- Service—notably, customer service, has become increasingly complex. If your house needs to be completely rewired because you are advised there may be a fire risk, then you will hire an expert to do the work - unless you are a trained electrician and have the time available. The same concept is becoming true in many service company relationships. Companies are seeking to hire experts because they just cannot deliver the same quality using internal processes. Customer service is a great example of this change in process complexity. A decade ago, most contact centres were solely focused on answering customer calls and emails. Today, customer service, or the term I see as more befitting: CX, involves an omnichannel approach supported by assistive technologies, such as artificial intelligence, data analysis, and decision support. Brands cannot keep up with customer expectations, so CX experts are needed for their higher-level customer service skills—those that cannot be provided in house by the client.
- Platforms are changing fast. Many large organisations are filled with big, clunky systems that are both expensive and inflexible. How can it be that in our personal lives we are familiar with the ease of the app store and cloud-based systems, yet so many enterprises are not using similar platforms? That is changing fast, as many business leaders find that they can deploy solutions without the involvement of the IT team. Outsourcing technology and services is no longer just about the CIO commissioning a service company, as a result of the vast potential of cloud-based enterprise solutions.
These trends are feeding into the strategic changes being experienced in boardrooms (with a C-suite that increasingly includes chief experience officers (CXOs) across the globe. Outsourcing has matured into consultative partnerships, because service companies bring deep insight and expertise. The new breed of outsourcing partner is the result of sweeping market changes, evolving customer demand, and disruptive innovation, like robotic process automation (RPA). The stage is set for a new breed of BPO partnership, to support a new way of business. Future success depends on selecting the right partner to move toward more contemporary, results-driven tools and strategies.
If you would like to discuss the subject further, please feel free to contact me directly at firstname.lastname@example.org.