If you are like most business and tech executives, you are probably dissatisfied, if not fed-up with traditional outsourcing and its labor arbitrage-centric business model. Most of the savings have evaporated, performance is lagging, and the innovation isn’t coming fast enough…or at all.
The outsourcing journey began 25+ years ago and while the outsourcing revenue decline over the past several years since its peak back in 2014 shows no signs of turning around anytime soon. What we are seeing is a dramatic and rapid increase in the market for digitally-fueled deals–service offerings powered by new technology, RPA, transition to new business models & new pricing.
But we realized just over two years ago now that too many enterprises were stuck in the legacy world and not ready for the digital age. With the advancement and convergence of emerging technologies such as blockchain, AI, cloud, analytics, mobile, automation & IoT, and new business models rapidly disrupting the old, we wanted to change the outsourcing conversation from one of offshoring work and labor arbitrage, to more of building out a digital strategy that would encompass the existing outsourcing strategies but build upon that with the digital transformation work that can be brought back in-house or it can continue to be served by trusted business partners who can help glue all the moving pieces together and eliminate the separate siloes that are stymieing transformation and all too common in many organizations. The reality is that many of the first, second and third generation deals that were signed, have played out and now clients are looking to understand the “new normal” for outsourcing deals.
There are still some organizations that are looking for the old model, but many clients have transitioned or leap- frogged these old constructs and are now looking to take advantage of the new models that incorporate digital services, RPA and AI. This creates a challenging situation for current providers, as it is forces them to outline their innovations more concretely during contracting. No longer is it enough to “guarantee a level of savings” as clients are interested in knowing how these efficiencies will be generated?
Enterprise sourcing has recently been a transformation catalyst helping organizations compete and thrive in the Digital Age. Sourcing suppliers have become partners in this transformation journey – especially those who can modernize their client’s technologyinfrastructure, digitalize their enterprise value chains and workforce. Technology vendors, IT Services companies and BPO providers have begun to coalesce their offerings and become integral components of the digital innovation ecosystem. However, the old models are being challenged and there is a “new normal” that is begging to emerge in the market based on the evolving needs of clients. This new normal relates to a more wholistic solution that is required by clients – a focus on outcomes and results that are delivered as solutions not independent transactions.