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Why outsourcing processes have become morally wrong

Posted by Anthony Lamoureux on 06-Mar-2015 16:36:00

BlogImage4The outsourcing industry needs to change. We are constantly battling against antiquated, costly, time consuming tender selection processes and contracts that blindly focus on cost as the greatest measure of value.

For example, take the way suppliers are selected. It seems morally questionable that those companies with big budgets can pay the likes of Gartner, to court them and for their cash get high up on the analyst list of “top quadrant” companies. That shows clients going to tender are not selecting a company because they may be really great at something, but because they have money. This is where the RFP process just doesn’t add value.

The outsourcing process today still starts off on the wrong footing. It is often a financial one, which means that the focus of the deal is to reduce, in part, the cost of IT, rather than the outsourcing deal being the differentiator and accelerator to help the overall business gain significantly greater savings in the overall business costs. The contract should not just look at the IT department (which is managing the outsource contact) but should provide benefit for the whole business. It’s a fundamental flaw.

Companies are tender to look at the outsourcing deal as very much an IT process and decision, rather than the selection of a board sponsored partner that can help the business to overcome its operating challenges.

It’s not about going into a company and slashing IT costs by 50% and causing carnage everywhere - because all that will do is save 1.5-2.5% of the overall operating cost of business. That’s nothing; just chicken feed. On the other hand if that IT department can find an outsourcing partner to help them make a 5% difference in operating costs across remaining 95% of the whole business operating cost, then you’ve already saved the entire cost of the IT department and made a significant difference to the company’s bottom line.

To do this you need to plan the way you make an innovative difference and look at new ways of working, rather than concentrating on the IT requirements. IT departments need to take bolder steps in finding a provider they can step into the abyss with to drive real innovation.

 

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Topics: IT Outsourcing

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