| | By Mick James
A measure of the
increasing maturity and
sophistication of the
outsourcing market is
the level of discussion
it can now sustain.
Where outsourcing might
once have been a
sub-topic at an IT
conference, it is now
able to sustain
heavyweight conferences
of its own that address
the full range of
business functions and
processes.
A case in point is
the 2nd annual European
Outsourcing Association
conference in Frankfurt,
which brought together
outsourcing companies,
advisers and clients for
three full days of
presentations and
discussion under the
rubric of “Outsourcing
and Shared Services”.
It’s clear that
outsourcing is no longer
simply a case of an
outsourcer delivering
expertise and an
outsourced solution to
clients. Outsourcing
expertise now resides in
many places, with
clients increasingly
structuring solutions
themselves and many
opportunities for
consultants to become
involved in deals as
third-party advisers.
Deals are no longer a
simple hand-over of
processes and staff to a
vendor, but can be
complex structures
involving multiple | |
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| | vendors and a mix of
in-house and off- or
near-shore solutions.
The title of this
conference is
significant in this
respect — not long ago a
BPO consultant confided
to me that his firm
didn’t push shared
services so much,
because once a client
had implemented a shared
services structure there
wasn’t enough value left
in the outsourcing
contract. Those days are
clearly over: clients
are increasingly aware
of the value in
combining transformation
and outsourcing and want
to retain as much of the
transformational value
in-house as possible.
The conference
featured a number of
remarkably frank client
presentations, with a
particularly interesting
contribution coming from
Deutsche Bank’s chief
economist Dr Jurgen
Schlaf. Schlaf’s
presentation addressed
the question of whether
European companies could
compete globally without
outsourcing. One
conclusion was that, in
IT at least, providing
services in house no
longer offers any
competitive advantage
over rivals. Ownership
of resources was no
longer as important as
sourcing management,
with companies making
the decision not just
between in-house and | |
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| | small and shrinking
component of the overall
outsourcing equation —
and getting smaller. He
added that with a wide
range of both offshore
and traditional
providers, and a
widening range of
countries offering
offshore services,
companies should
consider a balanced
portfolio of providers
to minimize risk and
optimise service
delivery. Also featured
at the conference were
explorations of newer
outsourcing markets such
as Poland and South
Africa, and also the
continued development of
traditional locations
such as India.
This theme was echoed
by Duncan Aitchison,
managing of outsourcing
advisory firm TPI. In an
analysis of 72
“mega-deals” he showed
that, perhaps contrary
to expectations,
incumbents did not on
the whole enjoy an
exclusive relationship
with their clients after
deals were signed, and
that the tendency to
set-up multivendor
relationships increased
with the size of the
outsourcing
arrangement.
Taking up the point
that “you can’t have an
outsourcing strategy
without a sourcing
strategy”, he argued for
outsourcing to be placed
inside a broader agenda | |
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| | for change, and for
companies to explore the
full range of service
delivery models. This
can of course include
“backsourcing” or the
bringing in-house of
formerly outsourced
functions. This need not
reflect failure of an
outsource but rather
changing business
priorities. Alexander
Duisberg, a partner in
German law firm Bird &
Bird argued that these
“exit strategies” should
be built in at the very
beginning of an
outsourcing deal, so
that exits can be
cooperative rather than
confrontational
episodes.
The success of the
conference reflects both
the growth of
outsourcing in mainland
Europe and also the
growth of the EOA
itself. With roots in
the UK’s own National
Ousourcing Association,
the EOA now has member
associations in Germany,
France and the
Netherlands, with
Belgium and Spain in the
pipeline. Next year’s
conference should
therefore offer an even
wider spread of clients,
countries and
viewpoints.
Contact Mick with
your views or
suggestions at:
mick.james@top-consultan
t.com | |
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| | outsourced provision,
but also whether to look
for outsourcing
providers locally or set
up their own “captive”
offshore resources. This
theme was taken up by
other presenters at the
conference, and can be
summed up as “No
outsourcing without
sourcing”. Other client
presentations from the
City of Copenhagen and
French engineering
company Alstom looked at
both the upsides and the
downsides of insourced
versus outsourced
solutions, with Alstom
vice-president Luc
Schmitz offering what
deserves to be another
maxim of outsourcing:
“Never attempt to
outsource a problem if
there is no clear plan
to solve it.”
Two other strong
themes of the conference
were the importance of
governance and risk
management in
outsourcing. Adrian
Quayle, Vice President
Strategic Sourcing,
EMEA, at the Gartner
group argued that these
two factors were the
most critical needed to
realize offshore savings
and that labour
arbitrage was now a | |
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