As we peruse the results of our soon-to-be-released State of Outsourcing 2014 study, one of the core elements that jumps out at us is the widespread dissatisfaction of enterprises in their own internal operations talent to change the processes, automate them, analyze them... or come up with creative thinking on how to improve things in general. The talent dearth is so bad that barely a third of buyers from the 312 enterprises we surveyed has seen any positive impact on their own talent with their current outsourcing relationships using their own internal talent:
Organizations clearly cannot reach their state of Digital nirvana without professional help. "Digital" capabilities, in this context, relate to the acumen of operational services talent to understand the interplay between their applications and processes to achieve better automation and more productive workflows that can ultimately lead to better analytics to base future business decisions. In addition, these capabilities also relate to the creative flair of staff to align their services with the core business and come up with new ways of doing things to drive value, new ideas for business improvement and, in short, to behave more like a "front office" employee than transactional operator.
Bad IT can be even more culpable than bad BPO. Let's not throw all the blame for this talent failure at the doorstep of the business operations staff. In so many cases, enterprises would have much more effective process capability if corporate IT wasn't so constipated with maintenance and infrastructure. In so many client cases, IT still can't figure out how to code without error, and they've done it for decades... at least processes change, but IT continues to be stuck in the dark ages for so many organizations.
The Bottom-line: A Digital talent crunch is coming and this could get ugly for some
At HfS, we predict a major talent crunch coming to the vast majority of ambitious organizations who are struggling to find or retrain their back office staff to be more front office staff and "Digitally savvy" with their approach to services. Two thirds of outsourcing clients are happy with how their internal teams manage costs, keep the basics ticking over ("lights on") and respond to compliance needs. But, as these "light on" capabilities become increasingly commoditized through more sophisticated global delivery and standardized technology platforms, the need for these armies of back office operators is steadily decreasing.
What is clear is that technology has become a major component for future value of the enterprise (read our earlier study on this topic) and one avenue for operations staff to increase their future value is to train in areas like analytics and process automation where they can add whole new echelons of value to their organizations. Sadly, many of the two-thirds we identify above are not going to make it, and others are simply not going to be needed - the relentless pursuit of increased value and decreased labor costs will see to that. Less is more is the brutal rule for the future of the enterprise operations function.
For forward looking service providers and consultants, these clients are becoming rich hunting grounds for valuable partnerships in the future as the need for the Digital skills and new talent exacerbates. Most clients will find their need to develop or acquire better talent a fruitless exercise and will look to their external partners to plug these operational gaps that will drive future value.