I have never (I repeat never) witnessed such an intense level of interest in global sourcing than the current environment. I simply am struggling to find the time to do anything but take calls from companies in deperate need of working out their sourcing options. In fact, if anyone wants to send me compeling guest posts, be my guest, as this thing is creeping into my weekends far too much these days However, I have been alarmed with the recent retrenchments that several of the leading sourcing advisors are being forced to make. Their problem is simply the cost model – if large engagements close out with nothing immediate to re-staff the advisors, they simply cannot afford to keep them on the bench. What worries me is how buyers are getting their advice and direction.
Bottom-line, buyers are being forced to avoid spending on consultants unless deemed absolutely essential, and investing a few hundred grand on getting the support, methodology, data, ideas, knowledge and experience they need, seems to be beyond many firms at the moment. So what are they doing? The answer is scratching around for snippets of wisdom, being courted by service providers offering "free" evaluations, turning up at industry events hoping for free info and joining LinkedIn groups hoping for a silver bullet solution for helping them through the sourcing maze.
So what's the answer?
Advisors need to be onsite with their clients at least two days a week. The "do it yourself" sourcing model doesn't work, unless the buyer is extremely exprienced with the outsourcing process, or has hired a former advisor to manage an internal program. As an analyst (and former advisor), I can tell buyers what they need to do, but I don't have the time to hold their hand and execute their sourcing agenda for them. They need consultants who can come in and do it for them. Moreover, it works much better to have an external party run a sourcing evaluation, than an inhouse staff member, due to the sensitivity of the situation. So the cost model needs to change, and it probably will, with more unemployed advisors looking for work (and there are some really good ones coming onto the job market at the moment).
I can see most of the sourcing advisors moving to "billable-only" compensation models for their consultants (some already are), and away from having them on full-time salaries, which they simply cannot afford when they are not being utilized. In addition, the rates need to change to a retainer model, and away from a billable-hour model, which simply gets too expensive for clients. Yes, the FORTUNE 500 can still shell-out for Big 4 consultants, but outside of that I see the need for a more cost-friendly advisor model that leverages the advisor talent in the market and doesn't cost the earth for buyers with severe spending restraints.
I know many advisors frequent here regularly, so please chime in with your views…