Outsourcing advisory firms must shift from Tactical to Accountable support

June 27, 2007 | Phil Fersht

The role of the outsourcing advisor has shifted significantly over the last couple of years. Outsourcing has become such a core issue facing almost all companies today - becoming extremely complex in many cases - that companies are depending more than ever on trusted informed advice upon which to base their crucial decisions – decisions that will impact them for the next decade and beyond. Until recently, there weren’t too many independent outsourcing advisory firms which had the niche specialty to quantify the possibilities, source a supplier and broker a deal. However, the old sourcing advisor mentality of “going in to do a deal and slipping quietly out of the back door” is well-and-truly over. The secret sauce behind assessing vendors, getting a good price and doing a quick deal, is now pretty much a standard practice – there are at least 15 advisory businesses out there, of varying sizes, claiming they can do this for you. The level of competency of these advisors is open to interpretation – but how can you assess how good these firms are if their core practice is helping make outsourcing deals happen, and their clients then try and manage the transition all by themselves - right through to the operational end-state?

Companies should seek advisors which can be held accountable. Outsourcing buyers need to be able to declare in 5 years’ time: “XXX did a great job helping us through this process, and we still keep them close to our business for advice on how to govern our provider(s), manage our internal operations and cultural change.” However, advisors can only be held accountable if their clients decide to make them so – and that means they need to engage an advisor which will be with them for the long haul. If you buy an expensive car, for example, you will more than likely always go back to the same mechanic when you have an issue…so when you have car trouble in the future, you can always go back to the same garage and get them to take care of your problem. The garage has become accountable for the general performance of your vehicle – and no matter how many problems you may have along the way, they will be on hand to try getting you back on the road again. Moreover, wouldn’t you prefer to use a garage that you know has sufficient expertise to take care of more than merely the basic problems and will be in business for the long haul?

In the today’s intricate global sourcing environment, the role of the advisor is becoming almost as important as the capability of the outsourcing supplier. Companies should have an advisor helping them through their entire business lifecycle – and outsourcing is simply one change agent of several scenarios geared towards achieving operational excellence and core business focus. What’s more, the outsourcing decision is becoming more challenging with the newer wave of companies evaluating their options. Most of the earlier adopters made decisions based on short-term cost considerations, and went for the least complex outsourcing arrangement that had the quickest cost benefits. Nowadays, an increasing proportion of companies considering their global sourcing strategy are faced with more complex decisions, for example, many of these firms already have existing shared services operations and multiple outsourced point solutions; multiple IT systems and applications; multiple language needs and specific country laws and issues with which to contend; compliance requirements; cultural issues…the list of requirements goes on and on. There have been too many past occurrences of buyers who engaged with sourcing advisors that came in to make an outsourcing deal happen, and then allowed that advisor to exit the equation, leaving them to fend for themselves to manage unparalleled transition challenges and cultural change within their organization. In many cases, the advisors’ specialty skill was to broker the deal, and the reason why they exited the relationship was simply that they did not have the depth and breadth of expertise to warrant their continued presence.

Advisors...keeping you on the road

Posted in: Outsourcing Advisors

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