unique change opportunity<\/a>\u00a0for firms, as they look for better payroll systems, flexible recruitment support, a streamlined global accounts payable process flow etc. However, BPO areas usually necessitate more intricate business re-engineering and change management than those in IT support areas, and the cost-savings can be a lot less attractive in many instances. In addition, a lot of the fresh demand is coming from the mid-market, where the numbers of process staff involved are fewer, and the labor arbitrage savings less attractive than those of larger companies with greater scale. Not to mention the pressure on vendors to maintain their profit margins, which is going to make it tough for them to be as cost-competitive with mid-market deals as they are with higher-end pursuits. <\/em><\/li>\n<\/ul>\nThe bottom-line: outsourcing is back on the table, but the industry will only be able to respond initially to demand in commodity areas.<\/strong>\u00a0\u00a0It’s encouraging for the outsourcing industry\u00a0that customers are seriously looking\u00a0at outsourcing to solve many of their performance issues, however,\u00a0trying not to insert\u00a0too much of a damp squib into this positive data,\u00a0many services vendors are not geared to give them the cost-savings they\u00a0hope for,\u00a0in many instances.\u00a0 Not many customers will turn away opportunities to drive out 30%+ cost-savings and the chance to improve their support operations, hence the resurgence in demand after such a\u00a0 long period of careful planning.\u00a0 However, the industry has been geared to solving low-hanging fruit outsourcing opportunities, such as application support and\u00a0standard transactional business processes, where the common denominator has been cost-reduction via high-scale labor arbitrage.\u00a0<\/p>\nWhile there is clearly a lot of\u00a0new business to be taken on in this environment, the real issues are arising in the mid-market, where lesser-scale necessitates a vendor partner which can deliver more\u00a0 than low-cost staff in a scalable delivery model.\u00a0 The transformation many mid-market customers need to move into an outsourced environment, often requires new technology implementation that incorporate\u00a0elements of SaaS and Cloud computing,\u00a0deep domain-specific consultative support and a skilled change management program.\u00a0 While several services vendors have these capabilities today, they are scarce and come at a price.\u00a0As a consequence, many of these\u00a0customers will be disappointed at the level of immediate cost-savings on the table and will be challenged to create outsourcing business-case justifications to their leadership, in order to proceed.\u00a0<\/p>\n
The challenge is on for services vendors to craft creative solutions for clients that provide more than merely standard delivery underpinned by labor-arbitrage.\u00a0 The winners will be those that can step up and craft creative, innovative offerings\u00a0and<\/em> convince their shareholders they are doing the right thing.<\/strong><\/p>\n\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"Wow… just look at that growth Industry analysts are often accused of\u00a0hyping the market they cover, creating hockey-stick\u00a0growth projections\u00a0to get…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,51,835,849,79,81,836,91,837],"tags":[],"ppma_author":[19],"yoast_head":"\n
The Industry Speaks, Part III: Demand for outsourcing is reaching new heights, but will vendors disappoint? - Horses for Sources | No Boundaries<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n