{"id":2121,"date":"2017-03-30T16:02:00","date_gmt":"2017-03-30T16:02:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/outsourcing-disease_033017\/"},"modified":"2017-03-30T16:02:00","modified_gmt":"2017-03-30T16:02:00","slug":"outsourcing-disease_033017","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/outsourcing-disease_033017\/","title":{"rendered":"The spreading outsourcing disease: barely a third of buyers see real value in their current provider relationships"},"content":{"rendered":"<p><img decoding=\"async\" src=\"\/storage\/app\/media\/Phil\/Polling Providers Dissappointing.png\" \/><\/p>\n<p>Oh dear &#8211; here are the private views of about 60 outsourcing clients we polled today at the <a href=\"http:\/\/www.hfsevents.com\/new-york-2017\/\" target=\"_blank\" rel=\"noopener\">HfS\u00a0Summit<\/a> in New York. \u00a0Close to half the room are either feeling let down by their provider over-promising, or merely feel they are only really\u00a0getting\u00a0cheap labor from\u00a0their relationship. Moreover, barely a third of them actually believe their provider can come up with the goods, provided they pay for them via the legacy FTE\u00a0pricing model. Now, these buyers are highly experienced and sophisticated, so this data is particularly hard for the outsourcing industry to digest.<\/p>\n<p><strong><span style=\"color: #ff6600;\">So a few simple takeaways from this:<\/span><\/strong><\/p>\n<p><strong>Service providers have to stop the over-promising and start over-delivering.<\/strong> \u00a0Over-promising may result in some short-term wins, but the implications of long-term damage caused by missing client expectations are much more hazardous. Sadly, investor pressures to sustain unrealistic growth is forcing several service providers to over-sell without the talent resources to deliver anything beyond low grade offshore delivery.<\/p>\n<p><strong>Many providers are proving their competency, but failing as proactive co-innovators<\/strong>. \u00a0As we <a href=\"\/traditional-outsourcing-run-out-of-value_031917\" target=\"_blank\" rel=\"noopener\">recently revealed<\/a>, a third of senior management does see real potential in their service providers to become genuine co-innovation partners, but there is a stark difference between fantasy and reality. \u00a0Providers need to prove they are willing to share risks, really roll up their sleeves with their clients &#8211; and clients need to work harder to create an environment of trust that they&#8217;ll stick with their providers, provided they are willing to co-invest with them. <a href=\"\/blog\/barbra-mcgann\/Design-Thinking-integral-role-value-of-outsourcing-service-design-delivery_031417\" target=\"_blank\" rel=\"noopener\">Design Thinking<\/a> anyone? \u00a0Maybe it&#8217;s time to get in a room together and figure this whole thing out. \u00a0<\/p>\n<p><strong><span style=\"color: #ff6600;\">Bottom-line: We&#8217;re going to see a lot of chopping and changing of service providers in this volatile\u00a0environment. \u00a0<\/span><\/strong><\/p>\n<p>Several buyers cited they felt their providers were too comfortable with them and were not worried they would get ejected from long-term outsourcing relationships. \u00a0However, with advisors, competitive providers and RPA\u00a0vendors all touting the <em>magic 40%<\/em> of cost savings through automation, the leadership layers are exerting unprecedented pressures on outsourcing governance leads to demand change. In many cases, buyers are simply bringing in advisors\u00a0and RPA\u00a0tools vendors themselves and running their own pilots, but eventually, they are likely to put their existing deals out for rebid to find providers willing to guarantee the RPA\u00a0savings. \u00a0And that is where the market is going &#8211; lots of cut-throat rebids, higher degrees of risk-taking to win business and more clients being over-promised. \u00a0We&#8217;re in a vicious cycle where desperation is trumping good, pragmatic partnerships where both buyers and providers can figure out how to work together in trusted, risk\/reward sharing environments. \u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Oh dear &#8211; here are the private views of about 60 outsourcing clients we polled today at the HfS\u00a0Summit in&#8230;<\/p>\n","protected":false},"author":3,"featured_media":2122,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,81],"tags":[303],"ppma_author":[19],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - 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