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Stop Calling it Outsourcing – 9/1/12

Stop Calling it Outsourcing

Nobody is in the outsourcing business any more than restaurateurs are in the nourishment business. Both are outcomes. No one makes a restaurant choice based upon caloric value alone. That industry is better understood as providing a fine dining experience together with all the constituent elements of atmosphere, presentation, taste, quality, service and value.

Likewise, nobody displaces their workforce simply for the sake of doing so. A similar understanding of customer motivation might move us toward a more fundamental understanding of what those of us who now call themselves outsourcers really do. I propose that the history of our industry so far can be understood under the twin disciplines of cost control and performance as related to corporate services. Let’s consider what that means.

Corporate services would include all the traditional outsourcing verticals such as customer service and support; IT management, system implementation, development; finance and accounting; data entry and so on. Cost control need not mean lower costs necessarily either. Factors such as conversion of assets or variable costs to a fixed monthly expense can contribute less obvious advantages to overall cost control strategies.

Of course, cost control is meaningless independent of performance. By virtue of focus, experience, and best practice, most vendors in our industry are capable of meeting or exceeding some element of efficiency and/or quality as related to SLAs, workforce management, recruiting, documentation, training, development, implementation, automation, or CSAT for the services we assume and provide on behalf of our clients.

Stop Calling It Outsourcing - Corporate Services

When one embraces this expanded definition of what we do, several conclusions follow:

  1. Outsourcing remains only one of many cost control and performance strategies.
  2. New revenue opportunities are revealed outside of strict FTE focused solutions.
  3. Those opportunities occur within the current skillsets, expertise and comfort zones of most vendors. For example, standard services such as process documentation, SOP development, training development, process optimization, workforce management and quality assurance simply become ala carte offerings.
  4. Lower barriers to contractual entry and exit — as opposed to full-on outsourcing agreements — opens new business opportunities with clients formerly resistant to taking the big plunge.

Admittedly many providers work from a somewhat narrower focus. For those unaccustomed to such an approach, a few challenges remain. Firstly new, more consultative skillsets may need to be acquired. Many vendors now lack real process re-engineering talent and know how. New compensation plans, contract formats and pricing models many need to be created. We’ll explore evolving revenue models as a separate topic as well.

So your next conversation on the street might go something like this: Acquaintance: “So what business are you in?” You: “Corporate services cost control and performance.” Acquaintance: “Oh, you mean the outsourcing industry?” (Obviously read this article) You: “Well that is one possible outcome, we have many strategies toward achieving those goals, for instance…..”

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