Category Archives: Outsourcing

Looking for a benchmarker? Ask some questions

Benchmarking business and IT operations is a tried-and-true method of ensuring that internal and/or external service providers are performing efficiently in terms of costs and service quality. A good benchmark shows how an organization is doing relative to industry peers and market standards, identifies improvement opportunities and provides a stake in the ground from which to plan and implement a transformational change strategy. But a good benchmark doesn’t happen by itself. As a client, you have to conduct due diligence … More

ADM Staffing Requires a Team Effort

Large companies must maximize the value of their applications environment to compete in today’s business environment. Because Application Development and Maintenance (ADM) is so intricately tied to bottom line results, many organizations seek specialized service providers to ensure best-in-class capabilities. While transitioning to an ADM outsourcing contract requires the staffing and onboarding of a significant set of new skills under a tight time frame, successful staffing remains important long after the end of transition. If not managed properly, this process … More

Rise to the Challenge of IT and Business Process Transformation in the Insurance Industry

A significant part of an insurance company’s operations consists of back office processes that have been brought together through the acquisition of legacy books of business, differing client needs and an evolving regulatory environment. About 80% of insurers’ back office processes are similar to each other. The remaining 20% vary widely and can be very specific to the operation of a particular insurance company. The lack of a common operating model undoubtedly hinders companies from lowering the cost of operations … More

When Services Contracts are Thrust into the Public Eye

Procurement professionals often think of themselves as ‘behind the scenes’ members of the organization. This is even more true in the case of procurement teams focused on indirect spend. In one high profile story hitting the news right now, a procurement team may be about to find themselves thrust into the light – and not under happy circumstances. In 2012, the New England Compounding Center was found to be at the center of a meningitis outbreak for selling tainted steroid … More

Is Your Mega-Outsourcing Contract Renewal Closer Than You Think?

The renewal of a major second generation outsourcing contract presents an interesting dilemma. Changing service providers, especially one that manages a large part of your operations, is never easy, even in the best of circumstances. The incumbency factor, shrinkage in your retained organization, the limited internal capability depth and the need to devote management bandwidth to a huge transition, all while keeping the lights on, would give pause to most organizations. If your incumbent has at least earned a “first … More

Reimagining Your Outsourcing to Drive Productivity

Productivity is the ratio of inputs to outputs. Doing more for less is good. While outsourcing has aspired to do more for less, we have typically seen what has been called “the same mess for less.” Tightly controlled outsourcing contracts that have reduced risk and cost have also limited creativity and reengineering that could lead to improved labor productivity. They also run the risk of creating what management consultant Margaret Wheatley calls “highly controlled mechanistic systems that only create robotic … More

Service Providers Tell All: How to Improve Innovation in Services Relationships

Clients often complain that they don’t get enough innovation from their service providers, so we asked a group of providers at our recent Sourcing Industry Conference about why this might be. They defined innovation as a two-way street and said their clients don’t understand the collaborative process needed to foster innovation. They also noted that the contract between service provider and client can cloud the matter with vague promises of innovation but that it often lacks specificity on how to … More

How to Create a Service Provider Evaluation Process That Earns Its Keep

Once an RFP has been sent out to that long list of potential service providers, you might be inclined to sit back and think “job done.” However, the period during which the service providers are preparing RFP responses is a golden opportunity to design an evaluation process to assess and analyze the responses when they arrive. Effective and insightful evaluation models can be sophisticated without being complex and ought to play an integral role in the overall selection process. But … More

Rethinking Innovation in Outsourcing: Part 2

Click here read Part 1 of this series. Understanding innovation is similar to understanding creativity. The two are, in fact, pretty much the same. People who study or experience creativity will tell you that creativity is only possible within limits or boundaries; it never arises without a decision to create, or from chaos or a blank slate. In my own experience in many different fields, from artistic endeavor to the outsourcing business, I’ve observed that creativity requires three factors of … More

Rethinking Innovation in Outsourcing: Part 1

A few weeks ago, the Wall Street Journal published a story that pronounced the word innovation dead. Well, the Journal didn’t quite put it that way, but if you look at the basic statistics that were reported you’d have to agree that “innovation” is now business jargon with little real meaning. Alas, no more so than in our world of outsourced services. In outsourcing, the concept of “innovation” has been the cause of a ton of heartburn for both clients … More

Top 5 Outsourcing Developments Uncovered in the New 2012 Vertical Report

The just-completed Momentum Market Trends & Insights 2012 Vertical Industries Report finds that changes in year-over-year outsourcing spending across 27 vertical industries ranged widely, from a 12 percent decline in the consumer durables vertical to a 53 percent spike in utilities, where operators are seeking help to meet new regulatory requirements. In 2011, annual spending increased in 15 vertical industries and declined in a dozen, and the report predicts spending patterns will swing again in 2012. More importantly, the report … More

Can India’s Dominance in the Global Services Industry Be Challenged?

The short answer is that it would be very difficult. Why? Let’s look at the numbers. The top five most-populous countries are China, India, the U.S., Indonesia and Brazil, in that order. Apart from its population’s limited English skills, Brazil is relatively richer than other emerging markets and has an economy powered by natural resources and commodities. As of yet, Indonesia has not been able to jump on the global services highway because of internal structural issues, and the foreseeable … More

Avoid “The Big Mistake” in Building your Outsourcing Business Case

While an outsourcing transaction can be a powerful tool to improve business operations and financial performance, it can prove counterproductive without a sound business case. This is especially true if a company lacks effective governance. The process of preparing and negotiating an RFP is already complex and stressful. Add time pressure, lack of transparency and poor planning, and you may end up making “The Big Mistake”—a business case that looks good on paper but, in reality, leads to higher costs. … More

TPI Index Shows Outsourcing Market Cooled in Q1

On our last 1Q12 Global TPI Index conference call, we discussed noteworthy trends in the sourcing market during the first quarter. Our headlines revealed that: By both contract awards and total contract value (TCV), the global commercial outsourcing market dropped quarter-over-quarter and year-over-year. A weak quarter after two consecutive strong quarters is a familiar historical pattern. While mega deals nearly vanished, mega relationships held firm . . . the latter mainly consisting of restructurings. Restructuring TCV climbed over the same … More

Top 5 Things to Know About the Record-Setting Outsourcing Activity in 2011

A record amount of outsourcing contracts were issued in 2011, and an increasingly diverse set of service providers shared in the bounty. The 2011 MomentumTM Market Trends & Insights series Annual Report took an in-depth look at what drove the record level of contract awards and found that emerging business needs and classic outsourcing drivers fueled the demand, which is expected to remain strong. Here are the Top Five findings from the new Annual Report: Record levels of outsourcing contract … More