Those of us who have been around the services industry from its infancy speak in code…both in acronyms (BPO, BTO, BTO, PPE), and in highly connotative shorthand — the cowboys, the Indians, nearshore, offshore, onshore, smartsource, resource, eSource, etc.
One of the most telling codes is how we differentiate between the unholy trinity in this industry…clients (the “light” side), intermediaries (the advisors and lawyers who comprise the middle spectrum) and providers (always the “dark” side…stirring visions of Darth Vader and the Evil Empire).
Today, in the services industry (with profound apologies to historical reference), dark-side folks are held in suspicion — at least by some customers. Perhaps it is an unexplainable distrust of the underlying commercial premise of the free market or our general aversion to put ourselves in a position where we are “sold to.” Possibly our suspicion emanates from a heightened sense of fair play (if I speak to or grant a platform to one provider, I have to speak to them all) or a concern about the provider community’s independence of thought and approach.
The prevalence of these reactions may result in a lopsided public discourse on the industry, concentrating on points of view and contribution from the lighter side of the spectrum — clients and intermediaries — relegating the provider community viewpoint to those forums that are sponsored — speaking engagements, conferences, white papers — or co-presented with light-side types. We seem to love those Darth Vaders when they come bearing gifts.
Is this a fair shake and the best way to raise the debate and the ultimate advancement of the global services industry? Look at the provider community from a different point of view. Think of service providers as problem solvers first — who just like corporate customers have to develop, test, produce and market products and services that make a profit. Not much different from those who buy services, just on the other side of the table, faced with the same challenges and issues. The only real differentiator is the focus of the business — corporate non-core is their core. The global services provider community deserves to be given commensurate respect for a range of reasons:
First, in many respects they are the pioneers and explorers of the services industry — good and bad — as they exist today. In most nascent markets, the providers or producers detect an opportunity; put a rough proposition out in the marketplace; continue to make substantial investments until someone buys and refine it as the market evolves and demands changes. Outsourcing providers of all stripes — ITO, BPO, onshore, offshore, integrated and point service — have designed and produced a range of tools — some well crafted, some experimental — which can transform business processes.
Second, some of the newer genres of providers, unfettered by consulting or corporate shared-services legacies, serve as industry laboratories, inventing and refining service-delivery management. Take, for example, the as yet unrecognized contributions that outsourcers (and some offshore captives) are making to advance of the structure of human resources management offshore. Often working under new tariffs that are not obligated to reflect the risk/reward structure of most mature corporations, de novo outsourcing firms have a clean slate to redefine employee management in a global market. The next generation of attraction and retention strategies, virtual teambuilding and communications structures could emanate from these providers, leading the corporate market — if they take notice.
Third, some of the providers have the ability to invest in invention through new processes and applications of technology, and are providing an industry service by encoding and communicating these practices. Corporations are not in the business of investing in process improvement on a sustained basis as a matter of course, while, for providers, the ability to continuously invent is the lifeblood of a better value proposition and the key to market penetration.
Fourth, a good provider grasps and institutionalizes the practice of continuous improvement. Serving multiple clients through multiple deals in a range of industries yields a great opportunity to leverage and refine real learnings, not hypothetical best practices invented by those of us who are members of the consulting or advisory persuasions.
Fifth, the advent of the use of third parties has put commerciality on the table as a critical success factor for non-core functions. The specter of a corporation entering into an alternative delivery strategy, whether rumored or an actual competitive bid has brought reality to a number of internal functions. When the cost is perceived to be too high or the quality subpar, savvy management will seek out competitive options.
After a sourcing arrangement is struck, a good provider has the ability to change its clients’ culture by teaching it how to be more commercial in relationships, whether internally or with third parties. In some corporations, non-core or back-office functions have evolved into entitlement organizations, forgetting that they are enablement services for the core business with the responsibility to provide the best service at a market-based cost. Transforming an internal department’s mindset to one of keeping cost and policy impact and customer focus top of mind pays untold dividends. Providers are in the position to lead by example.
Sixth, by virtue of their business, good providers should have a much better view of business-process risk. Providers, in order to protect their own operational risk, should as a matter of course, be able to clearly identify the risk framework of processes under their control, as well as the client’s upstream and downstream process risk, and tie it all together into a viable control framework. Few corporate internal audit teams work with providers collaboratively to identify risk tolerances and develop mitigants. This represents a substantial opportunity to leverage the outsourcing process to improve the controls environment.
Seventh, the provider community should be recognized for its contribution to advancing strategies and tactics for globalizing operations. Certainly there has been a substantial body of invention through trial and error emanating from the corporate community through the implementation of captive operations, but best practices are coming with high velocity from providers, particularly in the areas of business continuity planning, training and work shadowing, and determining core/non-core scope acceptability.
Eighth, over time corporations will recognize that exceptional pools of leadership talent are trained in and can be eventually sourced from the provider ranks. That experience will rise in value on the corporate side of the fence as integration and provider management skill sets increase in demand. The currency of a “tour of duty” on the dark side should enhance a manager’s value and bring process and commercial skill sets that are not easily learned in a corporate environment.
Lastly, if managed appropriately, a provider can often prod and provoke senior management into action despite the best efforts and strategy of operational management to promote the sourcing message internally. At times a provider’s relationship-management expertise far outstrips that of the corporate rank and file. Relationships are a major currency in selling the concept of outsourcing; generations of highly successful client-services executives’ skill sets have been honed by the likes of IBM, EDS, Accenture and the accounting firms. Don’t underestimate harnessing the power of a golf game or Wimbledon tickets — they are a great platform for messaging, especially when staff initiative is rebuffed.
Not all providers are true beacons of light in an evolving business-transformation industry; indeed it is fair to say that they do not have most of the answers and are just as challenged by issues and opportunities as their corporate clients. However, by pushing the collective industry to partner, exchange, test and communicate, perhaps the spectrum of players will fade to grey.