By Deborah Kops, Sourcing Change
I’m stumped. Our business process outsourcing brethren have the global business services dance moves mastered in spades. They know how to set up and operate a center. They’ve proved their professionals can transform processes and continually improve them. They hire some very talented folks. Their operating data comes from experience, not third-party research. They are constantly on the hook to deliver some semblance of innovation and automation.
So why don’t they dominate the GBS consulting market? Or even show up in the majority of RFP processes?
Now, as you all are well aware, I love to opine. And, as a former Big 4 consulting partner, I suspect I might know at least something about what clients need, how they evaluate offerings and what they look for in the team tendering advice.
Now, I’m not talking about consulting as a point solution or process improvement embedded in a contract, but doing the sexy, non-recurring stuff—design of target operating models, strategic plans, model reboots, organization design, process reimagination, stakeholder engagement–in short, helping GBS clients make the critical decisions that deliver the highest level of performance for the enterprises they partner with. The Big 4, the strat houses and a few specialist boutiques have owned the market for years.
Hear me out before jumping down my throat. I’m not saying that providers are completely absent in the GBS advisory space. Almost every one of them have a number of engagements going at any given time. But are they the headline jobs that initiate, reframe or reshape the model? And do GBS leader client types tout their consulting chops along with their delivery capability?
I’m just asking why I see RFP processes with the same few names with dependencies on the same brands over and over again.
So I sat down to parse why the establishment of a GBS consulting line of service has been elusive for the majority of providers. Here’s my list:
- Separation of church and state Will a provider-based consulting team actually provide independent advice when it goes against self-interest? Tell a client not to outsource when there are half-a-million global staff ready to take over and hopefully transform business processes? GBS leaders worry about the proverbial fox-in-the-henhouse.
- Trust Those providers with substantial long-term outsourcing contracts usually have top-table relationships with the GBS leader’s CXOs. GBS clients may be reluctant to foster the necessary intimacy–challenges, hopes, frustrations, facts—that is the hallmark of a good consulting relationship when they don’t know where the information the provider gleans will go, or how it will be positioned.
- A front for sales Too often, providers deploy (or, perhaps more accurately) are perceived to deploy) consultancy as a wedge to develop relationships for recurring work, sometimes giving consulting work away for nothing. The GBS leader cottons on to that pretty quickly. In GBS world, very little of value comes free.
- Tendency to conflate solutioning with consulting A good solution professional focuses on execution and problem solving while a good consultant focuses on strategy and recommendations. The former delivers a functional or process solution while an experienced consultant helps to ensure that the right decision is made given corporate context, the needs and opinions of stakeholders, and other, less tangible factors. Not necessarily the same muscle, folks.
- Repurposing of internal talent A good consultant is a very rare bird, indeed. S/he is wise, has an uncanny ability to connect dots known and unseen, can easily read a room, can pivot on the proverbial dime when challenged. Age and experience are almost a prerequisite. The tendency to anoint bright young things already on the payroll to suddenly play consultant is likely not a recipe for success.
- Hard to attract consulting leaders In consultancy, having great talent is table stakes. It’s a challenge for providers whose compensation structures are based on offshore packages to swallow the imperative to pay competitively. Also, consultants, especially those that are senior, tend to conflate their personal brands with the organizations they work for. A stint in a vaunted consulting firm does more to burnish a brand than that of a provider who may or may not invest and stay the course.
- Reluctance to invest While established consultancies are able to forecast growth, the non-recurring nature of the work makes it difficult to invest in an expert team ahead of demand. Growing a consulting practice is more than hanging out a shingle; it requires a long-term view and the ability to stay the course when the forecast turns south. How many of our provider friends have posted news about their groundbreaking CFO or GBS advisory practices that disappeared at the next website refresh?
- Thought leadership sub-optimally positioned and messaged Providers post thought leadership about as much as consultants, if not more so. But do they connect the dots across their experiences, driving prognostication by connecting the dots of their many case studies? Saying, with confidence, that they truly understand GBS from the purview of the enterprise? Writing consistently, clearly and concisely to create momentum?
- Offshore centricity Buyers of consulting services tend to value proximity and propinquity (defined as “perceived closeness or familiarity between people due to shared culture experiences or emotional bonds”). Providers with teams and HR constructs that lean to offshore talent may be challenged in competing.
- Outsourcing revenue construct Providers’ core business is selling labor and tech, or if we are lucky, human-in-the-loop tech. Recurring revenue drives higher valuations as opposed to one-off engagements.
How does a provider break the mold and monetize the considerable assets they’ve developed as a provider of services? Here are a few suggestions:
- Invest in a practice with a P&L in its own right, not as a loss leader to attract recurring revenue. Line of sight to revenue is critical.
- Hire a team of consultants with a verifiable track record Go for the gold and hire rockstar professionals who actually know how to consult. The industry is littered with consulting wannabes who think that because they’ve mastered a subject or a solution, they have the nous to adapt that knowledge to context. Don’t try to repurpose a leader who wants something new to do. Good consultants apprentice for years.
- Pound on consistent, differentiated thought leadership Say something that matters to the market, not what you want them to hear. Develop a process to harness insights and craft them into compelling arguments for change. Stop putting out papers like a drive-by shooting.
- Resource proximate to buyers Proximity and time zones matter to senior leaders. They don’t want to extend their workdays, or that of their consultants– to 10 pm. They don’t want to constantly pay for expensive flights to conduct workshops . They want to rub shoulders consistently with their advisers—at the same places that they usually show up.
- Show up as a consultant! Industry trade show booths usually have a number of friendly kids who frankly don’t have the ability to have critical conversations with leaders. Bringing grey haired consultants to the events and positioning them on plenaries as true thought leaders is critical.
- Think about a partnership Partnerships can mean hard yards, especially in light of the preferences and conflicts in the GBS market, but it is possible to create relationships with more traditional consultancies. There are examples of providers that have elevated their brands by playing support to a big consulting name, providing the hands-on knowledge that the lead dog cannot.
- And last, recuse the company from providing outsourcing services! Now, this one is hard to swallow for companies that make their money from managed services or solutions, business process management or outsourcing—or whatever you want to call it. Consulting is impactful, but attendant revenue is rarely predictable or recurring. When evaluating client revenue potential, outsourcing will almost always crowd out a consulting opportunity if the client looks to maintain swim lanes. Having clear business rules when it comes to the pursuit process might just be useful.
Will providers sit up and listen? Should they? Will we start to see their expertise translated into a new value creation model for GBS? Your guess is as good as mine.