Welcome to the first edition of my Outsourcing Pulse List. What is it? A periodic list of observations about what outsourcing industry companies and individuals do or say. The Pulse List will feature those that miss a beat, some that never miss a beat, those with new beats that radiate with wide ramifications, and sudden fluctuations. Curious, out-of-whack ideas, items of concern, and also insightful statements – that’s some of what you’ll find in the Pulse List. You may even find yourself or your company on the list.
Since this is the list’s debut, we’ll start with two lists – one of news items bound to arouse curiosity for their potential impact on outsourcing life as we know it, and the other some insightful comments from buyers of outsourcing services.
List of Sudden Fluctuations in the Outsourcing Throb
Think about the ramifications to the industry from these news developments:
1. IBM and the State of Indiana are suing each other over a terminated outsourcing deal. Whenever an outsourcing failure hits the media, it grabs attention. But this deal makes my Outsourcing Pulse List because of this sentence in the news article:
The Family and Social Services Administration is also looking to set aside IBM’s claim of $83.4 million in cancellation penalties claiming that this clause in the agreement is unenforceable under state laws.
2. For evidence that social media is now impacting outsourcing, look no further than what’s happening with TelstraClear, New Zealand’s second-largest telecom company. The news headline is provocative – “Brand Suicide” – but the action of the Kapiti citizens is even more so. Irate that the company is outsourcing 80 call center jobs to the Philippines, citizens are waging negative campaigns about the company on Facebook.
3. Infosys Technologies Chairman N.R. Narayana Murthy said India may soon want to look next door for help in building up its IT and BPO talent pool. Since “next door” is Pakistan, this raises a lot of questions about how to resolve safety and geopolitical issues.
Buyer Throbs List
If there’s one phrase that describes the following statements from buyers of outsourcing services, it’s “worth their weight in gold.” Here’s what some buyers are saying.
1. “Sometimes the enemy is us.”
Kudos to this buyer who took off the rose-tinted glasses that cause many companies to think that, since the buyer turns over control of the outsourced process/function, the service provider is then the only one to blame when something goes wrong. Time and again a root-cause analysis shows the buyer is often to blame because it didn’t fulfill its responsibilities for giving the provider the necessary data or other information or resources the provider needs in order to deliver services effectively.
You’re probably thinking: Okay, that’s great, but where to start? Buyers need to make sure they first do everything in their power to ensure thorough training and knowledge transfer. Then on an ongoing basis, they need to ensure that both parties work collaboratively on problems and solutions.
2. “We want to protect the relationship.”
This buyer is from a wise company that wants to ensure its ROI. After all, if you think about it, an outsourcing arrangement is really an investment in a relationship. If the relationship isn’t working, the services won’t be satisfactory and the investment won’t achieve the targeted return. This wise company takes the following perspectives in protecting its investment:
- Make sure the project managers provide clear, concise requirements and expectations to the provider
- Train people at the buyer’s company to respect the relationship
- Ensure that people use the proper level of escalation for any issues; permit no tolerance otherwise for anyone speaking negatively about the relationship
3. “I don’t know what I don’t know.”
This comment has been stated to me by several first-time outsourcing buyers on a quest to determine what information is most important for their company’s initial outsourcing initiative. I also hear this comment from people who drew the short straw in assigning a relationship manager to oversee a outsourcing deal. They are definitely thinking along the right lines – what’s important that will help our company’s long-term best interests, and what are the risks and pitfalls that might prevent us from succeeding.
But the statement is reflective of an industry-wide problem. These buyers tell me they don’t know whether to look for success drivers or failure drivers and don’t know how much weight to apply to various factors. They also don’t know how to judge the validity, applicability, or comprehensiveness of some of the information they find. Though they’re searching for it, there is not just a single answer to what they’re seeking. They often miss a lot of crucial information.
As to the three buyers’ comments that made my Outsourcing Pulse List, I think there’s a lot to be said for what they said.
What do you think? Any concerns about the items in the Sudden Fluctuations list? Any lessons learned in not being your own worst enemy or in how to protect your outsourcing investment? Any advice for the newbie buyers surfing the Net for help? Post a comment and share your insights and experiences.
By the way – if you observe something that belongs on my Outsourcing Pulse List – good or bad – e-mail me at ksgoolsby@gmail.com (your identity will be protected).
Since 1998, freelance writer Kathleen Goolsby has studied outsourcing relationships’ successes, failures, trends, and best practices. She has interviewed more than 860 executives at buyer and service provider companies and is the author of “Critical Requirements for Building and Sustaining a Successful Outsourcing Relationship,” a chapter in Global Outsourcing Strategies: An International Reference on Effective Outsourcing Relationships (December 2006, Gower Publishing). As a freelancer, she also currently serves as the Senior Writer for Outsourcing Center (whose parent company is sourcing advisory firm, Alsbridge) and has authored dozens of articles as well as white papers. In a past role, she was editor of Outsourcing Venture (a former print publication). You can contact Kathleen at ksgoolsby@gmail.com.
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