Business process outsourcing service providers and outsourcing buyers within businesses will not get the most out of outsourcing because they are not investing in skills development, a study has found.
An Accenture sponsored report revealed that business skills such as the ability to define business objectives beyond cost reduction and to influence executives are required by 83% and 77% of executives at global businesses.
The research –Is good enough really good enough? The great talent paradox in outsourcing – was carried out by HfS for IT services giant Accenture. It interviewed executives at 282 businesses, only half of which had invested in these skills and are restricting the benefits of outsourcing to efficiency and cost reduction as a result.
Only a third of businesses that outsource services think they have the right skills in place to drive innovation or define business outcomes.
Suppliers are also failing to support customers in certain areas, with only half providing formal training in analytics and relationship management.
With business process outsourcing (BPO) today moving from its back-office roots into the middle and front offices, there is an opportunity to create value rather than just cut costs. But many suppliers and their customers do not have the skills to do this.
“The majority of enterprises’ outsourcing governance teams are comprised largely of procurement professionals, contract negotiators and project executives, who are not learning the necessary skills to shift their focus from tactical project management to strategic business alignment,” the report stated.
“Enterprise leaders have set up their governance teams to fulfil tactical demands in the early phases of outsourcing to mitigate risk, but fail to develop the necessary strategic business skills as their engagements mature and their needs move beyond managing tactical operations," it read.
“To be successful at achieving maximum value from outsourcing, enterprise outsourcing executives need to work collaboratively with their service providers to create an environment of learning and innovation, in addition to operational excellence,” said Phil Fersht, CEO and founder, HfS Research, and author of the report.
“A quality outsourcing provider should deliver the appropriate talent, technology and process acumen, but this will only reap rewards when the ambitious outsourcing buyer can work with their provider to define business outcomes together and forge a realistic path to achieve them.”
- Focus talent investments to enhance core business skills
Enterprises that have been successful with outsourcing invested in external experts with skills beyond operations management, procurement and service-level measurement. Over time, they have developed a good number of operations managers in-house, and their service provider excels in these activities. Such companies are now investing instead in skills that improve their core business.
- Access the strategic talent of service providers
Operational capabilities are now routine and are no longer true differentiators when a buyer is choosing a service provider. Service providers should invest in developing the methodologies, analytics and talent that are instrumental in creating value beyond cost reduction, and buyers should evaluate potential providers against these capabilities.
- Revamp skills expectations for the existing team
Successful enterprises have looked for strategic skills by redefining the job competency models of individuals managing service providers.
- Establish shared stretch goals to encourage skills development and usage
To prevent the outsourcing relationship from plateauing, enterprises and their providers should jointly review goals, metrics and objectives regularly and reposition solutions as necessary to meet business needs.