2011 Readers' Choice: Outsourcing
This Outsourcing list shows some interesting movements. The difference for the companies that gained popularity this year may be their focus on industry and not just outsourcing in general. Also interesting, according to Simon Ellis, practice director, Supply Chain Strategies; BOVC, IDC Manufacturing Insights, is that the top companies have recently “diversified”’ with software acquisitions. Perhaps, the lines are blurring between software and business process outsourcing providers.
CGT: How should outsourcing be approached today?
Ellis: We continue to see interest in outsourcing, especially if it’s a way to scale business capabilities as demand returns. I can’t emphasize enough that it needs to be about capabilities, not just capacity. Companies will use outsourcing for expanding resources (and capacity), but what they really want are the capabilities to increase sales and profit margin in an increasingly complicated market.
CGT: What trends in this area are worth exploring? Which ones may be hype?
Ellis: There is no single trend other than the fact that outsourcing is increasingly accepted, followed closely by the fact that companies are trying to figure out how to operate their value chains as seamlessly and efficiently as if one company managed every process and capability.
If there’s hype, it’s that outsourcing is easy and always works. Like any relationship, it requires maintenance and care, with a short- and long-term cost/benefit analysis, and clarity around “core competencies” that strategically define where outsourcing is appropriate.
CGT: Are you seeing a shift in the types of business processes that are being outsourced?
Ellis: There isn’t a dramatic shift among the processes that are outsourced, but the goals of outsourcing are changing. Besides just efficiency and cost savings, we more frequently see outsourcing as a means of allowing consumer goods companies to enter a new market, geographically or in product line — and then perhaps bring the capability back in-house. I think that’s an important distinction.
BREAKOUT FAVORITES
Customer Experience: Infosys
Infosys BPO received the 2010 Asian Shared Services Excellence Award for “Best New Outsourcing Services Delivery”. The award recognizes the outsourcing relationship between P&G’s Singapore Customer Service Centre and Infosys BPO for Order Management and Accounts Receivable.
SMB Market: IBM
“At Arla, we are striving to create value through innovation and cost reduction. That is what will allow us to grow.” -- Jesper Erichsen, CIO, Arla Food (regarding its use of IBM IT outsourcing to facilitate its globalization initiative)