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Outsourcing: Not just about cutting costs?
It's all about the special relationship

By Nick Heath

Published: Monday 12 May 2008

Global outsourcing has moved past corporate penny pinching according to industry experts.

Instead the key is to treat outsourcers as an arm of the business, with customers expecting suppliers to have intimate knowledge of their workings and to get access to top-flight skills across the globe from their suppliers.

In return, providers are given greater freedom to innovate in service delivery and even business strategy, with more emphasis on rewards rather than punishment to drive them forward.

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Speakers at the Financial Times Global Outsourcing and Offshoring Conference agreed that companies making a success of outsourcing no longer see low-cost labour as their main motivation.

Kevin Campbell, chief executive of outsourcing at Accenture said: "Cost reduction and labour arbitrage has been a huge driver in outsourcing but high performance companies realise that it is not about what you can subtract from your business but what you can add to it.

"They are looking for growth opportunities that come from having access to critical skills and a highly motivated workforce. It is the ability to put together different components of a company's operating model both onshore and offshore."

Campbell said that despite a trend to spread risk and expertise between many different providers that large companies were trying to simplify the complexities of multi-sourcing contracts.

He said that large companies dealing with about 40 different providers were approaching Accenture to consolidate these deals with fewer suppliers, a process called 'bundling'.

And Peter Brudenall, partner at the global outsourcing division of law firm Hunton and Williams, said: "The difference with outsourcing now is that companies now want to see providers coming up with more innovation, they want to see a transformation of what is being outsourced."