Consider the Source

The Optimus Primes of Outsourcing

Parents of young, robot-obsessed children will recognize Optimus Prime as the chief hero of the good guys in the Transformers line of toys, comics and the blockbuster movie now in theaters (other brand extensions hitting your pocketbook soon).

There's a neat synchronicity here: The most visionary companies are starting to recognize transformation as the hero of outsourcing, with the best service providers filling out the ranks of the good guys. This is no small vision, as the tide today is taking a great number of companies toward the offshoring model, as I wrote last week.

Part of what's great about the buzz about transformation in outsourcing is what it's not: "Transformation" has long been bandied about as "consultant speak," but the transformation that we're hearing more about is something bigger – and we're hearing it from clients and contacts, not consultants.

I've written previously about the increasing use of outsourcing to drive change around the scope of the deal itself – and beyond it: When services are outsourced, with attendant standardization and consolidation, that process serves as a catalyst to enhance how all the work that touches those services is organized and delivered. Clients are factoring these derivative benefits into their cost evaluations and giving the best service providers an opportunity to create broader benefits for the clients.

Now we're also seeing the truly visionary, ambitious clients look to outsourcing as a way to migrate older operations – systems, applications, and processes – to Brave New World models. In this new world, the contract is less about defining which assets are affected and more about capturing the emerging capabilities of BPO, software-as-a-service, and other models for improved efficiency.

For these firms, the essential make-versus-buy question is swinging toward "buy," because the alternative of carrying forward legacy operations increasingly is untenable: Can I modernize myself, or should I outsource – and structure the contractual terms accordingly – to produce real, fundamental change and to pay for services in a very different manner?

The Transformers – the companies and organizations really seeking fundamental change – are stepping up, looking to move beyond complex, costly, and confused legacy applications. They look like heroes to me, and I'm betting their own customers will come to feel the same way.

The Next Big (Vision) Thing

I’ve spent quite a bit of time in recent weeks with clients who are looking to outsourcing to accomplish some mighty big things.

Our industry has long spoken about “transformation” to mean a sourcing solution that goes beyond a simple fix to pervade an entire enterprise and accomplish something on a bigger scale. Most often the term has been bandied about to talk about overhauling IT, a call center or financial-reporting activities. All those transformations are still occurring and are still relevant.

But what I'm seeing and hearing about is an even more ambitious flavor of change – one that has captured the fancy of some very progressive executives. These leaders share a vision of fundamentally reorienting and resizing their organizations – with outsourced services as the tool for doing so. Among other things, they’re targeting operations that could become more productive by having a more responsive and flexible infrastructure delivered through expert outsourcing.

This reminds me of my days running infrastructure services for a global investment bank that I'd like to think was quite progressive. Indeed, while our scope of responsibility was limited to the basic computing and communications services, the leaders of the bank created forums to directly align technology and operations – essentially to find ways that the outsourced infrastructure services might accrue benefits in productivity or efficiency to the teams that actually used the technology to do their jobs.

Now it's happening everywhere: Executives see outsourcing as a means to a much broader end state, and the transformations they are considering go well beyond the domain limits of individual functions.

Isn’t this just business process outsourcing I'm talking about?  Maybe, but it has a distinct vertical orientation to it – meaning it’s often BPO for companies that are looking to effect the broadest definition of people-intensive work processes.

Conceptually, the idea has been around for a while, but the appetite for change through outsourcing is just now starting to ramp up. It's exciting to be part of.