The Death of Outsourcing Advisory

Andrew BurgessBlog

Death of Outsourcing Advisory

A few years ago I wrote an article for Outsource Magazine claiming, rather grandly, that ‘outsourcing was dead’. My evidence was that Outsourcing (with a capital O) was no longer considered a ‘thing’ – back in the day people ‘did’ Outsourcing projects, but now they do ’transformation programs’ or ‘IT strategies’ of which Outsourcing is just part of the solution, rather than the end in itself. I still very much hold hold this view, but now want to extend this obituary to Outsourcing Advisors (of which I have spent a large part of my career being one). There are four main drivers that are slowly killing off the Outsourcing Advisors.

Transformation Trumps

In much the same way that Outsourcing has become business-as-usual, the need to engage specialist resources to manage and implement an Outsourcing project has been subsumed by the greater need for the client to be able to transform the business. Transformation is a much broader challenge and requires a different set of skills. An Outsourcing Consultant would typically go to a CIO or CFO and ask ‘what would you like to outsource?’ whereas a transformation consultant asks ‘how can we make your business more efficient, more flexible, more scalable,…’. And the answer to the that question will likely be a combination of process improvements, shared services, technology, outsourcing, change management, etc. It may well be that our hypothetical transformation project will require some outsourcing advice, but it will be purely ‘subject matter expertise’ – specialist advice on specific aspects of the program, rather than influencing and managing the program as a whole.

Outsourcing Ordinary

The second driver is the fact that pretty much everyone in the world (I may have exaggerated slightly to make my point here) has done Outsourcing. Because Outsourcing is so prevalent, most people that have any senior responsibility in a business will have experienced or managed outsourcing in some form or another. Which means that almost anyone can claim to be an outsourcing advisor if they so choose (just have a look through Linked In at anyone claiming to be a Change Management Consultant, for example, and I’m pretty sure you will also find that they can do outsourcing advisory as well). Of course, they may not be able to do it as well as a seasoned professional, but, as we have seen already, business doesn’t need seasoned professionals any more – they want people with specific experience as part of a wider team. And, of course, many of these individuals will be much cheaper (less than half the day rate) than an advisor from an established firm.

DIY

The other competition for Outsourcing Advisors are the in-house procurement (or sourcing) teams. Now with much more experience than they ever had, they feel that they can manage the sourcing aspects of transformation projects without outside help. And most of the time this is fully justified. Occasionally, they might need point solutions over a few days or weeks, but it won’t be big bucks for the specialist advisors (c.f. the outsourcing projects of the 1990s where consultants would be assigned to a client for at least 9 months full-time). The increased dependency on third parties in business has meant, ironically, that sourcing them has become viable as an in-house activity – plenty of volume and plenty of people with the skills to do it (some of whom are ex-sourcig advisors), and without the high day rates.

The ‘A’ Word

The biggest driver though must be Automation. Not the automation of the advisor’s role (although that must surely come at some point in the future) but the automation of the outsourced services. The BPO sector, as I have written about on numerous occasions, will be fundamentally changed by the advent of robotic process automation (RPA) and artificial intelligence (AI). Right now, we are in a transition phase, where clients are looking at and implementing these technologies but there are only a handful of software vendors and system integrators around – which means there is very little demand for formal sourcing projects (a simple recommendation from an expert is much more appropriate than a full-blown RFP). As more software vendors come onto the market the demand for formal sourcing will increase, but this process can be handled by the in-house procurement team, with the external experts focussing on the actual automation and transformation requirements.

I was so convinced by these arguments on the death of Outsourcing Advisory that I actually took action and have recently changed my job – after working for over 15 years as an outsourcing advisor I now focus on transformation, automation and other innovative approaches to how businesses are run. Organisations will, I believe, want to engage with ‘Management Consultants’ – people with the necessary wide range of experience, expertise and ‘softer’ skills that are able to influence and implement change across the business. Outsourcing Advisors will still have their place, but it will be limited to subject matter expertise, a role that will increasingly become narrower and narrower as the experience and data is shared across more and more people. It is my bold prediction that in 5 years time (or maybe sooner) we won’t see or hear of Outsourcing Advisors any more – they will simply be a quaint exhibit in the Management Consultants Museum (sat between Time & Motion and Business Process Re-Engineering).

Share this Post