Outsourcing is big business for the consulting industry. 2001-03 has seen a significant shift away from more traditional consulting services towards outsourcing and outsourcing-related work. Philip Geiger is a Board Director at the IT consulting firm, Xayce:
You only have to look at the number of outsourcing announcements by blue chip companies in the last few months to appreciate that the time is fast approaching when a lack of appreciation about IT and business process outsourcing (BPO) would be akin to ignoring the impact of IT in the 1960s. Clients expect their consultants to understand the many facets and implications of BPO. The upside is that this represents a significant opportunity (and one that will close as clients acquire the experience to do it themselves); the downside is that you won't be able to ignore BPO. You could get away with that for a while, but - ultimately - clients won't want to talk to you.
From the supplier point of view, the case studies in this chapter typify two distinct sectors of the outsourcing industry.
PA Consulting Group's role was to advise the MHRA throughout the outsourcing process. It worked with the Agency to convert a high-level strategy into a practical set of requirements and to draw up a proposition that balanced the MHRA's need for flexibility with the commercial interests of potential bidders. Much depended upon establishing the right governance principles from the outset, upon being clear about how risks would be shared, and upon ensuring that the relationships involved did not deteriorate into confrontation. As the scale and complexity of outsourcing continues to grow, this independent, in-between role looks set to become ever more important.
As this case demonstrates, success will be determined by the extent to which a consulting firm can play the role of an honest broker, helping to create working relationships where all sides stand to gain. Commercial acumen and a broad knowledge of how other deals have been constructed are also prerequisites here: PA was able to add value to the client because it had seen where other contracts had succeeded or failed and apply these lessons to the challenges facing the MHRA.
Accenture's work with Sainsbury's begins with a consulting premise - how best to improve business performance - and translates this into practical changes to systems and processes. While advising its client on how to achieve those improvements, it is also responsible for making them happen. Thus, while PA's role was to develop a commercial framework within which other suppliers could work, Accenture's work with Sainsbury's includes implementing new systems, exploring the use of new technology, and re-engineering the way Sainsbury's and its suppliers work collaboratively. Atos Origin, too, was responsible for the delivery of the outsourced service, working side by side with
VOSA's own staff across a wide range of operational areas.
Clearly, both firms' track record in delivery is fundamental to their success here, but it was the use to which this experience was put that makes these projects outstanding examples of this kind of work. Neither firm was satisfied with the conventional relationship between client and outsourcing supplier: both set out to create environments in which more time would be focused on achieving the client's business objectives, and less on debating the minutiae of the contract. Success in this sector of the outsourcing market will primarily stem from the supplier's attitude.
That advice and delivery are being undertaken by different firms is significant. While 10 years ago it might have been possible for a single supplier to fulfil both of these functions, to give advice and to be involved in delivering the service, most clients now see the two roles as mutually exclusive. A firm that sells delivery services cannot be expected to offer independent advice on who is best positioned to deliver a service, because it has a vested interest in the outcome. By contrast, a firm that focuses on delivery is likely to be better positioned when it comes to offering in-depth knowledge about a particular technology. Both roles have their place in the market, but clients want suppliers to be clear about their position.
However, both models illustrate the extent to which organizational boundaries are changing - and this is one of the reasons why a more open, collaborative and flexible relationship is so critical. To be effective, outsourcing advisers and suppliers have to function as though they were part of their client's organization, sharing common objectives, making decisions on their behalf, and developing a similar culture.
Ironically, the greatest measure of successful outsourcing is the extent to which a process appears to be in-sourced.