The Types of Outsourcing Clients: Which Type Are You - Northernworx

Outsourcing has so much more to offer than simply ?cutting costs?. By finding the right outsourcing service provider with the right skills and talent that works for you, you secure both cost benefits and business value for your organization.

In their article ?Time to ring-fence ?Lights On Outsourcing? and focus on ?Business Transformation Services?, Horses for Sources (HfS) categorized outsourcing clients into three ?camps? according to their use of the outsourcing initiative in alignment to their business objectives.

The first group, labeled as the ?Lights On Camp?, describes those organizations that outsource simply for the cost advantages. These are the companies that do not view outsourcing as a strategy or a long-term solution. For them, outsourcing is simply a way to cut costs, handing over a business process to an outsourcing service provider who does it better, quicker, and cheaper.

The second group, labeled as the ?Efficiency Camp?, describes those organizations that recognize outsourcing, if implemented wisely, as a strategy for process improvement.

?We don?t see a hell of a lot of competitive differentiation in these processes, but we do recognize that there?s more than an initial 30% we can lop off the budget if we?re smart about this. So let?s plan for phased process improvement and additional layers of processes to externalize in the future.?

The third group, labeled as the ?Transform Camp?, describes those organizations that simply outsourcing certain business processes does not solve the problem, and even runs the risk of function stagnation. For them, investing in process improvement is a vital part in outsourcing, as well as the role of the outsourcing provider in improving the overall business function.

?They [outsourcing providers] need to understand how to help us improve our business outcomes, based on the combination of our in-house teams, our shared services and what we have externalized to third parties.?

In comparing these three groups, it?s pretty much obvious which group is more ambitious in delivering business value and leveraging the outsourcing initiative to its full potential. Outsourcing has so much more to offer than simply ?cutting costs?. By finding the right outsourcing service provider with the right skills and talent that works for you, you secure both cost benefits and business value for your organization.

Related Article: Time to ring-fence ?Lights On Outsourcing? and focus on ?Business Transformation Services

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