By Anubhav Saxena
Over the past two decades, I’ve worked as a senior founding executive with two major service providers, and I like to believe that my colleagues and I have helped our clients build and execute strategies to save money, improve operations and solve their business problems.
Recently, however, I moved to a new position with a sourcing advisory firm. This move was inspired by the changes I observed in the marketplace and by the unique opportunity I recognized in an advisory role. Specifically, I’d be able to help clients articulate their strategic vision of where they want to go, and match that vision with service provider capabilities and solutions.
I began my career during the era of Outsourcing 1.0, when we, as service providers, held much of the leverage. Although clients knew why they wanted to outsource (namely, cheaper, faster and better), the process of getting there was largely in the service provider’s control. During this phase, clients typically sought a single service provider to cover a wide range of services under a one-throat-to-choke model. Service level agreements were the rulebooks that providers and clients played by to define success. Outsourcing 1.0 was an era of limited options, limited players and even more limited definitions of success.
Over time, clients demanded more ownership of the process and dictated how they wanted work done. In a spirit of “the customer is always right,” service providers customized their solutions to conform to unique and sometimes inefficient client processes, in an era I’ll call Outsourcing 2.0. Multisourced environments became more prevalent, as clients sought to leverage specialized capabilities and build best-of-breed, handcrafted solutions. While this yielded some benefits, clients often found themselves struggling to manage disparate providers with conflicting agendas, as well as enduring inefficiencies resulting from a lack of standardization. During this period of growing maturity, collaborative sourcing models became more prevalent and value expectations grew.
Moving to the Era of Outsourcing 3.0
Today, as the service market continues to mature toward Outsourcing 3.0, both clients and providers are recognizing the economy-of-scale benefits of standardization and limited customization. As such, clients are increasingly willing to change their complex and inefficient internal processes and requirements and adopt the provider’s standardized solution at a lower cost. Capability and maturity models are beginning to co-exist and gold standards are starting to emerge.
Paradoxically, while service delivery is evolving toward simplicity and standardization, service delivery models are becoming increasingly complex and multi-faceted, with SMAC, automation and other disruptive technologies, and various platforms, providers and solutions sets further fueling the growth of multisourcing.
In this environment, clients have the opportunity to achieve the innovation and transformation they seek. But while they know where they want to go, they often don’t know the best way to get there. And while they recognize there may be more than one right answer to a business problem, they often need help in finding the best answer, particularly given the rapid pace of change and innovation in the market.
This dynamic is fundamentally changing the role of the sourcing advisor. Traditionally, clients worked with advisors to define specific requirements through a highly prescriptive RFP process, and service providers checked off the boxes to show that they could fill the order. Advisors made sure all the t’s were crossed and i’s dotted. Today, clients are asking open-ended questions such as “How would you solve my business problem?” Here the advisor’s role is to engage clients and service providers in a strategic dialogue to assess options and to identify suitable models and solutions that can meet the client’s needs in the future.
