Capturing Insights from Across the Globe

Capturing Insights From Across The Globe

Chairmans Interaction with the Global & Local Corporations
Recently Zia Qureshi, Chairman IAOP Australia, attended the Outsourcing World Summit,
participated in research activities as a member of the IAOP Global Research Committee and held
various Australian Chapter meetings. This combined with the Business Catalyst expertise in
outsourcing, puts him in a unique position to share current developments in the field and his
insights that will benefit the Australian corporates.

One can outline a long list of benefits of outsourcing, but what really makes a difference and
passes the so what test is that outsourcing enables the executive team to focus on the core
business, the things that really matter to achieving success and getting ahead, or, as Professor
Oren Harari puts it breaking from the pack.

In this world of a copycat economy, executives and manager really need to be on the ball and entirely focussed on
customers, business strategy and competitors including the ones that may emerge from the left field.

Outsourcing is not a magical solution Avoid Fantasy Land stuff.

Outsourcing, just like any business initiative or project needs to be handled with great care, expertise and above all, sound
management and commercial principles. Its not a guaranteed or a magical solution that will give you cost savings, better
business outcomes and transfer risk to third party. This unrealistic approach has led to the mixed results in achieving
success and sometimes created expectations that could be best described as a fantasy land stuff.

The question of whether to outsource is a rhetorical one. The question today is: How to manage outsourcing smoothly for
a successful outcome?

Outsourcing is no longer a trend. Rather it is an embedded business model that is growing and gathering momentum,
with the split being 60 percent on information technology and 40 percent on business services. With massive integration
over the last few years, there has emerged a new industry with complexities for the uninitiated, whose charge it is to select,
contract and manage disparate service providers in everything from human resources, engineering, finance and information
technology.

The World Outsourcing Summit 2007 Las Vegas

The World Outsourcing Summit in Las Vegas earlier this year was attended by 600 delegates. The summit highlighted a
number of major trends that are emerging from leading corporations from around the world quite differently from the
past. Much of the debate in the summit, the IAOP Chairmens meetings and the global research committee forum revolved
around the confusion in relation to the value of outsourcing. While expectations have not been met, much real value has
been delivered by outsourcing. There were some good signs at the World Summit to indicate that the profession is finally
maturing. It was also clear that outsourcing is expanding and continuing to grow rapidly.

IAOPs Research Survey

Research from IAOPs recent survey examined the reason behind the failed deals and revealed several disparities between
service providers and their clients, with each pointing their finger at the other.

The key findings from the survey were as follows:

Few companies are consistently generating value from outsourcing

Providers are three times more optimistic in stating they generated value in outsource deals when
compared to customers
Unrealistic expectations, no outsource strategy, and too many requirement changes were identified as some
of the main reasons why outsourcing relationships fail
Customers place more emphasis on transaction and process, however, much more upfront work needs to be done
 Capturing Insights from Across the Globe
Capturing Insights From Across The Globe
Providers are not doing enough to set clear expectations on the outsource relationships
Advisors are under serving customers and providers in areas such as change management, and managing
the transitions. More focus should be placed with upfront strategy development and change management.

The corporations who have approached outsourcing from a real business world perspective, have done well by focusing on
a number of critical success factors outlined above to ensure business outcomes are achieved. It is not surprising that the
worlds most successful companies are continuing to leverage outsourcing and are making a success of it.

Ensuring the Success of Your Outsourcing Chairmans

Chairmans Insights
1. Be clear on your strategy and rationale for outsourcing, understand what you are outsourcing, why and what
benefits are to be achieved- be realistic in your expectations.

2. Make sure the commercial deal is sound and it results in a win-win scenario. It is simple: you get what you pay
for. Ensure there is enough opportunity for the vendor to make a profit and return on its efforts through a bonus
scheme or results driven incentives.

disasters
People may not admit it, but most of outsourcing disaste rs are driven by cheap deals where nave management
coerced the service providers to deliver Rolls Royce service at Holden prices.

3. Do not outsource a problem without at least understanding whats involved in solving it. You dont have to solve
the problem fully before outsourcing. An outsource service provider may well be better placed to help solve the
problem but you do need to have a clear understanding of the problem,
problem whats needed to fix it including skills,
resources and investment. Only then are you in a position to talk to the service provider. Do not hesitate to get
other specialists involved.

4. The trend has well and truly now shifted towards making smaller deals and breaking the overall operations into
chunks, using multiple suppliers if necessary.

5. Implement sound governance process and a comprehensive management framework with people who are
experienced in outsourcing leadership and not contract management.

Lateral leadership skills are what make for a successful relationship with service providers.
providers. These skills cant be
taught or handed down through management manuals. Take away the buzzwords and very few understand this
illusive skill even less posses it.
it

6. See outsourcing as an extended web of evolving relationships rather than a set and forget model. Ensure these
relationships have a cultural fit with your organization and their longer term objectives are aligned with yours.

7. If innovation and value creation are on the agenda, as opposed to acquisition of commodity type services, make
sure there are appropriate mechanisms and processes in place in your organization to achieve this through your
own work that leverages the service providers capabilities and knowledge. No matter who your service provider
is, innovation doesnt happen automatically
automatically.
omatically

8. When developing a contract, take control and lead the legal team.
team The dynamics of rapidly changing operations
such as IT do not lend themselves to be written up as a detailed contract in a traditional sense. It needs a creative
approach that involves flexibility, a broad framework for collaboration and working with vendors on the basis of
business and operational plans that are likely to change constantly.

9. An outsourced function is still your business,

business so lead and stay in control - participate, facilitate, review and enable
the service provider to deliver outstanding service in a win-win scenario.