Driving Efficiency with Adaptive Outsourcing
Forrester® Research demonstrates that more than 25% of North American customers are dissatisfied with their outsourcer’s ability to hit cost and SLA targets. And failure rates for outsourcing can range from 25%-50%. Forrester’s review of failed contracts found that the single biggest reason for failure is a lack of flexibility.
One of the main problems is that vendors can take a rigid approach to outsourcing engagements that does not consider all of the facets of a client’s technology lifecycle. A company who is an early adopter of a new technology can have substantially different requirements than one who is a laggard in the adoption lifecycle. What’s needed is a provider who adapts their solutions to whichever phase of the lifecycle that their client is currently in, and can transform and evolve their approach to keep pace as the customer’s needs grow and change. The result will be a stronger, more strategic relationship between customer and vendor, where the customer will experience lower overall costs and a more targeted and flexible approach to their business needs.
A vendor capable of adaptive outsourcing can cut new technology deployment time by weeks when compared to an in-house or multi-vendor strategy. This is because in-house teams have a learning curve on any new technology, and multiple vendors have a learning curve in regards to the client. But when you have a vendor that is flexible enough to adapt to any technology need, combined with a long-standing customer relationship, the result is less learning curves and a faster ROI on the project overall.
BPO Improvements
An adaptive outsourcing model also yields benefits in business processes, as these processes are often linked to the technology lifecycle. There’s no reason a vendor cannot bring the same flexibility to business process outsourcing as they can to a technology engagement. Example: While prototype technologies can be deployed to address new processes, mature technologies can support full-production processes. And commodity, low-cost platforms can be used as existing processes start to be phased out.
Key Components of Adaptive Outsourcing
There are several components and strategies that encompass an adaptive outsourcing model, and can be found in vendors utilizing this approach. These include:
- Account teams that can recognize shifts in the technology lifecycle.
- Flexible account management structures, with teams that grow and constrict with the current phase of technology support needs.
- Vendors that are very actively involved in their clients business planning cycles.
- A vendor/customer interaction model built on collaboration and partnership.
A vendor that practices an adaptive outsourcing model is one that can deliver real advantages to the client. Rather than clinging to the metrics outlined in the SLA, this type of vendor will focus on providing value to every phase of the technology lifecycle. Whether it’s speed-of-implementation in the early stages, or cost reductions when dealing with late-stage technology, adaptive outsourcing is the solution that links pricing, contract terms, and service levels directly to client needs. It’s simply the best way to build a positive client/vendor relationship—one that yields definable and measurable results over the long term.
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1. Julie Giera and Andrew Parker, “Adaptive Sourcing: Outsourcing’s New Paradigm,” (January 12, 2006), Forrester, http://www.computerweekly.com/DowntimePDF/pdf/Adaptive%20Sourcing.pdf
2. Created from concepts presented in: Julie Giera and Andrew Parker, “Adaptive Sourcing: Outsourcing’s New Paradigm,” (January 12, 2006), Forrester, http://www.computerweekly.com/DowntimePDF/pdf/Adaptive%20Sourcing.pdf