How Much and How Fast is Outsourcing Changing?

The International Association of Outsourcing Professionals®, (IAOP®), recently concluded it’s annual Outsourcing World Summit.  IAOP said it was their largest Summit ever, with more than 850 delegates attending on behalf of buyer, provider and advisor companies from around the world.

Outsourcing as a profession, a function and an industry is certainly well represented at many other conferences but it’s hard to envision one global event that brings together so many practitioners, end customers, advisors and service providers at one time – all solely focused on outsourcing.  This year in fact the provider community seemed particularly well represented, with 83 unique companies and associations exhibiting in this year’s Global Services Mall and many others in attendance as delegates, speakers or panelists.

Because the Outsourcing World Summit draws so many unique disciplines, specialties and geographies it also feels very referential for the industry as a whole.  What I took away from this year’s Summit, in terms of both hard facts and anecdotal observations, is that the industry is very much alive and well, yet is extremely self-conscious of it’s need to redefine it’s future value.  Some attendees said it more outright than others, but in general the consensus seemed to be that if outsourcing’s value proposition over the next five years remains labor arbitrage, off-shoring and ‘lift and shift’ then a huge opportunity has been missed for all the industry’s constituents.

How Different Will Outsourcing Look in the (Near) Future?

A great place to look for that answer is the survey IAOP released at the Summit.  IAOP, in collaboration with Accenture, surveyed its members and affiliates worldwide in 2012 and 2013 to monitor the evolution of outsourcing and identify developments. Some of the report’s key findings include:

  • Outsourcing is in growth mode and its influence is now felt across increasing numbers of business processes and functions.
  • As customers and providers alike become more experienced they are targeting more strategic business outcomes—supporting plans for growth, increasing flexibility and accessing specialized skills and talent.
  • To support those strategic goals, more customers are looking for higher-order, knowledge-based skills rather than operational skills alone.
  • The importance of innovation as part of outsourcing contracts continues to be an interesting development. Although customers rarely cite innovation as a primary reason for outsourcing, they overwhelmingly expect innovation as an additional value derived from the outsourcing relationship, and are likely to see innovation as a collaborative endeavor with their provider.

Another revealing possibility for outsourcing’s future direction was revealed in the titles of many of the presentations and panels at this year’s Outsourcing World Summit.  Take a look and you’ll see much more than the traditional fare of governance, quality, locations and vendor selection.  Here are a few that stood out:

  • 5 Steps for a Successful Transition to Managed Services
  • Talking SMAC – Contracting for Social, Mobile, Analytics and Computing
  • Cyber Warfare
  • Is it the Dawn or Death of Outsourcing
  • When Outsourcing Can Lead to Jail Time
  • Insource to Outsource to Crowdsource… What’s Really Next?
  • Doomsday Predictions for Outsourcing vs. The New Normal

Not everyone at this year’s Summit is embracing a big transformation of outsourcing’s core value proposition.  Look no further than Robotic Process Automation – predicted by many to be one of the most disruptive technologies to hit the industry since Cloud computing.   For every early-adopter that has already made digital labor part of their back office delivery model there are 3 to 5 providers who simply can’t recognize how much impact this technology can have (to be fair, that number was double just three months ago…).  Adding this kind of technology driven change on top of everything else that was discussed at this year’s IAOP Summit and I was left concluding the outsourcing industry really is poised, ready and capable of a major, self-imposed make over.

How much of this change will happen by the time the 2015 Outsourcing World Summit rolls around?  I’m predicting far more than many expect!

Share your predictions, thoughts and comments with us or join the conversation on Twitter at #2014OWS / #IAOP.  We’d love to know what you think about the future of outsourcing.