Shared Services and Outsourcing Network’s The Year in Review and the Year Ahead

A global perspective on the year just past and the year ahead from the world’s largest community of shared services and outsourcing professionals, SSON.

When I was recently contacted by SSON‘s Jamie Liddell to provide my thoughts on “The Year in Review ” for 2009, as well as “The Year Ahead” in 2010, relating to shared services and outsourcing I must admit that there was no shortage of ideas and reference material.

Shared Services & Outsourcing Network

Over the past 12 months I have had the opportunity and privilege of interviewing some of the industry’s top thought leaders on the subject of shared services and outsourcing including Sources for Horses and former AMR Research analyst Phil Fersht and IACCM’s CEO Tim Cummins.

The Fersht interview, which originally aired on June 24th was interesting on many levels, not the least of which was the fact that according to industry studies two-thirds of all outsourcing programs fail to achieve the expected results. While there were a number of reasons that had been cited and discussed for this dismal track record during the 45 minute interview, one of the most telling revelations came from the fact that even though organizations were looking to increase their activity in this area, few companies were actually going beyond the rob Peter to pay Paul mindset that led to the failures in the first place. Specifically, becoming disenchanted with outsourcing services through domestic providers, organizations repatriated development internally through the engagement of overseas providers from countries such as India.

The problem of course is that the change in geography did little to address the origins of the problems with domestically driven initiatives, which is the client’s abdication of responsibility for managing the process. In other words, success with outsourcing will continue to be elusive if companies insist upon assuming a spectator role in their own business process improvement programs.

Recognizing these challenges and their overall contribution to the poor results, companies are now starting to turn toward solution providers that can facilitate without intimidating the management process, which was reflected in the PI Window on Business “Emerging Giants: Future Titans of the SaaS World series.”

In particular, the August 20th segment in which I interviewed Blueprint’s Senior VP and CMO Matt Morgan. Morgan discussed at length the emergence of “visual requirement definition” as well as the myriad of other tools that are now available to organizations who want to gain access to needed resources without losing control of the development process.

While organization’s assuming greater responsibility and control for their outsourcing projects in 2010 will continue to be the trend, the question as to level of outsourcing activities beyond the domestic landscape remains to be seen.

On September 30th I welcomed both Canada’s Trade Minister Stockwell Day and an international guest panel of experts that included IACCM’s Tim Cummins to discuss the impact of the Buy American policy on both the domestic and international economic landscape. During the 90 minute special, Tim made the prediction that outsourcing activities would begin to shift away from India to South Africa where, as he put it is a nascent outsourcing sector that will make it the new preferred destination for companies looking to outsourcing for improved process performance and bottom line savings.

Whether this transformation will shift into high gear in 2010 or the year after is yet to be determined. However it is safe to say that 2009 was the starting point, and that 2010 will be the year of transition.

This latter point of course demonstrates how outsourcing activity extends beyond the sector itself to encompass and impact global economies.

As I had discussed on the PI Window on Business Show, and both the Procurement Insights and PI Window on Business Blogs, the Clark and Fourastie “three-sector hypothesis of industry” (which is now four with the advent of high tech and R&D industries) as it relates to the development of a wealthy nation’s economy, demonstrates outsourcing’s economic impact . (Note: the now “four industry sectors” of the hypothesis through which a wealthy nation must progress to maintain its economic position includes the extraction of raw materials (Primary), manufacturing (Secondary), services (Tertiary) and later knowledge-based (Quaternary). Outsourcing encompasses elements from both the third and fourth sectors.)

Referring once again to India, the advent of that country’s rise to prominence as a preferred outsourcing destination for American firms, each of which have committed to investing $1 billion into its economy, has significantly impacted its standard of living. In fact studies show that India has seen double-digit wage growth for much of the 2000s.

The critical points to consider regarding the India case reference is that outsourcing is a key cornerstone of the Tertiary and Quaternary sectors that are essential to a nation’s economic viability and ongoing strength. How this plays out during 2010 and the ensuing years will likely have a significant influence on the global economy as a whole, especially if predictions such as the one by IACCM’s Cummins forecasted shift from India to South Africa materialize.

Given the above, it is safe to say that as we move further beyond 2009, we will one day come to see it as a pivotal year of change that like 2010 will represent the bridge between past failures and future success on multiple levels of what is a complex industry.

For those of you with a penchant for keeping score, here are the links to the 2008 review and 2009 forecast.

Year-End Special PI Window on Business

I thought that it would be a great idea to share the global view of where Shared Services and Outsourcing has been, and where it is headed in 2010 and beyond with our PI Window on Business Show listeners.

Joining me from the land down under for a special PI Window On Business segment on December 30th, is none other than SSON’s own Jamie Liddell, whose highly popular annual review feature is certain to both inform and inspire debate.

Please note that the start time is 10:00 AM EST on December 30th, versus our usual 12:30 PM slot on the Blog Talk Radio. Remember to access the Live broadcast through the On_Demand Player below.

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