Outsourcing is Now About Innovation, Not Just Lower Costs

Value, rather than cost, is the new watchword, and will likely be measured by how service providers help empower business growth through innovation

outsourcing managers

Lower operational costs are no longer the key motivation behind outsourcing, as enterprises across the world are increasingly expecting service providers to inject agility and innovation into their business operation.

These days, before signing the deal, companies try to figure out how service providers can add capacity to their business and advance their functional capabilities.

“Value, rather than cost, is the new watchword, and will likely be measured by how service providers help empower business growth through innovation,” says Deloitte’s global outsourcing survey 2016.

In the survey, most respondents have viewed service providers as key business enablers and ‘purveyors’ of innovation. In other words, enterprises expect them to help transform their business rather than just provide a source of price arbitrage.

Many said that they are actively tracking the incorporation of innovation into their outsourcing agreements. However, survey results indicate that the majority of respondents still struggle to define, track, and motivate innovation from their service providers, or that they are unsure how to do this formally within a contract.

The real innovation taking place is outsourcing’s enabling of organizations to buy a module of service that can be effectively procured, integrated, used for a period of time, then safely removed from the environment when its useful life has expired.

Thanks to advancing technologies such as robotic and cognitive process automation, outsourcers have somewhat been able to ease the bulky business operation for the service buyers, assisting them with mergers and acquisitions in addition to mitigating business risks.

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Findings also indicate outsourcing’s accelerated growth into additional functions, like real estate, facilities management, and procurement. “Responses to this year’s survey reflect the growth of outsourcing across mature functions, including IT, human resources, and finance, during the two years since our last survey,” said Deloitte in a press release.

Unlike its 2014 survey, people involved in outsourcing no longer appear to worry about prospective legislation and regulation on outsourcing decisions. Also on the decline is the fear over cyber security.

Another notable change is that 75% of outsourcing buyers are discussing the use of robotic and cognitive process automation to improve outsourcing results.

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