Tweet

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

Written by: Jon Hansen

Article Overview: 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 and Outsourcing Network's The Year in Review and the Year Ahead

Over the past 12months 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.

Related Articles
  Outsourcing Accounting: Easy Accounting Outsourcing to India for Small Businesses in USA
  News for Software Outosourcing Development
  EDS Encourages BPO Growth
  Flexibility -- Key Factor To Consider While Selecting Your Outsourcing Vendor
  How to Conduct Effective Outsourcing Interviews

Article Tags: abdication, amr, amr research, blueprint, business process improvement, cummins, dismal track record, emerging giants, iaccm, improvement programs, interview one, matt morgan, mindset, minute interview, morgan morgan, outsourcing programs, outsourcing services, research analyst, saas, solution providers



Related Forum Posts
How to valuate a business - Hi Garth - here is how we did it at Northern Crown Capital when I was helping them raise venture capital for Toronto-based entrepreneurs. Assume the start date is 2003 so 2008 projections are 5 years out: How Northern Crown Capital Valuates a Business 2008 Financial Projections Earnings Before Tax $5,865,000 Tax Rate 42% Taxes $2,463,300 Net Earnings $3,401,700 Amount Seeking to Raise Today $3,500,000 Discounted Value of Future Opportunity, 5 Years Out 2008 P/E Ratio 15 Value of Company in 2008 $51,025,500 Discount Rate Applied 30% Year 2008 $51,025,500 Year 2007 $35,717,850 Year 2006 $25,002,495 Year 2005 $17,501,747 Year 2004 $12,251,223 Value of Company at Investment in 2003 $12,251,223 Less: Investment Amount $3,500,000 Present Value $8,751,223 Discount for Risk & Private Company 40% Less: Discount for Risk & Private Company $3,500,489 Private Company Value $5,250,734 Present Value (What the Owner Keeps) $5,250,734 60.00% Financing (What the Investor Gets) $3,500,000 40.00% Total $8,750,734 100.00% I hope this helps!
Re: HAPPY NEW YEAR! - Happy New Year!
New Year - New Resolutions? - Anybody got any goals they'd like to share for the New Year?
Re: Hi Everybody - Thanks a million GT Have a Happy New Year
Re: Happy New Year - Happy New Year Everyone! Here's to reaching your goals and beyond in this new year and new decade!


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Gas bills go up by 18% can we take any more

Stay Employed In A Down Economy

Ways to Improve Your Landing Page Conversions

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.