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Intellect Paper: A new decade, a new outsourcing challenge
Historically, recessionary times have been good for outsourcing, but will it be
the same this time? A concern of some is that the outsourcing industry will not
be ready or able to deliver without a creative re-think of business models in
key areas, such as pricing structures, relationship models and the contracting
processes.
This will weaken the UK's competitiveness and grow a deficit in the current
account. In short, the industry runs the risk of missing the boat at a pivotal
time in its history. This has been brought about by the coming together of three
'revolutions' - technological, commercial and financial - combined they have
created the 'perfect storm' for the outsourcing industry.
This paper is the output from a series of roundtables at which representatives
from over 40 organisations have considered these factors. Academics, industry
commentators, consultants and legal minds, have analysed the future
relationships between outsource buyers and suppliers.
These experts concluded the impact of the rationing of cash and capital, the
lock in of deal-based legacy contracts and the emergence of new competitors with
innovative business models which deliver web based applications as services 'in
the cloud' would transform the outsourcing landscape within five years.
This paper challenges the established view that IT has to be a capital and
people intensive industry. In this new decade, business survival and performance
will be driven by business leaders demanding: agile technology, fast
procurement, speedy delivery, opex-funded transformational initiatives that
payback within the financial year and the delivery of value deep into their
business' frontline. CIOs and board level decision makers need to take a fresh
look at their existing and future outsourcing contracts and to contract
differently. Re-negotiating existing long-term contracts are an imperative if
businesses are not to be locked-in. I hope you find the content to be
insightful, thought provoking and a catalyst for you to seriously explore and
evaluate the possibilities set out in this document.
