Outsourcing clients rightly want noiseless delivery, and providers work hard to achieve it. But if silent running becomes an end in itself, it may mask deeper problems in an outsourcing engagement, and stifle innovation.
We’re in a pretty unhappy place, after all, when fewer than half of enterprise outsourcing managers say they’re satisfied with their career prospects. And fewer than a third say they’re getting the industry knowledge and analytics skills they need to drive business outcomes for their organizations.1
Those are among the disturbing findings of a recent report by HfS Research that asks the question “Is Good Enough Really Good Enough? The Great Talent Paradox in Outsourcing.” 2 The report looks in depth into the top priorities of outsourcing buyers and what they honestly think about the talent available from their service providers, as well as the outsourcing management in their own organizations. And the results make for sobering reading.
The research concluded that most outsourcing engagements are gravity-bound: “…fully two-thirds of enterprise outsourcing buyers are struggling to achieve any genuine business value beyond mere cost reduction and efficiency,” and “barely
a third of enterprise outsourcing buyers (i.e., customers) believe their current governance talent—the people responsible for managing the service relationship—can drive innovation, define business outcomes, or believe that they have even above-average analytical skill.” 3

While this may be unsettling, the true “nugget” from this research lies in the one-third of the 282 major enterprises studied for this report that are seeing value from their outsourcing engagements, and are heading for new worlds. What HfS Research calls the “Strategic Outsourcing” group is where buyers’ experience and investments have produced insightful and invaluable lessons in how to escape gravity and capture the greatest business value from outsourcing. Their learnings?

Before selecting a service provider:
• Enterprises should focus talent investments on enhancing their core business skills
Organizations need to determine the most effective use of their internal staff versus their outsourcing partner. Service providers are experts in operations management, and by transferring these activities, the organization can instead focus on developing their internal talent and help them excel at specialties that are core to the business.
• Revamp skills expectations for the retained team
Successful enterprise outsourcing managers have strong analytical, influencing, process transformation and consulting abilities. Enterprises must be committed to build these skills in their current teams, and/or to hire individuals that already possess these talents.
• Assess the availability of strategic talent prior to service provider selection
To bring higher levels of value to clients, service providers must be both process experts as well as subject matter experts – in their functional area and the client’s industry. Just as important, is the service provider’s on-going commitment and investment to the outsourcing team for continued talent development and training.
After selecting a service provider:
• Manage governance organizations like business functions, not like cost centers
Enterprise outsourcing governance teams need to be encouraged to focus on business issues, not just administrative cost reductions. Formal training programs that develop governance staff’s communications skills, business acumen and goal-setting as well as improve their ability to align stakeholders and analyze data are critical in moving outsourcing in a strategic direction.
• Establish shared stretch goals that encourage the deployment of skills on a regularly reviewed basis
The governance team should be constantly challenging the service provider to present new and innovative solutions. Performance metrics should be revisited and evaluated against strategic goals at least once a year, to avoid the trap of the “lights-on” mentality, and to achieve goals beyond mere cost savings.
• Manage the service provider's talent as an extension of the enterprise
The enterprise should consider the service provider as a partner, and be prepared to leverage their provider’s capabilities to create business value. Likewise, however, the enterprise must also consider how to best manage and develop its own talent in an on-going and continually evolving relationship.
Bottom Line: Enterprise Leaders Who Want Greater Value from Outsourcing Must Focus on Talent!