Are strategic partnerships the secret to agility?

There was a time when out­sourc­ing con­tracts last­ed a decade or more and the news was lit­tered with head­lines of over­spend­ing and failed out­comes. Inno­v­a­tive approach­es to out­sourc­ing have, how­ev­er, been qui­et­ly evolv­ing over the past five years or so. This shift comes in part to accom­mo­date the speed of tech­no­log­i­cal change that is help­ing reimag­ine oper­at­ing mod­els, but also to match the chang­ing demands of agile organ­i­sa­tions’ need for more strate­gic part­ner­ships.

Tra­di­tion­al­ly, out­sourc­ing was focused on cost-cut­ting and improv­ing back-office ser­vices. Now strate­gic part­ner­ships are about col­lab­o­rat­ing with spe­cial­ists to inte­grate new prod­ucts or val­ue-added ser­vices a busi­ness can­not effi­cient­ly build on its own to inno­vate, accel­er­ate growth and secure an edge over its com­peti­tors.

What strategic partnerships can do

The Glob­al Sourc­ing Asso­ci­a­tion, a not-for-prof­it mem­ber­ship asso­ci­a­tion which shares best prac­tice on sourc­ing, pre­dicts the out­sourc­ing mar­ket will become simul­ta­ne­ous­ly more col­lab­o­ra­tive and more com­pet­i­tive with con­tracts based on out­comes rather than out­puts, and part­ners shar­ing risks to ben­e­fit from greater rewards for all par­ties.

Cost pres­sures con­tin­ue to weigh on busi­ness­es, but to remain com­pet­i­tive, agile organ­i­sa­tions must ensure they have access to cut­ting-edge tech­nol­o­gy. With­out the means or desire to nec­es­sar­i­ly recruit those skills in-house, busi­ness own­ers are under­stand­ing that only when they devel­op strate­gic part­ner­ships with experts can they access the tools and skills they need to adapt to the mod­ern world of busi­ness.

Mon­eypen­ny, a glob­al out­sourced com­mu­ni­ca­tions provider, deliv­er­ing tele­phone answer­ing, live chat, switch­board and mul­ti­chan­nel cus­tomer ser­vices, under­stands the ben­e­fit of agile part­ner­ships from both sides of the equa­tion. Mon­eypen­ny not only pro­vides agile part­ner­ships, offer­ing small­er com­pa­nies the arti­fi­cial intel­li­gence-gen­er­at­ed tele­pho­ny ser­vices that they wouldn’t be able to hire in-house, but also bespoke ser­vices to multi­na­tion­als.

In addi­tion, the com­pa­ny nur­tures its own agile part­ner­ships with tech­nol­o­gy experts to tap into the tech they need to fur­ther their ser­vice offer­ings to clients.

Moneypenny’s chief exec­u­tive Joan­na Swash says: “Out­sourc­ing used to be a bit of a dirty word. Over time the whole image of out­sourc­ing has changed con­sid­er­ably. Agile part­ner­ships are dif­fer­ent now. It’s about mak­ing sure you have the right rela­tion­ships in place and you take the time to real­ly under­stand what your busi­ness prob­lems are, and that’s how you get real­ly strong out­sourc­ing rela­tion­ships. But you can’t out­source some­thing with­out being ful­ly invest­ed in it.”

Partnering strategies are changing

Often, out­sourc­ing was about tak­ing away what was often seen as the headache of the non-core ser­vices and hand­ing them over to a third par­ty to deal with at a much cheap­er cost. Today, cost is less of a pri­or­i­ty.

Lengths of con­tracts have also rad­i­cal­ly changed. Gone are the decades-long con­tracts and notice peri­ods that tie in busi­ness own­ers irre­spec­tive of the out­comes. Nowa­days, con­tracts are often month by month, or for one or two years. In fact, agile organ­i­sa­tions say the length of the con­tract isn’t an issue because, if you want to retain the part­ner­ship, you make sure you’re achiev­ing out­comes to secure the repeat busi­ness.

“There’s a big recog­ni­tion that the world changes very, very quick­ly. And you need to be able to flex your providers and your inter­nal resources to cope with dif­fer­ent kinds of macro-eco­nom­ic con­di­tions, local con­di­tions or staffing. We don’t real­ly want to enter into too long a con­tract with any­body. And cer­tain­ly not with­out the abil­i­ty to make changes in that rela­tion­ship as the ser­vice pro­gress­es,” says Ms Swash.

That flex­i­bil­i­ty is at the crux of the new strate­gic part­ner­ships. Busi­ness­es need to know that dur­ing the peaks and troughs of the busi­ness cycle they can buy in the ser­vices they need to ensure the smooth flow of busi­ness. Own­ers do not want to have to pay for a prod­uct or ser­vice they are not ben­e­fit­ing from dur­ing a qui­eter peri­od.

“We’re see­ing a dif­fer­ent dia­logue from even a year to five years ago. In the past, it was very much a sup­pli­er rela­tion­ship focused on key per­for­mance indi­ca­tors and cost deliv­ery. But we’re see­ing a big move towards flex­i­bil­i­ty and agili­ty,” says Kirk Croal, man­ag­ing direc­tor of Huntswood Out­sourc­ing.

Choosing strategic suppliers

Strate­gic part­ner­ships will only work, how­ev­er, if they are based on trust and trans­paren­cy. It’s a sub­stan­tial leap of faith for organ­i­sa­tions, but the rewards are sig­nif­i­cant. The shift is also com­ing in the form in which teams work with out­sourcers. Mr Croal says, in the past, he may have been work­ing more with the pro­cure­ment side of the busi­ness, but now he works increas­ing­ly with clients’ oper­a­tional teams, which isn’t nec­es­sar­i­ly the cheap­est approach, but can pro­duce the best results for the cus­tomer expe­ri­ence.

“Our cus­tomers want a strate­gic part­ner that is going to be more than just a com­pa­ny which makes stuff for them. We now have com­pa­nies which share the design, inno­va­tion, the col­lab­o­ra­tion, engi­neer­ing. Our job is to basi­cal­ly make sure our cus­tomers’ prod­uct is bet­ter than the com­pe­ti­tion,” says Tony Hague, chief exec­u­tive of West Mid­lands-based PP Con­trol & Automa­tion, a strate­gic out­sourcer to man­u­fac­tur­ing machine builders.

His­to­ry shows that it is dif­fi­cult to catch up if you ignore or delay act­ing on indus­try dis­rup­tion. Agile organ­i­sa­tions that view this dis­rup­tion to out­sourc­ing as a chance to exe­cute real change, even when it may cost more in the short term, will be far bet­ter posi­tioned to gain com­pet­i­tive advan­tage in the long run. Those that don’t risk being left behind by their nim­bler com­peti­tors.

As Ashish Kumar Gup­ta, cor­po­rate vice pres­i­dent and head of Europe, the Mid­dle East and Africa at HCL Tech­nolo­gies, con­cludes: “Com­pa­nies that haven’t been able to change with the times become irrel­e­vant in the mar­ket.”

What strategic partnerships can do

Partnering strategies are changing

Choosing strategic suppliers