Outsourcing : changing more than just processes

Outsourcing is more than just about cost:
* Business growth as an outsourcing objective

* Skills access through outsourcing

* Global sourcing set to accelerate

* Boost in outsourcing in the financial services sector

IT services company Unisys predicts a single over-arching trend in outsourcing for 2007: that businesses will want their outsource service providers to deliver more than improvements to processes and costs.

Brett Hodgson, Managing Director at Unisys New Zealand, said, “Whatever the levels of maturity in outsourcing in different countries in our region, the theme from customers is consistent. Outsourcing is the means to change, and deliver more to, a business or a government. Today it’s so much more than the means to changing or improving or managing just the processes of a company.

“The ability of outsourcing to do this plays directly to the profitability of businesses, and to the speed with which they can react to market demand. The days of thinking of outsourcing as being just about cost are over. Effective identity management, effective data protection, and effective protection of intellectual property will all influence the choice of outsourcer, because the customer is also outsourcing its reputation.”

Unisys believes there are four factors influencing this trend.

Growth as an outsourcing objective
Businesses will increasingly turn to outsourcing to improve customer loyalty. This will come from improving customer service, responding more quickly to opportunities or challenges, IT innovation and improving the returns from the investment made in IT infrastructure. Outsourcing IT infrastructure, in one way or another, will let companies do all this more quickly and more flexibly, in a way that satisfies the CFO. In particular, business process outsourcing will increasingly be seen in these terms – and not just about saving costs.

Accessing skills through outsourcing – balancing supply & demand
Access to skills and specialised expertise will encourage outsourcing in countries or markets where skills are at a premium. Businesses will seek outsource service providers which have these skills, and which can make them available flexibly and affordably. In mature markets such as Australia and New Zealand, these will increasingly be accessed offshore. Short-term projects will grow within larger, traditional outsourcing contracts, requiring specialist skills. This will be particularly prevalent on infrastructure projects and on networking integration projects.

Global sourcing
Global sourcing will continue to grow – and gain acceptance, including from within the public sector. Inter-related will be the role of risk management expertise as an associated discipline. Customers (in financial services, for example) will increasingly chose only those service providers that can demonstrate robust data protection and audit regimes to protect identities and intellectual property.

Overall the outsourcing debate will become less about cost containment and more about accessing the best IT skills and expertise. Global sourcing will apply equally to IT outsourcing and business process outsourcing. New Zealand, Malaysia and the Philippines will continue to grow as offshore options to complement the more established locations of India and China. And on-shoring – the use of skilled resources from low-cost countries on local projects – will also become an option.

Increasing the share of wallet in the financial services sector
The financial services sector will see a continued increase in outsourcing, influenced by continuing profits and the demand for increased flexibility. Intelligent customer relationships will be a focus – with the banks focusing on the customer and the outsourcers focusing on hosting and managing the associated infrastructure. This will extend to outsourced applications development. Mergers and acquisitions will also see an increase in consolidated infrastructures. And the need to balance security and privacy of customer data will continue to be a central theme.