Goodbye marriage, hello partnership

Or outsourcing as we knew it is dead, but the new way of outsourcing is alive and kicking

If there is one thing that we can learn from Donald Trump’s campaign in the current race for the upcoming presidential elections, it is that brazen quotes get you noticed. But such an unabashed statement needs to be explained to have any value beyond merely grabbing the attention. I began writing this post with the title ‘Outsourcing is dead, long live outsourcing!’ in mind. A true statement, yet an overused title. So, being brazen I am saying goodbye marriage fifties style and hello partnerships in business.

Old fashioned outsourcing is dead

Over the past years much has been written and researched on the fact that outsourcing is dead, yet long live outsourcing.  KPMG and HfS performed an extensive global research into the status and trends of outsourcing in 2012 published under the title ‘Outsourcing is dead, long live outsourcing!’. And more recently, in October 2015, Tom Davenport wrote an article ‘Why Companies Have Stopped Outsourcing IT’ in the Wall Street Journal. Outsourcing was like a 1950’s TV marriage; it was capacity based. The husband took care of all the mission critical processes in the marriage. He as the head of the household was solely responsible for the financial situation, all major decisions and the well-being of the family. The wife performed tasks such as cooking, cleaning and taking care of the kids. That type of outsourcing is becoming extinct because it does not deliver the value that the business needs.

From body shop to partnerships

The expectations and mindsets of the customers have changed. In the outsourcing world, we have moved from traditional marriages to partnerships. Creating bits of code is a thing of the past. Quick releases, continuous delivery, optimal user experience, delivery of tested software are just a few of today’s requirements for software product companies. The old body shop format of outsourcing cannot meet those needs and expectations; it is seen as highly unprofessional. Today’s market requires smart outsourcing or partnering. A partner that understands the needs and the urgency of the client and who takes full ownership over the agreed part of the software to be delivered.

Modern-day outsourcing: taking ownership

A modern-day partnership is built on trust, communication, and insight. This requires a different behavior and mindset. The partner should ask questions, verify assumptions, discuss implications and gain real insight into the expectations of the product and the objectives it should achieve. State of the art tooling, regular meetings, email, personal visits and telephone are all ways of continuous communication between outsourcer and customer. Teaming to meet the client’s objectives. The partnership also implies that an outsourcing company has to bring bad news should such an occasion occur and not continue ‘business as usual’ but address it. That is taking ownership.

Different mindset needed

The new way of outsourcing based on partnering requires a different mindset, not only from the outsourcing company but the client as well. For an outsourcing company to understand the sense of urgency and the needs of their customers, the client needs to share and give insights. The customer is the domain expert and knows the ins-and-outs specific to their industry. Only by sharing these can the delivery and technology partner meet its end of the equation.

Outsourcing means being a partner

Outsourcing as a concept is alive and kicking, but the older self is becoming a dinosaur. A Deloitte study held in 2014 shows this. Smart outsourcing or partnering is the future. Outsourcing is no longer about having great technology expertise; it is about the ability to deliver that great technology and ensuring the customers a carefree experience. It is about taking ownership and being a partner.

Mihai Nadas
Managing Director of Yonder