Managing outsourcing from the inside requires a new breed of professional – but what expertise will they need?
Now that outsourcing has grown to become a fundamental part of the UK economy, those tasked with the important job of negotiating and managing an outsourcing contract must, you might imagine, be highly qualified and experienced professionals.
In fact, you’d be wrong. Currently there is no standard, universally accepted career path for an outsourcing professional, and those doing the job come from a variety of backgrounds. Many have risen through the company’s procurement or HR functions and, while highly skilled in those roles, have no particular knowledge of outsourcing.
As Steve Walsh, head of enterprise HR services at BAE Systems, says: “There are probably not as many organisations as there should be who look at it as a genuine standalone role.”
This lack of experience can be a handicap for those tasked with managing a complex client-provider relationship. Walsh, who had previously worked as a project manager and made the switch to HR six years ago, believes that his commercial background gave him an extra insight when working with outsource providers.
“I can recognise whenever there’s a dispute between the service provider and our organisation that it’s not always the service provider to blame,” he says. Whereas professionals who have always worked in HR “often don’t have the necessary skills to step back and understand what’s reasonable”.
Procurement professionals can find themselves similarly at a disadvantage because, says Jag Dalal, managing director of thought leadership for the International Association of Outsourcing Professionals (IAOP): “They are trained to procure against a set of requirements, not to question the requirements themselves.”
Given the importance of the role, it may seem strange that organisations don’t put more effort into nurturing and recruiting people with the right mix of skills. The reason, however, is that too many still go into outsourcing with the principal aim of cutting costs and little recognition that they need a long-term strategy.
“Most clients aren’t very smart clients,” says Anthony Hesketh, associate professor at Lancaster University Management School. “They go to outsourcing providers and say, ‘Who will take our troublesome HR function away from us?’”
So what qualities should an outsourcing professional ideally have? The consensus is that the job requires the ability to take a view that is both long and broad. As Clive Longbottom, founder of IT analyst Quocirca, puts it for his area: “The new outsourcing professional has to be able to bridge the gap between the needs of the business and the services offered by an outside entity.
“They need a full understanding of what the organisation’s business strategy is now and in the foreseeable future, and must also have a working understanding of emerging trends in the technology field.”
The consensus is that an outsourcing professional requires the ability to take a view that is both long and broad
Eoin McCoy, a board member of Aspire, a Polish association for outsourcing and offshoring, believes that the outsourcing professional should have a clear understanding of how the outsourcer can improve existing processes.
“Moving work is only successful when you view the outsourcing as part of a transformation,” he says. “It’s about taking a model, breaking it up into its fundamental parts and putting it together again by giving the right processes to the right skill sets.”
The ability to weigh up risks and benefits is crucial – some organisations increase their risk by using only one provider or allowing business units to make their own outsourcing decisions.
Sarvesh Singhvi, who has 16 years’ experience in outsourcing as both customer and supplier, argues for an enterprise-wide strategy. “Outsourcing should be a centrally managed function,” he says. “So someone across the enterprise can look at it and say, ‘We cannot give more work to the vendor you requested because we’ve already given it too much or we’re overexposed to it in that particular location or it doesn’t have the right terms and conditions’.”
Dalal believes that the tide may be turning in favour of increased professionalisation. Some organisations, such as Proctor & Gamble and American Express, he says, have created separate outsourcing departments that sit outside the procurement function.
The emergence of recognised qualifications could also help to change attitudes. Both the IAOP and the UK’s National Outsourcing Association have developed sets of qualifications, broadly equivalent to each other. The IAOP’s certified outsourcing professional qualification covers 10 skills that together take in the outsourcing process from end-to-end, from “defining and communicating outsourcing management practice” to “providing outsourcing governance”.
Acceptance of the qualification may be slow, however. So far, the IAOP has certified about 600 professionals (with 600 applications pending), split almost equally between people who work for providers, those who work in an advisory capacity and those who work for client organisations.
Lancaster University Management School ’s Anthony Hesketh believes that recognition of the role will come about when clients move away from their current short-term mindset. They need to invest in professionals by developing a recognition of the skillset required, providing the necessary training and adjusting salaries upwards to attract the best talent, he says.
“Clients and providers have to make smarter investments in terms of what they’re doing to build their executive capital that looks after those particular deals.”
Kim Thomas is a freelance journalist specialising in business and technology. She writes for national newspapers and business magazines, and is associate editor of CIO magazine. Her qualifications include a PhD from Aston Business School.