Outsource Magazine Issue 29 - (Page 78)

What’s the point of outsourcing? DLA Piper in association with Outsource is running a survey looking at some of the biggest questions in outsourcing. To launch the survey – which you can take at www.outsourcemagazine.co.uk/outsourcedlasurvey – Duncan Pithouse presents a “state of the nation” perspective on outsourcing... Duncan Pithouse, DLA Piper Duncan Pithouse is a Partner with DLA Piper (www.dlapiperoutsourcing.com), specialising in noncontentious technology and sourcing matters, and focussing on complex international outsourcing contracts. He advises on a wide range of outsourcing transactions and all aspects of a client’s sourcing requirements. S o, what is outsourcing? And has it always been the same? How does it change? Why does it change? What is the point of outsourcing? No doubt you have very clear views on the answers to all these questions, garnered and developed over a number of years of working within the sourcing sphere whether as a user, buyer or advisor or a combination of all of these roles. What we hope to do over the course of this article, and our survey (which you can complete at www.outsourcemagazine.co.uk/ outsourcedlasurvey), is to understand on a broader scale the current state of the outsourcing market, the challenges facing it now and how it is likely to develop over the near future. We hope this will enable us to develop one of the first cross-sector and cross-participant analyses of the state of the outsourcing market so that we can be better prepared to engage in outsourcing now and in the future. Outsourcing, offshoring, nearshoring, strategic sourcing – whatever name is applied to it – is a variation on broadly the same theme – it is of course getting someone else to do for you what you could have done yourself, and continue to need to have delivered to you or for you. As early as 1982, US management consultant Tom Peters recommended to US businesses that they should “do what you do best, and outsource the rest” as the primary salvation of US business profitability, and numerous companies have followed that advice in the following thirty years. What is being outsourced becomes more complex and specialised with every month. As customers look increasingly to outsource functions and services that are closer than ever to their core business (and even to what they do best), they do so creating new issues. Yet, whatever the nature of the outsourcing, the same four core issues continue to recur and challenge organisations looking to outsource services and functions. RecuRRing Themes Letting the service provider do what it needs to do vs. retaining control At the heart of any outsourcing is the fact that the customer is handing over delivery responsibility to the service provider, and is doing so in such a way that it wants the service provider to bring to bear its existing processes, ideas, policies, structures to deliver efficiency improvements and cost reduction. But at the same time, the customer invariably has clear ideas of what it wants and even how it wants it, especially in regulated businesses such as financial services. This apparent inherent tension is arguably the single most important philosophical issue in outsourcing, since failing to properly appreciate the risk associated with getting the balance wrong will inevitably drive up the price, and not result in appropriate transfer of responsibility to the service provider – so damaging the delivery of the required business case and business benefits. One potential answer is the increased prevalence of “co-sourcing”, using a closer operational relationship between the customer and the service provider, with joint teams, jointly produced deliverables and continuous prescribed skills transfer. This though throws up a further set of issues particularly around “finger-pointing”, apportionment of liability, service levels and reverse service levels, and IP ownership To take the survey, go to http://www.outsourcemagazine.co.uk/outsourcedlasurvey 78 www.outsourcemagazine.co.uk ● ●●● http://www.outsourcemagazine.co.uk/outsourcedlasurvey http://www.dlapiperoutsourcing.com http://www.outsourcemagazine.co.uk/outsourcedlasurvey http://www.outsourcemagazine.co.uk/outsourcedlasurvey http://www.outsourcemagazine.co.uk/outsourcedlasurvey http://www.outsourcemagazine.co.uk

Table of Contents for the Digital Edition of Outsource Magazine Issue 29

Call Me Maybe?
Optimising Your supplier Portfolio
Application Development Outsourcing
Are You Fat?
The Future of BPO
Digital by Default
The Face of Finance
Procuring Excellence
The Importance of Being Secure
NOA Round-Up
Steering the Flow
Changing Shape
Legal Transformation
Getting to the Real-Life Win-Win
What’s the Point of Outsourcing?
The Legal View
Top Ten
NelsonHall Round-Up
The Oral Review
Online Round-Up
Inside Source
The Last Word

Outsource Magazine Issue 29