IT Outsourcing 2.0: Why Providers Should Change Their Attitude

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Alfredo Saad Alfredo Saad – IT Outsourcing Consultant

Since the beginning of the outsourcing era, during the eighties, a typical complaint by the organizations that outsource their IT services is made explicit during the satisfaction surveys periodically conducted by the providers. It concerns to their perception about a certain inability of providers to promote innovative ways of providing the services, which would impact positively the buyer organizations regarding to:

– The efficiency and effectiveness of their business operations

– Their competitiveness and agility in the market they operate

– The treatment of the permanently mutant requirements of their client community

Although buyer organizations typically recognize the provider’s ability regarding the fulfillment of their tactical and operational contractual obligations, they resent a provider’s consultative approach, aiming at prospecting and discussing innovative alternatives.

It should be highlighted that, in theory, the search for innovation should be a mutual motivator for both parties: for the provider, because this could bring an instigating expectation about having additional deals closed in its own marketplace and for the buyer, because this could result in a better performance in the market they operate.

It is a fact, however, that the providers, immersed in the day-to-day contract difficulties, tend to prioritize the contract’s operational and financial stability. A restricted short term view relegate to a secondary role (rarely accomplished) the intention to assign consultative resources which, by interacting with the strategic level of the buyer organizations, could generate, in the medium term, some of the mutual and significant benefits shown above.

Such complaint of the buyer organizations, long observed, become a critical factor in the current digital disruption scenario, where many new technologies (cloud, IoT, big data, analytics, wearables, 3rd platform, mobile apps, among others), emerged during a relatively short period of time, boost more quickly than ever the importance of the variables involved. Among these variables (note that some of them are mutually conflicting) we can highlight: competitiveness, agility, efficiency, effectiveness, cost reduction, time-to-market, market share, compliance, regulation and legal obligations.

This criticality, increasingly prevalent and urgent, has forced the providers of IT outsourcing services to change their attitude as a reaction to the pressure of their clients. The need for such radical and mandatory change actually allows two opposite attitudes:

– The change occurs, making viable a significant deepening on the client-provider relationship, with mutual benefits (including, for the provider, a strategic and value-added differentiation relatively to its competitors), through a solid and enduring partnership or else …

– … the change does not occur, encouraging the clients to search for providers which show up as more responsive to their requirements.

It should be noted that the provider’s decision to change has some pre-requisites that must be accomplished. Some of them are:

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