Co-operation works… but know your limits

June 12, 2009

In the world of outsourcing, service providers have co-operated where necessary – i.e. when specifically asked to do so by potential clients – but there is very little co-operation in other circumstances.

I think this is wrong-headed and short-sighted.

Let’s say you were working for one of the best HR outsourcing businesses on the planet. You find you can compete against the other HRO firms on a like for like basis, but with more and more clients looking to make savings across the whole of their business, they want to combine HR with finance, oh, and will throw in a technology refresh too.

How are you going to compete against an IBM or Accenture turning up and saying “sure guv, no problems, we do all that and more – we’re the answer to your prayers mate!”?

Of course, the more sensible and mature clients are going down the multi-sourcing route, which is to your benefit, but I’m increasingly working on synergistic relationships between BPO and ITO firms before a client has specifically asked for it. There are several advantages to this approach, including:

  1. The cost of sale for each party goes down and,
  2. Each firm’s margins are strengthened because they are concentrating on what they’re really good at

There is the obvious issue of governance to consider (and I will be looking at that in another blog), but in the current economic climate, this type of arrangement could and should lead to more positive outcomes for clients and service providers alike.

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