More outsourcing means more complexity

14 November 2012
According to a recent study by KPMG, the outsourcing of back office functions is due to increase over the next six months, which is of course good news for outsourcers. But the report mentions suppliers are concerned customers will not renew contracts. With outsourcing trends moving away from the single supplier model to an approach where buyers choose the best provider for specific tasks, and contract lengths becoming shorter, clients can achieve more flexibility and efficiency when outsourcing. This approach also presents a new level of complexity. How do companies best manage the increased numbers of ‘moving parts’ that need to be monitored to ensure what they are all delivering is producing the desired business outcomes? In addition, how do companies move from one structure to the other while managing the risk to their business? Access to dynamic and up-to-the-minute information across a range of business functions is critical to managing complex contracts and limiting risk, and technology can provide this. By linking business operating data to the key data of an organisation, the outcomes and effect of any changes can be managed, offering suppliers the opportunity to show they are at the sharp end of delivery and giving clients confidence they can manage risk when moving their business from a single big supplier to multiple specialist providers. When multiple suppliers are then tightly linked to the outcomes and capabilities sought after, resource, cost and timeline can be completely understood by both supplier and client alike and managed accordingly. Anyone with experience in outsourcing will know that while you can outsource a function, you cannot outsource the responsibility. By giving both sides access to timely information on how the process is running and taking a risk management approach to the contract, it makes it much more likely that small problems will be solved before they become big problems. ☛ George Davies is chief executive at MooD International
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