Treat Your Outsourcer as a Business Partner

Most organizations think of outsourcing as a transaction: the sourcing company has expertise and economies of scale to offer; the company gets professional support for a service that is not otherwise able to be leveraged by the business.

For a significant number of situations, this is reasonable enough. What about for the rest? For them, more innovation in working with the sourcing partner may be in order.

For instance, one trend that continues to grow in the outsourcing community is the notion of producing global centres for certain services.

If you are going to market with a requirement that may well evolve significantly over time, why not consider approaching the market from the point of view of a joint venture to develop one of these global centres around your needs?

You gain the benefit of being an early adopter of the expected path; the vendor gets experience and the ability to sell new business based on the relationship and what they learn from it.

This type of manoeuvre works best when you are dealing with a vendor wanting to enter a new market.

Regional players, for instance, may often be overlooked (for as a regional player any stacked-ranking of companies will tend to favour the “strong in most if not all geographies” companies), yet the regional player may have local dominance and specific expertise that could be used to grow.

Working with them actively not only meets your needs, but, more important, produces a revenue stream for the company. Likewise, strong players in other geographies who are looking to enter your home base make excellent joint venture partners.

Don’t overlook, as well, situations where you may have significantly better access to money than does your potential supplier.

This is not a suggestion that you should do a deal with a financially-shaky sourcing partner: few things are worse than to have your supplier shut down suddenly!

Nevertheless, a rush of recent deals where assets needed to be acquired may produce some operating cash flow difficulties: this is a perfect time to work with a supplier who has what you need and to do a joint venture deal that sees you provide some bridge capabilities in exchange for cash flow back year after year.

As we enter a year with substantial deal negotiation on the table, now is the time to consider whether you simply want someone to give you a deal — or if you want to make some money from the sourcing market.


About passionateobserver

I am a passionate observer of our society, the economy, and politics. Mostly I don't like much of what I see, so I write as a concerned citizen. To the fray, I bring a background in the philosophy of history, a lifetime's reading, a work history in information technology management, consulting and education.
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