Evolving sourcing needs spur changes in provider, customer relationship

Tools

With the celebration of President Barack Obama's second inauguration, the election season is definitively behind us, along with the high-pitched anti-offshoring rhetoric that tends to accompany presidential campaigns. This does not mean that it's back to outsourcing as usual, though. For a variety of reasons that have nothing to do with politics, companies are pursuing new sourcing models to meet needs that go well beyond cost-cutting.

The traditional service provider and customer relationship is evolving as the outsourcing market continues to mature and its strengths and weaknesses become more apparent. In today's market, many businesses are looking for more collaborative, sustainable relationships with their providers, Ben Trowbridge, CEO of the sourcing advisory firm Alsbridge Inc., told me recently.

"Today, it's a mindset of simply a buyer and seller in an outsourcing relationship. That's a traditional way of thinking about the world," Trowbridge said. "The client needs to think like an investor, asking what is the long-term investment in the relationship? The seller also needs to think about its investment in the relationship and build up equity in it."

Trowbridge said that he is seeing a wave of clients deciding to go at it alone when it comes to IT services, and other clients are establishing hybrid sourcing models. In some cases, a provider supplies and manages a site while the customer handles the services. The IT professionals may be employed directly by the customer or employed by the provider and "leased" to the customer.

Harley-Davidson is among the large enterprises pursuing one of these new hybrid sourcing models. Rather than outsource its data center, the iconic motorcycle maker recently bought an outsourcing provider that was interested in expanding in Milwaukee, where Harley-Davidson is headquartered.  

"You could think of this as outsourcing or insourcing," Trowbridge said. "It makes sense for the outsourcer."

Meanwhile, large outsourcing firms overseas can be expected to hire a growing number of United States-based employees, he predicts. "The opportunity over time is to increase the ratio of their hiring in the United States because it just makes good sense. You can't put everything in India," he said. - Caron