BPO and Outsourcing Providers: Are They Banking on Your Involvement, if Not Your Spend?

BPO and outsourcing providers may be banking on more than just cheaper labor to prop up their bottom -- not to mention top -- line this year. They're also banking on procurement getting involved in the sourcing of their services taking off as well. A recent article by a CSC Executive in Forbes suggests that outsourcers are seeing procurement more and more on the other side of the negotiating and vendor management table. To wit, among the five trends the column cites for outsourcing in general this year is that "Procurement will continue taking a bigger role in sourcing. It used to be that in selling IT services and outsourcing, nobody worried about aligning themselves with the procurement groups of a customer organization. But now, as a seller, we constantly see procurement organizations aggressively enforcing their views on buying decisions, vendor selection and related activities."

Getting affirmation of this trend from the provider side is fascinating, and telling. Procurement's involvement in buying complex IT services and outsourcing is something we've tracked on Spend Matters for sometime. For organizations (and providers) interested in learning more about how services procurement is advancing to accommodate these areas, it's worth checking out our Spend Matters Compass Research series in this area. From selecting the right services procurement and vendor management technology to winning over support from business and IT stakeholders, there are many lessons learned that can accelerate an organization's progress in this area. For a quick and hopefully deep primer on these subjects, you download our research in the area by reading the following briefs:

  1. Selecting Services Procurement Technology -- Options, Approaches, and Philosophy

  2. Services Spend -- Beyond Contingent Labor: Achieving And Implementing Savings Across Previously Unmanaged Categories

  3. Making Procurement a Services Spend Ally: Tips and Tactics for Winning over Business Stakeholders and Spend Owners

I agree with CSC that many senior procurement leaders are increasingly "able to play the balancing act between traditional procurement viewpoints (who purchases everything from pencils to coolers) and line of business viewpoints (who are the actual subscribers to the IT services)." But I'm not so sure we're all there just yet -- there's still a lot of learning that needs to happen within procurement, especially around managing the lifecycle of services and outsourcing engagements versus just the upfront negotiation. Just as they have complex indirect materials, direct materials and other categories, procurement and supply chain organizations must get smart in looking at how to best manage non-contingent services categories, including IT procurement, on a total cost basis.

- Jason Busch

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