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Previewing the NOA’s “Outsourcing in 2020” research findings

News
27th December 2015

Early in 2016 the National Outsourcing Association will publish The Outsourcing Yearbook 2016, featuring a research survey on outsourcing trends for 2020 and beyond based on the views of their member companies. The survey incorporates feedback from 134 organisations split approximately across one-third outsourcing suppliers, one-third buyers, and one-third advisers and support organisations.

Webhelp UK participated in the NOA research and so we have had an early look at some of the results. As I mentioned, the complete research will be published in the NOA Yearbook so look out for that, but I found some of the headline results really interesting and worth commenting on now. These are some of the most important numbers from the research:

As a strategy, outsourcing is getting more important. 70% of the organisations polled said that they plan to increase their use of outsourcing in 2016, with 83% of those questioned expecting the wider industry supporting outsourcing to increase in 2016.

Cost remains the most common reason for companies to use outsourcing, with 35% citing it as the primary reason to outsource, but in second place now comes the customer experience. 23% of those questioned said that improving the customer experience is their primary reason to outsource – an extremely important observation.

Large numbers of respondents also see technology as an enabler for a different type of outsourcing in future. 83% believe that Robotic Process Automation (RPA) will become significant in the next decade and 80% believe the same for Artificial Intelligence (AI).

The entire contract process is changing too. Companies are moving away now from the old master- servant model into a world of partnership. Contracts are increasingly based on payment for outcomes, service providers are being contracted in a way that lets them share the risk and also benefit from the rewards of an improved service, and notice periods are getting shorter.

I can see a trend here. Not only are more companies saying that they need to use outsourcing as a critical part of their business strategy, but the customer experience is really being used as a driver of change too. Companies are also exploring new innovative technologies and ways of contracting with partners. None of this looks like the outsourcing we used to read about a decade ago.

Can you remember some of those articles on the client and supplier relationship? Outsourcing used to be an endless power struggle between all-important CIO and a powerless supplier. The situation is far more complex today because the suppliers have some much-needed expertise that the client companies are buying in and the buyer within the client has probably changed too. Power is no longer concentrated in the hands of the CIO, often the business line manager is purchasing what used to be seen as IT or technology solutions on their own budget because so many solutions are delivered via the cloud.

All these changes are positive and reflect the new reality in 21st century companies – you can no longer vertically integrate and have all expertise under one roof. Creating an association of partners with different expertise and the ability to work as a team is now critical for success.

Based on these research findings, here are some of my own thoughts on what will be really important for anyone involved in outsourcing – and particularly in Customer Experience outsourcing – in 2016:

•      The increase in outsourcing is to be expected. Thankfully many suppliers have moved on from the low-cost business model of the past and are now offering services and expertise that simply cannot be found in-house. This is particularly true in Customer Experience, where the market is moving so fast that companies cannot keep up with customer demands without calling upon those who specialise in this area. Partnership used to be a sales buzzword, but in the present-day business environment it is a reality and this can be seen quite literally by the way that contracts are now being written that explicitly ensure that both parties benefit when the project succeeds. Forget the hot air – if you are both going to earn from making the project work out then the partnership is real.

•      Customer Experience as the main reason to outsource is critically important – gone are the days when outsourcing was just a cost reduction strategy. A quarter of all companies are now saying that the only reason they outsource is to improve the customer experience – this underlines the previous point. If you want to offer a great customer experience then you need a world-class service team that is staying on top of what your customers want 24/7. That is very difficult to deliver in-house, so it’s no surprise that outsourcing is seen as a better way to improve the customer experience. You work with the experts and you get the benefit of their experience across the world.

•      New technologies are changing the marketplace. I entirely agree with the observations on new tech such as AI and RPA, except I would not say that this is going to be important in a decade, many contact centres are already using RPA today – it works, it is a proven technology. In a decade there will be RPA that can learn on the job and the empathy from a robot will be exactly the same as that from a human; robots and humans will be blended together to offer a great Customer Experience. 2016 will be a critical year for AI tools like Oculus Rift, which is owned by Facebook. It’s about to go mainstream, but it is not there yet, however whenever I am trying to think of the technology that will be important in ten years I try looking back ten years to see how state of the art looked back then. Then nobody was even talking of omnichannel, multichannel, or using any social networks, so guessing what will be important in a decade is tough, but I think that both RPA and AI will be a significant part of Customer Experience technology long before 2026.

•      Basing pricing and contracts on outcomes is really important. This works really well for both the supplier and the client, because if the outcomes from working together are well aligned and deliver results then the client will not mind paying more – it almost certainly means that they are making more anyway. Customer Experience contracts based on outcomes rather than purely the number of FTE is going to become more and more common in 2016. This has been a real issue for companies that have added social support to their existing contact centre because once your support is social – and transparent – that part of the team is really strongly concentrated on marketing the brand too. Are they getting rewarded for that marketing function or just as more headcount in the contact centre? Pricing and rewarding on outcomes is the best way I know to ensure that you detach the headcount required to deliver a service from the value of that service.

The NOA research really does identify some of the key trends I expect to see in outsourcing in 2016, but what do you think of the research?


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Article by: Webhelp

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