People, process, and technology—we all know the key levers for business transformation. And we all claim that the people dimension is the most enduring source of competitive advantage.
So why does talent so often get the short end of the stick, so to speak, when it comes to establishing and managing outsourcing relationships?
Why is talent treated as the most fungible element in a skills-based industry?
Shedding new light on this “talent paradox” is the focus of new research from Horses for Sources (HfS), the results of which confirm that outsourcing initiatives only deliver sustainable value when enterprises and their outsourcing providers invest in developing the talent that actually fuels the performance of their outsourced functions and processes. Two-thirds of enterprise outsourcing buyers revealed that they were struggling to achieve any genuine business value beyond mere cost reduction and efficiency.
"Our research points to shocking shortfalls in the investments that enterprises are willing to make in the talent charged with managing outsourcing relationships and executing the processes and functions that serve the customers", the report reads.
"The sad truth is that too many buyers believe “good enough is good enough” and that people are fungible; however, soon that won’t be good enough for ambitious enterprises."
Other key figures from the report - based on a survey of 282 major enterprises engaged in outsourcing and qualitative interviews with many buyers and providers - include:
- Under a third of enterprise outsourcing buyers believe their current governance talent - i.e. the people responsible for managing the service relationship - can drive innovation, define business outcomes, or believe that they have even above-average analytical skills
- Less than one in four enterprise buyers make formal investments in training and developing their outsourcing management staff in areas that are strategic to the business
- Only half of all BPO providers have established formal training programs to develop industry expertise and skills in analytics and relationship management, and only 60% of providers invest in "bread and butter" capabilities such as transition management and continuous improvement
The result is a paradox in the industry’s approach to talent. Even as outsourcing moves from the back office to the middle and front offices, where value creation is paramount, and even though governance executives declare they want to achieve more than just cost reduction, they are not making the investments at the key leverage points in value creation—the people.
This ground-breaking report investigates why many of today’s leading enterprises are trapped in a talent paradox—affirming the importance of people on the one hand and, on the other, failing to provide the support and resources necessary to transform talent into competitive advantage. Also, the report suggests the practical steps that governance leaders can take to break out of the paradox and manage their outsourcing relationships for strategic and sustainable value.
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