Outsourcing's value-add is plateauing because of insufficient investment in skills

Proponents of outsourcing on both sides of the fence – in-house buyer and third party provider – have had their wrists slapped by a recent report critiquing their lack of investment in skills training. It's a welcome wake-up call for an industry that has for too long relied on efficiency gains from the standardization and automation of what have traditionally been fairly labor-intensive processes. As this phase of low hanging fruit is now past, and expectations for "collaborative, innovative" value-add services and solutions are the norm, the question is: how do we get there? As clever as outsource providers have become in developing new tools and strategies to support their client engagements, now, as ever, human capital remains the single most important investment on both sides of the fence. That's the conclusion of a new report by HFS Research, sponsored by Accenture, which identified insufficient investment in talent on the part of BPO providers as limiting their value-add potential. On the face of it, this is nothing new. Automation can go a long way–a very long way–but, as the report's authors point out, changing times call for new skills, and these skills appear lacking. What we talking about, specifically, is the ability to define business objectives beyond cost reduction, and the ability to influence. Just a third of the buy side customers [those buying BPO services] believed their current governance skills [managing the service relationship] could drive innovation or define business outcomes. And only half of BPO providers are actively developing their staff's skill set in analytics and relationship management. What this means is that while we hear an awful lot of drumbeating and lip service for the cause, the follow-through is, well… still to happen. This doesn't apply to everyone, of course. I recently came across a BPO website which positioned a video about investing in its own staff at the centre of its marketing platform (they must have seen this report coming). What you can take away from this report: governance is not just a matter for procurement professionals, contract negotiators, and project management executives. What's needed is a more strategic, rather than tactical, focus. The report suggests four steps to remedy this talent paradox: 1. Focus talent investments to enhance core business skills, as opposed to operations managers. 2. Access the strategic talent of service providers, in terms of methodologies and analytics that create value beyond cost reduction. 3. Revamp skill expectations for the existing team. 4. Establish shared "stretch" goals to encourage skills development. See the full report [inlinead]

Outsourcing's value-add is plateauing because of insufficient investment in skills

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