A new approach to outsourcing in the changed economy
Written by Dr Andrew Hutchison, expert for intelligent networks at T-Systems in South Africa
Despite the global economic downturn in recent years, many outsourcing deals have been re-negotiated and extended.
In many such cases the deals changed, in the sense that the commercial model was scrutinised and optimised to meet client objectives.
In some instances this was also done with an associated relaxation of volume commitments and service levels, or a bringing forward of the financial benefits of transformation projects.
In South Africa the marketplace mirrors this, and companies are now, more than ever, regarding outsourcing as a means to distribute IT resources – and share costs.
With this newly shaped landscape, a new set of challenges emerges for outsourcing service providers. While companies stay committed to outsourcing they also have new or evolved requirements.
Organisations want flexibility – finite contracts are something of the past and options to change requirements and even terminate contracts – with relative ease – have stepped to the fore.
These attributes are a natural result of the current economic climate; companies don’t want to be trapped in a contract that has to run its course despite market turbulence.
Additionally, organisations now require assurances that their chosen outsourcer is backed by a stable, parent company that will step in if the provider in question experiences its own economic challenges.
The emergence of multi-outsourcing
A substantial number of major SA organisations have gone the outsourcing route, and many of these “first generation” outsource companies have subsequently added additional elements or business layers to their outsourcing strategies.
Unfortunately, second and third generation outsource agreements can be challenging in terms of achieving additional savings of the order that were made during an initial outsource.
For this reason re-negotiation and re-scrutiny of the outsource principles and details can be a way to allow organisations a financial benefit beyond what would otherwise be possible.
In the case of multi-sourcing strategies, companies have to proceed carefully with an understanding that while it can be good to spread risk and responsibility across multiple service providers, there is an additional ‘co-ordination’ requirement that is introduced.
It can also be difficult to isolate and assign responsibility in the case of technical incidents when multiple providers are involved.
In such cases it is almost always necessary to have an “aggregator” type function performed either by one of the service providers, or by the client organisation itself.
The customer is king
In a trying economic climate companies must ensure that they manage contracts very closely, and can achieve the levels of flexibility that they require from a commercial perspective.
It is also important to look beyond pure ‘service levels’ to judge the quality of a contract. Similar value systems between client and outsourcer plays an important role in the harmonious establishment and subsequent success of a contract.
Like-minded organisations, with the same goals in mind, will stand an outsourcing project in good stead. Additionally, it is always prudent to establish a group of experts that monitors a project, ensuring that initial goals and resultant strategies stay on track and are met timeously.
Ensure that the responsibility for success of an outsource is shared: this entails keeping certain competencies in-house, while others are outsourced. Customers can sometimes make the mistake of outsourcing too much of their core competence.
Organisations are experts in their own fields of business and should continue to focus on what makes their businesses unique and a success.
Ultimately, the outsourcing relationship should move beyond mere costs savings or functional delivery, and support the realisation of tangible business benefits based on shared responsibility via a clear-cut, appropriate contractual agreement that stands both the company and outsource provider in good stead.
G7 Summit guide: What it is and what leaders hope to achieve
Unless you’ve had your head buried in the sand, you’ll have seen the term ‘G7’ plastered all over the Internet this week. We’re going to give you the skinny on exactly what the G7 is and what its purpose on this planet is ─ and whether it’s a good or a bad collaboration.
Who are the G7?
The Group of Seven, or ‘G7’, may sound like a collective of pirate lords from a certain Disney smash-hit, but in reality, it’s a group of the world’s seven largest “advanced” economies ─ the powerhouses of the world, if you like.
The merry band comprises:
- The United Kingdom
- The United States
Historically, Russia was a member of the then-called ‘G8’ but found itself excluded after their ever-so-slightly illegal takeover of Crimea back in 2014.
Since 1977, the European Union has also been involved in some capacity with the G7 Summit. The Union is not recognised as an official member, but gradually, as with all Europe-linked affairs, the Union has integrated itself into the conversation and is now included in all political discussions on the annual summit agenda.
When was the ‘G’ formed?
Back in 1975, when the world was reeling from its very first oil shock and the subsequent financial fallout that came with it, the heads of state and government from six of the leading industrial countries had a face-to-face meeting at the Chateau de Rambouillet to discuss the global economy, its trajectory, and what they could do to address the economic turmoil that reared its ugly head throughout the 70s.
Why does the G7 exist?
At this very first summit ─ the ‘G6’ summit ─, the leaders adopted a 15-point communiqué, the Declaration of Rambouillet, and agreed to continuously meet once a year moving forward to address the problems of the day, with a rotating Presidency. One year later, Canada was welcomed into the fold, and the ‘G6’ became seven and has remained so ever since ─ Russia’s inclusion and exclusion not counted.
The group, as previously mentioned, was born in the looming shadow of a financial crisis, but its purpose is more significant than just economics. When leaders from the group meet, they discuss and exchange ideas on a broad range of issues, including injustice around the world, geopolitical matters, security, and sustainability.
It’s worth noting that, while the G7 may be made up of mighty nations, the bloc is an informal one. So, although it is considered an important annual event, declarations made during the summit are not legally binding. That said, they are still very influential and worth taking note of because it indicates the ambitions and outlines the initiatives of these particularly prominent leading nations.
Where is the 2021 G7 summit?
This year, the summit will be held in the United Kingdom deep in the southwest of England, with Prime Minister Boris Johnson hosting his contemporaries in the quaint Cornish resort of Carbis Bay near St Ives in Cornwall.
What will be discussed this year?
After almost two years of remote communication, this will be the first in-person G7 summit since the novel Coronavirus first took hold of the globe, and Britain wants “leaders to seize the opportunity to build back better from coronavirus, uniting to make the future fairer, greener, and more prosperous.”
The three-day summit, running from Friday to Sunday, will see the seven leaders discussing a whole host of shared challenges, ranging from the pandemic and vaccine development and distribution to the ongoing global fight against climate change through the implementation of sustainable norms and values.
According to the UK government, the attendees will also be taking a look at “ensuring that people everywhere can benefit from open trade, technological change, and scientific discovery.”