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Outsourcing 2.0

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Hopping on the 2.0 bandwagon, the Outsourcing Institute put out their Outsourcing 2.0 whitepaper, much to my entertainment.

How do we know when we’ve reached an Outsourcing 2.0 environment? Web 2.0 capabilities will have brought an entirely new mindset to the outsourcing community that will become just as contagious as the technology tools themselves. We will see that through Outsourcing 2.0 the buyers, sellers and influencers will now have access to data that in the past was difficult to obtain. That data will only get richer as more people use it because the users themselves will be considered co-developers. The long tail of market penetration will be leveraged through the existence of central platforms, aggregating and harnessing the collective wisdom of all segments of the industry.  ((Casale, Frank.  2007, The Outsourcing Institute.  “Outsourcing 2.0.  The New Outsourcing and What it Means to You.”))

In other words, Mr Casale can’t think of a good definition for Outsourcing 2.0, but feels the need to be a 2.0 like everyone else, so he’s just going to tie outsourcing to Web 2.0.  We’ll have outsourcing 2.0 when the outsourcers adopt Web 2.0.  I find this hilarious and annoying at the same time.

Let me give you my take.  We don’t all have to be 2.0’s, but there’s a good possibility that outsourcing already became a 2.0 in the 1990’s when nobody knew what 2.0’s were.  Not to make this too convoluted, but the real transformation in outsourcing came when people started to realize that they could get rid of not only the payroll and benefit administrative transactions, but they could outsource broader business processes.  Yes, you heard me right, the major shift in outsourcing happened a long time ago with HR BPO (or HRO).  Traditional outsourcing was just the guys like ADP taking over transactions, check printing, running gross to net against a rules engine and filing the taxes.  While not terribly complex, this was taking a major burden away from the businesses.  When Exalt (now Hewitt) got in the business of outsourcing business processes, there was a fundamental shift in what could be outsourced and that the scope could be much broader than just the administrative transactions.

Let me be clear on my opinion.  There is no “3.0” coming around the corner any time soon.  We’ve all read the stories about HRO customers being dissatisfied and we’ve heard about the high costs and lack of vendor profitability.  If there is a transformation in the HRO space, it’s not going to be a major leap or redefining.  It will simply be a streamlining of fees and profitability, an increase in processing efficiencies, and a major increase in service delivery and customer satisfaction.  These are not real enhancements – they should exist today.  It’s just that the industry is too immature to have figured out the optimum model yet.  Just because they figure out the model does not mean there has been a major transformation of the industry.

I for one, am not expecting a new outsourcing “versioning.”  They have a lot of improvements to make in the current “version” and I’m not about to give the industry an excuse for their current problems.  Let’s hope they fix themselves soon though.

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3 responses to “Outsourcing 2.0”

  1. Naomi Bloom Avatar
    Naomi Bloom

    I agree with your assessment of Casale’s article, but there really are some next generation, comprehensive HRM BPO service offerings in the works, and they’re all about a new level (breadth and depth) of automation done on a multi-tenant basis. ADP’s GlobalView, when delivered as a full BPO offering, provides a glimmer of what’s to come. Imagine truly intelligent, Amazon-like self service that doesn’t require Tier 1 contact centers, fully multi-tenant HRMS platforms that service multiple, sizeable clients in a single instance with full configuration by client so that tenants aren’t unduly constrained as to their business rules or processes, and enough built-in advisory content to enable manager self service to be much more than manager’s doing data entry. All this and more is built right now by current and new HRM BPO providers, but we won’t see the full results of these investments for two to three years.

  2. Steve Smith Avatar
    Steve Smith

    Am so tired of the spammed garbage being spewed from Casale and that awful website of his. What I find even more annoying is his need to broadcast to the world “New OI buyer members update”…. I mean, imagine if every blogger / website had to tell the world everytime a payroll manager from Hertz, or an acounts payable clerk from Citigroup registers for free whitepapers from their sites…. I am amazed the man makes a living fom that pathetic excuse of a firm. Thanks for highlighting this on your site. Kudos to you.

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