PAC Predictions 2021: Next-generation transformational outsourcing

There has been a surge in recent months in the kind of broad-scope outsourcing engagements that many thought had been consigned to the dustbin of history.

Large, long-term deals that involved the transfer of staff and physical assets to the supplier had been in decline during the last decade, as businesses opted for more flexible sourcing models that better suited their digital transformation strategies.

But the impact of Covid-19 and the overwhelming need to take cost out of the business while setting a new course for the post-pandemic market has encouraged boardrooms to rethink the way they engage with their technology service partners.

Some organizations had even started to move in this direction prior to this year. Deutsche Bank and John Lewis are two prime examples who had major outsourcing deals in the pipeline before the coronavirus took effect, but others will surely follow, particularly in embattled sectors such as retail and manufacturing.

So what will be different in the new generation of deals?

Firstly, clients are looking for a much higher degree of commercial flexibility. One thing they have learned in the last 12 months is to expect the unexpected, and they will be looking for much greater freedom in being able to scale their partner’s services up and down, without fear of financial penalties.

Secondly, the aim of these deals will be to deliver real and lasting transformation, as opposed to having a “your-mess-for-less” mindset. In practice, this will mean operating within project frameworks that are geared to support the client’s changing requirements, rather than basing the day-to-day engagement around a contract designed to support a stable environment.

These kinds of relationship will only ever work if there is a true partnership (perhaps the most abused word in our industry) in place. Those suppliers that have worked hard to earn their clients’ trust during the last year’s disruption will be well placed to benefit.

Learn more about the top 10 IT trends, which we believe will have the greatest impact in 2021.