What will 2015 hold for the outsourcing industry? As we look ahead, here are the top 5 trends Neo Group thinks will have the strongest impact in 2015. Several touch on supplier risk, which we believe will begin to touch everything else in the global services environment.
- Supplier Risk Management Becomes More Structured And Actionable. In the past few years, there has been high interest in supplier risk, but it’s mostly been theoretical. Companies knew they needed to understand the risk of their suppliers and they talked about supplier risk a lot. But they didn’t do much about supplier risk in a tangible way. As end customers become more aware of a company’s supply chain, the brand risk that comes with a supplier failure go up dramatically. In 2015, companies will begin to really integrate supplier risk into their daily operations, moving from quarterly meeting risk discussions to making key business decisions based on different risk events on a real-time basis.
- Location monitoring will default to sourcing teams. After the Ukraine situation and corresponding issues with Russia in 2014, more companies will care in a tangible way about the locations of their services providers. However, even though these formally would be considered geopolitical risks, because they primarily affect service providers, the location monitoring will fall to sourcing and shared services teams. This is the right approach as we see increased disruptions due to location issues such as shrinking labor pools, changes in laws, weather issues and economic malaise.
- Digital officers and services continue their upward climb in corporate suites. The age of digital, focused on empowered customers and automated delivery, continues to become more important. As companies add Chief Digital Officers, the number of service offerings targeted to those executives will also rise. Neo expects a greater focus on revenue impact and more clarity and variety among these services in 2015.
- More technology services being purchased by business-line leaders. As consumer products like cars and washing machines and thermostats continue to embed technology, more and more product engineering teams will treat IT and IT services as core purchases and will take over those contracts directly. This will split current shared services organizations that don’t understand the trend. And temporarily it shifts some power back to suppliers who have new target buyers and more opportunity to sell without the formal bidding and RFP processes they’ve become so accustomed to in the past.
- Data and analytics will play a central role in sourcing advisory. As the complexity of sourcing rises and clients become increasingly sophisticated, the need to find the next set of opportunities and optimization will benefit greatly from analytics and not just expert advice.
Christine Ferrusi Ross, Partner & SVP, Neo Group — Neo Group is a globalization advisory and analytics company that helps organizations achieve business objectives and address business challenges by leveraging global services and sourcing.