Outsourcing customers not sold on supplier ‘innovation’ claims, warns NOA

The research found that 92 percent of buy-side professionals agreed that outsourcing delivers business value, but innovation claims are not well received

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Outsourcing customers have become more content with suppliers, but are not convinced by ‘innovation’ claims, according to the National Outsourcing Association (NOA).

The National Outsourcing Association (NOA), partnering with financial technology supplier Polaris, surveyed 158 of its members to discover how buyers and sellers “bring added-value to their outsourcing relationships”.

The research found that 92 percent of buy-side professionals agreed that outsourcing delivers business value, and 81 percent believed that outsourcing has made their company more competitive. Over a third (36 percent) primarily used outsourcing to improve their service.

But suppliers believed things were going better than their buyers did, with suppliers perceiving clients were benefiting 9 percent more than the clients themselves. Also, the topic of “innovation” is “not delighting buyers” – with “innovation” running at a “success perception deficit” of 31 percent.

The NOA said: “Initiatives like ‘innovation labs’ are not as well received by buyers as the suppliers would hope. Suppliers need to reinvent these activities in a way that makes their value clear - they must also always put people and relationship skills first.”

It added: “Buyers and suppliers should work together to foster innovation at appropriate levels, in order to generate a competitive advantage in their business. Above all, they need to get the basics right – building relationships and developing quality governances are both cornerstones of creating added-value in an outsourcing relationship.”

The future looks positive for outsourcing though, as the majority of buyers plan to increase the scope of their outsourcing (59 percent).

By 2017, shows the research, most new outsourcing contracts could be based around business outcomes, with 34 percent of buyers already using business outcomes frequently as part of contracts, and 36 percent of buyers planning to use them more.

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