Page 9 - Logistics News - August 2021

T H OU GHT L E A D E R SHIP

events, organisations face a rapidly evolving In light of this, the following areas warrant
landscape, including regulatory changes, continuous consideration in the context of future outsourcing
advancements in technology and the adoption of arrangements:
more advanced approaches by authorities to enforce • Realignment. There should be realignment with
compliance with regulations. the overall outsourcing strategy and drivers. While
the cost advantages of outsourcing will always be a
As a result, organisations have incorporated significant attraction, organisations should increase
outsourced partners to circumvent productivity their focus on creating more robust and resilient
challenges, streamline their operations and add additional supply chains. Organisations should reconsider
resources that may have been lacking in-house. It is whether critical functions that may have been
essential to mention that outsourcing is not a new or a outsourced or offshored can be brought in-house or
novel approach. Its roots can be dated back to the 1980s. near-shored to local suppliers.
• Governance. Organisations should rethink their
Outsourcing started as a way to reduce operational costs. governance and control structures. Governance
Over time, the primary purpose of outsourcing evolved, and processes and mechanisms are often vital to
in the 2018 Deloitte Global Outsourcing Survey, reducing the successful implementation and operation of
costs was no longer the primary purpose to outsource. It outsourced arrangements. Organisations were
was overtaken by faster time to market, flexibility to scale, forced to reduce some of their tight governance
competitive edge and better user experience. systems to fit the changing work environment,
which was one of the themes that emerged early
However, if we fast forward to the 2021 version during the pandemic.
of the Deloitte Global Outsourcing Survey, the Being agile and flexible in this context was
results indicate that reducing operating costs is a benefit to these organisations. It would be
becoming a critical factor once again. Organisations beneficial for organisations to have a more flexible
are now choosing their outsourcing partner based on structure of governance and control that can be
the extent of cost reduction. This has been mainly adjusted depending on the conditions and the
attributed to the global economic uncertainty caused environment in which the organisation operates.
by the COVID-19 pandemic. This would also encompass the development
of strategic relationships with outsourcing
Concomitantly, this shift in outsourcing drivers partners.
highlighted the many gaps in organisations’ • Contingency. Organisations should increase their
preparedness for disruptive times. Many contingency measures by investing resources in
organisations suspended operations whilst others low probability, high impact incident planning that
saw their operations, sales and business relations translates into variable performance obligations
diminish. Looking forward, there are opportunities and pricing structures hard-coded into the
and lessons to be learnt from this global disaster. outsourcing arrangement. This will enable clarity on
performance and price expectations if similar future
Outsourcing will play a significantly more strategic disruptive events occur.
role in the short-term resilience and long-term
growth of organisations. Traditionally, outsourcing In one of his novels, Robert Jordan wrote,
focused on auxiliary activities to build capacity for “The oak fought the wind and was broken, the
an organisation to focus on its core operations. This willow bent when it must and survived.” Likewise,
promoted loose control over outsourcing partners. the last year and a half has shaken the ground of
However, this approach was proven unsuccessful in many organisations. Outsourcing will remain a L O GI S T I CS NEWS
the pandemic as supply chain outsourcing partners powerful tool for organisations to support and
struggled to align themselves due to COVID-19 adapt their strategic goals in light of the changing
regulations and operational restrictions. ‘winds’. •

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