Outsourcing NG

Now: Most outsourcing deals are built around a transactional model. This transaction-based model is tied to a cost-plus or fixed-price-per-transaction pricing model to ensure the company buying the services is getting the lowest cost per transaction. The service provider is paid for every transaction - whether it is needed or not. Thus, more inefficient the entire process, the more money the service provider can make!

Also, Today's outsource providers often have a small army of program managers who micromanage the outsource provider.

Next-Gen: Here, company buys services in a performance-based approach. Instead of paying an outsourcing provider for unit transactions for various service activities, company and its service provider agree on desired outcomes. Some possible quantifiable outcome targets are - Availability, Reliability, Cost, Revenue generation, employee or customer satisfaction, Asset Investment targets.

Here, company outsources to service providers that are real experts and is managed such that it creates a culture of insight, not oversight.

Comments? Do you see this trend?

-Cheers