Ann All spoke with Bob Mathers, a principal consultant for Compass Management Consulting, about insourcing. Mathers will lead a webinar called "Risks and Benefits of Repatriating Outsourced Services" at 11 a.m. EDT on Wednesday, June 23. You can register to attend the webinar on the Compass site.
All: Are companies more interested in repatriation now than they have been in recent years? If so, why?
Mathers: I think they are. The visceral, knee-jerk explanation for it is it's due to dissatisfaction with the outsourcing marketplace. I think there's some truth to that, but I also think we're seeing more of these massive, long-term agreements coming up and so we're seeing organizations look at different ways of sourcing, maybe chopping these 10-year deals into shorter agreements, taking one deal into four or five shorter deals with narrower scope. As you do that, you want to evaluate all of your options.
"Transition is more well understood than it used to be. There are people who can do it well, and in a fairly short period. The stories of difficult transitions, like any good stories, tend to take on a life of their own."
All: Some organizations might even decide to continue to outsource some functions and to bring some others back in-house?
Mathers: Absolutely. We're seeing clients pushed to multisourcing. We're seeing shorter terms, clients demanding more flexibility in those contracts. So instead of these massive agreements where the topic of repatriation comes up literally only once every dozen years, we're seeing organizations with more contracts. The shorter duration means the terms are staggered and the conversation is coming up more frequently because organizations are almost in a continual cycle of evaluating their options.
A lot of organizations have some mix of internal and external service provision. As they mature in the services they deliver internally, they may feel they get better at it and think, "Hey, we can do a better job at a lower cost."
All: Do you think the current political environment is causing more organizations to consider insourcing functions that are outsourced in an offshore environment?
Mathers: I don't think so. With offshoring, I think we've seen inflation in some of the most popular offshoring countries, so the labor arbitrage advantage is fading. Some of our larger clients have captive service provisions. So you don't always need to rely on an outsourcer. To say it another way, repatriating doesn't mean you have to do everything onshore.