At the end of last year I compiled a list of the GSA’s predictions – and a wish list for what I hope to see! – for 2018, which we released at our final event of the year (our not-at-all-coincidentally-entitled ‘Sourcing Predictions 2018’ seminar). I thought it was about time this made it up onto the GSA site; so, without further ado, here’s what we think is in store for the next 12 months….
For several years now it's been the archetypal no-brainer, when compiling a list of predictions, to wave airily in the general direction of artificial intelligence and state confidently that "AI will change everything"; what's been (understandably) much less straightforward is putting any kind of firm timeline to what's coming. Will 2018 be the year that "everything changes"? No - this is, of course, a more evolutionary process than that implies - but we will see an acceleration in terms of the number, scope and scale of AI-focussed and -related deals being done globally; moreover we'll see an increased willingness on the part of companies and public sector bodies to engage with some of the looming commercial and social challenges being thrown up by these new technologies.
The middle management question
Across the world, outsourcing faces a significant problem in the form of a pronounced shortfall in middle-management talent. Not enough professionals are rising through the ranks, and not enough experienced talent is available on the market to make up for that development gap. The industry has been aware of this challenge for a long while but has allowed itself to kick an increasingly rusty, tetanus-laden can down the road rather than taking the steps necessary to address it; in 2018 the issue will reach a critical point, at which it will become problematic for some providers to take on substantial levels of new business because of a fear over the prospects of delivery failure brought on by this mid-level staff shortage - with this situation, clearly anathema to senior management and shareholders alike, forcing significant change (and, dare it be said, investment?) on the part of some key industry players.
New challenges, new opportunities
A cursory glance at the news on any given day this year would be enough to paint a pretty gloomy picture of the world at large - but in challenges often lie the best opportunities, and the outsourcing industry has an excellent chance in 2018 to help organisations large and small through the infernal labyrinths of Brexit, growing US isolationism (especially, anti-NAFTAism), shifting policies on the part of the key central banks, and many more. Providers demonstrating the requisite combination of understanding, flexibility and the ability and will to think beyond the immediate bottom line can and must seize the moment in terms of establishing themselves as invaluable strategic partners in the face of difficulties which often appear to defy rational analysis: put simply, companies now more than ever need to be ready for anything, and the outsourcing model can be a very useful tool in the quest for that readiness.
A rapidly changing ecosystem...
The outsourcing landscape is shifting - and 2018 will see the pace of change quicken. For example, one prominent dynamic in recent years has been the rapid emergence of start-ups (often based around one core product) which have been able to make good headway thanks to a high degree of flexibility and agility - before being snapped up by one or other of the industry behemoths, usually entirely deficient in those qualities but in possession of very significant investment war chests. This will continue apace in the coming year - while those long-established leviathans which can't keep themselves current through acquisitions as well as in-house tech will be in danger of stagnating more quickly than ever.
...And changing roles
There is also increasingly rapid change globally in terms of what are the key roles on which the outsourcing industry is founded. For one thing, a confluence of factors (prominently, an increase in in-house capability and experience) has led many to question the long-term viability of the advisory market. While this seems premature if not wilfully pessimistic, it certainly appears as though certain advisory niches (for example, location experts) might not be long for this world - expect to see some traditional advisory revenue streams being dammed up in 2018, along with continued consolidation in the broader market.
Greater focus on adding value
It's an inconvenient truth that at a time of huge disruption for many traditional businesses, the outsourcing deals which should be helping them across to the digital promised land are instead dragging them down to oblivion because of fundamental errors in their design and a lack of will (and, perhaps, long-term vision) on the part of their providers. The next twelve months will (and must) see a recalibration of a good number of agreements and the relationships behind them, as buyers increasingly recognise that many extant deals may be succeeding in their immediate aims (with dashboards a reassuring shade of green) but are hampering (potentially fatally) organisations' chances of making a success of their analogue/digital transitions. This move will in the main be led by buy-side professionals - but providers could endear themselves (further...) to their clients by initiating those discussions before they're forced upon them.
Women of the world unite!
This is, happily, both a wishlist entry and something of a prediction: 2018 will see further advances made by women on all rungs of the outsourcing ladder. While certain corners of the space have traditionally been occupied overwhelmingly by male employees, great gains have been and continue to be made in the quest for something at least approaching gender parity at senior level - with the GSA's own Women in Outsourcing group helping to drive things in the right direction.
Corporate social responsibility has become of increasing importance in recent years as companies have realised its value to potential customers and employees alike. A heartfelt wish, therefore, is that 2018 sees both more, and better, CSR efforts on behalf of the outsourcing community. Such a globalised and diverse industry hardly lacks proximity to and awareness of some of the most serious problems facing society today: this year, let's really point our minds and chequebooks towards solving them.
It's easy, as we have, to predict the growing importance of artificial intelligence: working out the ramifications of that trend, and preparing for them, is infinitely harder. Still, prepare we must: considering the potential scale of the impact of AI on jobs and prospects it would be a dereliction of duty not to attempt to cushion whatever blows are coming, and better and more open communication and collaboration in this area between a broad array of stakeholders must be on any wishlist for the coming year in outsourcing.
One factor in short supply when it comes to several of the biggest challenges facing outsourcing and business more broadly is clarity: a pronounced lack of certainty when it comes to, say, Brexit (and subsidiary issues such as the role of the EU GDPR for the UK post-"Leave") means that many significant decisions which should be being taken now are being postponed, sometimes with crippling consequences. We don't have to know everything all at once, but we should know more than we do; here's hoping...
Things can only get better
One can rarely go wrong when wishing for quality improvements (especially in an industry so focussed on delivering quality) - and it would be silly not to mention the GSA's Global Sourcing Standard and to hope for the continued expansion and adoption of this important code of conduct. Similarly, if more specifically, let's all wish for ever-increasing transparency in the global outsourcing industry: shining a light upon sometimes obscure activities and transactions can only benefit the community at large.
Survival of the flexiest
There's never been a time when flexibility and agility have been as important as they are today - and those attributes will only increase in importance over the course of 2018. Many organisations - indeed, many economies - appear to think that sheer scale can be an effective substitute for the ability to react quickly and effectively to shifting market conditions; this misguided belief could be the cause of much woe in the near future, and a key element of this wishlist must be an awareness amongst leaders across the entirety of the outsourcing spectrum that, as Darwin never actually said, "It is not the strongest of the species that survives, nor the most intelligent, [but] the most adaptable to change."
CEO, GSA UK