Outsourcing challenges and how to address them

Outsourcing can be a complex endeavor, even for experienced companies with a number of outsourcing engagements under their belt. Depending on scope, organizations may spend six months to a year or more in the RFP process, homing in on the right providers and negotiating a contract that will stand for just a few years. Those years go by quickly, and before you know it, it is time to consider recontracting with the existing providers or going back to the marketplace. Technology and client demands have changed dramatically in that time, making it incumbent on business executives to seek new capabilities offering higher quality at lower costs. Meanwhile, the competition is closing in.

In this whitepaper, we address some of the challenges in existing – or during the development of - new outsourcing contracts, as well as the methodologies and tools KPMG can offer to tackle these challenges.

Multi-vendor challenges

Until recently, many organizations leaned towards monolithic outsourcing models, where a single vendor provided a comprehensive set of services. This model offered simplicity and consistency, but often at the cost of flexibility and innovation. However, as the pace of technological advancement accelerates and with increasingly complex business needs, a shift towards multi-vendor outsourcing is emerging as a more adaptive solution. This reflects a broader trend towards agility and specialization in the business world, where companies are increasingly looking to leverage the best-in-class capabilities of various providers to stay competitive in a rapidly evolving market. This shift towards multi-vendor outsourcing introduced new challenges or emphasized exiting ones.

6P Value Assurance Methodology

Our 6P methodology takes a holistic view of value-enabled services by assessing 6 domains. It enables increased value in sourcing relationships by aligning service expectations, perceptions, and realities in long-term agreements to maximize value. This framework is used when reviewing an incumbent relationship as part of a sourcing strategy that may lead to re-negotiation or a competitive procurement process, instigated by a buyer or when reviewing a deal as part of a mid-contract activity to optimize the relationship, which can be instigated by either the buyer or provider of the service. The principles employed by our framework are as follows:

Joint governance (and potentially payment) by service provider and buyer.
Equal review of supply and demand.
Engagement at all levels of the respective organizations, with joint agreement at the executive level on the exercise objectives.
An iterative approach that seeks to highlight what is being done well versus what can be improved with both parties.

Take the next step

In today‘s rapidly changing business environment, optimizing your outsourcing strategy is essential. This whitepaper provided a glance on some of the KPMG methodologies, designed to bring clarity and efficiency to your outsourcing landscape. Consider this whitepaper as a first step. We offer a comprehensive suite of services tailored to your needs and will gladly partner with you throughout your outsourcing journey. Let‘s discuss how our methodologies can empower your business and achieve your outsourcing goals.

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