The new era of outsourcing
How outsourcing is a new tool for value creation
Learn how companies are going beyond cost savings to transform outsourcing into a strategic tool for innovation and value creation.
This webcast discussed how outsourcing has transformed itself from playing a traditional role within an organization to one that is leading companies in value creation and cost efficiency. Panelists explored issues that led to this new paradigm, and how leaders can harness the financial and operational benefits.
Panelists discussed the following topics:
Service Delivery Models Have Evolved
Sourcing strategies are changing at an exponential rate as companies search for financial and operational benefits. Companies today are navigating the complexities of multiple delivery models, which include a mix of third-party providers, internal teams, Global Capability Centers (GCC’s) and embedded automation. Three models that were explored during the webcast were:
- Outsourcing. This model leverages a third party to perform services on the client’s behalf. Many of these services are typically non-core capabilities, such as traditional back-office functions or industry specific functions.
- Build/Operate/Transfer. This model leverages a third party to build a captive and operate it until the client is ready to operate it. In this outsourcing relationship, the third party stands up and builds and operates the center and the client has the transfer rights to bring it in-house when necessary.
- Global Capability Centers. In this model, a client-owned entity leverages global talent to deliver specialized services, such as engineering.
The panelists shared that there is no ‘one size fits all approach’ when determining the appropriate model, but instead, key considerations such as speed to value, operational control, up-front capital investments, access to talent, and IP protection should all be evaluated.
The Third Party Relationship is Changing
Modern outsourcing leverages third parties as transformational ‘partners’, an evolution from their role simply as a ‘vendor’. Organizations that build trust-based, business-aligned relationships with their providers will be better positioned to scale smarter, move faster, and deliver lasting value.
- Staff augmentation, co-sourcing, and contracting for transactional services models are not going away. These traditional deals offer more labor-based solutions where work is centralized and performed typically offshore, such as India or the Philippines.
- Strategic supplier deals are increasing. These often involve end-to-end technology-driven outsourcing to either eliminate work or produce more cost-efficient outcomes.
- The newest trend is the transformational partner. In this relationship, a strategic partner evolves into a partner due to a greater level of trust that established over time.
While clients are seeking greater speed to implement transformation and want to quickly make deals with a third party, there is a delicate balance to hastening implementation versus getting the right contract for your organization. Moving too fast heightens risk after the signed contract phase.
Thriving Outsourcing Partnerships
Today, outsourcing is a strategic tool for doing business. At the core of this evolution is the development of healthy supplier-client relationships that unlock the multifaceted potential of outsourcing. Panelists reviewed key tenants of the relationship, such as:
- Establishing Trust. Core to impactful outsourcing partnerships, trust increases transparency and reliability, which as a result compels suppliers to align closely with business goals.
- Promoting Collaboration. Collaboration ensures that clients and suppliers pursue strategic objectives together, fostering innovation and creating competitive advantages that pave the way to new markets.
- Maintaining Flexibility. Accommodate changes in the environment or unforeseen circumstances by adjusting the existing approach to service delivery.
- Monitoring Service Quality and Performance. Consistent adherence and achievement of performance metrics minimizes disruption and drives efficient business outcomes.
- Instituting Innovation. An aligned vision and a focus on excellence drives continuous improvement and enhancements to supplier capabilities to strengthen partnership and accelerate customer growth.
The Growing Strategic Role of Procurement
Procurement has evolved into a strategic role, moving beyond individual functions to enterprise-level decisions. Leaders now design sourcing strategies, manage cross-functional governance, and ensure alignment with business outcomes, focusing on innovation and value delivery.
Outsourcing decisions are no longer confined to individual functions, but they are increasingly enterprise-level strategic calls.
Procurement’s new focus is on building flexible frameworks, enabling innovation, and navigating complexity.
As delivery models integrate and contracts become more complex, procurement becomes crucial in negotiating deals and shaping value delivery.
Procurement is now coordinating across finance, IT, HR, and operations to ensure outsourcing aligns with broader transformation agendas.
Navigating the Future
The challenge for leaders is no longer whether to outsource, it is how to govern across delivery models in a way that supports business goals, resilience, and continuous transformation. Some leading organizations combine external providers with internal centers, GCCs, shared services, and flexible models like built-operate-transfer that use insourcing, outsourcing, digital labor, AI, and global business services. Choosing the right model is complex, but you are not alone; KPMG is a trusted advisor, here to help you navigate the journey.
How KPMG Can Help
KPMG is ranked as one of the world’s best outsourcing advisors since the inception of the IAOP rankings. KPMG is:
- Independent. Solution agnostic, we apply market knowledge and unbiased objective advice to help clients.
- A trusted partner. For more than 100 years, organizations around the world have trusted KPMG for our business advice.
- A firm with a proven track record. In our increasingly complex world, firms find that taking a holistic view across their internal support functions can yield the greatest return. Transforming these functions requires the precision and expertise of a marketplace leader.
- A firm that uses research-based methodology. KPMG continues its ongoing relationship with HFS Research, a leading research organization in the field of outsourcing. The combination of the two leading firms covers the spectrum of shared services, outsourcing and transformation through ground-breaking methodology and thought leadership.
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