Businesses Are Moving Towards Specialized Sourcing

Business - 10 Jul 2017
Harshit Singhal

The paradigm of strategic sourcing is undergoing a fundamental transformation as Technology is becoming fast evolving, complex and becoming a clear differentiator.

Digital technology has become ubiquitous and core to most of the businesses. Digital technologies create new risks, including business risks, in terms of providing expected returns on investments. In order for the business to manage these risks and stay ahead of the curve, there is an imperative for the businesses to address some fundamental strategic questions with regards to their technology investments:

  • Are we investing ahead of the curve? What if we get caught in the first mover disadvantage?
  • If we invest behind the curve, would we lose the battle if we move after the competition?
  • What proportion of these investments is a differentiator for the organization?
  • Are these technologies truly changing the customer behavior and expectations as they stand today?
  • Should the technology processes map the current organizational processes or should we initiate a Blue Ocean strategy to think which aspects of the business would be disrupted and hence develop new age processes for the organization?

As the businesses address these queries to define their technology direction, they need to choose an appropriate technology partner to implement these changes as well. Organizations need to rely on partners and business models that focus on costs which manage risks while ensuring the outcomes and rewards.

This transformation and the role of technology is impacting the key outsourcing decisions. Outsourcing decision has been moved from a cost based decision to a competitive edge decision, from a generalist base to a specialist base. Hence, the decision making between large companies and boutique is based on:

  Large Technology Partners Boutique Technology Partners
Integrated Technology Solutions Complex organizational design internally makes it difficult to break the silos. Multiple facets of the digital wave including customer engagement mechanism, organizational process mapping and organizational decision making process are all getting merged with the technology products & solutions and are best brought by new age product services organizations.
Executive Sponsorship & Thought Support Thought support from the Consulting team with limited top management support Ensures alignment of business strategy, technology architecture and software solution
Depth of Knowledge at execution Traditional focus of large companies has been to “train the talent” rather than “hire the right talent” for execution. Boutique companies are able to bring high quality talent and groom them on technology solutions leveraging new age solutions including artificial intelligence, machine learning, iOT, virtual reality much better.
Software Quality Mechanism Standardized software processes ensure greater standardization of the outputs across the clients. Boutique players are higher on the innovation and the strength of the processes could be limited.
Agility While the development mechanism has moved from “Waterfall mechanism” to agile technologies, the expected speed to deliver products is shrinking far more. For boutique product development companies, the expertise yields them for a specific faster go to market than traditional software providers.

These imperatives have led organizations take a conscious call on seeking support from specialized boutique organizations for their solutions and product development with in-depth technology awareness to provide agility and guaranteed outcomes.

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