The Real Deal: Lisa Ross on BPO Sourcing Advisers

This continues a series of guest columns from practitioners and bloggers I respect. The category - The Real Deal describes them well.

I have written before about the changing influence game - where sourcing advisers (and others) are increasingly influential in a number of tech markets - more so than industry analysts like Gartner or Forrester. This is probably even truer in the BPO space. So much so, that there are now analysts who track the ecosystem of sourcing advisers.

Lisa Ross, who runs FAO Research which researches the Finance and Accounting Outsourcing market writes about the impact of such advisers in that segment, but she might as well be talking about the broad outsourcing market.

"As finance & accounting outsourcing (FAO) becomes an increasingly attractive operational alternative for global companies, third-party expert advisors who assist with sourcing endeavors have similarly become increasingly popular. FAO Research estimates that 65% of companies exploring business process outsourcing (BPO) hire external consulting firms to facilitate their relationships with suppliers.

The process of procuring business services, especially those that are finance related, is unlike procuring hardware, software or more typical consulting services. Prospective outsourcing buyers generally lack a solid understanding of the outsourcing process, as well as the project management skills and time, to make the best decisions alone. And, often, they are just “too close” to their current situation to envision a desired future state. 

As a result, FAO eagerly leverage the niche expertise of external consulting firms in managing the breadth and complexity of sourcing F&A functions and sub-processes globally. More and more consulting firms are coming to market as guides for buyers of sourcing transactions by helping determine if outsourcing would be a viable option, select suppliers, close deals and even manage engagements post contract.

In fact, external sourcing advisors have become critical business partners for buyers, with FAO Research estimating that upwards of 60% of buyers of full-scale, enterprise-wide FAO services use an external sourcing advisor to perform upfront due diligence and to recommend whether to outsource and/or to make internal process improvements for transformational change. These advisors are experts at business operations (including financial modeling), have deep process and sector knowledge, know a great deal about globalization and understand which service providers can best manage select business functions.  

FAO Research recently embarked on a first-of-its-kind research initiative analyzing sourcing consulting firms worldwide to determine who is making the most significant impact globally and examine how these firms differ. In a three-part report series, they reveal perspectives on how prospective buyers can leverage their advice and choose the most appropriate outsourcing service provider to meet their needs. The report also provides detailed profiles of 16 major, global consultancies providing sourcing advisory services.

In an emerging and fast-growing market such as FAO, there is a large assortment of sourcers from which prospecting buyers can seek advice. Sourcing advisors have become dominant players, sharing the power of knowledge."

She can be reached at lisa.ross@faoresearch.com