Global sourcing is a well-established phenomenon across most industry verticals. Companies in the manufacturing vertical have also embraced global sourcing to a significant extent. In doing so, companies have adopted multiple sourcing models (Global In-house Center (GIC), service provider, and hybrid).
Within the manufacturing vertical, the service provider model is primarily used for delivering technology services, and the GIC model is preferred among business process services. Some manufacturing companies use a hybrid sourcing model (i.e., a mix of GIC and service providers) for business process services. Finance and accounting (F&A) has the largest scale and global sourcing penetration in this vertical.
Most companies in this vertical set out on their GIC journey to generate cost savings and to ensure reliable service delivery. By moving transactional work to GICs, companies achieve the initial set of benefits. However, enterprises are now looking for greater added value from their GICs.
Specifically, enterprises expect GICs to step up in three priority areas: driving process efficiencies and standardization, delivering complex services, and creating revenue impact. Delivering on these priorities requires a significant increase in the GICs’ capabilities. At the same time, many of these priorities align well with the core strengths of service providers (e.g., efficiency and productivity improvements).
This alignment presents a strong case for GIC and service provider partnerships to create value for the enterprise. In this context, there are multiple ways in which GICs can use service providers, including consulting support for process improvement, implementation support to drive efficiencies through automation (e.g., Robotic Process Automation (RPA)), co-creating delivery centers through hybrid constructs (e.g., build-operate-transfer (BOT)) and virtual captive, and divesting / carving out work to service providers.
As enterprises mature in their use of sourcing models and strive to generate additional value, we expect GIC–service provider partnerships to significantly increase in the near future.