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Integreon Reverses – A Change in The Outsourcing Landscape? I suggest Not.

April 18, 2013

Over the past month, both Osborne Clark and CMS Cameron McKenna have announced significant reductions in the scope of their respective outsourcing arrangements with Integreon. As you would expect, these two announcements coming so close to one another created much comment in the trade press and amongst industry watchers.

Many articles talk of the “turning of the tide” and the “change in the landscape”, with speculation rife that these two high profile losses for Integreon are actually harbingers of doom to the outsourcing industry in the legal sector.

Outsourcing Maturing in the Legal sector

Looking a little closer at the detail of the announcements and I would suggest that the opposite is actually the case. Rather than a demise of the industry, we are seeing a maturing of outsourcing – a natural process that was observed in other industries a decade or so ago.

First, both OC and CMS were keen to stress that they continue to see Integreon as strategic partners with important roles to play in the ongoing support functions for both firms. Second, CMS also confirmed that the workload that was coming from Integreon would be placed with an alternative outsourcing provider and while OC was taking most work back in house, it too will transfer some of the Integreon work to another provider.

Taking the CMS example.  In 2010 they announced an outsourcing deal for “the whole of the back office”. This included IT, HR, finance, business development, communications, knowledge management, facilities management and administration services – WOW! I can imagine the arguments at the time – “giving it all to one provider gives us a better financial deal” and “giving it all to one provider will lead to an efficient integrated service and avoid finger pointing and hand-offs”.

However, when looking at outsourcing there are two really important principles that are at play here:

  1. The outsourcer must be a true specialist in their area – with people, processes and technology that are proven best in class.
  2. Where the scope is broad, it is always best to have more than one provider – each of which can (or claims to be able to) do the job the other is doing. Keeping their eye on the ball!

Whereas the CMS strategy may have been to ‘big bang’ outsource to get cost reduction and process improvement across the board, they have learned the lessons of other industries and are now looking at a more sophisticated model.  In other words they are now applying the principles above.

What Will Happen Next?

It appears that each of the firms are travelling a typical path. They will deploy a more sophisticated sourcing model with ‘best of breed’ providers working alongside each other and in harmony with in-house functions.

The next challenge they will come across is what is sometimes termed ‘service integration’.  They are building an environment with many providers responsible for different functions. To deliver a seamless service to end users, these providers need to work effectively with one another. This doesn’t happen by itself!

I mention this in my ‘top Ten Tips’ piece on IT outsourcing. You need to consider the end to end organisation when outsourcing – not just the component you are looking to put out. In a simple operating model you need to consider all of the functions, who is responsible for which part and then overlay all of the support processes – service integration is about the ‘who’ and the ‘how’ of making those end to end processes work.

Summary  

The Integreon reverses are not negative stories for outsourcing, they are simply the growing pains of quite a young outpost of the outsourcing world.

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2 Comments
  1. Thanks Mark for the balanced and expert opinion in your blog post. In general, the news media does seem to have missed the mark.

  2. Thanks Eric. As I said, I don’t see outsourcing reversing in the UK legal sector. On the contrary, as the shake out continues more and more firms will look to see how better service at lower cost can be delivered.

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