Now that Phil Fersht has joined the dark side of the force — leaving AMR Research to work for an outsourcing provider — can we still take him seriously as an objective industry observer? Of course, especially considering the continued quality of his recent posts. Most recently, I read one of Phil’s numbers on what he describes as the “new normal” in outsourcing. According to Phil, “There isn’t a lot of secret sauce these days for what many clients are currently demanding, where in the past, incumbent service providers could play the “capability game”. With many of these skills becoming mainstream, the competitive playing field has leveled out.”
This is the “new normal” as Phil describes it. Despite this, the former analyst argues that outsourcing’s future will clearly move back into being a differentiated game at some point. In his words, “while clients demand cost-arbitrage today, the next wave of efficiency gains can’t continue to be found from swapping out higher cost for lower cost”. But how long will the “new normal” last, especially in the procurement arena?