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In The Headlines
The Heat Is On for Energy Management Outsourcing

Supplier Supplies Capital, Engineers to Save Energy and Money

Best Practice
Reference Checking in Seven Easy Steps

Everest Voice
How Suppliers Can Benefit From Working with an Outsourcing Consultant

Focus on Healthcare
No Room for So-So Performance

Focus on Sales
Maintaining a Competitive Edge Through Sales Outsourcing

Case Study
Barking Up The Right Tree

ASP FOCUS
Coping with Increased Development Cycles

Case Study
Getting Started on the Right Foot

Gain Control of Your Computing Environment

Outsourcing Information Design and Delivery

Outlook on Outsourcing in Wireless

Last month I shared 10 tips to help buyers work with an outsourcing consultant. Now it's the suppliers' turn.

I'm a senior consultant at the Everest Group, whose consultants have spent the last 10 years developing deep relationships in the supplier community. Originally Everest focused on helping buyers develop business process outsourcing (BPO) strategies and solutions. Those solutions always included outsourcing suppliers! Eventually, our knowledge of the supplier community prompted us to develop a special supplier practice, zeroing in on the unique challenges suppliers face in the outsourcing industry.

Why do outsourcing suppliers need an outsourcing consultant? As consultants, we take a broader view of the world. That perspective forces us to understand the supplier marketplace in great depth. We understand its dynamics, challenges and future trends. This research gives us a more extensive understanding of the market's inner workings than a single supplier can see from its front window.

Since we advise clients in a wide variety of industries, we have a broader client base than most suppliers. After watching an innovative approach work in one industry, we can apply it to another. This cross-pollination brings new ideas to the table.

And the outsourcing industry is maturing. Today there are value propositions that weren't possible a few years ago. Suppliers that can add more value have a competitive advantage, which translates into growth, profit and a higher return to shareholders. Outsourcing consultants who specialize in this area can help suppliers flush out these opportunities.

Here are some of the reasons why suppliers work with outsourcing consultants.

1. Repositioning their business.

Several supplier assignments have involved helping the supplier reposition its business in today's rapidly changing business environment. One client offered 40 different areas of services. This company asked us to help determine which of these services were best in class. They wanted to know what they were good at! We helped them select these areas, then came up with a strategy to help them leverage their strengths and grow the business.

In another case, a finance and accounting supplier owned office buildings across the country. This BPO supplier wanted to upgrade its people, systems and capabilities. Other than real estate appreciation, it made no money owning these buildings. We helped this supplier arrange a sale/leaseback to another outsourcing supplier specializing in real estate. With facilities management costs off the book, the BPO supplier had more capital to invest in its core business and drive more profitability.

Then there's what I call "the Application Service Provider" (ASP) dilemma. ASPs are known for their IT and technical skills. Now, however, they are hearing from their clients that they want business process help along with their applications. We're also observing the BPO trend is accelerating in the outsourcing marketplace. We see significant growth opportunities for suppliers who are both ASP and BPO providers. Suppliers on both sides of the street have to determine if they want to build the requisite expertise or find a partner. We can help.

2. Adding Outsourcing as a New Product Line

A Fortune 500 company called us recently for advice. It had dabbled in outsourcing but had never focused on it as a formal business offering. In the current economic climate, this corporation felt outsourcing could become a profitable business and wanted to learn how to structure its offerings.

3. Improving Shareholder Value

A third supplier knew it had a problem just by looking at its stock price. Its capitalization rate was fairly low. We helped this firm isolate its strengths and create a new business that added value through risk sharing. The added revenues should increase the company's value for its stockholders.

4. Searching for an Alliance or JV Partner

Some suppliers approach us to help them find an alliance or joint venture partner. Sometimes we help a supplier analyze whether it should invest its capital in infrastructure and expertise to pursue a new direction. Or, the supplier has already determined it wants to forge an alliance with another supplier in those areas where it has no experience. We help the client select a partner whose strengths mitigate its weaknesses to create a winning offering. Then we broker the deal.

Suppliers looking for more effective ways to accomplish their work hire outsourcing consultants.

Lessons from the Outsourcing Primer:

• Outsourcing consultants help suppliers:
1. Reposition their business.
2. Add outsourcing as a new product line.
3. Improve shareholder value.
4. Find an alliance or JV partner.
• Outsourcing consultants have a broader, deeper understanding of the supplier marketplace.
• Outsourcing consultants understand supplier challenges and future trends.

Publish Date: September 2001

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Copyright © 2001 - Everest Partners, L.P.

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