Does the future of outsourcing lie in a purely electronic marketplace?

Over the past few years, we have watched as business functions such as conferences and seminars (and even the most traditional transactions: from the supermarket shop to the auction and second hand market stall) have turned electronic.

In this electronic environment, is it just a matter of time before we see even more human business functions, like new business negotiations and the procurement of services, standardised in HTML?

In the outsourcing world, and among service providers and CIOs, such talk isn’t revolutionary. We are technical and technological experts by nature, adept at streamlining and standardising complex business processes. Surely an electronic marketplace for negotiating and procuring managed services is therefore the next step?

Yet, what would the consequences be in losing that human interaction – is it attention to detail, quality of service and innovation? But on the other hand, how much time and money would it save in thrashing out standard agreements and services? Quite simply, how would it actually work?

Firstly, it should be noted that the UK government is already exploring the use of an electronic marketplace through its G-Cloud framework for government procurement. This provides a forum to agree terms and conditions in advance with suppliers, as well as pricing and service descriptions.

>See also: Customer satisfaction drives outsourcing decisions on large tech contracts

While it could be argued that the private sector lacks the homogeneity and collective desires of the public sector to undertake a similar framework, it could be a possibility that service providers, or even a third-party adviser – acting as an independent broker – may see the benefits of a standardised platform.

Though efficient, an online marketplace could also cut out quite a vital part of the procurement process: humans. At this stage, many organisations may feel more than a little uncomfortable signing off sizeable contracts without actually talking to an adviser or provider about their unique requirements.

And as many service providers can testify, clients’ desire for creative solutions and innovations during a supplier bid is not going to die down with the birth of an electronic marketplace. Yet it is worth thinking about if and how the current lengthy procurement process already kills this creativity.

Ultimately, the question as to whether it is even possible to stifle this kind of progression remains. While there may be different appetites for this electronic way of doing business across regions and sectors, the more we see an online marketplace as an added factor to the future of outsourcing, the more comprehensive we can make the final platform. Are we moving towards an electronic marketplace whether we want to or not? One just has to look at the sprawling growth of Amazon to realise the potential of an online global platform for supplying demand.

Our view is that within three years the global electronic marketplace will be a reality. However, we recognise that issues about its functionality and feasibility remain, and there are many contending views from the industry.


Sourced from John Keppel, partner and president at ISG North Europe

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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