Procurement Trend #29: More Outsourcing

Twenty-six trends to go,
twenty-six trends to go,
so many things we need to know,
so onward we will go.

We’re in the midst of discussing in detail each and every trend we debunked in our Future of Procurement series so that you understand not only why the historians are still talking about these trends, but why they are still relevant to many Procurement organizations that are stuck in the past with the historians.

The goal is that, at the end of this thirty part series, you will not only know what you need to do to prevent staying in the past with your organizational “peers”, but what you need to do to not only stay in the present but start marching towards the future, which is coming faster than you think.

So why do so many historians keep pegging it as a future trend? There are a number of reasons, but among the top three today are:

  • Because outsourcing is not just manufacturing anymore, it is design
    as more and more companies outsource bigger and bigger pieces of their product’s lifecycle
  • Because outsourcing is not just tech support anymore,it’s software development
    as more and more companies outsource custom software development, implementation, and integration
  • Because outsourcing is not just back-office functions anymore, but front-office functions as well
    as even functions like Public Relations, Advertising, and Legal are thrown over the wall … all the way to India!

So what does this mean?


Procurement needs to work closely with Engineering and the Supplier and foster an atmosphere of collaboration as close working relationships will be required to insure that the vision of Engineering is reached in the best way possible. With competition so fierce in just about every industry, the design of a product is critical to buyer acceptance and a company’s success, so Procurement needs to put on its SRM (Supplier Relationship Management) hat and make sure there are no bumps in the relationship.

Software Development

Procurement needs to work closely with whatever department is commissioning the work to make sure detailed functional specifications, that include a description of core business processes is produced; that regular quality assurance and acceptance testing takes place; and that regular checkpoints are put into the process and adhered to. Serious issues need to be identified before they prevent product delivery or result in significant cost overruns, which currently happens in the majority of software development projects. Many industries have proven time-and-time again that you can’t just throw a software development project over the wall and expect success. Software project failures have been responsible for many of the biggest supply chain failures in history (and if you do not believe the doctor, go check out Supply Chain Digest’s Top Supply Chain Disasters of All Time), so Supply Management knows all to well the disaster that can happen with an IT project that is not appropriately managed.

Front-Office Functions

Soon, outsourcing of Legal, Public Relations, and Marketing Support will be as common as outsourcing of Finance, Accounting and tactical Procurement functions are today. Procurement needs to work with key stakeholders to define core requirements, goals, frameworks, knowledge capture, and reporting structures to make sure that the third parties represent the business the way it wants to be represented and that everything is captured and communicated. This may not be an easy task, but it is a critical one.