This year sees the 25th anniversary of the birth of what is now the National Outsourcing Association. During that time they have grown from a spark of an idea to being the pre-eminent promoter of outsourcing. Chairman Martyn Hart recalls the beginning, the last 25 years and thoughts for the future.
The seeds of the NOA
In May 1987 there was a meeting in the Telecom Tower, where a radical idea was floated: British Rail should outsource its telecommunications to British Telecom. John Welsby, BR Chairman at the time, agreed. So a Board level committee was set up to explore the idea with Nick Kane from British Telecom, and Board Member David Rayner, as the senior British Rail representative.
BR managers wanted some reassurance that outsourcing worked and a body of evidence had to be built to prove that this new idea was possible. In the end, the deal didn’t come off, as political winds were blowing and BR was heading towards imminent privatisation.
However, the outsourcing idea wasn’t lost, and some of the people from whom the body of evidence was built from (GEC, Unilever, Trafalgar House, France Telecom, etc.) got together and held regular meetings as a forum for the exchange of ideas, and often, simply comparing notes on their experiences. Out of these meetings, the association was finally formalised in April 1993.
This foundation for the NOA as we know it today was a response to a growing need for both outsourcing customers and suppliers to share ideas, review successes and failures, stop re-inventing wheels, and in doing so create a body of expertise and best practice that could carry the industry forward. It was via this wider vision that the NOA soon became more firmly rooted.
The NOA was formally incorporated as a company limited by guarantee in 1995.
The NOA today
Currently we have over 350 fee-paying members. These comprise a majority of blue-chip user organisations - some managing the largest European outsource deals - as well as premier suppliers, leading consultants and legal advisors in the field.
Today it had been recognised that organisations look towards outsourcing to obtain strategic business step changes, which were not possible organically or by simple acquisition. Outsourcing inherently is generic and the association had recognised that it was the organisational business objectives that were important and makes major contributions to Business Technology and Business Process Outsourcing.
The NOA has been designed to be a tight ship and we have successfully navigated through many recessions especially the Dot Com bubble and burst. During this time we have managed to grow the services we offer such as professional qualifications (with the NOA Pathway), developed numerous prestige events (such as the best practice awards) and we have also created successful spin offs such as sourcingfocus.com, the leading portal for outsourcers (with 14,000 members as friends of the NOA), the NOA’s Outsourcing Yearbook and the creation of the EOA. We have also started Parliamentary involvement through the All Party Group on Outsourcing & Shared Services.
How outsourcing has changed
In 1987 outsourcing was limited to on-shore, mainly in telecommunications. Only when the telecommunications markets were liberalised from the early 1990s onwards could concepts like remote working be made possible. Coupled with the rise and rise of computing power and application software it was possible to achieve significant cost savings, quality and rapid deployment benefits by outsourcing. However, the contracting vehicles were not very sophisticated and many customers and suppliers found themselves in contracting muddles leaving to dissatisfaction, issues which are being progressively addressed to this day.
The next 25 years
For the next 25 years, outsourcing will be progressively accepted at all levels of business. Organisations will make decisions on where to source their resources to give them the maximum return. The way outsourcing relationships are set up will take the market and the business requirement changes of both customer and supplier into account and there will be less problems contractually for the “normal” outsourcing services like ITO and BPO.
However, there will always be a frontier where organisations may outsource areas where “others fear to tread”, which will bring “interesting” problems to those constructing the relationships. However every organisation will have parts of it that for one reason or another it will (or it should) never outsource or commit to a shared service: understanding where; will become a key competitive advantage for those that get it right.
As our Chairman Martyn Hart says, “if you want something done you can only do it three ways; do it yourself (in-sourcing), with a friend (shared service) or get someone else to do it for you (outsource)”. The only thing that separates the first two from the later is the legal contract but in the future those first two services will be progressively constructed on outsourcing lines and viewed the same as an external services provider.