Many organisations make the mistake of outsourcing their core digital capabilities. Co-sourcing is a better alternative, provided you do it right.
Digital capabilities are the skills, knowledge and understanding of digital to create or consume value. For example, a bank uses its digital capabilities to create value by offering customers the ability to transact online. Customers use their digital capabilities to consume this bank’s value by checking their online account balances and making payments.
You can see how this relationship drives digital transformation. Businesses must match or exceed their customer’s appetite for digital value to compete in the marketplace.
To bridge this growing gap, a typical knee-jerk reaction is to buy new IT systems. But a system is just an enabler. By itself, it does not create value. To create lasting value, you also need to build capabilities around product development, analytics, digital marketing, and DevOps, etc. Tall order? Yes. That is why many organisations are enticed to outsource the entire thing altogether—a disastrous choice.
A taxi operator in South-East Asia outsourced its data and app development to a company in China for a long time. This meant that nobody internally understood the details of the app. This was all fine when fleet management was the core competency. With the arrival of Uber and then Grab, the operator’s core competency shifted to customer experience. Unfortunately, the outsourcing model prevented the taxi operator to cope with the speed of the digital upstarts. Even simple changes took months to deliver. You can imagine the prospects for this company.
If outsourcing is not going to work, then you have to build your digital capabilities in-house. This includes focusing on:
In this article, we’ll focus on acquiring the right talent for digital transformation.
You have three options to acquire talent:
The pros and cons of each approach are listed below.
A quick glance shows that the co-sourcing model seems like a better option. In this model, external talent is integrated with the organisation on a long-term basis. The external talent could be an individual (e.g. consultant) or a whole function (e.g. call centre).
For example, a traditional agriculture company that wants to get into farming tech will take too long to organically build its digital capabilities. Having an external, talented team join the local team on a long-term basis can make things progress faster.
While co-sourcing seems to be a viable alternative, it has its risks. A big one is around intent. Co-sourcing is not just about delivering new products and services. It is also about acquiring the digital capabilities needed to transform the organisation. If this intent of the co-sourcing arrangement is not clear or deliberate, the arrangement might end up looking a lot like outsourcing.
At PebbleRoad, we’ve been offering the co-sourcing model for a few years now. Our double-loop digital transformation approach means that we have two types of outcomes: product and transformation. The first loop caters to digital products and services, while the second loop focuses on organisational transformation. Some of our long-term engagements are ending and we are proud to see the teams we worked with grow and thrive without us.
Here are some things we have learned so far.
While it is true that the co-sourcing model offers some relief in terms of acquiring the digital capabilities needed to accelerate progress, you cannot forget about the transformation required in your leadership, work processes, unified digital platforms, infrastructure and broader work culture. Ignoring these will just increase your organisational debt and stop you from achieving the organisational transformation you desire.
Don't let your hard work go to waste. Put in place a ContentOps system for content governance and to help you produce high-quality content at scale.