Sustainable Global Outsourcing

Why is sustainability, also known as corporate social and environmental responsibility (CSER), important in global information technology (IT) outsourcing? Our extensive research over five years, including hundreds of interviews with outsourcing buyers, providers and advisers, provides answers to that question. Most importantly, this research describes the competitive benefits that accrue to outsourcing providers and buyers when they collaborate on sustainability issues. After reading this book, you will understand how collaborative sustainability can create benefits not only for your outsourcing relationship, wider society and the environment.

Outsourcing success is never guaranteed. The Outsourcing Center and the Farmer School of Business Administration at Miami University, Florida, USA,¹ examined the causes of outsourcing failure and found that 11% of the 256 respondents identified poor communication as a frequent cause of outsourcing failure, whereas 40% of the respondents believed that better communication would add more value to the outsourcing relationship. According to the Outsourcing Unit at the London School of Economics, UK, “The outsourcing highway is littered with casualties.” It cites multiple examples of outsourcing failure since 2000,² including the following:

Our research has tracked the evolution of sustainability into outsourcing arrangements since 2005. We have observed the increasing importance given to sustainability issues by buyers who demand that their providers are able to match the standards through the outsourcing supply chain.

In this chapter, we examine sustainable global outsourcing through the lens of GITO providers. The chapter begins with an examination of a set of 19 leading GITO providers to understand their sustainability maturity. We then describe two case studies, of outsourcing providers Accenture and a large Indian GITO provider, which seek to understand how these two providers apply sustainability concepts in their business operations. The chapter continues with presentation of the Sustainable Global Outsourcing model, a new model that applies directly to the outsourcing relationship between buyer and provider and describes how the relationship can be improved while also creating benefits for society and the environment. The model and this chapter provide guidance to outsourcing buyers and providers on how to measure and improve their sustainability in the outsourcing relationship.

The accumulated evidence is clear: the importance of sustainability is growing for all organizations. Employees, customers, shareholders, governments, unions and NGOs increasingly expect both public and private organizations to behave responsibly toward individuals, to society and to the planet on which we live. At the same time, as we demonstrated in Chapter 1, global outsourcing of IT has become an important and accepted approach by which organizations can reduce costs and remain competitive. Chapter 2 showed how outsourcing buyers and providers integrate sustainability into relationships, from RFP onward. Chapter 3 focused on identifying the sustainability maturity of providers and introduced some practices for collaboration on sustainability projects that bring benefits. In this chapter, we focus in detail on the competitive advantages that may be accrued from collaboration and the practices that enable such benefits. Here, we focus on the role of sustainability in the management of established relationships, as opposed to early stage supplier selection activity. The benefits that may be accrued from collaboration on sustainability projects are illustrated with the case study of the UK-based CFS and its outsourcing provider Steria. Managed effectively, collaboration on shared sustainability projects strengthens the outsourcing relationship by building trust in various ways between buyer and provider employees.

As Chapter 4 showed, sustainability in outsourcing offers shared value to buyer, provider and good causes. These benefits can be strategic in the sense that competitive advantage may be derived for the buyer and provider. For example, by instilling sustainability practices throughout its operations and encouraging them at its clients, Steria gains value through reduced attrition in its workforce, thus lowering operating costs and building a trust relationship with clients that encourages further outsourcing contracts. Steria’s vice president for corporate responsibility commented that “this model is feasible for any client; it can be just computer support or can be the entire model, the full client partnership”. Accenture’s work in India, described in Chapter 3, demonstrates that other outsourcing providers understand the benefits of collaborative sustainability.

As this book has illustrated, sustainability is a key issue for all organizations and has emerged as a central dimension to the management of outsourcing, both onshore and offshore. The big question is how to integrate sustainability into outsourcing arrangements and secondly how to “do well by doing good”, that is to harness pro-market strategies in order to increase returns on philanthropic investment.