Integration of the outsourcer's strategy with that of the client

ENGLISH ABSTRACT: "Strategy is when you are out of ammunition but keep on firing so that the enemy won't know". (Mintzberg, 2005, 13)Business Connexion (Pry) Ltd (BCX) is a leading black empowered ICT company with a proud 25-year track record. BeX is an integrator of competitive, innovative business solutions based on information and communications technology (ICT). Business Connexion runs mission-critical ICTsystems for many JSE listed organisations and manages products, services and solutions for key public sector organisations, parastatal enterprises and a host of medium sized emergent companies.Nampak is the largest and most diverse packaging company in South Africa, with operations in Africa and Europe as well. Nampak Pty. Ltd. has experienced declining revenues over the last two years despite an upturn in the South African economy. This has resulted in them putting pressure onBCX and going out on a request for proposal (RFP) for the infrastructure outsourcing.This research report addresses how a company like BCX can align its strategy to that of an outsource client, Nampak Currently in an outsource environment the client will say that they see no value add from being outsourced. BCX will produce statistics to say that they are performing to service licenceagreements (SLA). Between BCX and the Nampak there is misaligrunent. The outsource market is a maturing one and companies like BCX are struggling to maintain and grow their market share.Currently there are international players like HP trying to enter the African market. Globalisation is affecting the economy of South Africa. An organisation's strategy defines the sum of its choices about where it will compete, how it will create superior value for its customers, and how it willgenerate superior profits for itself. If you look at the strategies of the competitors they will invariably say and come to the same conclusions as Bex. This report hopes to show that strategy development is the search for ways to build a competitive advantage through distinctive capabilities. It is aboutfinding new ways of doing things that provide an advantage over the competitors.The literature review indicates that everyone is a strategy consultant and that there is no one definition in defining and aligning this strategy! Methodologies do exist and where a company takes the advice of consultants they fmd themselves ending up with a synonym for the word strategy -expensive. The literarure review looks at some of the academics and consultants thinking on the subject since 1960. Interviews were conducted with key players within Group IT for Nampak and with some of the business executives of Nampak. The interviews were supplemented by informationgathered by the author from working on the account for two years.This researeh report aims to use the experience of the people working on the account to derme the strategy with Nampak going forward.Currently BCX runs the Nampak account within the structures of a cluster and uses shared services to manage the account. The strategy is a reactive one and Nampak sces very little value add from BCX.Nampak sees BCX as a strategic supplier as opposed to a strategic partner. The conclusion of this report represents the "what" of the report.By continuing to carry on in the fashion BCX has, will result in them losing the outsource contract with Nampak. This is the reason that Nampak has gone out on a general request for proposals to the market. The "so what" of the report is that BCX will lose the Nampak account should it not changethe way it handles this outsource business.BCX would be better off running the account as a stand alone business with its own executive who is empowered to make decisions. This fmding supports the work of Miller and Heiman who do consulting on how to handle large strategic accounts (Miller, 2004). The recommendations of this research report support the direction some of the executives at BCX would like to take, which is treat each large outsourced account as a stand alone business. BCX needs to position itself as a strategic supplier to Nampak and be more involved in the business. The "now what" is more fully explored in the recommendations part of this report.Companies think that by introducing a new product or service they will beat the competition. Whilst this is sometimes true, companies are better off focusing on delivering what they do to the client better. The recommendations focus on how BCX can deliver better value and strucntre themselvesmore efficiently. A good strategy in outsourcing means fully understanding your own and your customer's position so that like a good general you are in the right place with the right people at the right time.