Should you use a sourcing advisor?

I need to declare upfront that I work for the largest global sourcing advisory firm (TPI) but I don't think that leads to inherent bias in considering this question.

Years ago, when I was setting up a subsidiary company, I had some tax and legal questions to resolve. In working out how to progress the resolution, I knew that neither I nor anyone in my company had the skills, knowledge or experience to deal with the issues effectively. So, I had to find someone to help, but how could I choose from the myriad of options available?

Fortunately, I was given some guidance by someone far more experienced than I was. That advice consisted of three parts.

• Find a company who deals with this topic (setting up a subsidiary) regularly, i.e. hire a professional guide who makes a living doing this.


• Find a company with a solid process for guiding you through the exercise, i.e. make sure your guide has a map, knows how to use it, and actually uses it so you can manage the unexpected detours.


• If you've still got multiple choices, choose the one who has specific domain knowledge in your exact circumstances of setting up a software and services subsidiary in Australia for a Canadian company .

When I went to apply this guidance, I was shocked. It pointed me to a firm that charged outrageous hourly rates. Naturally I challenged both the firm and the person who gave me the guidance.

And that was my first lesson in the difference between unit rates and total cost--you must consider the productivity of the people and also how they will leverage your own productivity. In the end, I went with that firm--they used far fewer hours than I expected and they required my time for the appropriate tasks rather than the wrong things like checking the work they did.

I think the same guidance applies to many business activities, including sourcing complex services (IT or business process services are complex services because of the numerous joint client and service provider activities required to complete a task).

Very few companies do complex service sourcing on a regular basis. As such, it pays to ask yourself how external assistance can help you leverage your own skills to be both more productive and to also produce a better outcome.

While this can seem like admitting that you can't do everything, look at the people in finance who get in M&A experts or the legal department who bring in external counsel. Leveraging external skills and experience is a actually a sign of strength not weakness, and provided that you do it based on sound principles of how it helps improve your productivity and the quality of your results, then you are bound to make wise choices.

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Michael Rehkopf

Michael has more than 20 years of experience in operations, strategy and sourcing covering all major parts of the globe. He has also worked for Australian, Canadian, German and Japanese companies in both business process outsourcing and IT outsourcing.
Michael's industry experience includes the financial services, manufacturing, telecommunications and travel sectors. He leverages this diverse industry experience and his university background in accounting, IT and his Master of Dispute Resolution, to assist clients in the development of business strategies and the implementation of sourcing strategies. These include the associated evaluation, negotiation and organizational change.
Michael is currently a partner at TPI, the world's oldest and largest sourcing advisory firm. Prior to joining TPI, Michael held leadership positions with Siemens Business Services, OpenPlus International, Mitsubishi Electric and Netron.