I attended the Detroit Auto Show a few weeks ago, which I’ve been told was the best attended show since 2005. What an amazing forum of product, engineering and innovation, providing an invigorating look to the future of manufacturing and a fitting backdrop for my optimistic predictions!

As the saying goes, knowledge does not simply fill a clay pot, but is rather a raging fire that must be continuously fueled. Innovation is no different.

Outsourcing services providers continually work to improve operational process and execution, which drives performance. That is foundational in any outsourcing relationship. Once performance is mastered and sustained, innovation becomes crucial. Three strategies that a provider can leverage to bring incremental business value to a client’s business include “de-siloing”, providing unique insights, and conducting assessments:

• “De-siloing” means offering services that cut across multiple capabilities. For example, a provider running a loyalty program for an automotive client should also target a client’s technical support or customer care opportunities and link the learnings across those value chains together.
• Providers can offer new services that provide unique client insights or touch, such as unique insights to customer behavior by leveraging analytics. Partners can drive more traffic to parts and service, enhance reporting for supply chain and parts performance, and most importantly, boost performance at a dealer level.
• By conducting thorough assessments of client processes, providers can identify the client strengths and gaps in supply chain or dealer support. The provider acts as a trusted advisor offering ideas to improve the client’s operating model.

Mike Tyson once said, “They all have a plan until they step into the ring and I punch ‘em in the face.”

That, to me, captures the feeling of the shocks to the global economy over the past several years. Mere survival forced all segments of our economy to become more efficient and laser focused on innovative approaches to customer acquisition, retention, and loyalty. The Detroit Auto Show demonstrated how auto manufacturers are investing in delivering unparalleled performance, better understanding their customers and supply chains, and innovating to distinguish themselves from competition.

This is where outsourcing providers can truly provide strong value―by applying best practices from deep and varied domain expertise to create differentiators for their clients. Through 2012 and beyond, I envision that clients will partner with providers on core processes to accelerate innovation, “variable-ize” cost in their business, and to compete.

As the recession or “economic flatness” continues, special interests are lobbying to bring jobs back to the United States. While we still see strong interest to outsource, there is an increased openness to bring key business functions, or work that enables competitive strength back to the United States, or closer home in nearby locations such as the Dominican Republic. Clients look to providers to have a deeper understanding of their business model, deliver excellent performance and provide unique insights that help grow revenue, reduce expenses, and streamline processes.

Keeping operations onshore gives clients improved control over their business, driving higher quality and efficiency, but at a significant cost. However, as processes become more systematic and measured, near and offshore solutions can provide cost arbitrage, and potentially open new global markets. I predict that progressive manufacturing companies will strike the optimal balance of the two models to deliver cost effectiveness while optimizing quality and control of key processes.

Today, consumers communicate in real time through text, shop online, and have little use for a mailbox. The Millennial Generation (aka Gen Y) that is now entering the workforce will consume information, products and services increasingly through 24/7 online channels, especially social media.

Within the manufacturing sector, we therefore see social media, digital marketing, mobility, analytics and reporting as just a few key enablers. Outsourcing providers can make stronger inroads into their clients’ businesses by leveraging these enablers to expand channels of communication targeted at specific audiences. Moreover, those providers who have the ability and the agility to create customized enabling solutions that can close gaps in their clients’ processes and performance will gain traction in 2012.

The future of outsourcing looks bright in the coming years for those who are prepared to invest their time, talents, and resources to boost competitive advantage for their clients.

If you enjoyed reading this Crystal Ball 2012, here are some other blogs in this series from other Minacs leaders:

• CEO Deepak Patel’s vision for 2012 and beyond for global outsourcing in this post.
• President-APAC, Milind Godbole sticks his neck out as a veteran outsourcing practitioner in this post.
• President-NA & Europe, Anil Bhalla offers insights on technology trends that are changing business in this post.