to become the one-stop shop that their customers require. In recent years, downsizing has been a major focus as large corporations try to maintain competitiveness and solvency. Today, partnering makes more sense for large companies so that they can maximize their labor pools and capitalize on their partners talent to fill specialized client needs.

For service firms to sustain and grow their businesses, strategic partners are crucial to their success and viability with their customers. If a solution provider cannot meet the total needs of the client in this highly competitive market, it runs the risk of losing that client over time to competitors that can provide expanded services through better strategic partners. With every new deal that is completed between strategic partners, the relationship builds, evolves, and leads to new business with a heightened sense of trust and reliability among the team members. Trust among the team players is paramount to creating a successful partnership.

Strategic Service Partnering Mind-Set

A service firm must truly embrace partnering as a core way of doing business if that firm wants to reap the benefits, rewards, and revenue of such an opportunity. The service firm must promote a win-win attitude and choose its partners wisely with growth in mind and strategic advantages in place. Otherwise, strategic partnering will not lead to the desired goal that management is expecting.

If the service provider embraces partnering, it will earn a large share of its revenues through a variety of partnering channels and arrangements. Well-planned strategic partnerships create sales opportunities through the identification of complementary service offerings and add-on services. Chapter 6 covers the topic of service line and service offering creation in detail, and should be considered a complement to this chapter.

Strategic partners can develop highly successful programs incorporating each companys services into a larger service offering for new or existing customers. Partners can exploit particular area(s) of expertise in each organization and leverage those skills for new business. In general, strategic partners find new opportunities through the salesforces that they share. New revenue opportunities are created in a symbiotic way where each partner benefits from the other partners expertise and customer base. These benefits include the following:

Increased market share with combined services

Decreased capital expenditures for R&D and employee training (reduced need to build internal service skills and support infrastructures for some services)

Increased value to clients through additional services

Better economies of scale Expanded geographic areas of client coverage Decreased costs of sales lead generation Increased use of low/no cost external salesforces

Geographic Types of Strategic Partnerships

Strategic partnerships can be formed with local, regional, national, or offshore companies based on the service offering needs of the partnering company. When selecting a geographic partner, key considerations include security, communication, speed, quality, and price. For example, it may make better sense to partner with a company in close proximity if the amount of face-to-face communication for the particular service is significant. However, pricing concerns and the size of the job may prohibit use of a local partner. Also, the intention of most geographic partnerships is to expand service offerings into new territories with less investment. Make sure you understand the objectives you are trying to accomplish, and then select partners who best enable those objectives on a variety of levels, including geographic location and servicing capabilities.

In todays professional services marketplace, rarely is any one provider equipped to furnish the complete range of specialized services that its clients require. Ad agencies went through merger mania in the 1980s and 1990s because their clients required them to provide every service imaginable. This was due in part to globalization of corporations and their desire to reduce the number of vendors they managed because of administrative costs and perceived ability to achieve volume discounts. Supply side partnering makes sense for professional services firms that do not want to carry the financial burden of funding employees for specialized or low demand services. These professional services firms can tap a partner when needed for specialized services and still make a profit via a referral fee or other similar arrangement.

Large companies demanding a broad array of services geographic coverage from the professional services firm pose challenges to the growing firm. Strategic partnering enables the growing firm to focus on its core services and conserve its capital while at the same time creating powerful alliances and opportunities to expand and build the firm. If a solution provider cannot meet the total needs of its client in this highly competitive global economy, clients will look elsewhere to have their needs met. More than ever, supply

Supply Side Partnering

side partnering makes sense and helps partners leverage their combined skills when necessary.

Globalization and Service Partnering

The Internet and its digital convergence of information and communication technologies, such as e-mail, instant messaging, video conferencing, and voice-over Internet protocol (VOIP), have enabled companies to extend their reach for strategic partners beyond their borders. At technology trade shows in the United States, it is not uncommon for offshore companies to send their top professionals to develop strategic partnerships with U.S. technology companies. Over the past 10 years, the rapid expansion of technologies mentioned earlier has enabled companies to transmit work to distant locations instantaneously and receive completed work without delay from transportation. With a growing demand for complex and specialized services, U.S. companies need an ever-growing pool of talent and manpower. Certain areas of the world such as India, Russia, and China offer a wide range of high-quality talent where significant numbers of engineers are churned out every year from top schools comparable to MIT and Stanford. This global workforce is highly trained and well educated and has strong work ethics. Many global technology companies such as Microsoft and Cisco have developed corporate partners and technology campuses in India to augment their U.S. operations. Microsoft and Cisco have established these technology campuses to create a technology beachhead for future growth. IT workers in the United States cannot fill the increasing demand over the next 10 years. Exhibit 8.1 shows the approximate rates and workforce sizes in a variety of offshore markets.3

In the 1960s and 1970s, the communication infrastructure and technology were not adequate to enable service-based partnerships to work. U.S. corporations moved manufacturing offshore to cut costs in the 1970s and 1980s. Real-time, close, collaborative communications between U.S. offices and their foreign manufacturing counterparts were not necessary for the manufacturing process to be successful. Service-based industries require constant communication between partners. The convergence of Internet-related communication tools has enabled companies to manage offshore professional resources in a way that was not conceivable in the 1960s, 1970s, and 1980s. The emerging era of digital globalization has transformed the way that large global project teams collaborate. Global project teams collaborate over the Internet with digital white boards and conferencing tools in real-time, making it feasible to grow new workforces in dispersed locations. Large service-based projects can now be handled by multiple teams in more than one country or geographic area through global partnering and using Internet-related communication tools that did not exist 10 years ago.