Better Incorporate Third-Party Providers in Field Services

Better Incorporate Third-Party Providers in Field Services

The use of third-party field service providers is a hot topic for all equipment manufacturers. Outsourcing to a third-party provider continues to be one of the most inquired about business challenges that we receive in the TSIA Field Service research practice. This is a huge topic that is applicable to nearly every organization: 9 out of 10 Field Service organizations outsource some or all their operations.

Percentage of Outsourced Field Service Operations

Pie chart showing percentage of outsourced field service operations
LAER Effective Sales Coverage

When we dive deeper and look at the why, many people's initial thought goes to cost reduction. Let’s see what our TSIA Field Services Benchmark data tells us.

Bar chart showing percentage of why organizations outsource field services
TSIA Field Services Benchmark

The data reveals that cost is a driver for outsourcing; however, it is not the main driver. Lack of density in a region is the leading reason to outsource. It is followed by changing workloads and the need to respond to customer's tightening service-level agreements (SLAs). Cost only comes in as a reason to outsource 50% of the time.

TSIA has provided a number of insights on the topic on how to successfully partner with third parties for field service outsourcing, including, including a blog post and conference keynote.  

Real-World Examples of Third-Party Provider Integration in Field Services

At TSIA Interact in May 2021, a TSIA member and a partner shared their insights on partnering with third parties to outsource field services.

A Practitioner View: Scaling a Global Field Service Organization

NI, one of TSIA’s industrial equipment members, was tasked with scaling their global field service organization to keep pace with growth. Their customer expected global quality and consistency, proficiency, and high system availability, which required nimble scalability and cost-effective delivery.  

Historically, for support needs, staff was borrowed from other departments or freshly hired. Borrowing support could wear its welcome out quickly, and option two was expensive and not a quick fix. NI settled on the matrix below to help guide the decisions for staff sourcing based on volume and complexity.    

Matrix for staff sourcing based on volume and complexity
Using 3rd Party Providers to Efficiently Service a Dispersed Install Base -Anthony Bacak, NI

That takeaway from NI is, "Managed properly, field service labor partnerships are a win-win for both vendor and partner. Especially when scaling to accommodate install base growth and transitions."

A Partner View: Creating Efficiencies for Existing Resources

One of TSIA’s partners, Field Nation, discussed ways to make direct employee resources more efficient. The idea is that sometimes to do more, you must do less. The actions that you deem you must do less of are prime for outsourcing.

ROI model for outsourcing
Rethinking Utilization, Three Strategies to Improve Profitability -Steven Salmon, Field Nation

The image above describes the ROI model as a way to frame the outsourcing thought process. The key is to align the type of resource with the value, the location, and the variability of the work.  

  • Reduce travel time: Choose resources closer to the work so that your employees do not have so much non-value-added windshield time.
  • Outsource your low-value work:  Why are you allocating your highly valuable resources or your employees to do lower-value work? This is one of the areas where you should do less things that are not delivering a competitive advantage to your company.
  • Increase emphasis on "value-add": Have your field engineers identify cross-sell / up-sell opportunities, address training, utilization, or adoption gaps for the work you assign them and keep in-house.

Field Nation says that the result of this model is that ultimately your in-house employees will be more productive.

A Guide for Field Service Outsourcing

The Service Delivery Segmentation Pyramid featured below provides a methodology to guide choices for what to outsource, and the results can fund the upskilling and creation of the new Field Solution Engineer. The layers incorporate the points of both NI and Field Nation’s presentations mentioned above.

Field Service Delivery Segmentation Pyramid

Service delivery segmentation pyramid
Source: Hitachi Data Systems TSW Conference Presentation
  • Automation: Eliminate low-value activities to enable operational efficiencies at lower costs. Take the people out of the process.
  • Independent Service Provider: Outsource low-value-add simple beak/fix and installations. This is especially helpful in geographical areas where you have low density.  
  • Customer Engineer: Retain complex BREAK/FIX and Installations that require the expert knowledge of in-house staff. The second level can backfill here when workloads fluctuate.
  • Field Solution Engineer: Reinvest resources and create a full solution support that can add higher value and move beyond break-fix. These are the ultimate trusted advisors you want to have on your staff.

The base of the pyramid starts with the lowest technical complexity and value-added topics.  The first two layers are the “do less” side of the coin. Allow low-value, simple work to be outsourced and automate things that do not really need human intervention.    The top two layers are the “do more” areas. Focus your key talent on high value add work and the more complex and begin to build your expert, trusted advisor staff.The operational efficiencies and cost savings gained as you ascend the pyramid help self-fund the additional upskilling needed to develop the higher-level talent at the top.

What's Next?

Utilizing third parties for field service operations is here to stay. It requires focus and management to be successful.  

TSIA will be providing a research paper in the fall of 2021, which will go into more detail about the research conducted and subsequent strategies to help manage third-party providers.  

At our upcoming Technology & Services World Conference October 18-20, we will also convene a panel to discuss best practices, strategies, and future initiatives around using third parties for field service activities

For more information about Field Services and how membership can help you solve your most pressing business challenges, contact TSIA today.

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