TPAs - Midlife Crisis?

Third Party Advisers (TPAs) have surely seen better days. The leader TPI launched TPI Momentum a year ago to also start working for sellers of outsourced service providers breaking their long tradition of advising only buyers of outsourced services. This Irish TPA says outsourcing is the silver bullet you have been waiting for but dont do it without their help. TPAs have also faced some criticism from insiders and outsiders about potential conflicts of interest.


Does the world need TPAs? I would say YES emphatically. Outsourcing advisers often bring a world of order and discipline and process and objectivity to a deal. Without them, some clients would really struggle with their outsourcing initiatives.


Can TPAs do a better job? Absolutely. My guess is that  for every good TPA out there, there are three mediocre ones. Many of them are leading their clients down the garden path to failure.


Can a client rely only on the TPAs to get it right? No. The client needs to hear the vendor views in equal measure. The real interesting practical ideas (which are implemented)  often come from the vendors. While the TPAs have seen many deals and can bring best practices, the vendors have actually executed the post-deal projects and know what happened well after the TPA took their money and kissed goodbye; we all know experience counts more than knowledge.


Are TPAs needed on every deal? Of course not. Use them for complex stuff. Dont use them if you just want their templates. Any good vendor can give you those and you can pick and choose what you like.


Like all management consultants out there, TPAs are feeling the pinch from the struggling world economy. They are often dispensed with, sometimes with disastrous outcomes. Some other clients have smartly saved money that would have gone to TPAs and retained some of their own people instead.


I think TPAs will bounce back since outsourcing is here to stay. However, I think there will likely be a shakeout which will see some average firms disappear. Some of them will transform themselves and create for themselves a more accountable (for outcomes rather than deals) role.