With most companies now into outsourcing, it is inevitable that for some companies, there will be some problems in the outsourcing relationship.
It does not matter if the business is big or small; somehow after the signing of the contract, the client does not have enough experience to make sure that the provider meets their expectations. And they are not even sure if they are in a win-win situation in cases that seem vague and were not clearly defined during the negotiation stage.
Some companies appoint their internal manager whose process under him is being outsourced to manage the outsourcing relationship. In an article in Outsourcing Center dated October 15, 2010 it says “managing outsourcing relationship compared to managing in-house services is a completely different kettle of fish – or a different ball game..” quoting Tim Stacey, Managing Partner of Spice-ITSM.com, an independent provider of outsourcing governance services abroad (his firm is just one of the few offering this type of service globally but more on IT managed services).
For one, an internal manager does not have the experience in delivery services or familiar with the different kinds of contracts (including certain terms and conditions), service level agreements of various types of industries and thus, does not have the benchmarking experience to know what the best practices are in outsourcing relationships. Second, instead of his time being freed up (because of the outsourcing) so that he can focus on the core activities of his Company, his time now is being eaten up by a responsibility for which he has limited experience himself. Third, he will not be as objective as an independent consultant will be compared to outsourcing it to a third party provider.
Thus, some companies turn to an independent firm or individual who can implement governance on the relationship management between buyer and provider.
This is a new service which as far as I know is not yet being offered here in the Philippines. To illustrate clearly, the independent governance provider acts as a go-between or a middle man between the buyer and its provider in governing or managing the relationship between buyers and providers. And in terms of approach and the corresponding results, there are “different strokes” for different providers of independent governance. And the type of approach that a provider will use will determine whether the buyer’s expectations are met or not. For instance, there is a provider abroad which uses more of a procurement style approach. They have this software to measure performance of a particular buyer’s provider. According to this article in Outsourcing Center, this will not work since effective governance cannot be properly accomplished by software alone. And it is not just about cost saving but the ensuring of the delivery of best service and maintaining a win-win atmosphere paving the way for a smooth relationship between buyer and provider.
Instead of just a cost-focus or procurement approach, a better middleman is one whose approach is not just “operational but relationship-oriented approach” as the term is being used in that particular article in Outsourcing Center.
In a survey conducted by Vantage Partners through case studies, in-depth interview and survey questionnaires for almost 200 respondents representing buyers, providers and influencers shows that effective relationship management results to buyers satisfaction, service level agreements complied as to deadlines and deliverables, quick response to requests, greater innovation and thought leadership and the Company’s staff and executives having more time to do other work.
Michael Corbett, executive director of the International Association of Outsourcing Professionals (IAOP) says. “Essentially, all the promises in the world of a productive outsourcing arrangement won’t pay off if the relationship is poorly managed.” However goodwill alone does not bring about good relationships: an effective management technique, good governance structures should be in place aside from skills and necessary experience.
With outsourcing becoming more of a necessity rather than just a choice nowadays, buyers and providers are working doubly hard to make the relationship work. However, even if the desire is there, buyers should especially take concrete steps and adopt the right strategies so that the Company’s decision to outsource will really bring in the “value for their money.”
Having an independent entity or person taking care of governance to handle outsourcing relationships is an important step toward the right direction – and that direction is towards a successful outsourcing relationship between buyer and provider.
Source:http://www.mb.com.ph/articles/284561/wanted-independent-governance-outsourcing
