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Signs of Informality in Outsourcing Relationships

by: Sarah Joson

Friday, June 29, 2012 | Outsourcing News |

Outsourcing Partnership has become too Informal?

As multisourcing and project-based transactions are gaining traction, large long-term operations are still common nowadays. These are the ones that date several years back before flexible service offerings were pitched to business executives, specifically the owners of small to medium-sized businesses (SMBs).  

Businesses that are involved in long-term outsourcing partnerships have a common denominator and that is the challenge of maintaining a professional relationship with their respective service providers.  In some cases, providers become too familiar and lax in their position that they tend to forget that they are business partners and not part of the internal team.

Frank Usher, Managing Consultant of Outsourcing-Center.com, shared six indicators that an outsourcing partnership has become too informal:

1. Metrics are based on short-term work instead of the operation as a whole. In meetings, providers are the ones who give suggestions.
2. Software and technology are not updated. When basic technology is not updated, other segments of the operation are disrupted or simply do not have the capability to move forward.
3. Budget is not allocated properly.
4. Providers wait for the clients to voice out their concerns before working on the tasks. Also, the pipeline is usually disregarded.
5. Standard operating procedures have become a thing of the past. Even if both sides have suggestions, they do not make the effort to collaborate and try the suggestions.
6. Company code, procedures manual, and contract clauses are out-of-date.

In general, the client should always be on the lookout for signs that the partnership is veering towards a relaxed relationship, which could lead to numerous issues that may affect the company in the future.

Since outsourcing relationships are far different from traditional ones, having a designated team to manage the vendor will help streamline processes and provide a monitoring system for both the internal group and the service provider. It will also help foster an effective environment wherein the provider stays proactive and the client is diligent in supervising the operation and making critical decisions.

All in all, it is safe to say that an outsourcing relationship that is too informal can affect the output of the operation. Keeping things professional on both sides can drive a business to its full potential.

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