What You Need To Know About Governance Before You Outsource Jobs

Posted on 27. Jul, 2009 by admin in Business Outsourcing

It is not surprising that some internet marketing companies are not making a success out of outsourcing, while others have seen a tremendous success. When you consider outsourcing is there a trade secret or is good fortune to be given credit? How about outsourcing governance being one of the prominent reasons why outsourcing is so successful for some. It is widely accepted by businesses that customary procurement procedures do not help in deciding on an outsourcing partner. Neither do monetary negotiations which only lead to losing scenarios.

It is definitely true that a governance based model is a better recipe for success.

“What really is outsourcing governance all about?”  This is not a common question  that is asked. Outsourcing governance is essentially a combination of relationship management, service delivery management, contract and financial management. Many industry experts find the task of outsourcing governance much like that of a marriage counselor. Many years of field experience, professional training and knowledge of the latest trends help advisors to sort out issues between parties. Managing an outsourcing partner is a challenging task. It is not the same as administrating the in-house staff. An outsourcing advisor has the tools to sort out both the outsourcing provider as well as the customer. Outsourcing advisors understand ell the procedures including all the stakeholders in the meetings organised at the most basic level of the project and throughout the project. It is the absolute influence of the advisor rather than the authority, which is accepted by all parties to clear out false arguments and avoid the blame game. Outsourcing governance plays a major role to help avoid clashes arising from cultural differences and geographical distances.

Parties involved in an outsourcing contract have to build a proper rapport if they are to function as a team. An outsourcing advisor can help by discussing probabilities objectively as they have a thorough understanding of the dynamics of an outsourced relationship. Secondly, outsourcing governance helps in negotiating of contract terms through contract management. Outsourcing advisors have an in-depth understanding of the execution and management of contracted services. Thirdly, implementing the outsourcing governance brings with it the nitty-gritty of the trade secrets that are under financial management. Over time the best written contracts can develop loop-holes depending on how the business scenario changes. Finally, service delivery management is not just about Service Level Agreement (SLA). It can be drawn out and monitored efficiently by even other experts. It is the outsourcing advisor’s job to help the outsourcing partner to deliver real business value rather than just meet the metrics on paper.

The industry data pertaining to the percentage of loss of business due to improper outsourcing governance methodology is possible to be erratic. The fact remains that lack of outsourcing governance affects businesses by as much as 50% at times. Implementation of outsourcing governance can help secure long term relations and provide significant gains to company profits.

Tags: outsourcing, Outsourcing Governance, Outsourcing Partner