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.

Here are some of the common concerns:

Difficulty in monitoring vendor accountability when dealing with multiple outsourcing environment

Outsourcing technology from multiple vendors can cause finger pointing when things go wrong. The solution does not lie in using a single vendor. The answer lies in asking each outsourcing vendor the question about how they will deliver top quality outcomes without compromising the service levels of the business.  In the IT industry this would mean, the outsourcing vendor should have expertise across a range of software, hardware, and applications.

Loss of control of budget, resources, technology utilisation and vendor selection by using a single vendor to manage a multi-vendor environment

Outsourcing tasks to a single vendor who has the size, expertise, technology and demonstrated ability to deliver the goods, can actually result in greater control of tasks and deliver measurable business results. Have a frank discussion with your outsourcing vendor about their commitment to minimising commercial risk, minimising operational and administration involvement and providing consistent service levels. Your outsourcing vendor should be able to provide references, outline cost savings, and define how and when your staff have the final role indecision-making.

The difficulty in deciding what to outsource and what to do in-house given the rapid growth of technology

Technology is growing at such a pace that what is current today becomes obsolete tomorrow. You need an outsourcing partner who can adapt to your environment as your requirements change. Ask them if they offer a support management continuum that covers the range of support services- from an environment controlled by customers to a fully outsourced operation. You cannot predict the future, so you need to ensure that your outsourcing partner is ready to support you in any situation.

Outsourcing management of vendors will add a strain on the budget

Some of the main reasons for using an outsourcing partner include reduction in the demand for in-house resources, reduced support costs, faster turnaround, reduced risk of failure, greater user satisfaction, improved visibility, support quality control, and increased flexibility to deploy resources as needed. Organised this way, outsourcing the management of several vendors actually reduces costs and increase the value that technology brings to the business. Find out how your outsourcing partners plan to help you achieve a better alignment between business needs and service levels. Further ask them about the role their role in performance management to ensure that their performance is on target.
An outsourcing partner can slash workload and costs and raise productivity. Employee’s time can be allocated to meet core business requirements. Do your homework, find the right outsourcing partner, ask the right questions involve your staff in strategic decision making, and reap the benefits of outsourcing as your environments change and capabilities expand.