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In long-term relationships, the key component for success
of the relationship is best laid during negotiations,
which lead up to the signing of the Service Level Agreement.
Some of the common practices employed for a successful
management of outsourcing relationship have been listed
below.
1. Relationship between key management personnel:
If there is a good understanding and strong working relationship
between the key management personnel of both teams, then such
relationships often tends to last long. Research on outsourcing
success has indicated that peer friendships and working chemistry
with one's counterpart in the other company has been an important
factor in long term relationships.
2. Measurable Objectives:
The objectives to be achieved by outsourcing
must quantifiable and must be established as criteria
right at the start of the contract. If the customer
can compare the performance with the pre-established
objective, then the benefits of outsourcing would be
clear. The vendor would know where they stand in meeting
customer expectations.
Well-defined performance criteria have quantifiable objectives,
service quantities, quality, customer satisfaction and are
measurable against other providers.
3. Forming special committees:
Successful outsourcing relationships involve setting up of
special executive committees or boards that draw out the best
strategies for smooth & effective handling of outsourcing
relationship. Identification, resolution and rapid escalation
of issues are a key responsibility of this team.
4. Incentives and Penalties:
The provider is encouraged to meet or exceed customer expectations
by establishing performance based pricing. When performance
exceeds the criteria, the incentives apply and when they fall
short, the penalties are imposed.
5. Periodical review meetings:
For a successful software
outsourcing relationship, it is better to have frequent
formal review meetings. These meetings can discuss what
both teams are working towards and a high level view
of the future goals and objectives. Product reviews
and deliverables can be discussed at such meetings.
6. Training vendor personnel:
The vendor personnel need to have ongoing training so that
they align their business goals to the business objectives
of the customer. The issues driving the clients needs have
to be understood and the vendors' service has to relate to
them.
7. Bridging cultural differences:
Both parties to the outsourcing relationship will have their
own culture. These differences have to be recognized and bridged.
Organizing social events, education on company background,
participation in others' quality programs, etc are some of
the ways to bridge this gap.
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