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Growing dissatisfaction
There is growing dissatisfaction with outsourcing relationships
as per research reports. This dissatisfaction can be attributed
to a number of causes, related to both the parties' to outsourcing.
- Unrealistic expectations of the customer due to over promising
during sales process.
- Divergent interests of the customer and the provider.
- Inflexibility to align the outsourcing relationship to
the change in business needs.
- Cultural gap.
- High rate of turnover of people managing the outsourcing
process.
Outsourcing is not just a contract signed between two parties.
It is a relationship, which has to be managed from day one
of the contract. Successful outsourcing relationship requires
a lot of professionalism and good management. While fundamentals
of good management don't change, the way they are executed
changes to a great extent.
Importance of outsourcing relationships
Management of outsourcing relationships is important
because it ensures maximum value from the investments
made and enables to give world-class services to its
customers. World-class service can be provided only
if the IT vendor delivers. In effect, the software
outsourcing service provider becomes key to the
business success of the outsourcing client.
Managing the relationship right at the start
The foundation of successful management of an outsourcing
relationship is laid when a company begins to communicate
to potential suppliers about its intention to outsource certain
functions.
Successful management of outsourcing relationship depends
on the way the requirements are defined, the way the objectives
are described, the way a vendor is chosen, and the way a Service
level agreement is written. The people who are selected to
manage the relationship are also of prime importance. Continuous
improvement should be defined and expected.
Managing successful relationships requires a new breed
of managers
Outsourcing success depends a lot of general management skills
rather than technical or operational skills.
- Negotiation skills: To negotiate on a day-to-day basis
to keep the services provided in line with the services
required.
- Communication skills: Outsourcing managers are basically
a bridge between the organization's business needs and the
providers' services. Communication becomes the essence of
a successful outsourcing relationship.
- Business skills: To continually understand the changing
business needs and aligning the services as per the business
objectives.
Involvement of top management
The top management must be involved in reviewing the relationship
and giving it a proper direction. Senior management plays
a critical role in communicating the reasons and results of
outsourcing across the company.
Managing outsourcing relationships like any good management
is hard work. It requires constant attention. It requires
an expectation of continuous improvement and a proactive approach
toward achieving it. Both partners play an equally important
role.
Future of Outsourcing
Outsourcing is here to stay. In a highly competitive business
environment, companies need to stick to their core competencies
and go for strategic outsourcing to reduce their costs and
become more effective in their services to their customers.
Outsourcing will be looked at as an essential business skill.
A companies' success in managing their outsourcing relationship
will determine its business success.
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