Outsourcing – ‘Why Worry About The Other Guy?’

There have been examples of outsource arrangements that have terminated when they need not have done.  They represent relationship and commercial failure.  One mark of a win:win arrangement is one in which the parties can innovate together.  Not many actually do that effectively even when the opportunity is there, so why not?

You could think of an outsource as having three dimensions, each of which must be in good health to reach true success.  A bit like a three-legged stool – take one leg away and it does not do what it should.

  • Financial: both parties need to be satisfied that the arrangements are fair for long-term success.  That does not mean being uncommercial or solving somebody else’s problems for them, but in the long run a win: lose will be likely to end up as a lose: lose which is difficult to recover.  Why would either party support and develop a relationship in which they are suffering financially?
  • Relationship:  people do business with people, and corporate relationship management is vitally important, as both sides require an environment in which reasonable expectations, openness, communication and trust are practiced.  It is a short step from failure here to an environment of adversarial behaviour and blame.  Few seek to do business, or more business with organisations in relationship strife.  This then often leads to bottom line disappointment, exacerbating the problem.
  • Reliability: both sides need to see the other as delivering.  On the provider side there are the obvious aspects of service and change delivery being on time and on quality, after all that is the heart of the business.  It is not a one-way street though.  Clients need to be clear and deliver on their strategy, product direction and plans for development of their own infrastructure.

Looking at an outsource arrangement in these three dimensions from the perspective of service provider and recipient can tell you a lot about how to get the best results and is good business.  Good business is generally profitable business too.

Note: This opinion piece was first published by Knadel Limited prior to the Catalyst-Sionic merger