Nearshore Americas

Outsourcing Contracts: Six Ways to Preserve a Good Marriage

Building better relationships between outsourcing providers and customers is an enduring topic probably because relatively few “marriages” go as well as expected.

Steve Semerdjian, a partner in the New York office of Loeb & Loeb LLP and Chris Nuttall at PA Consultingran an informative panel discussion last week at the Sourcing Interests Group Leadership Summit on this subject by directing the focus on ways to improve the contractual process. Here are our top six take-aways from that panel discussion:

1. Both sides: Go into the relationship with the sincere commitment to make it a “partnership” and use language to that effect. Both parties should recognize that a high-performing outsourcing relationship will enable the client to become ‘best in class’ and be on a course to generate more value.

2. Provider side: Understand deeply and thoroughly what the customer wants and most importantly know what the customer’s customer (the business associate) is desiring. Cultivate a sense of “customer intimacy” so if things start to veer far off-course, the tightness of the bond will “right” the relationship.

3. Both-sides: The contract should include drivers that identify key contract objectives, especially in ways the program will manifest into higher levels of efficiency. In many instances, this is prime territory for the provider to demonstrate its strategic value.

4. Provider-side: The provider should have a robust capacity to adapt and attend to the unique needs of the client, whether or not that client is all that capable of articulating in one voice its evolving needs. Too often the provider is approaching the relationship in a generic fashion without truly committing to understanding the unique variables and conditions current in the client’s market environment.

5. Client-side: To minimize risk, consider entering the first year of the relationship on a “time plus materials” basis to establish a true operational cost baseline. In successive years, the contract can be amended to include more strategic targets.

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6. Both-sides: The best contacts are those that live forever in a drawer because both parties remain satisfied with the mutual gain they are deriving from the project.  In other words, strive to invest in the relationship and attend to it – by having an open and forthright dialogue that creates a “culture” of alignment between provider an customer.

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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