View from the Buyside: Five Ways Vendors Go Wrong

Between 2006 and the mid-2010s, finance and accounting functions at The Home Depot were transitioning from Atlanta to offshore providers in India, similar to many other large companies in the U.S. Work was initially split between two companies, but later consolidated under a one-company master services agreement.

The transition occurred after the company had already established a structured outsourcing model with defined knowledge transfers and ramp-up schedules. Performance was more or less stable under that framework, according to Roberto Ladera, who spent 19 years with The Home Depot working on its outsourcing operations.

Years later, the company decided to consolidate its outsourcing initiatives into an increasingly popular centralized global business services structure, which resulted in operational disruption while Ladera was working as a finance project manager in the field.

Ladera was tasked with managing the workflow for outsourcing from the company to India and also supported the transfer of operations to the single company. His experience helped him identify where outsourcing vendors often go wrong.

1. Expanding Without Preserving Experience

When the move to a single-company was complete, the operation’s scope grew very quickly. Leadership structures changed and large portions of the offshore team were replaced, which caused an issue with knowledge retention, wreaking havoc on the momentum that had built for a decade.

Scaling headcount would bring financial gains, but as experienced personnel exited and new hires ramped up, service levels began to decline. Escalations were increasing and error rates were rising.

Ladera said headcount growth often does not offset the loss of domain expertise in complex environments, and those lessons were on full display during his tenure.

2. Inadequate Process Documentation During Transition

Aggressive timelines compressed knowledge transfer, and standard operating procedures were incomplete or contained inaccuracies stemming from rushed training sessions.

Processors executed tasks in accordance with flawed documentation, which very steadily led to quality defects and rework.

Stabilization required the creation of internal quality control teams within each finance vertical. These teams audited processes, corrected documentation and retrained staff. Documentation deficiencies created downstream operational risk that took multiple years to correct.

3. Elevated Attrition During Contract Reset

As performance pressures increased, offshore attrition rose. Newly hired staff faced steep learning curves in a high-visibility retail finance environment.

Turnover resulted in repeated retraining cycles, recurring knowledge loss and sustained instability. Even large global firms with established talent pipelines can struggle to maintain continuity during rapid scope changes, Ladera said.

In outsourced finance operations, retention directly correlates with service stability, he added.

4. Cultural Reluctance to Challenge Client Assumptions

Under the prior model, U.S.-based relationship leadership was more likely to negotiate scope or push back on unrealistic timelines.

During the consolidated engagement, relationship managers were more inclined to accept client demands without adjusting commitments. This led to overextension and performance degradation.

Vendor willingness to challenge scope, staffing levels or delivery timelines is a risk control mechanism. Over-commitment without capacity alignment increases failure probability.

5. Over-reliance on SLA Enforcement, not Relationships

Service-level agreements addressed performance credits and penalties, but leadership reached a crossroads when weighing the benefits of actually enforcing the measures. As metrics deteriorated in the early years of the consolidated agreement, leadership initially enforced credits aggressively.

This strained the vendor-client relationship without materially accelerating operational recovery.

Stabilization improved only after leadership focused on documentation repair, governance discipline and staffing continuity over penalty enforcement. Once operations normalized, performance metrics rebounded.