There’s a growing recognition that an outsourcing initiative is a journey. Executives of some of the world’s leading companies have said that to me when I interviewed them about the successes and challenges in their outsourcing arrangements.
A question I’ve asked when interviewing literally hundreds of outsourcing execs is what they would do differently the second time around if they had an opportunity to start over (from the initial negotiation phase).
It’s hard to believe, but a few (very few) say they wouldn’t do anything differently and that everything went smoothly and according to plan. Many reply that they actually did get that second-time-around chance as they renewed their contracts and corrected the aspects that weren’t working very well or that they plan to tweak some things at the upcoming contract renewal.
Others tell me what they now realize in hindsight would have helped them avoid the costly challenges they encountered. They’re the people that others embarking on an outsourcing journey need to listen to.
I think it’s like going on trip and taking along a travel guidebook that offers insights about the history of the area and points out the major tourist sites and pitfalls. You know, things like: it’s worth an extra day to take the side trip to see the . . . the cottonwoods along the riverbank are two centuries old, but make sure you don’t go there during the summer months if you’re allergic to . . . the best place to purchase beautiful native handcrafts at reasonable prices is . . . make sure you wear comfortable shoes because there are eight flights of steps to the view at the top . . . and be sure to avoid the risks of eating at Taco Joe’s.
Here’s some outsourcing “guidebook” insights I’ll share with you. Among the most frequently cited challenges that execs tell me they would do something differently to avoid if they had an opportunity to start their deals all over again are:
- We didn’t select the right pricing model
- We didn’t build enough time into the transition / migration phase to accommodate unanticipated challenges
- We didn’t have any contractual or financial incentives to motivate the service provider to bring us the level of innovation that we were counting on
How about your own outsourcing experience? Did you have a good sense of how your company would need to change after starting on the outsourcing journey? Were there things you ignored or misunderstood or incorrectly assumed that came back to haunt you later? Did you make decisions that were ultimately self-defeating?
Is there something you would do differently the second time around – and if so, where would you go to get the insights about the best way to structure your outsourcing arrangement?
Since 1998, freelance writer Kathleen Goolsby has studied outsourcing relationships’ successes, failures, trends, and best practices. She has interviewed more than 860 executives at buyer and service provider companies and is the author of “Critical Requirements for Building and Sustaining a Successful Outsourcing Relationship,” a chapter in Global Outsourcing Strategies: An International Reference on Effective Outsourcing Relationships (December 2006, Gower Publishing). As a freelancer, she also currently serves as the Senior Writer for Outsourcing Center (whose its parent company is sourcing advisory firm, Alsbridge) and has authored dozens of articles as well as white papers. In a past role, she was editor of Outsourcing Venture (a former print publication). You can contact Kathleen at ksgoolsby@gmail.com.
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Why are the ones who made mistakes the ones to listen to, more than the ones who believe they got it right from the first go? How do you know that isn’t the equivalent to asking people whose marriages have failed what they have learned about creating a good marriage, but failing to ask the people whose marriage was successful what they did to make it so? Wouldn’t it be equally worth asking those people who claim to have done it well just what they did to make it so successful? Might a comparison between the responses of the two not provide better data than listening solely to those who didn’t ‘get it right’?