I recently switched to a different dentist – but not because I didn’t like the prior one or the dental care he gave me, nor did the switching have anything to do with the prices he charged. I left because of the hygienist and the receptionist in his office. It’s a situation very similar to what many buyers experience in outsourcing relationships.
I have some non-dental health issues that affect my dental treatment and require some special considerations at the dentist office. These issues and necessary workarounds prevent a dentist and his staff from treating me the same way they treat other patients. There’s no doubt that the prior dentist’s hygienist and receptionist were not happy that treating me necessitated veering from their routines. Their body language clearly reflected they were irritated.
When I interview outsourcing service providers, one question I always ask is: how does your company differ from its competitors? It surprises me how often I hear responses like: We have best-in-class technology, the most effective methodologies, domain expertise, etc.
They’re like the marketing comments about services at the dentist’s office: “We have equipment for making crowns right here in our office, so we don’t have to fit you with a temporary crown and send off to the lab for a crown and make you wait for weeks before returning to get the permanent crown. Plus this solution saves you money because it streamlines the process.”
Few outsourcing service providers answer my “how-does-your-company-differ” question with something like: “We put our efforts and investments into ensuring this will be a successful long-term relationship.” That’s a differentiator. But it shouldn’t be. After all, it’s a basic foundation that enables outsourcing to succeed.
As CIO recently reported, a KPMG survey of 450 CIOs revealed that the majority of respondents say that IT value tops their agenda for outsourcing now, even more than cost optimization, and they are looking for transformation.
The days when IT was seen merely as a way of improving efficiency seem behind us. These days, CIOs expect IT to contribute directly to realizing the business strategy and to have a central role in management.” … Outsourcing providers, consider yourselves duly noted.
Those kinds of outcomes in outsourcing – anything not commoditized – don’t happen unless there is a strong, mutually beneficial relationship. Just as I switched dentists because of the poor relationship with others in the office, outsourcing buyers switch providers if the relationship isn’t satisfactory on all levels and throughout the life of the contract.
The parties must establish their relationship approach up front. What causes companies to veer from that path? Is it that the buyer’s questions in the RFP focus too much on the solution and capabilities? Is it that the service provider doesn’t understand how to convey in the RFP and negotiations what its relationship approach will be? Is it that the parties don’t know how to establish a relationship when trust is not yet built? Do they not understand how to communicate their expectations of each other? What do you think is the root cause?
There likely would be fewer outsourcing failures if “efforts to ensure a successful long-term relationship” were the norm instead of a differentiator.
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 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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As with any relationship whether its companies or people, an ongoing interaction is neccessary for the relationship to continue. If you think about a friendship you had at some point in your life where over time, you stopped calling one another often, then it became periodic, next thing you know, you have not talked in a year or two.
I think the same is true for outsourcing relationships. During the sales cycle a service provider is frequently speaking with and possibly meeting with their client, working at building trust and explaining the ways that they can help their client. This typically continues during the early stages of the relationship until things get “comfortable”. The relationship is taken for granted because both parties are accustomed to dealing with one another regularly and no one is taking the time to interact with each other and find out what is currently happening in their world.
I believe at the core of any successful outsourcing relationship you will find that there is a personal connection between people from both parties who regularly interact and maintain a friendship/relationship. In my opinion it’s people who are at the heart of a successful outsourcing relationship – not service or product.