Outsourcing based on mutual trust rather than punitive
service level agreements can create 20% to 40% difference on
performance indicators such as service, quality and cost, according
to research from LogicaCMG and Warwick Business
School.
"Power-based relationships are poor substitutes for trust-based
partnerships, given the high transaction costs of monitoring and
imposing sanctions and the limited goals that can be pursued by
both parties," says Andrew de Cleyn, senior vice-president, global
service delivery at LogicaCMG.
Ignoring the value of the relationship with your outsourcer and
failing to put the right people in place to manage it is
"tantamount to corporate negligence," says Leslie Willcocks,
professor at Warwick Business School and report co-author.
The report points out that a successful relationship doesn't happen
by accident. "It comes from planning, is steered by the right
people, structures, processes and measurement, and is earned from
performance," argues Willcocks.
The clear implication is the you need to perform regular health
checks on outsourcing relationships that you may have and use
techniques such as balanced scorecards and executive dashboards to
assess progress