Friday, January 24, 2014

The Good Outsourcing Client

I’ve promised (in a prior post) to share my thoughts on why the outsourcing industry has proven to be such a serial under-achiever in terms of innovation and value to the Clients who trusted in the promises of leverage and focused expertise.  While I don’t want to “tease” the reader on this topic, I thought that I’d preface my comments with another/related topic.
What does it take to be a good Client in an outsourcing relationship?

I developed my views as I was leading the sales organization for a large outsourcing service provider.  And, I colored those views through my decade of experience on the Advisory side of the industry.  Ironically, that’s where I am today – advising companies on their strategies for whether/how to “buy” services as an alternative to building/running themselves.
You may have noticed from prior postings that I am promoting a view that the sell-side of outsourcing is flipping in dramatic fashions as Clients change their buying strategies.  Some service providers will make it through the inflection; others will fall away.  Of more interest, new entrants will be taking flight.  But, I digress.

Here are my top ten ways that an outsourcing Client can/should behave to get the most value from their contracted services agreements:

  1. Economic Game Planning – transparent sharing of expectations, assumptions, and tactics; open book “Account Planning”
  2. Respect the Boundaries – defined services at defined prices; not “anything goes”
  3. Governance in Good Times and Bad – cadence is essential; tiered points of interface; informal forums
  4. Zero-Tolerance for Ethical Lapses – mistakes happen / deceit cannot
  5. Bi-Directional Management System – balanced energy on internal stakeholders and external providers
  6. Find the Provider’s “Nexus of Influence” – where are resources controlled and decisions taken?  It may be in surprising layers of the organization.
  7. Become a Storyteller – celebrate hard by recognizing excellence, and enabling contextual awareness
  8. Don’t Fish for Tuna in a Lake – recognize limitations in scope and scale
  9. Know if You’re a Lighthouse – early adoption of new services carries a different risk profile
  10. Always Serve as a Reference – the most valued lever, when happy and not

As I’ve said to everyone who will listen on this topic, success pivots around people. Even for highly-automated processes, it’s a people industry.  All service-based relationships rely on passionate, engaged people who are committed to success – on both sides of the buyer-supplier relationship.
As we segue to the “As A Service” economy, many Clients of outsourcing will be looking at their provider relationships with the question: are you part of my past, or an enabler of my future?  Living by these ten principles will provide a solid foundation for making that decision as an informed buyer.



  1. Peter, what are your thoughts about where and how C-leaders of fast-growth companies will first learn and the adopt a more productive approach to sourcing? There sure seem to be adequate signs that there is a blind spot to this choice over paying more fore mediocrity on the payroll. Thanks, Joe

  2. Joe;

    In my experience, the learning is coming foremost from our experiences as consumers. All of us, as consumers, are being conditioned to expect (and enjoy) the virtues of a real service experience. Those expectations are cascading quickly to the Corporate world. As such, the questions are being asked ... and the expectations are defining the agenda for a different form of sourcing.