The Rational Outsourcing Blog

Thursday, November 09, 2006

An useful article on Outsourcing Performance Management

I was recently reading an article on Outsourcing Performance Management written by Sam S. Adkins in the Workforce Performance Solutions Magazine at While I don’t agree with all his points, and especially with some of his prioritizations, this is a very useful article to read on this topic. My favorite quote is the following. I could not agree with it more.
Probably the most important component of an outsourcing relationship is trust. Trust is a two-way street and has to be cultivated by both parties. Trust is built by setting realistic goals and expectations and by having objective ways to measure success.
Building trust is a process. It occurs naturally when providers know that their service matters and that what they do is directly aligned to the customer’s business strategy. In an outsourcing relationship, trust is built by being willing to compromise and by being dependable, predictable and ethical.

The author also provides a list of “10 Ways to Be SMART About Outsourcing”. I have quoted the top three, you can read the rest at
1. Do your budget homework before you sign the contract. Outsourcing may not be cheaper, and cost savings may not occur. It is a common misunderstanding that outsourcing automatically cuts costs. It is possible that outsourcing will actually increase costs, but achieve one of your other goals.
2. Accept that outsourcing is usually a one-way street. Once you outsource a function, you will probably not be able to bring it back in-house. It is almost impossible to bring a function back in-house once your head count and operating budgets are reduced. If you become unhappy with your outsourcer, your only option may be to select another outsourcer.
3. Resist the temptation to change project deliverables in midstream. Cost is fluid while the project is fluid. Unexpected change, second thoughts and spontaneous creativity can be expensive. A really good way to frustrate an outsourcing partner is to constantly change requirements. While it is rare that an outsourcer decides not to negotiate a new contract based on this, it is common for them to bump the prices on the next contract in anticipation of constant change.

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