How To Create Win Win Relationships In Outsourcing

Let me ask you ask question...

What defines a partnership in outsourcing today?

Now you may be coming from the “client” perspective where you are receiving services from your “supplier”. Or you may be the supplier providing those services to your client.

You may be an existing corporation or SMB, or you may be a startup or micro business.

But what is it that you consider should be the ingredients or attributes of that relationship?

You see, I believe there are critical attributes you need to establish if you are to have a true partnership.

When you have these, in the right order and with the right focus, then you will truly have a win win partnering relationship in outsourcing.

When you do not have this, when you do not establish a win win relationship, your ability to leverage the value of outsourcing will be greatly diminished.

Unfortunately however, the reality is that this second scenario is often the case.

Let me explain...

In one academic and industry study, it found that up to 55% of outsourcing could be considered marginal at best and only 20% of outsourcing was determined as “high performing”. 

Now before you try to shoot down these claims, because they are “big headlines”, similar research suggests that a lot of this has got to do with relationships.

So what do I really mean by this and importantly what are the critical attributes you need to establish in your outsourcing relationships?

Well we need to recognise that this is no longer the world of “master servant” relationships.

Those days are long gone and if you think they are not, well I just hope you get it very soon.

The world has moved on and we are now living in the age where collaboration and networks are key.

The ecosystem that your business is part, inter connects with your clients or your suppliers and we need to continually seek value with each other if a win win is achieved.

Sure, business cases and commercials are mandatory, however we need to think differently today to ascertain how we may work together to ensure mutual long term benefit – and that does not come from a master servant relationship.

So here are three things you need to do...

First, whether you are the client or the outsourcer, even before you have established a relationship, you need to adopt the mindset that partnering is critical and this means value for all parties.

Now value is often an interesting topic and I recall having many long discussions with my outsourcing partners over the years on this.

In my early days, it was typical to discover we all had differing views on what this concept of value actually was. But having these conversations afterwards and looking back is not how it should be done. You need to have this discussion up front and explore ways to create value together, not what each individual partner will bring to the table.

It is the collaboration that creates value – the convergence of minds!

Secondly having established the “intent” of your relationship and partnership - you now need to work on it.

Relationships just do not happen. They take constant work from both sides – after all, ask any marriage counsellor!

You will not always see eye to eye, but you have to establish a mature relationship, where you can freely discuss your differing views and then find commonality (note I did not use the word consensus, as for me I often think there are trade-offs with this – but that is just me!).

Third, you need to also be open and honest and recognise that circumstances change.

Businesses have new needs, disruption causes change.

Hence it is always a possibility that the strategic intent of your win win relationship in outsourcing has now become obsolete or redundant.

Perhaps you have outgrown the other partner. Possibly there has been a change. If this is the case, you need to maturely recognise that this is the reality and either take “marriage counselling”, i.e. have some sort of intervention, or separate.

Recently, I was providing some business consulting to a client who maintained a significant outsourcing relationship to do just that -they had gone passed the strategic use by date of that outsourcing relationship.

I have also recently advised one of my outsourcing clients where it was time to cease with us – despite the revenue hit that it would cause my company, it was time to split as we recognised that culturally and value wise, there was no alignment and this client just viewed us as the “servant” and thought they were entitled to interact with us in an entirely unprofessional way. (Now I know on the surface of this comment, it may not provide the full story – but trust me on this – we had enough!)

These are sometimes difficult decisions we all need to make from time to time.

However, when we do this and when we focus in the right place, set the intent upfront and be open and transparent, while being professional in our endeavours, I thoroughly believe we all can establish the sorts of win win relationships in outsourcing, regardless of which side you stand, in this age of collaboration.

If you want to learn more about this topic, or discover more broader business and technology themes, then attend The Startup Business's regular online seminars...

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