Why Your Outsourcing Partner Can’t Ever Be Just Another Vendor…

By Jon Milward, Group Marketing Director, Northdoor

Financial services companies are probably the biggest consumers of IT outsourcing.  According to the World Retail Banking Report, 77% of retail banks now outsource at least one part of their business and common industry estimates show that outsourcing provides banks with a saving of 20%-40%, depending on whether processes are located locally or abroad.

Jon Milward

There is quite a range of outsourcing options and the popularity of the various models waxes and wanes in the industry.  But in truth there is a place for all of them – the skill is picking the right one for your situation and making sure you contract it in a way which provides the right level of control, flexibility, and risk transfer.

There are a number of good reasons for choosing to work with an outsourcer when it comes to managing and delivering your IT. For a start, outsourcing gives you the cost saving and access to expertise that is not always attainable in house.

Nonetheless, the outsourcing process is a two-way street. You may be able to outsource the work required, but not the responsibility. Essentially, you are responsible for both the outsourcing decision and performance.

Experienced customers tend to have stronger relationships with their outsourcing providers, and therefore are in a better position to deliver quality services through seamless collaboration with their outsourcing partners.

As such, outsourcing should not be viewed as a mere contractual arrangement, but the ability to build a real partnership with your supplier will help to maximise the return on your investment considerably. In other words, don’t underestimate the human elements required to build a mutually beneficial relationship.

Here are some helpful tips to ensure that the ‘human touch’ forms an integral part of your outsourcing governance.

• Make sure that your supplier is aware of your overall strategy from the outset, and also kept completely up to date as it develops. In a successful outsourcing relationship, your suppliers should act as an extended part of your organisation to help you deliver your business strategy, and so you should treat them that way, with regular updates and a steady flow of information.
• Build relationships with your outsourcing partner at multiple levels, meaning from directorship to account management and delivery. These mapped relationships will not only help the two organisations understand each other’s culture and values, but will also improve communications and rapport. Moreover, building a mutually understanding and supportive relationship will help to bring any problems to the surface more quickly, and also ensure that they are resolved more easily.
• Ensure that all of the responsibilities and dependencies related to the service delivery are made clear from the outset; everyone involved will need to understand who does what and when, as well as the dependencies between your company’s input and the ability for the outsourcer to deliver the services required. You will also need to consider the impact if any third-party vendors are involved. Any disruption on one part could disrupt the final service delivery, since these business processes may be interconnected and/or interdependent.
• Establish regular performance reviews as well as a clear issue escalation process to make sure that the business objectives and service performance levels are being met. It’s a good idea to set a monthly performance/operational review, for example, as well as a bi-annual contractual review and an annual strategic review to ensure that your suppliers are aware of any changes in strategy, and also to cement the relationship between both companies.

Also, by planning in these regular review meetings, issues can be escalated effectively and prioritised according to their importance. For example, there may be an operational and/or tactical issue that needs addressing, or in some cases a more strategic change might be required to keep the services aligned with the strategy.

All of these points lead to the same conclusion: an outsourcer should not be viewed as ‘just another vendor’. Instead, it should be considered as an important extension of your function or company. By building a relationship beyond the contractual setting, an outsourcer can be transformed into a trusted partner that can help you to achieve your core business objectives, on time and every time.