Key management practice (Governance) outsourcing relations

Analytical discourse

According to researches of world analytical companies, growth rates of popularity of outsourcing grow and will grow at good annual average rates. And it occurs in spite of the fact that outsourcing is in an active phase of development more than 20 years. It is connected with the fact that process bears a number of tactical advantages which the companies use for increase in the competitive positions in the market.

One of key values of use of outsourcing is cost reduction. It is important, however, is not paramount. Large players of the market aim at implementing the strategic objectives using outsourcing now. Therefore innovations, access to new technologies – here what interests the companies which want to give some functions on outsourcing.

Suppliers of outsourcing become not just ordinary partners, but contractors experts who know all best offers in the market and are ready to deliver unique business services. Clients attract outsourcers to implementation of new solutions which could be applied in the business.

Main principles of the correct management system for outsourcing

The industry of IT services grows in the general segment of outsourcing most in high gear. Already very many companies are able to manage well practicians of IT outsourcing, made in these relations investments and experience, so why not to give them on outsourcing business processes – the personnel, finance and purchases?

The research KPMG shows that the companies, starting with fragmented models of provision of services, gradually move to the consolidated model (when the company uses identical management models for different business functions), and come to the optimized stage. Such trend is characteristic now of large players of business who using outsourcing adapt to a situation of global business services.

It is one of the most significant trends in outsourcing. Following it it is possible to reach economy at scales and also to increase efficiency and effectiveness of the company.

Being in the form of the fragmented model, the companies often work with several contractors. Gradually their quantity increases. The difficult environment of provision of services requires management and need of coordinating of activity of all contractors among themselves appears. Before the company there is a question: how to monitor the level of provision of services, to control the reporting?

Integration of a great number of providers is a serious call to a management system. All information in this case should gather in the internal central database. There the companies aggregate data from the multiple systems and begin to manage them. If there is no such base, then the company will meet difficulties sooner or later and will not be able to move ahead in the direction of hybrid model where are applied management practice, the so-called "Governance" governing the relations between the client and contractors.

Mike Bils, founder and president of SIG Governance Academy

In turn, it is extremely important to have well improved relations between the client and service provider, otherwise you will not be able to apply innovations and interact effectively.

Shows researches with which guests of an action were acquainted by Mike Bils that only 29% of customers can (are ready) to create trusted relationships with contractors. And only 53% of suppliers are sure of the opportunities in this area. Though at the same time more and more clients are interested in strategic initiatives, effective transformations and the innovative solutions. Therefore here not to do without cooperation and partnership.

There are several tipologiya of such relations:

1. Transaction type. It is characterized by the fact that service is provided to the client in the form of goods and the client in this case is interested only the price. Partners are not interested with each other and do not need trusted relationships.

2. Level with additional cost. The supplier is interested in business of the client and aims to learn about it more information. Partners discuss the service level, register terms, aim to change processes to work more effectively. The relations become confidential.

3. Specialized type. Partners should learn about each other as much as possible. The type is characterized by high standard of knowledge about the client and work of his business. Personalisation of processes is implemented and the high level of loyalty is reached.

4. Partnership. A striking example is consolidation of Canon company and HP for the purpose of creation of the laser printer. Complete interdependence, separation of responsibility, general organization structure and resources. The partnership purpose – to reach an innovation.

It is necessary to work with each partner differently. For effective partnership it is worth developing skills, to apply system approach to management of the relations. The more you are coordinated with the partner, the receive big benefit.

Thus, following the main practicians in the field of management of the outsourcing relations, and aiming at innovations, the company will be able effectively and successfully to keep outsourcing projects, building in them the development strategy.

It is prepared with assistance of ICL Services

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