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Outsourcing Lessons & Tips

Spin-offs and divestitures are a lot like outsourcing

Your co-worker today can become your service provider tomorrow. Use a formal transition agreement to document service definitions, service quality expectations, charges, metrics, governance processes, assets, licenses and third-party contracts to support an orderly and manageable transition.

Multisourcing multiplies the risk of process gaps

Many handoffs increase risk and obscure accountability. Define the process interfaces in each agreement.

Don’t confuse people transfer with knowledge transfer

Requiring people to remain “in role” doesn’t matter if the processes change or responsibilities are shared. Require documentation and a knowledge transfer plan.

You never get a second chance to make a first impression

Outsourcing day one readiness is frequently underestimated. Define how the first invoice, SLA report, ticket transfer, purchase, etc. will work, don’t assume!

Outsourcing relationships don’t end overnight

Undefined termination assistance services are not enough. Negotiate a termination agreement to identify the services, service levels, and charges that apply while winding down.

Start governance early — before the bad habits begin

Create a functioning governance process before the contract is signed. It should guide transition, day one readiness, and contract training.

There’s no magic — understand how you get from current to future state

Most outsourcing deals describe a future state but don’t clearly explain how to get there. Include a detailed transition and transformation plan in all contracts.

Understand your switching costs

Short term, small outsourcing deals don’t give you flexibility if it costs too much to transition out of them. Understand and manage barriers to exit.

All outsourcing contracts expire

Be prepared for this certainty with an exit plan that guides your actions and preserves your options. It is never too early!

Outsourcing invoices are often incorrect

Invest the time in validating your actual consumption each month. Make sure there aren’t extra charges for services that should have been included in the rate/base.

Maintain flexibility when soliciting outsourcing proposals

You will get a better solution if you let the provider sell what it can deliver. The different bidders proposals can be normalized to help you make the best choice.

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