Question

What is outsourcing governance?

Answer 1

OUTSOURCING:

An outsourcing engagement is usually a long lasting and complex transaction which bears a considerable amount of risk. A well recognized way to mitigate the risk arising from the shift of responsibilities between outsourcer and service provider is the constitution of a joint governance structure.

OUTSOURCING GOVERNANCE:
Governance of outsourcing is the set of responsibilities, roles, objectives, interfaces and controls required to anticipate change and manage the introduction, maintenance, performance, costs and control of third-party- provided services.

It is an active process that the client and service provider must adopt to provide a common, consistent and effective approach that identifies the necessary information, relationships, controls and exchanges among many stakeholders across both parties.

PRINCIPLES OF OUTSOURCING GOVERNANCE:

Balance stakeholder needs.

Companies that successfully outsource continuously "take the pulse" of all stakeholder groups to balance their needs over time.

Pursue stakeholder involvement.

Formal governance boards and steering committees are essential, but informal stakeholder involvement is the way successful relationships are built and maintained over time.

Seek cultural synergy.

One criterion often used when selecting an outsourcer is cultural synergy. Governance groups can achieve improved results by identifying and building on strengths both cultures share.

Drive out false agreement.

False agreement occurs when someone agrees to do something without any intention of actually doing it. Although not unique to outsourcing relationships, this can be particularly damaging to them.

Remember that the "customer" is not always right.

Governance group members must keep their minds open and reach across organizational boundaries to understand the motivations of all stakeholders.

Experience matters.

When governance group members are drawn exclusively from the client company, they begin with an experience deficit that puts them at a real disadvantage.

Avoid the paradox of alignment.

Alignment between the client company's goals and the service provider's actions has long been considered the Holy Grail of outsourcing.

SLAs aren't enough.

Service-level agreements are extremely important and should be continuously refined and improved over the life of the agreement. However, they must be augmented by other methods to ensure customer satisfaction.