Over the past couple of years, I have noticed that organizations
engaging in outsourcing activities are increasingly willing to rely
on service providers' standard service descriptions. The main
driver of this trend appears to be tight budgets. At a time of
economic uncertainty, there is less capacity for rigorous review of
a service provider's standard service descriptions and service
levels. Lacking internal resources, customers are increasingly
relying on service providers' expertise to fill in the gaps. A
second factor may be a form of complacency. As customers accumulate
a history of positive experiences with successful outsourcings,
they may become less vigilant about potential problems in new
outsourcing relationships. In any event, it is clear that many
customers are willing to accept service providers' assurances
that the standard descriptions and service levels "work for
However, customers do so at the peril of the outsourcing.
A few years ago, the foregoing observation would have been
superfluous: it would be harder to think of a more obvious
requirement in the context of an outsourcing. While organizations
engage in outsourcings partly to benefit from the expertise of the
service provider, it is clearly essential that both parties ensure
that their expectations for the outsourcing are fully aligned.
While service providers are generally experts on the services they
provide and the manner in which they provide them, customers need
to understand how their internal organization will use and rely
upon the services and how this may differ from other customers of
the service provider. The expertise of the service provider should
inform the customer's needs, but not determine them.
Ultimately, the customer needs to dedicate sufficient resources
to ensure a full appreciation of the services that are being
contracted (including service levels and the consequences of any
service level failure). Generally, this is a two-step process
understanding the organization's needs without reference to
the service providers' services; and
understanding any discrepancy between the organization's
needs and what the service provider is willing and able to
The second part of this analysis will result in discussions
between the customer and the service provider which will prove
useful in understanding the service provider's ability to meet
the customer's requirements and its ability to problem-solve
– including obtaining assistance to mitigate the impact
of any discrepancies that are found to exist.
How much time and effort does it take to perform this type of
analysis? Often, more than most organizations think will be
necessary. But the time and effort involved will help the
organization better understand its needs and ensure that its
expectations are reasonable and achievable. Like any necessary
preparation work, however significant the time and effort required
may be, it is unlikely to compare to the time and effort required
to resolve the situation if the analysis is not performed and the
parties subsequently find that their expectations are inconsistent.
Having said that, the ease and effectiveness of available exit
strategies can be considered when determining how much time and
effort should be spent in performing an analysis of the services
offered (however, if an organization is not spending the necessary
time and effort to perform an analysis of the services it will be
outsourcing, one has to wonder whether it has spent sufficient time
analyzing exit strategies).
While service providers may argue that their expertise allows
them to offer "off the shelf" outsourcings, few customers
consider themselves to have only "off the shelf"
requirements. It follows, therefore, that only the customer will be
fully competent to determine whether the proposed terms will meet
its needs and that it will be well worth its time and effort to do
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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