Outcome Outsourcing
The key factor in maintaining a successful relationship, both personal and professional, is trust. Attaining that trust depends on a healthy system of communication. For the outsourcing industry, this means increasing the level of transparency and information-sharing are key catalysts in attaining an outcome-based approach.
The shift towards outcome-based outsourcing is described by Genpact’s Mohammed Haque as “a journey that can take at least 18-24 months to implement” due to the requirement of a complete data assessment of the buyer’s landscape.
Advancements toward value-creating platforms require attaining a more in-depth understanding of a customer’s industry. Haque explains that it is “extremely important that the buyer understand the level of risk the provider must take to help the customer achieve the desired business outcome. This will only work if it is a complete partnership type of relationship and if there is strong governance and relationship management. And senior leaders on both sides must work together.”
Upon getting a good grasp on the needs of a buyer’s business context, it then remains to align service level agreements (SLAs) to meet desired strategic goals. To further solidify the commitment of both parties to a value-adding partnership, industry experts advocate employing a model in which the responsibilities for risk mitigation and maximizing returns on investment are shared.
According to Haque, only 5 to 10 percent of outsourcing arrangements today utilize outcome-based pricing – the other 90 to 95 percent of outsourcing arrangements are based on time, materials, or a fixed fee. However, he predicts that within the next five years, outcome-based outsourcing contracts will grow to 40 to 50 percent. Whatever outsourcing arrangement you choose to implement in your company, make sure it is a win-win situation for both client and vendor. And throughout your negotiations, always strive to maintain professional trust and understanding between the two parties. After all, good professional relationship is needed in order to make an outcome-based business survive in a competitive industry.
Are you implementing an outcome-based approach in your outsourcing business? Tell us what challenges you have encountered when you made that shift! Feel free to share your experiences and feedback with us! Other business owners might be able to learn from your strategies.
If you are looking for a reliable contact for outsourcing, you can check out the services offered by iStaffSource. This company can help you source, train, hire, and monitor your future virtual workers. Hiring can be a lot easier for you. Ask iStaffSource how you can find the best virtual employees fit for your business needs. Leave us a message or an email via the comment box below!
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