Managing an outsourced environment.

Many managers don’t realise there is a range of options available in the way they manage outsourced solutions.  Often they end up learning the hard way how to get the best out of the arrangement.  There are of course good ways and bad ways of managing an outsource, but no one way will fit all situations and contracts.  

We have identified four outsourced management models that are each appropriate depending on different market conditions.  Each model outlines the differences in approach needed and each shows the behavioural preferences required to manage the outsource effectively.  Here is a little insight into these four approaches:

1. The Colleague.

The Colleague approach is the true partnership relationship model.  It values reciprocal trust between the organisations, it needs individual and organisational rapport, as well as a deep understanding of how to work in the light of cultural differences between you and the outsourced provider.  It requires intensively active account management in the relationship, both working with the full range of the customer’s internal stakeholders, but also securing and allocating resources to joint improvement projects and overseeing the execution of those projects.  Focus has to be on delivery not process, driving a collaborative performance based partnership.  

2. The Capitalist.

The Capitalist approach requires a very different style of management, appropriate when you are outsourcing a service that is highly competitive within it’s own market.  This approach tends towards an increased toughness and moves away from a softer relationship (Colleague) style.  In this model we should not expect to generate longer term joint working parties, instead the focus must be on meeting agreed performance, rather than driving breakthrough change.  It’s also vital that resource should be allocated to ensure our own organisational retention of knowledge in the outsourced discipline. 

3. The Collector

The Collector approach is all about aggregation.  It is the right approach when your leverage is low (as in situations where you are not spending relatively much on the service provision). In this model we have to focus much more on the role of building and consolidating.  Process efficiency is also high on the agenda and it becomes critically important to reduce technical dependance on the provider.

4. The Controller

The Controller approach has the focus on assurance of supply and avoiding potential for costs to be driven upwards by the provider.  This model comes into it’s own when you are in danger of the tail wagging the dog, the provider locking you in and calling all the shots.  

Risk analysis and mitigation need to be front of mind. 

The success of your outsourced arrangements will be strongly determined by leading your business in the most appropriate strategic and behavioural approach.  Knowing when to apply each model is at the heart of this success.