Vested Outsourcing: Five Rules That Will Transform Outsourcing (review)

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Vested Outsourcing: Five Rules That Will Transform Outsourcing (review)

I’ve gotten myself into another outsourcing effort. On the plus side, the company selected a vendor that helps companies create outsourcing relationships. Additionally, they suggested this book as a guide.

And the book is pretty good. I’ve worked directly on creating two outsourcing relationships and additionally worked within a couple more – this book matches many of the lessons I’ve learned from those experiences.

Vested Outsourcing is all about creating value for all parties in the contract relationship; since the total money on the table isn’t finite, and since a partner will find ways to get the part of the contract value they need to continue to do work (or go bankrupt), it’s best to find a win-win solution where the contract objectives incent both parties to create a successful relationship.

The five rules are simple:

  1. Focus on outcomes, not transactions
  2. Focus on the WHAT, not the HOW
  3. Agree on clearly defined and measurable outcomes
  4. Optimize pricing model incentives for cost / service trade-offs
  5. Governance structure provides insight, not merely oversight

Though simple, these rules can be hard to enact. Look around you – these five rules are excellent ones to use in any management situation; how often are they? I think that’s mostly due to the desire to control the solution and the (for the western world at least) natural inclination to look for win/lose game solutions without recognizing that the “game board” could grow larger if both parties work together.

The authors walk through the process of outsourcing from start to finish, including emphasizing that its important to retain critical knowledge in case you ever want to switch to another partner or in-source the capability.

By itself, this book won’t solve your problems, but it does have it’s “heart in the right place” and is a worthy read if you are considering large-scale outsourcing.

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