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March 17, 2011 -
Getting the full value out of an outsourcing partnership involves more than simply shifting the risk and responsibility to someone else at the lowest possible cost. You have to actively manage the relationship. While outsourcing is often a way to reduce headcount, you should continue to use progressive performance management approaches similar to the ones you use with valuable employees.
There will always be problems, and sometimes the service provider will make mistakes. It's important to give the service provider a chance to fix the mistake and make sure it doesn’t happen again. How they recover is almost more important than being perfect in the first place. Blaming and punishing the service provider won't foster a strong working relationship and may cause them to hide things or stop communicating about important issues.
When you deal with issues, consider what you would have done when you were managing the service yourself, probably with fewer constraints, and manage the provider accordingly. Flexibility is probably what enabled you to manage successfully. It's the same flexibility your service provider needs to be successful with a working partnership.
Of course, for this to happen there should be trust in the service provider and vice versa. Establish this early through regular and open communication. Both sides should be open and honest; even a hint of mistrust can poison the dynamic.
If possible, co-locate their key staff with yours to foster a more integrated working relationship and ensure that your issues, goals and problems are communicated. Include the service provider in meetings so they hear information directly and can use their experience to help you with issues.