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Length of Contract Affects Outsourcing Partnership
outsourcing, partnership, contract
July 15, 2010 -
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The success of a relationship with any outsourced service provider hinges on establishing a sense of partnership. Many factors affect the ability to create a partnership, but one that facility managers may not have considered is the length of the contract.
A contract that's re-bid every two years doesn't suggest that a long-term relationship is being created. A longer contract with extended renewal options is more likely to foster a partnership, simply because of the longer time horizon. By building in some renewal periods, you can extend the contract easily if things are going well and renegotiate pricing instead of re-bidding the service.
Also, progressive outsourcing agreements don't constrain the service provider with detailed specifications or procedures; they focus on the end result and let the service provider achieve the goals using their experience and abilities. A flexible contractual arrangement provides more opportunity for a partnership while also meeting overall goals and reducing costs.