A New Generation of Outsourcing Governance


Today's guest blog on the evolution of outsourcing governance comes from Claude Marais, Partner and Managing Director, Governance Services, TPI.

Claude_marais1 Outsourcing governance is increasingly coming under scrutiny.  Until recently, outsourced functions were overlooked during budget cuts or productivity initiatives as many assume they already gave their "pound of flesh". This is no longer true given the pervasiveness of outsourcing in the average company today.

Companies are entering into the third generation of outsourcing governance. They realize the value of viewing it through the lens of business operations, creating the same level of scrutiny as any other part of their organization.

But what is this third generation of outsourcing governance?

During the first generation, governance was focused around measuring the service providers' cost and performance alone. During the second generation, companies focused on improving isolated elements of internal governance. 

The third generation, however, takes a holistic view of outsourcing governance and also optimizes the governance processes end-to-end. It is built on four pillars: governance expertise, strong processes, integrated technology and flexible resourcing options.   

Companies start with a top down view to get a clear, single and holistic perspective of managed outsourcing activities. They establish a common data view with their service providers and measure key aspects of the governance processes to better understand where efficiencies are needed.

Companies are developing a clear view of the governance tasks they want to perform themselves, perform offshore in their captives, or get third parties to do for them where they can provide a better mix of expertise, processes, technology and arbitrage capabilities. The third generation carries with it significant and exciting change in the way companies manage outsourcing environments.