Embedding Improvements And Innovation Into Outsourcing Arrangements

Business decisions to outsource often focus on the need to improve service performance and drive innovation. At the outset of an outsource process, most service providers enthusiastically promote their "transformational" outsourcing services and the resulting improvements and innovation. But companies mostly find that, once a contract is signed, much-promised performance improvements and innovation rarely materialise. So, how can an outsourcing relationship be structured to drive the desired service provider behaviour and deliver service improvements or innovation?

Regardless of the amount of due diligence carried out, service providers are instinctively reluctant to agree to improved future service levels in excess of those historically achieved, especially where the service provider is taking over customer facilities, assets and employees. But companies may be entitled reasonably to expect higher levels of service than if a service is provided in-house because