How to Offshore: Relationship Management

Spend Matters welcomes a guest post from Vantage Partners. Click for Part 1, Part 2, Part 3, and Part 4 of this series on managing performance in offshoring relationships.

Promote root cause diagnosis and collaborative issue resolution
An effective way to promote exceptional performance is to distinguish penalties between problems that occur for the first time and recurring problems that have not been addressed at root cause. With an incentive for eradicating problems at their roots, providers may be more likely to communicate service issues and become more interested in generating solutions that prevent those problems from recurring. Rewarding exceptional delivery with bonuses is another way to incent the provider to deliver up to its capabilities.

And to reduce attrition, and thereby mitigate inconsistent performance, customers might work to engender provider loyalty by treating the offshore staff as part of a joint team. "What I have seen work great is a cross-pollination of both vendor-client resources across geographies," says Alok Verma, Senior Vice President at WNS Global Services. "Vendor resources rotated onsite at client premises, as well as senior and operational client leadership visits to vendor sites on a frequent basis, is critical, especially during the early stages of an engagement."

Use technology to promote effective communication
Limited opportunities for face-to-face communication represent one of the challenges with long-distance performance management. As LawScribe's Gary Zeiss says, "You don't get the ability to walk down the hall and intimidate people into working." Distance also makes it more difficult for the parties to work side-by-side to jointly diagnose service issues and collaboratively resolve them.

To deal with distance, many partners work to align around expectations for timeliness in reporting issues, arrange site visits, and embed service representatives within the client organization. Customers and providers are also increasingly making good use of technology to communicate more effectively, particularly around performance issues. For instance, Bhanu Sreenivas Vanukura, founder of Sevate Software Services, has implemented a structured requirements and expectations definition tool that undergoes much iteration before an assignment even starts. "Significant time spent on joint exercises as to where we are and where the customer wants to be after this assignment in terms of business benefits has helped us immensely," Vanukura says.

Survey respondents across the world have also found the following tools to be effective in their offshoring deals (Vantage Partners, Managing Offshoring Relationships: Governance in Global Deals, 2010):

  • Communication systems for issue tracking
  • Web portals that project live performance status and generate reports
  • Video and audio conferencing
  • Instant messaging
  • Shared desktops for remote access
  • Voice over Internet Protocol
  • Communication benchmarking systems
  • Webcasts/online conferences
  • Wikis and other collaborative work places
  • FTP servers for data exchange

In addition to these communication methods, measurement tools can be used to automatically collect metrics and track performance, particularly for operational metrics (such as use of physical IT assets), saving significant time in the monitoring process. A shared set of performance data tools can also promote problem solving and issue resolution. Performance management tools can track the types of performance problems that arise over time and how they are resolved. This helps governance teams recognize when the same types of problems continually arise, or when problems persist in one geography but not another, so that appropriate action can be taken to address them.

The next and last part of this series will discuss another best practice in managing performance in offshoring relationships: practice joint contribution instead of blaming.

- Danny Ertel, Partner, and Sara Enlow, Principal, at Vantage Partners

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