Before You Fire Your Outsourcing Provider, Read This

We get brought into a fair number of outsourcing engagements that need to be "corrected."

Service has declined. Staffing isn't right. Costs aren't what the firm expected. Reporting isn't giving management the information it needs.

Eventually someone says, "Maybe we need a new provider."

Maybe.

But first I would ask: Is the provider really the problem, or was the engagement structured incorrectly from the beginning?

Start With What You Bought

A common problem is a mismatch between the model the firm believes it contracted for and what the provider is actually delivering.

You're paying for 10 FTEs. One position becomes vacant. Who is responsible for backfilling it?

You have a cost-plus agreement. What exactly qualifies as a "cost"?

Or maybe the firm is unhappy with service—but there are no meaningful SLAs defining what acceptable service actually means.

These aren't small details. They're the foundation of the engagement.

Define Success

Every outsourcing agreement should answer a basic question: What does success look like?

How quickly should requests be completed? What accuracy level is required? What hours need to be covered? What reports should management receive?

Your statements of work should define the services, volumes, hours, staffing where applicable and measurable performance expectations.

Then you need reporting that tells you whether those expectations are being met.

Otherwise, everyone has an opinion about performance, but nobody has good data.

Don't Forget the Contract Details

Regardless of the outsourcing model, there are several things I want to see addressed.

Have clear statements of work and service levels. Define non-solicitation provisions. Consider gainsharing so both sides benefit from efficiencies. Include detailed cancellation and transition requirements.

And make sure your firm retains the right to give outside experts access to contracts, reporting and invoicing.

Some firms waive that right.

Hard to believe.

Your clients seek outside expertise when they need it. Why would your firm voluntarily give up the same right?

Don't Put Outsourcing on Autopilot

The work isn't finished when the contract is signed.

Volumes change. Technology changes. People change. Your firm's needs change.

And chances are, the people sitting across from you today won't be there the next time the contract comes up for renewal.

So before replacing an underperforming provider, go back to the basics.

Are you outsourcing the right process? Are you using the right model? Do you have the right metrics? Does everyone understand their responsibilities?

If not, changing providers may simply give you a new company operating under the same flawed structure.

Get the structure right first. Then hold the provider accountable for delivering it.