# Are you getting full value from your outsourcing partnerships? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-02-15 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Maximizing BPO Partnerships: Key Strategies for Success Meta Description: Learn how to ensure your BPO partnership thrives through effective governance, proactive benchmarking, and relationship optimisation. Make the most of your URL: https://financedigest.com/are-you-getting-full-value-from-your-outsourcing-partnershipshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-861132240-1736816236444-compressed.jpg) _By_ **_Jill Stabler,_** _Sourcing Practice Lead,_ [_The Hackett Group_](https://www.thehackettgroup.com/) In any outsourcing relationship, it’s tempting to think that once the contract is signed, the heavy lifting is done. After all, isn’t offloading worries the whole point? In reality, like any relationship, it takes energy and commitment. Even in this [digitally driven era](https://www.financedigest.com/bringing-financial-services-into-the-digital-era.html "Bringing financial services into the digital era"), people make partnerships work. Business Process Outsourcing (BPO) clients focus, naturally enough, on specifics of the contract, such as [service level](https://www.financedigest.com/is-ai-taking-quality-and-cost-optimization-of-enterprise-services-to-the-next-level.html "Is AI taking quality and cost optimization of enterprise services to the next level?") agreements. But we find they sometimes overlook a range of [opportunities to make sure their BPO partnerships](https://www.financedigest.com/how-partnerships-between-fintech-start-ups-and-traditional-banks-herald-a-brave-new-world-of-opportunity.html "How partnerships between FinTech start-ups and traditional banks herald a brave new world of opportunity") perform. 1. **Governance.** In a [recent study](https://www.financedigest.com/silicon-capacitors-market-to-garner-us-3100-million-by-2027-at-8-cagr-recent-study-by-tmr.html "Silicon Capacitors Market to Garner US$ 3,100 million by 2027 at 8% CAGR – Recent study by TMR") by The Hackett Group 74% of executives cited governance as the critical success factor in making BPO work. [Every contract](https://www.financedigest.com/legislate-raises-3-6m-to-give-startups-smes-the-technology-to-query-and-compare-every-contract.html "Legislate raises .6M to give startups & SMEs the technology to query and compare every contract") has a governance schedule, but they can be overly focused on monitoring hard performance metrics. This made sense when [technology was changing](https://www.financedigest.com/how-advanced-self-service-technologies-are-changing-the-face-of-finance.html "How Advanced Self-Service Technologies are Changing the Face of Finance") slowly, but it makes less sense now. Contemporary [governance must](https://www.financedigest.com/2016-must-be-the-year-of-board-level-transparency-and-good-governance.html "2016 must be the year of board level transparency and good governance") also focus on making the transformative partnership promised through sales and contracting actually happen, keeping you accountable and on track as you incorporate the digital transformation you signed up for into your processes, and in sync as technological advances makes more possible. 2. **Benchmarking.** Most contracts include a right to benchmark price and service against good market value, yet many customers don’t [consider this until their contract](https://www.financedigest.com/4-questions-to-consider-before-embarking-on-a-contract-packaging-expansion.html "4 questions to consider before embarking on a contract packaging expansion") is nearing its end. Over 70% of [contracts The Hackett Group has benchmarked in recent years demonstrated opportunities for price and service](https://www.financedigest.com/axion-swiss-bank-and-avaloq-sign-long-term-contract-for-bpo-services.html "Axion Swiss Bank and Avaloq sign long-term contract for BPO services") level optimizations mid-contract term, so we recommend taking advantage of this contractual right. In addition, 12-14 months out from contract expiry, [invest in an ‘off contract’ benchmark to inform end of term strategy](https://www.financedigest.com/investing-in-a-first-party-data-strategy-can-save-the-day-for-retailers.html "Investing in a first-party data strategy can save the day for retailers"). Unconstrained by contractual terms, you get a fuller view of what good price, service, and contracting practice looks like today, and into the mid-term, e.g., what the [next 5 year](https://www.financedigest.com/novartis-to-spin-off-generics-business-sandoz-next-year.html "Novartis to spin off generics business Sandoz next year") automation-driven commercial glidepath should be. 3. **Relationship optimization.** Sometimes, a relationship can look good on paper, but go wrong in operation. It’s easy to blame. But take a critical look at whether your own organization has the roles and enablers [needed to make the relationship succeed](https://www.financedigest.com/top-5-seo-services-you-need-to-succeed-in-2022.html "Top 5 SEO Services You Need To Succeed In 2022"). The Hackett Group’s experience of facilitating impartial reviews shows that behavioural drivers of dysfunctional relationships exist on both sides. Objective [insight is the catalyst for customer](https://www.financedigest.com/accountancy-firm-brookson-uses-artificial-intelligence-to-improve-customer-insight-and-prevent-churn.html "Accountancy firm Brookson uses artificial intelligence to improve customer insight and prevent churn") and supplier to pivot from emotive argumentation to a jointly owned remediation programme, getting things back on track before further value leakage occurs. 4. **Renegotiation review.** If you intend to renegotiate, you likely have a well-functioning incumbent relationship. So far so good, but we [see too many customers](https://www.financedigest.com/britains-metro-bank-returned-to-profit-in-september-sees-no-customer-stress.html "Britain’s Metro Bank returned to profit in September, sees no customer stress") re-sign in haste. BPO is [moving fast](https://www.financedigest.com/microsoft-unveils-ai-office-copilot-in-fast-moving-race-with-google.html "Microsoft unveils AI office copilot in fast-moving race with Google"). What [worked 5 years ago will need re-alignment to contemporary solution](https://www.financedigest.com/how-digital-signage-and-avoip-solutions-can-enhance-the-return-to-work.html "How Digital Signage and AVoIP Solutions Can Enhance the Return to Work"), commercial and contracting best practices. Agreeing to agree after contract renewal, often due to timeline pressure, shifts [risk onto the customer](https://www.financedigest.com/more-than-purse-keepers-and-risk-managers-modern-cfos-are-driving-customer-experience-with-data.html "More Than Purse Keepers and Risk Managers, Modern Cfos Are Driving Customer Experience With Data"). Starting early [creates time to get independent market insight to inform clear goals](https://www.financedigest.com/how-to-create-financial-goals-for-your-business-in-2021.html "How To Create Financial Goals For Your Business In 2021") and expectations, and ensure you are not overpaying for services by establishing ‘guardrails’ your incumbent must meet to retain your business. Having this review serves as ‘proxy competition’. The right base relationship combined with a little investment upfront can [avoid the one-time costs associated to running an RFP and deliver a great refreshed deal](https://www.financedigest.com/uks-argo-blockchain-shares-soar-on-deals-to-avoid-bankruptcy.html "UK’s Argo Blockchain shares soar on deals to avoid bankruptcy"). If your supplier is incentivized to engage, it could [save them the cost](https://www.financedigest.com/saving-on-water-bills-more-than-just-a-drop-in-the-ocean-for-businesses-facing-the-cost-of-living-crisis.html "Saving on water bills: More than just a drop in the ocean for businesses facing the cost-of-living crisis") and risk of participating in an RFP. 5. **Exit strategy review.** Nobody gets married thinking they will wind up in divorce court. But most marriage counselors will tell you a prenuptial agreement is a good idea. Similarly, negotiating how the end of the relationship will be handled can [save money](https://www.financedigest.com/how-to-save-money-for-a-car.html "How to save money for a car") and trouble down the line. Many contracts address this at a high level, but detail matters. The Hackett Group [works with many customers on pre-exit reviews to facilitate agreement of detailed terms](https://www.financedigest.com/apples-australian-workers-go-on-christmas-strike-demanding-better-wages-work-terms.html "Apple’s Australian workers go on Christmas strike demanding better wages, work terms") of reference, planning and a playbook for exit services which truly operationalizes those contractual provisions, leaving nothing to chance. Do this no less than six months before the end of the contract to minimize delays, costs creep, service degradation, and [risk of business disruption](https://www.financedigest.com/risk-management-redefined-navigating-post-covid-disruption.html "Risk Management redefined: navigating post-COVID disruption"). Executives we have surveyed tell us that level of executive engagement (60%), active management throughout life cycle (52%), and adequate [funding and resources](https://www.financedigest.com/norway-sovereign-fund-backs-teck-resources-in-battle-with-glencore.html "Norway sovereign fund backs Teck Resources in battle with Glencore") during planning and transitional phases (49%), are the most important differentiators for BPO success. There are very few bad [vendors or bad customers](https://www.financedigest.com/online-marketplaces-embracing-embedded-finance-to-benefit-both-customers-and-vendors.html "Online marketplaces: embracing embedded finance to benefit both customers and vendors     "). It’s good management of the partnership – the rules you set and follow, and the reviews you make at every stage – that enables you to prevent [issues and adopt an agile and proactive approach to fixing](https://www.financedigest.com/u-s-france-agreed-to-fix-u-s-subsidies-issues-says-macron.html "U.S., France agreed to “fix” U.S. subsidies issues, says Macron") things that do go wrong, ensuring your outsourcing partnership lives up to its full potential. _Jill Stabler is Sourcing Practice [Lead at the Hackett Group](https://www.financedigest.com/title-medical-imaging-equipment-services-market-to-witness-huge-growth-by-2031-with-profiling-leading-companies-agfa-gevaert-group-althea-group.html "Medical Imaging Equipment Services Market to Witness Huge Growth by 2031 with Profiling Leading Companies – Agfa-Gevaert Group, Althea Group"). This essay is adapted from her white paper “Five Opportunities to Drive [Greater Value](https://www.financedigest.com/keeping-data-connected-for-greater-business-value.html "Keeping Data Connected for Greater Business Value") from your Outsourcing Contract.”_ --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---