Governance Mechanisms for Outsourcing Contracts or Why You Should Let the Air Out of Your Tires
Transaction cost economics (TCE) has emerged as a common framework for understanding the choice of governance mode in economic activities. TCE suggests that in response to exchange hazards, firms either craft complex contracts or may choose to vertically integrate when such contracts are too costly to craft and enforce. As exchange hazards rise, so must [...]
Relational Outsourcing and The Role of Service Level Agreements (Part 3)
Particularly, these attributes appear to play a major role in the context of IT outsourcing relationships in that successful management of an outsourcing relationship today requires a highly interactive, flexible relationship between two organizations in order to sustain over the strategic planning horizon. from the Relational Governance section of the The Role of Service Level [...]
Relational Outsourcing and The Role of Service Level Agreements (Part 2)
I could not agree with you more Jon. However, i would like to describe how service and service levels are viewed in a relational model. First let’s remember that one of the 6 attributes of “Relational” is “Alignment”. For those who are still using traditional project management practices to manage relationships, “Alignment” means that no [...]
Relational Outsourcing and The Role of Service Level Agreements (Part 1)
This study extends the view that formal contracts and relational governance function as complements rather than as substitutes. We investigate how specific characteristics of service level agreements (SLAs) impact relational governance in information technology outsourcing relationships. from the Abstract of the study The Role of Service Level Agreements in Relational Management of Information Technology Outsourcing: [...]
Relational Outsourcing as a practical contracting and management model is finally coming into its own
Outsourcing of business operations is a growing trend in the U.S. In-house employees are replaced by a firm which handles the business using its own staff. Such agreements, writes Dennis F. Penepacker of Chicago’s Meyer Brown Rowe & Maw LLP, require the closest kind of relationships between the parties. He argues that neither the command-and-control [...]
Relational Outsourcing: Contracting Will Never Be The Same!
When I was asked to review a new seminar on outsourcing contracting I have to admit that the “been there – done that” sentiment almost immediately came to mind. It is not that I am naturally cynical it is just that so many seminars relating to the contracting process seem to advocate a dot the [...]
A 2003 article detailing the failure of outsourcing in the U.S. Postal Service may in fact be at the root of present day financial troubles for the independent agency
The mailers failed to tell the commission, however, that several outsourcing arrangements that replaced qualified postal employees with low-wage workers cost the Postal Service billions of dollars. In Chicago, on April 29, APWU President William Burrus set the record straight: Invited to testify about the strengths and weaknesses of the current collective bargaining process, he [...]
A Relationships Over Deals Case Study: Bell’s Disconnected Outsourcing Strategy
The following is the first in a series of case studies in which we refer to actual customer complaints relative to the challenges of dealing with services that have been outsourced. While outsourcing provides a tremendous opportunity for an organization to better focus on its core competencies by leveraging the expertise and resources of a [...]
Outsourcing is often blamed for the loss of jobs, but is this a fair assessment?
The article draws coloration between outsourcing and job reduction. Outsourcing may be a cost reduction strategy but not an HR transformation strategy. If a private company can do the work better it only means that current operations is inefficient. By outsourcing it, you essentially get your hands on new capabilities to do it better by [...]
Sourcing Relationships Not Deals: The New Paradigm in Outsource Contracting
“This seminar bridges the disconnect between executive vision and practical front line execution. It is unlike any I have seen or been a part of.” When I was asked to review a new seminar on outsourcing contracting I have to admit that the been there – done that sentiment almost immediately came to mind. It [...]