Ask 10 buyers of outsourcing services for their keys to success in communicating with their service providers, and you’ll hear 10 different answers because, of course, the effectiveness of communication depends on the individuals involved. Some will also say it depends on whether they’re communicating about day-to-day operations, conflicts or opportunities. Others will comment that it depends on their governance structure. While these aspects carry weight in communication success, there’s another factor that takes precedence: the stage in the relationship’s life cycle.
Outsourcing Center has studied communication between buyers and providers in hundreds of relationships nominated over the past 14 years for the Center’s annual Outsourcing Excellence Awards program. In evaluating communication characteristics specifically around discussing opportunities, we found distinct attitudes influencing buyers’ communication; and those attitudes change at various times in a relationship.
One could characterize the buyers’ attitudes as the following:
- We want to make sure you’re aligned with our plans
- We’re a team
- You’re trying to sell us something we don’t need
- You’ve been great at delivering services so far, but it’s almost time to renew the contract, and we want you to do something different; if you say no, we won’t renew
Looking at these attitudes and stages in depth reveals that how much the buyer trusts the provider determines the attitudes.
Scenario #1: We want to make sure you’re aligned with our plans
This attitude usually occurs in the beginning stages of a relationship. The buyer wants to trust the service provider, but they haven’t worked together long enough for much trust to build. The buyer moves forward in good faith that its trust is not misplaced, yet some doubts lurk.
The buyer shares its roadmap and annual plans and communicates some of its opportunities without revealing all the details – just as much as the buyer thinks it’s necessary for the provider to know in order to align its resources with future needs. The buyer believes communication at this stage is critical in order to ensure the provider supports its needs adequately, and the buyer often asks the provider to help assess opportunities. The buyer is keen on expectation-setting as a prime goal in communication.
Scenario #2: We’re a team
At this stage, the relationship has survived the transition and has achieved some successes and objectives and often has also weathered some conflicts. The level of trust is high. Both parties are proactive in their communication. As one buyer described this phase, the parties “want everybody to be on board, work collectively, and compromise when we need to.”
Another buyer described this phase as “always having a huge amount of discussion and information sharing about solutions and opportunities,” along with involving the provider in the very early stages of any planning.
They communicate openly and frequently about what’s going on in their market and industry, and they help each other learn. They don’t just react to opportunities that occur; together, they seek mutually beneficial opportunities. And there are instances where the provider is very instrumental in helping the buyer take advantage of opportunities the buyer has in its market.
Scenario #3: You’re trying to sell us something we don’t need
Here, the buyer’s attitude often shifts when the service provider initiates conversations about innovation and continuous improvement. Some believe the provider is trying to charge Rolls-Royce prices when the buyer thinks it only needs Ford services.
Scenario #4: You’ve been great at delivering services so far, but it’s almost time to renew the contract
At this point, the buyer’s level of trust in the provider’s capabilities and services is high, but the level of trust in whether the provider will be willing to deliver more value – and sometimes at even lower cost – is not so high.
The partner scenario
There is another scenario: we’re partners. This attitude is especially prevalent in large-scale arrangements involving support for a rapidly growing business or for enabling large-scale business transformation. The level of trust is very high, and transparency is a key element in their communication. The buyer wants its partner to be a big part of any new opportunities, and both parties actively seek to leverage each other’s strengths in pursuing endeavors. Communication involves sharing information about each other’s strategic drivers.
Even so, this attitude and level of trust can suffer hits when either of the parties feels it has to bear more of the financial impact than the other when investments become necessary.
The trust factor
Trusting that one’s outsourcing service provider will complete a task, ramp up, or deliver services at the expected level is different from trusting in the relationship or trusting that the provider really has the buyer’s best interests at heart.
Where trust is lacking, there exists a sense of competition against each other rather than collaboration and brainstorming.
Is it important that communication around opportunities evolve beyond expectation-setting and planning for resources? In the relationships Outsourcing Center studied, the buyers reported that it was crucial. Communication based on a high level of trust led to jointly creating ways to capture more value from the outsourcing arrangement. It takes time to build trust, and mutual trust also involves being trustworthy; but it’s one of the biggest keys to success in outsourcing.