Outsourcing: All outsourcing relationships are adversarial in nature because vendors want to be paid as much as possible for delivering as little service as possible, while customers want as much service as possible for as little money as possible. That, in a nutshell, is how Dean Davison, analyst, Meta Group, sees the industry.
Anticipating change and the likely need for future renegotiation can enable the parties to plan for it, and that preparation can provide a more cooperative environment for making changes.
Renegotiation has become a fact of life in long-term outsourcing contracts, and customers entering five to ten-year arrangements should be prepared for that.That’s the bottom line, according to Syd Hutchinson, senior consultant, COMPASS America, Inc. It’s unusual for a contract not to be renegotiated, he said. There’s no way you can see everything that far out, so you should go into these agreements prepared to renegotiate.
Strategic outsourcing — what does that phrase really mean? Discussions on the subject usually are focused on two things: structuring a strategic relationship with one or more outsourcers and the process by which the outsourcers are selected. Such discussions, however, overlook an important element.
Most Effective Deal: Kellwood Company and EDS. In most business circles, the Kellwood Company is a well-kept secret. Although the company is the fourth largest apparel company in the U.S. and the largest producer of popularly priced clothing, their clothing does not carry the Kellwood label.
Outsourcing as a management tool will continue to be actively employed. Today, if a manager doesn’t look at all the ways of obtaining resources to do the best job for the company, he’s not doing his job right.
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