Outsourcing activities continue to grow but what are customers really looking for in their outsourcing relationships? Some areas of importance in vendor customer discussions in the outsourcing industry in the coming months will be:

Vertical Domain expertise: Vendors who can create efficiency through consolidation and alignment will be winners in the upcoming months as companies seek to reduce operational costs and streamline processes.

Cost Plus Performance Metrics: Who has heard of SLA's or Service Level Agreements? Larger companies and their vendor partners live and breathe SLA's. Well, more and more focus on performance metrics will require outsourced vendors to provide not just competitive pricing based on a full-time equivalent (FTE) resource but also SLA metrics. That means that the vendors who can offer pricing based on outcome will be the most popular.

Vendor Management Offices: I continue to believe that vendor management offices will be key to the next generation procurement practices. And why wouldn't any company not want to have a centralized vendor management team to conduct better negotiations? Vendors offering Vendor Management Office setup services may find a good audience too.

LifeCycle Pricing: This technique goes hand-in-hand with a robust vendor management team but even individually it may be of importance.  Vendors and customers will focus more on pricing strategies that are competitive and mutually beneficial over the entire lifecycle of the contract and not just in year one or year five of the contractual term. Lifecycle pricing may allow vendors and customers to review and adjust prices based on volume change, demand, and other criteria which in the past were not quite an area of focus.

There are other interesting areas such as cloud computing, contracts coming up for renegotiation, etc.  that will also drive some behavior changes in the outsourcing industry. We'll keep an eye out and our ears to the ground to report on new trends in outsourcing....