Clients and vendors both have to invest time, focus and resources for making any outsourcing relationship to work. Increasingly, vendor relationship management is a big differentiator in companies that are successful in extracting maximum value from their outsourcing partners.

Clients usually evaluate vendor capabilities across service area before awarding contracts. There may yet be some technology, niche skills and domain depth where the vendor partner may not have sufficient depth.

Working with vendor partner towards long term relationship not only ensures effective service delivery but also can unleash innovation. 

How to make relationships work:

Client

·         Keep strategic vendors involved in long term planning process. Closely follow the evolution of service providers' delivery engines: service portfolio, delivery locations and models

·         Enhance maturity of governance skills in managing complex globally delivered outsourcing services

·         Have jointly agreed performance metrics to measure vendor performance

·         Aggressive cost cutting/negotiations may impact financial viability of the deal from vendor’s perspective.  Strong relationships will lead vendor partner to go the extra mile – allocate extra effort/manpower required in specific challenge area

Vendors

·         Guide clients in their sourcing strategy development and execution - especially if their tolerance/maturity of global delivery is low

·         Be more proactive in contributing and demonstrating strengths in services/ domain area/ skills important to client's long term plan

·         Do not over commit capabilities. The required capabilities can be built over a period of time (If a strong relationship exists and clear long term objectives are shared then capability issues can be handled)