Companies traditionally have realized their financial objectives of outsourcing yet there remains instances of company- service provider conflict. Some of the exiting challenges:

• Lack of transparency
• Ineffective reporting
• Poor communication plan
• Continuous improvements 

There is a growing awareness among companies that service provider relationships should to be actively managed to realize the benefits of outsourcing. The companies clearly recognize the need for dedicated Vendor Management Office (VMO) to manage their strategic outsourcing, offshoring, and service delivery programs. However, the maturity of their Vendor Management capabilities remains low.

• Complexities of managing outsourcing service providers’ post deal execution are underestimated and poorly managed
• Manage multi-sourcing transactions across a number of service providers
• In addition, governance and change management mechanisms in transition and transformation programs have also become more complex to manage

There is a growing demand for services that can help organizations ascertain the maturity of their Vendor Management models and/or help them design, build, and implement leading-practice.

Companies often draw on the assistance of third parties that can provide specialized functional know-how and the industry-leading operating practices, processes, models, and tools necessary to create flexible, scalable Vendor Management frameworks that can effectively and efficiently manage outsourcing relationships.

The growing complexity of today’s outsourcing environment demands new skills in order to effectively manage an outsourcing program. Effective management of an outsourcing program now requires specific cross-functional skills and experience, specialized toolkits and disciplines, an enterprise view of the outsourcing program, and the ability to manage and integrate a large number of service providers (where required) to deliver an enterprise service.

Companies are increasingly investing in broad tools, systems, and processes for Vendor Management, as well as building Vendor Management organizations that can provide the resources to more efficiently and effectively manage their service providers and achieve their outsourcing objectives.

Based on: The Outsourcing Vendor Management Program Office (VMPO): Art, science, and the power of perseverance: Deloitte Consulting LLP (2011)