An outsourcing partnership is a mutually beneficial relationship between two businesses. And because it's a partnership, the responsibilities of training and managing offshore staff are shared between the client and the service provider. This is how an actively managed relationship in outsourcing functions.
Leverage Expertise Without Losing Control
But, why choose this management model? It's because this model lets you leverage your outsourcing partner's expertise without losing managerial control.
When you outsource to the right partner, you work together to define business goals, establish a timetable for accomplishing those goals, and set standards for measuring employee performance and production metrics. You and your partner also collaborate to find solutions to problems you may encounter.
In this model, you leverage a different kind of expertise: skilled people rather than organizational knowledge. There is some question as to how much organizational knowledge can actually be applied anyway. To avoid dissipating the economies of scale, you need to be more thoughtful in terms of how you use the provider. But you can constantly align the provider against your changing needs and, over time, capture the productivity benefits that you get from that, rather than having them accrue or sharing them with the service provider.
According to an expertly written article in CIO, service providers were "more responsive when governed in this model. They deal well with the nature of imperfect knowledge because you have the power to iterate in real time."
Fits the Hourly or Monthly Pricing Model in Outsourcing
Because you're the one managing the day-to-day work of your offshore staff, you'll know after two or three months whether your outsourcing efforts are working to your advantage or not. If your goal is to reduce costs, then you'll know you're saving money after you've been outsourcing for a quarter of the year. This is great when you know you'll only pay for three months' worth of services rendered by your staff before you commit to outsourcing for 6 to 12 months.
In outsourcing, you're either charged by the hour or billed each month for every person you hired. Either pricing model lets you work with your offshore staff for a short period at a time and avoid spending too much on outsourcing. This is why a consumption-based (hourly) or a subscription-based (monthly or yearly) pricing model totally fits an active management approach to outsourcing.
Your Business is Protected by an Expansive Contract
The terms of providing actively managed services are usually contained in a contract, which is more formidable than a service level agreement (SLA). The latter may be created as a separate document that is reviewed after 3 to 6 months while the contract may be renewed after it expires.
Agreements between an outsourcing company and the client must be flexible. There should be space for growth. The terms should allow you to adjust the metrics and expand the terms to fit the changing needs of your business. Risk mitigation measures, such as indemnity and confidentiality clauses, should also be included.
Consistency of Service Quality and Delivery
Because you're more involved in managing your remote team, you're assured of timely delivery of services that meet quality standards. This also leads to centralized management control, which applies the same standards to onshore and offshore teams. They follow the same workflows and make use of the same technologies.
Because of the time difference between the eastern and western hemispheres, offshore staff can continue working after their onshore co-workers have gone home. And so, someone is always there to answer phone calls and emails even on weekends and holidays.
Basically, an actively managed approach to outsourcing provides a systematic governance of your partnership. It ensures that you and your provider are on the same page. And, your staff on both sides of the Pacific work seamlessly together like cogs in a well-old machine.