Do retained teams screw up outsourcing?

By April 3, 2013March 9th, 2021Archive


Heaps of blame is placed on the outsourcing provider when a relationship goes south. You’ve heard the complaints.”Their salesmen oversell.” “The staff has no contextual knowledge.” “No one’s taking responsibility for following up.” “There’s none of that innovation they promised.” And while some of these complaints are valid, in many cases the client is playing a not-so-sophisticated game of passing the buck. Don’t always blame the provider; it’s often the retained team that’s queering the deal.

Privately, sourcing leaders will say that they spent insufficient time focusing change management on the team they’ll retain to manage the provider in an outsourcing relationship. In fact, the word insufficient doesn’t begin to tell the story. Change management focused on the retained team more often than not needs a major overhaul.

The standard approach to establishing a retained team doesn’t hack it. Institutional knowledge is vital. But many on the retained team confuse institutional knowledge with protection of the status quo. Subject matter expertise is critical. But SMEs often think that they are charged with retaining the old ways of working. Supplier governance is key. But for some on the retained team, governance is equated with alternating carrot-and-stick approaches, just to prove that they are in control.

What constitutes change management for retained teams these days? First, leaders go about drawing an organization chart that’s usually driven by a combination of the numbers (what can we afford per the business case?), the personalities (who’s been loyal and will have my back when the business makes noise?), and the need to retain excess expertise (synonymous with “who on the team will be able to pick up the pieces when the provider fails”). These folks are then shoved into the standard set of boxes promulgated by the industry, entitled Governance, Commercial, Regional Management, SMEs and sometimes Change/Communications if the vision is particularly expansive.

Then the cast of characters is quickly acquainted with the skills and behaviors required in the brave new outsourcing world. Acquainted is the operative term; there may be some level of training, but the rewards and associated measurements for these new capabilities rarely comprehensively realigned to reflect the new imperatives that result from the act of outsourcing.

And the retained team’s job profiles are very hastily rewritten, if at all. They are rarely linked to new spans of control, different metrics and reward systems.  There’s usually limited linkage with team members’ counterparts on the provider side, getting in the way of effective working relationships. And joint metrics and rewards with the provider to promote relationship success? Very rare.

Because of the “brave new world-ness” of an outsourcing model for many, sourcing leaders forgot about the imperative to develop an effective RACI (who’s responsible, who’s accountable, who needs to be consulted, and who needs to be informed). Without a RACI, the tendency to swarm decisions and communicate too broadly ensues. And that’s a dangerous situation for a group of folks that are trying to figure out how they operate in an unpredictable environment. When no one is clearly responsible and everyone has a say, the right decisions are in jeopardy. When no one is clearly responsible, the provider becomes confused, or plays all ends against the middle.

So what results is a (slightly) revamped team with fewer people working in pretty much the same way. Not much has changed except the fact that the responsibility for delivery sits with a third party—and there’s the rub. The sourcing relationship is managed by a retained team that’s not redesigned…or changed…to maximize the success of a new business model.

However, the right retained team can be the single greatest success factor, if sourcing leaders take the time to do a few things well:

  • Be brave enough to clean house Loyalty is not a qualification for inclusion on a high performing retained team.  Decide which skills and behaviors are vital to success, and apply them scrupulously to the talent you have. If the current staff, come up short, be brave enough to find the capabilities you need—elsewhere in the organization, or outside
  • Don’t duplicate the organization structure Most retained team structures are thinner versions of the old delivery model, with a few new roles tossed in for good measure. Start by thinking through the decisions that need to be made, the associated risks, the expertise required and the right spans of control. Only after you get this right, pick up a pen to draw the boxes
  • Rethink the rewards and measurements Many sourcing leaders forget to recalibrate performance expectations on a detailed level; as a result the reward and measurement systems reflect the previous operating model.
  • Be brutal about who’s responsible for what Holding hands and facing the unknown together is a recipe for failure. Draw clear lines of command—and communication—and be aggressive about who has a say, and who doesn’t.

Good outsourcing relationships start with good clients. If the retained team has its act together, the odds of success increase exponentially. Don’t let your lack of attention to the retained team screw it up.


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