The hard work starts after the outsourcing contracts are signed.

If only Dr. Phil would take on outsourcing governance relationships. If your company has outsourced significant business processes, you understand how hard it is to manage the relationship with service providers. But why? The business process is not new, you probably went through an extensive review and selection process to ensure that your provider has the resources and expertise required. How could there be trouble in paradise when you got along so well while you were dating?

Just like any new relationship, this new partnership with your outsourcing provider requires some adjustment, some new skills and a commitment to communication. After the outsourcing contract is signed, the real work begins.

It's not that companies can't handle these outsourcing governance relationships. Companies typically manage many very important ongoing relationships with employees, contractors, suppliers and customers. Every successful company has dedicated significant energy to managing these relationships. Each of these relationships is supported by an organizational structure, established processes, management methodologies and a supporting information infrastructure. Employees have the HR department, consultants have corporate sponsors, suppliers have procurement, and customers have sales and marketing.

If there was a wave of critical resignations in your east coast office, there would be no question as to who in the organization must be notified. The local human resources (HR) manager would be the first to know and would immediately escalate the issue to the senior HR executive. There are policies and systems in place to manage this smoothly. If the situation were customer defections instead of employee resignations, the people, processes and systems involved would be equally clear.

Now, think about your outsourcing providers. If something goes wrong with your outsourcing relationship, what happens? Is the escalation path clear? Is there one senior executive with ultimate responsible for the health of the relationship? What is your outsourcing governance policy? Do you have one? If not, can you simply substitute your HR policy or your customer retention strategy? Of course not, the relationship you have with your outsourcing provider is very different.

Outsourcing providers are unique. They are not employees, although in many cases, they do the work that employees used to do. They aren't just suppliers; they are involved in day-to-day operations. They are not contractors; you do not get to dictate how they are doing the work. They are new and different, and you must change your ways if this new relationship is going to work.

Fortunately, your existing relationships provide the framework for the adjustments required for outsourcing governance. Just like employees, contractors, suppliers and customers, your outsourcing providers need a supporting organizational structure, management methodologies and information infrastructure.

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