Inherent flaws in the outsourcing business model are analogous to a poison that spreads throughout the system leading to a serious ailment. In some cases, the ailment can simply cause negative side effects such as metrics that are misreported, under reported or poorly understood by both parties. In these cases, companies or outsource providers live [...]

A company afflicted by the “Outsourcing Paradox” malady may exhibit a telltale initial symptom: an attempt to develop the “perfect” set of tasks, frequencies and measures. The “experts” within the company try to prepare what they consider the “perfect” Statement of Work. The goal is to tightly define the expected results. After all – we [...]

Many companies that suffer from the “Outsourcing Paradox” often suffer from the Activity Trap. Traditionally, companies that purchase outsourced services use a transaction-based model. Under a transaction-based model, the service provider is paid for every transaction—regardless of whether or not it is needed. Businesses are in the business to make money – and outsource providers [...]

When the decision to outsource is made, it means jobs likely will be lost in the transition of work and jobs to the outsource provider. In response, employees typically will go to great lengths to hunker down and stake their territorial claim to certain processes that simply “must” stay in house. We call this disease [...]

At the beginning of any relationship, both parties go through the honeymoon stage. The Honeymoon Effect was studied by the Stamford, Conn., research firm Gartner, Inc. In her article “Gartner: Outsourcing deals based on price alone are likely doomed” (published at CIO.com on March 15, 2006) Kate Evans-Correia reported that the Gartner research investigators found [...]

To prevent the Honeymoon Effect, some companies have adopted approaches to encourage outsource providers to perform better over time. Those methods include establishment of bonus payments for attainment of specified levels of performance. Bonus payments can work. Unfortunately, and all too often, however, they create perverse incentives for the outsource provider to achieve only the [...]

One of the most common ailments afflicting outsourcing arrangements is the Zero-Sum Game; outsourcing companies play this game when they believe, mistakenly, that if something is good for a contractor, then it’s automatically bad for the outsourcing company (and contractors play the game, too). Company executives who play this game fail to understand that the [...]

Another ailment that bedevils many outsourcing agreements is Driving Blind Disease: the lack of a formal governance process to monitor the performance of the relationship. When we started working with companies more than 20 years ago, most outsourcing arrangements fell into this trap. They would develop arrangements but fail to outline how they would measure [...]

Most of us probably remember being warned by Mom that too much of a good thing can be bad for you (perhaps while you were gobbling up your Halloween candy). The same concept applies to measurement of outsource providers. The hallmark of the “Measurement Minutiae” ailment is trying to measure everything. The sheer volume of [...]

The saddest of all ailments is the one we call the Power of Not Doing. We recently observed a case of it at a Fortune 50 company. A senior manager was demonstrating what a great job her company had done on establishing measures. Company executives had signed up for a seminar to learn how to [...]