In any outsourcing project the importance of relationship management and in particular the need for techniques and procedures that impact the relationship of the two parties cannot be underestimated. Organisations and managers should use both formal and informal mechanisms concerned with the input and output specifications of an outsourcing relationship. Naturally such specifications are needed to steer performance in the desired direction:
If it is difficult to measure the output and/or the task is not well understood, input control is needed to ensure performance. Input control refers to selection, training, and socialisation, i.e. finding ‘a good match’ as well as the internalisation of company values and behavioural norms. In line with this, in an outsourcing context it is recommended that the client oversees the allocation of human resources to the outsourced projects and areas. It is recommended that action should be taken to ensure that people can meet and interact. Interactions, especially formal and informal face-to-face meetings, facilitate the building of trust, shared context, and cultural intelligence. A relationship based on these three aspects in turn makes for easier knowledge sharing, communication, conflict resolution, understanding of each other and each other’s expectations, goals, requirements, etc.
If it is possible to specify goals and measure the output in accordance with those goals then output should be monitored and controlled. Incentives can be used to motivate the service provider to live up to expectations. However, with regard to a cooperative outsourcing strategy, measuring the service provider’s contribution is difficult because of the need for client–provider interaction and cooperation to produce the result. Instead trust in each other, commitment to the relationship, and investment of resources in the relationship is needed.
It is experience that output-based service contracts offer the best outcome, if the trust between the two parties is present. Sometimes, especially in a start-up phase or in a more immature relationship, a combination of input- and output-based service can be recommended; for example, if the task is well understood it is possible to specify the behaviours required to achieve the desired performance, e.g. in the form of standard operating procedures, codified processes, prescriptions for when to use which methods, techniques, templates, and tools, etc. In an outsourcing context, the standardisation of processes for transferring work to the service provider and for getting the work done is emphasized.