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Summary of the article ‘Vested outsourcing: a flexible framework for collaborative outsourcing’
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Summary of the article ‘Vested outsourcing: a flexible framework for collaborative outsourcing’
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Vested outsourcingSamenvatting ‘Vested outsourcing: a flexible framework for
collaborative outsourcing’
The idea of vested outsourcing is to establish a systematic, collaborative outsourcing
relationship in which companies and service providers become “vested,” or mutually
committed to each other’s success, creating a long-term win-win relationship based on
achieving mutual determined goals. The model moves away from the conventional,
transaction-based and risk-averse approach to contracting. The goal is to craft collaborative
business-to-business agreements that create a set of working rules that can facilitate
successful and long-lasting business relationships based on mutually desired outcomes.
Achieving that win-win optimization through new levels of collaboration, trust and shared
value under a vested outsourcing model happens when the company outsourcing and the
service provider/supplier understand, commit to, and adopt the five principles or tenets of
vested outsourcing, which are:
1. Outcome-based vs transaction-based business model
A transaction-based approach cannot produce perfect market-based price
equilibrium in variable or multidimensional business agreements. For this reason,
organizations are exploring other types of sourcing business models, including
outcome-based approaches, which is the basis of vested outsourcing.
Element 1 - business model map
This first step is to understand the business at hand and document an
outsourcing business model.
Element 2 - shared vision statement and statement of intent
With the business model understood and mapped, the parties then work
together on a joint vision that will guide them for the duration of the vested
outsourcing relationship.
2. Focus on the what, not the how
The main difference between a conventional approach and the vested outsourcing
approach is that under the latter approach, the company that is outsourcing specifies
what it wants and moves the responsibility of determining how the work gets
delivered to the service provider
Element 3 - statement of objectives/workload allocation
Depending on the scope of the partnership, the company transfers some or
all of the activities needed to accomplish agreement goals to the service
provider
3. Clearly defined and measurable desired outcomes
Establishing desired outcomes and the statement of objectives (SOO) are necessary
first steps on the road to a vested outsourcing agreement
Element 4 - clearly defined and measurable desired outcomes
To have an effective, successful vested outsourcing relationship, the parties
must first work together to define and quantify their desired outcomes
Element 5 - performance management
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