It's now half a decade since third party processes migrated offshore to India. The offshore service providers have cut their teeth through issues of technology, people and infrastructure and are now used to managing client expectations on a 24/7 basis. The clients, on their part, have come to terms with the infrastructure of India's cities and witnessed 'voice neutralization' of Indian BPO representatives. Also, while making the mandatory trip to the Taj Mahal, they have seen significant dollar savings.

For an industry that has witnessed annual growth averaging 50%, 5 years is a long time. It is therefore appropriate and timely for us to review the most critical aspect of the offshoring exercise - client-vendor relationships.

The traditional client-vendor relationships for this industry began with skepticism and a cautious look at the working model of the captives - American Express, GE and British Airways. Internally organizations had to convince the board that the land of snake charmers could also be their back office. During this time the relationships were experimental. A few companies who had previous offshoring experience or were led by individuals who had pioneered offshoring to India brought in pilot projects for proof of concept.

The pilots worked in most cases. Today two out of every five Fortune 500 companies outsource to India. And the confidence of the champions of outsourcing at client side grew. It also helped the service providers to mature and understand both the hard metric requirements as well the softer needs of the client.

Contracts and Service Level Agreement (SLA) monitoring to a governance structure

Most relationships began with clients' personnel micromanaging offshored processes, monitoring SLAs and ensuring contract compliance. There has been a significant move away from this trend, especially with large, experienced clients. Today, governance structures have been put in place, defining expectations and setting accountability. Both the client and the service provider, put together outsourcing task forces and establish a review -based offshore management process.

This has been a big step for both parties as it gives the service provider room to perform, make improvements within the system and being fully accountable for end results. For the client's outsourcing team it takes away the burden of running the show over phone calls and emails.

Personality driven to organization-wide Traditionally, for the service providers, relationship management has been the job of the CEO or the CMO along with the head of service delivery. The head of service delivery fought the daily battles while the bigger issues were escalated to the CEO/CMO. For the outsourcers, their deputed head of outsourcing was responsible for service delivery and was accountable to the internal operations' teams.

As the model matured and offshore operations delivered, there was a realization that issue resolution cannot wait for the department heads to talk. The relationship mechanism began to change - process owners drove the chain of command in both organizations, began talking regularly and issues/expectations were quickly addressed.

The comfort and confidence in service delivery is a result of this ability of a team leader in India to pick up the phone and resolve a customer issue with his counter part onshore.

Vendors to partners

In the initial phase, complete buy-in and involvement from client's senior management is critical to success of the relationship and the overall offshoring exercise. With a senior management person championing the initiative, doors are opened faster and resistance is reduced. We have seen that in outsourcing relationships where a senior executive has sponsored the initiative, the initiative is always a success.



Today the service provider not only manages processes for its client but also actively advises clients on process management for offshore and onshore processes. Best practices across processes are actively shared with clients. The service provider is now seen as an advisor and partner who prioritizes processes for outsourcing, recommends strategies to improve productivity and helps reengineer onshore processes.

The service provider as a specialist

Service providers' growth in defined domains means the vendor is now perceived by clients as a specialist in that particular domain i.e., Insurance, Banking, F&A etc. More and more clients and potential outsourcers are focused on partnering with service providers that have established track records in delivery services in a particular domain or type of service.

Clients are also willing partners in spreading the word - providing testimonials and testifying to the credibility of their service providers to prospective outsourcers.

Growing together

Earlier business tasks were outsourced, the trend has shifted to end-to-end processes being outsourced. Innovative approaches and resourcefulness of an educated workforce in India has translated into substantial productivity and efficiency gains for outsourcers. Clients have witnessed cost savings, improvement in customer satisfaction scores and productivity where fragmentation of processes can be avoided.



The spectrum of services offered by the service providers has also increased. They now offer process-consulting services and have also moved in to higher end processing and business decision making/enabling services through research and analytics.

In a few instances, clients are seeing strategic value in the services and have taken equity stake into their service provider's corporate entity.

The mantra: transaction vs relationship

Relationship is core to outsourcing. For a sustainable offshoring initiative, the relationship eventually has to evolve to one of an extended organization. When a client perceives a service provider as an internal resource in a remote location - there is transparency, trust and governance.

Finally, it comes down to people, not contracts. One cannot pull out contracts and live by SLAs alone - trust in one's partner delivers success in meeting the offshoring objectives.