Much has been written about the challenges of offshoring: cultural disconnects, communications difficulties, sheer physical distance, and more. However, what should be done to overcome these challenges is often open to the reader’s interpretation. Unfortunately, most offshore sourcing managers have been thrown into their new role with little other than what they’ve read and a severe lack of expert guidance on how to manage relationships with offshore service providers. And this lack of knowledge can quickly derail an offshoring initiative.

Let’s examine a potential organizational model for governing a geographically dispersed organization, supported by a collection of best practices for global sourcing managers.

The Global Outsourcing Governance Model

A properly designed outsourcing governance model must address the strategic, tactical, and operational elements of a company. The functions of this design will address the service quality, compliance, change management, financial and contractual, and issues management components of the relationship with a service provider. This is typically a three-level governance model: the executive level, the program level and the operational level. In non-offshore scenarios, the entire governance organization is typically centralized. But in significant offshoring arrangements, some companies attain the most effective management and interaction when the operational team is distributed and placed either part-time or full-time at the provider site, within the appropriate business unit or dispersed locations.

During the design/build stage, success can depend on effective full-time, on-site governance support as the organization is defining critical operating models, decision rights and protocols, and performance-management tools. As functions being performed offshore become more complex, success increasingly depends on how the client creates a work environment with a different cultural perspective. The discussion below will focus on the operational, or relationship management, teams that become entrenched in the “organizations” they serve.

Managing a global outsourcing relationship requires a slightly different manner of thinking and execution in order to achieve the best results. In any outsourcing relationship, there are two primary constituencies that are managed daily by the “operational layer” of the governance organization: the business units or clients; and the service providers. However, in an offshore relationship, these two constituents are not only thousands of miles apart, they are from different cultures, and may have vastly different experiences and perspectives on everyday problems. The offshore relationship-management arm of the governance organization must focus on creating the strategic link between the client’s needs and the provider’s performance. This distributed relationship-management role is effectively the “communications glue” between the offshore service provider and the end users in the organization. Companies that approach offshore relationship management with the two constituencies (business unit and provider) in mind are able to do more with offshore resources and achieve better internal results and customer satisfaction.

Provider Facing

In the provider-facing relationship-management role, there is a regular presence by the client representative at the provider’s offshore delivery facilities. An often overlooked resource, this role includes overseeing projects, conducting performance reviews, and resolving problems, as well as proactively improving performance and communications ties. During the design/build stage (and potentially longer, depending on the complexity of the relationship), having a resource in the same time zone to expedite issues can be critical to the success of specific projects as well as the overall relationship. Provider-focused relationship-management personnel must be in sync with ongoing client needs to keep the relationship on track, identify opportunities, and improve performance. This is the part of the job that keeps people on the road and is always the most challenging part of managing a global-delivery model.

Business Unit Facing

In an offshore-delivery model, it is necessary to have resources focused on client-facing relationship management to ensure that business units are not only receiving the service they require but are effectively working within a decentralized delivery model. The client-facing role works to understand and communicate the needs of the end user with the service providers.