While no two outsourcing relationships are alike, some broad generalities can be drawn about different types of common relationships. For example, HfS Research identifies three main types of outsourcing relationships in its recent white paper, “The Great Talent Paradox in Outsourcing.”
As the type of outsourcing relationship you have plays a crucial role in determining how much (or little) value it will deliver, it is worth reviewing these three categories. Which one best describes your own outsourcing relationship, and are you satisfied with the result?
‘Lights On’ Outsourcing
As defined by HfS Research, a “lights on” outsourcing relationship is marked by a buyer seeking to simply drive out cost without incurring any “disasters.” As the buyer sees little to no strategic value in outsourcing, they see no need to pay for high-level talent or expertise. The “lights on” buyer is satisfied with basic execution of outsourced processes at a cheaper cost and governance typically consists of enforcing SLAs and otherwise meeting essential goals.