Many successful outsourcing engagements have settled into comfortable relationships, some going on for decades now, renewing at times the same contracts with few tweaks. Having proven their ability over time, service providers are looked upon as long-term partners. Familiar with a company’s core business and culture, providers are now offering clients management consulting process improvement services. Similarly, companies are asking for more provider capability: Can they take on higher-skill processes? Can they handle both the back office and the front office?

While the service providers are often looking to cross sell and up-sell, some engagements have lagged behind in offering value.  Depending on how engagements are structured the service levels are impacted for good or for worse, Recently I came across an engagement structure that moved from T&M with a rate card to guaranteed minimum per year for a basket of services. The immediate impact after moving into this structure was clearly visible. The service providers gradually downscale the top talents who were obviously paid more and moved in bunch of new recruits and also moved out key people with prized visas from onsite to other clients thus impacting the performance.

As companies go digital and scout for right talent to take them into the next level of automation be it Machine learning, Robotic Process Automation, Block Chain – just to name a few, they need to be more diligent with picking the right partners and not hesitate to bring back or move to other providers that are more capable to take their partnerships to next levels.  After all partnerships are the key to progress.  Long term engagements are giving way to short and medium term with focus on outcomes.

The days of ten year deals are nearing to an end, that is too long term given the way technology innovations are taking shape.  Getting locked in has its consequences.  Its not cost arbitrate that is weighing in on C-Suite, its capability Vs. Ability.  Over the last couple of years, more and more companies are looking at their outsourcing engagements closely to re-shape their combined futures.  Rightfully so, this is the right time to review and take remedial action.