The concept of flexibility is frequently encountered in the technology world. While it is often applied to software applications, it is also a critical success factor for long-term success in the field of outsourcing. That`s the view of Mike Sewell, Group Executive: Outsourcing at Business Connexion.
He notes that business activity is rarely static or predictable for any company. "If one looks at any of the major vertical markets in South Africa - the mining, financial, retail, manufacturing, energy or transport sectors - most are subject to a level of fluctuation in terms of volume. There are also numerous unpredictable external factors that contribute to business variability, such as the effects of globalisation, mergers and acquisitions and so on," he explains.
Since corporate activity is often erratic, it stands to reason that the contracts which determine the provision of outsourced technology services should also offer a level of variability.
While contracts for the provision of services often run to five years or even more, Sewell says astute service providers should offer their clients the opportunity to review arrangements depending on business conditions.
"The point is that if the client`s business shrinks or grows, it is in both companies` best interests to have engaged in a business model that is sensitive to such changes. That could even include reviewing the levels of service provided. Trading conditions may force the client in to a severe cost cutting mode. The service provider should be prepared to offer lower tiers of support and maintenance to reduce costs," he explains.
Such an approach reflects a mature business model - and also one that will forge a partnership that is mutually sustainable and beneficial. "Avaricious service providers that insist on the initial terms of the contract are in a legally unassailable position. However, putting undue pressure on the client will not only sour the relationship, but ultimately end in a lose/lose situation," adds Sewell.
Flexibility, believes Sewell, is a key differentiator. "When difficulties are encountered in an outsourcing relationship - which will happen - going back to the contract and forcing the issue is usually not the best solution. Both parties should be sensitive to the reality of not being able to predict the future, and should bring a willingness to renegotiate to the table. This mature approach ensures that the service provider remains relevant to the business of the client, while remaining profitable."
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