LSO engagements require a genuine partnership that affords both sides clarity and flexibility.
By John Higgins
During the past seven years of my affiliation with the outsourcing industry, the relationship between buyers and providers has intrigued me. Many of you have heard the phrase “healthy tension.” The implication of this phrase is that it is good, even healthy, for the buyer and the provider to share a level of tension in the business relationship. Alas, in the field of learning outsourcing services (LSO), I have sometimes observed this healthy tension move closer to the camp of unhealthy contention.
Indeed, a couple of years ago when I was hosting a panel discussion on the state of our industry, I stepped off the stage to visibly demonstrate how outsourcing relationships need to work. As I approached the audience, I asked for a buyer to stand up. At the time, I was a member of the provider community. As I approached the buyer, I greeted him and then embraced him in a hearty, back slapping hug. My intent was to point out that the relationship between buyer and provider needs to be one of partnership. Much to my surprise, another person in the audience stood up and publicly took me to task. This person, in a rather agitated fashion, said “you (as in a provider) need us (the buyers) more than we need you!” I was immediately taken aback and thought privately, “How is this industry ever to make this work if that is the state of buyer/provider relations?”
Contrary to that buyer’s view, in order for us to build effective, impactful LSO arrangements we must build partnerships—partnerships grounded in trust and collaboration. Now don’t think I’m getting all touchy, feely on you here. However, I do believe our industry has lost the spirit and the intent of effective business relationships. Our industry seems to be trying to create constructive and positive business relationships through a labyrinth of complex legal terms and conditions, managed by service level agreements (SLAs).
Learning outsourcing relationships are complex. Outsourcing arrangements span a wide array of services, across global boundaries, for periods of up to five years. Well-structured agreements are necessary to protect the business interests of the parties involved. However, once the negotiations have been completed, the agreements have been signed, and the procurement team, the legal team, the business development team, and the third- party advisors have left the building, people on the ground must make the relationship work. Those people need to construct effective working relationships, all the while concerned with the enforcement of rigid terms and conditions and the attainment of ambitious SLAs.
I spoke with several buyers of learning services outsourcing, and I asked them to describe, from the buyers’ perspective, the three elements they view as crucial to a successful outsourcing relationship. Here are the themes I heard.
Providers need to provide services that are grounded in a clearly articulated set of business case elements that the buyer has committed to. The provider needs to move as rapidly as possible through the transition phase of the relationship to ensure cost reduction is evident sooner rather than later. Once cost reduction has been integrated into day-to-day operations, providers then need to seek additional financial elements to sustain the viability of the agreement over time.
Providers need to consider flexibility and adaptability to changing business and economic conditions. The typical outsourcing agreement makes buyers feel like they can buy any color black Model T (to paraphrase fans of Henry Ford’s car) they wish. Buyers understand the value of a standard, consistent, factory-like approach to service provision. However, when the factory fails to respond to the market, the market will seek more nimble and responsive providers.
With the emergence of digital media and ready access to networks wherever we are, the development and deployment of learning has never before seen a greater need for rapid innovation. Providers are in the unique position to bring their customers the very latest in learning innovation, and LSO arrangements need to be structured to provide for innovation over the life of the arrangement.
And finally, providers need to act as true partners and team members. They need to ensure they represent the best interests of the buyers’ company and visibly demonstrate that they will place the buyers’ interests ahead of their own.
Next month, we’ll get to hear from providers on what they think the key elements to a successful relationship are. As we move forward in future columns, we’ll seek to leverage the respective voices of buyers and providers to get you thinking about how to improve the success of your LSO arrangements—regardless of which side of the table you sit.
John Higgins is founder of Higgins Learning Group and was previously global senior director for Accenture HR & Learning BPO Services. He can be reached at