Smarter Outsourcing: An executive guide to understanding, planning and exploiting successful outsourcing relationships

Leaving dysfunction behind

In our experience this second approach usually proves to be a big mistake. When the leave-behind organization is too large it creates dysfunctions that could ultimately destroy the deal. Put simply, this approach indicates that the board has lost its nerve or is not fully committed, and has therefore tried to go for a compromise solution that is neither in-house nor outsourced. The resulting dysfunction means client business is likely to pay a heavy price.

The first area of dysfunction resulting from too large a leave-behind organization is that it tends to create a tremendous amount of finger-pointing, by making it far too easy for the retained organization to blame the supplier for unpopular decisions. This, together ...