Last edited 21 Feb 2021

Vested outsourcing



[edit] Introduction

Vested outsourcing is a form of business process outsourcing (BPO) in which the client and the service provider appointed to deliver non-primary business activities develop shared business models and goals. Instead of traditional arrangements where clients and third-party suppliers work in silos to achieve results for different business entities, vested outsourcing aims to create a partnership that is mutually beneficial.

[edit] History

Vested outsourcing has existed for several decades, but it formally emerged in the United States as an alternative business model in the mid- to late-2000s as a response to Lean thinking and Lean Six Sigma. Research conducted at the University of Tennessee by Kate Vitasek resulted in the development of the approach and established the five differences between conventional outsourcing and vested outsourcing:

  1. Concentrate on results, not tasks.
  2. Look at what happens and not how it happens.
  3. Set mutual goals and concrete results.
  4. Establish a fee structure that includes incentives that benefit the client and the service provider.
  5. Use insight instead of oversight when dealing with the relationship.

In addition to Vitasek, the development of vested outsourcing has been explored by Ken Ackerman, Jim Eckler, D. Michael Ledyard. Daniel Logan, Karl Manrodt, Art Van Bodegraven and others in the field of strategic business management.

[edit] Building a partnership

Creating a shared value proposition or solutions concept is at the core of vested outsourcing, and this separates it from standard contractual arrangements. Both parties must agree to the terms of the arrangement and decide upon a desired outcome together. The outcome should be measurable through a set of objective benchmarks such as:

Vested outsourcing can result in aligned business strategies that can build more collaborative partnerships between clients and service providers. However, as with traditional business process outsourcing, vested outsourcing can also create an over-dependence on service providers and risk the creation of data privacy breaches.

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