Sustainable outsourcing success hinges not just on operational efficiency but on the strength of the client-vendor relationship. For business leaders managing global partnerships, conflict resolution is not a reactive measure—it’s a strategic capability.
What Drives Conflict in Outsourcing?
Understanding conflict sources is the first step in prevention. Common drivers include:
Inconsistent service delivery
Companies providers to deliver a certain level of quality. When that level is not maintained by the provider, clients can lose confidence in them.
The most common reason for the conflict is a misunderstanding in how the service should be delivered. Unclear service level agreements (or SLAs) can confuse both clients and providers on whether the targets are being met. There might be even questions about whether these service levels are even attainable.
Intellectual property misunderstandings
Conflicts surrounding intellectual property are also fairly common. These arise when there are questions about the ownership of IP assets.
One typical scenario is when providers make IP assets as part of their contracted work. The main question here is whether they can claim ownership by virtue of being the creator. Unclear answers to the questions can lead to friction between them and clients.
There is also the matter of unauthorized use of IP assets. This can go both ways and can create distrust between clients and providers. It can even end up requiring legal mediation.
Erosion of trust
The above conflicts can end up creating an air of distrust between clients and outsourcing providers. This can prevent them from establishing long-time partnerships crucial for growth.
Misconduct by both parties can also lead to trust issues. Misuse, or even outright sale, of company data is a common root cause There is also the issue of not disclosing operational information, like the use of subcontractors, which can lead to business disruptions because of quality issues
Operational misalignment
While the above causes might be complex, disputes can also happen simply due to differing business priorities. For instance, the client might prefer doing a business process a certain way, which might not match with the provider’s own method.
This type of dispute is not that hard to resolve, as it often comes down to settling for a compromise. But there is also the chance that both sides can’t iron out the details and might decide to just separate.
Each of these challenges can disrupt the path to building a collaborative vendor-client relationship.
Outsourcing Success Through Resolution Ecosystem: What to Look For
Dealing with disputes should not be just about resolving one issue at a time. Leaders must focus on developing a robust dispute resolution model. This model needs the following key characteristics.
Proactive
A clear escalation process will help dispute managers quickly get in and do their job. This process should include:
➡️ Recommended initial actions
➡️ Clear steps for escalation to higher authorities
➡️ Re-evaluation methods to help refine the process for future use
Structured
A clear hierarchy also plays a crucial role in faster resolutions. Members of the conflict resolution team should know the limits of their roles to ensure that they don’t overstep. They should also have a detailed collection of contact personnel for both clients and outsourcing providers to help in the resolution process.
Flexible
The dispute resolution team should be adept in using different methods to address each case, including:
👍 Direct negotiation: Team managers from the client and provider side should be capable of handling minor disputes within their departments.
👍 Third-party mediation: Both parties should create an independent dispute committee to serve as mediator for larger cases.
👍 Legal resolution: Both sides should have clear guidelines on when a conflict should be raised to the court or use other legal remedies like a private judgement.
Embedding this framework within your vendor management process improves both agility and accountability.
3 Steps to Prevent Conflict
While resolution is at the heart of a good dispute resolution model, future prevention should also be an essential part of this strategy. For a more strategic approach, companies and their providers should follow a three-step approach.
➡️ Identify future strategic shifts
Even early in the partnership, companies and their outsourcing partners should already forecast their future business development. By comparing their respective forecasts, both sides can identify where conflict might arise. They can then devise strategies to address these conflicts..
➡️ Preempt misalignment
To ensure that their business goals are still in alignment with each other, both parties should hold regular joint planning sessions, each side will give an update on their business development. They can then come together to address these changes and create appropriate strategies
➡️ Reinforce accountability through shared success metrics
Having the same measure of success encourages clients and their outsourcing partners to move towards common goals. That also encourages them to build a more harmonious working relationship and actively prevent conflicts.
This approach strengthens the foundation for establishing trust in outsourcing relationships.
RELATED: 10 Critical Outsourcing Challenges And How To Solve Them
Cultural Synergy as a Risk Mitigation And Outsourcing Success Tool
Culture plays an important role in the success of an outsourcing partnership. As such, even small misalignments can result in potential conflicts. Leaders should actively seek cultural compatibility through
🎯 Rigorous partner vetting to ensure outsourcing success
It all starts with finding the partner that best fits with the company. Business leaders should look into how the provider’s values align with theirs. They also want to create a comprehensive criteria to narrow their selection
🎯 Outsourcing success through ongoing dialogue
Companies and their outsourcing providers should also be ready to communicate with each other. This active exchange also encourages each side to find more ways on how they can work together more harmoniously. In particular, outsourcing providers should be able to raise concerns faster to open dialogues.
🎯 Empowering frontline staff
While the management is the main arbiter for conflicts, teams on both sides should also have the ability to address conflicts. An assigned point person within the team can guide members in resolving conflicts effectively before then can impact operations.
These initiatives are critical to how to build strong relationships with outsourcing providers.
RELATED: The Secrets To Motivating Outsourced Remote Teams
Achieve Outsourcing Success With Harmonious Partnerships
In today’s distributed business environment, conflict is not a threat—it’s a management discipline. While they can negatively impact operations when left unresolved, they can also be a source of learning and business growth.
This holds true when dealing with conflicts that arise when outsourcing. An effective resolution strategy can help strengthen the partnership and make it more adaptable to changes. All that contributes to lasting outsourcing success, as both client and provider strive to achieve their common goals.
We at Virtua Solutions have always made it our mission to deliver that same level of outsourcing success to our clients. And we are ready to build and nurture a strong, conflict-free relationship with our clients to achieve that.
Team up with us and enjoy a strong and harmonious partnership that on your way to business success!