Vested Outsourcing (VO)

What is Vested Outsourcing (VO)?

Vested Outsourcing (VO) is a unique approach to outsourcing that focuses on creating a mutually beneficial and collaborative relationship between companies and their suppliers. In this type of outsourcing, both parties become vested in each other's success, working together to achieve common goals and objectives.

Traditionally, outsourcing has been seen as a transactional relationship, where companies simply hire external suppliers to perform certain tasks or provide specific services. However, Vested Outsourcing takes a different approach by emphasizing a long-term partnership based on trust, transparency, and shared interests.

One of the key principles of Vested Outsourcing is the idea of "what's in it for we, not what's in it for me." This means that both the company and the supplier work together to identify and align their goals, ensuring that they are mutually beneficial. By doing so, they create a win-win situation where both parties have a stake in the success of the outsourcing relationship.

To achieve this, Vested Outsourcing focuses on five core elements known as the "Five Rules":

1. Outcome-based focus: Instead of focusing on the inputs or activities performed by the supplier, Vested Outsourcing emphasizes the desired outcomes or results. This allows both parties to focus on what truly matters and encourages innovation and continuous improvement.

2. Focus on the long-term: Vested Outsourcing is not a short-term solution. It is a strategic approach that aims to build a long-lasting and collaborative relationship. By committing to a long-term partnership, both parties can invest in each other's success and work towards achieving shared objectives.

3. Shared risks and rewards: In Vested Outsourcing, risks and rewards are shared between the company and the supplier. This means that both parties have a vested interest in managing risks effectively and maximizing the rewards. By aligning incentives, they can foster a culture of collaboration and innovation.

4. Flexibility and adaptability: Vested Outsourcing recognizes that business environments are dynamic and constantly evolving. Therefore, it emphasizes the need for flexibility and adaptability in the outsourcing relationship. This allows both parties to respond to changes and challenges effectively, ensuring the continued success of the partnership.

5. Governance structure: Vested Outsourcing requires a robust governance structure that promotes transparency, accountability, and effective communication. This structure ensures that both parties have a clear understanding of their roles, responsibilities, and expectations. It also provides a framework for resolving conflicts and addressing issues that may arise during the outsourcing relationship.

By embracing the principles of Vested Outsourcing, companies can create a collaborative and mutually beneficial relationship with their suppliers. This approach goes beyond the traditional transactional nature of outsourcing and fosters a partnership based on trust, shared goals, and shared risks and rewards. Ultimately, Vested Outsourcing can lead to improved performance, increased innovation, and enhanced value for both parties involved.