How the National Outsourcing Association Defines Industry Best Practices

Outsourcing can be complex, presenting challenges such as mismatched expectations, hidden costs, and security risks. To navigate these issues successfully, organizations need a clear framework and a shared understanding of best practices. The Global Sourcing Association (GSA), formerly the National Outsourcing Association, serves as a leading authority on sourcing and outsourcing.

It provides a comprehensive set of standards, a code of conduct, and a lifecycle framework to guide organizations. This blog post explores how the GSA UK defines these industry best practices and how you can apply them to your own sourcing initiatives.

What is the Global Sourcing Association and Why it Matters Today

The Global Sourcing Association, or GSA, is the new name for what was formerly the National Outsourcing Association (NOA). This change reflects its expanding global focus beyond the UK.

The GSA is a not-for-profit trade body that represents the interests of the global sourcing industry. It works with buyers, service providers, and advisors to promote ethical, sustainable, and high-value outsourcing.

The GSA’s mission is to set the benchmark for professionalism and to establish a unified approach to outsourcing best practices. In an industry that is constantly evolving, with new technologies and business models emerging, the GSA provides a stable foundation.

It helps organizations build strong, collaborative relationships with their partners. The GSA’s guidelines and frameworks are crucial for anyone involved in outsourcing, from seasoned professionals to newcomers.

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The Global Sourcing Standard from GSA UK

The cornerstone of the GSA’s work is the Global Sourcing Standard. This comprehensive framework defines and measures excellence in sourcing. It provides a common language and a clear set of principles for all parties involved in an outsourcing agreement.

The standard ensures that outsourcing relationships deliver maximum value for both the buyer and the provider. It’s an essential guide for anyone looking to implement outsourcing standards.

Core Pillars of The Global Sourcing Standard

The Global Sourcing Standard is built on several key pillars that cover the entire outsourcing lifecycle. These pillars provide a holistic view of a successful sourcing engagement. They are:

• Strategy and Business Case: This pillar aligns outsourcing with your overall business strategy. It’s about ensuring the initiative has a solid business case and will deliver tangible value.

• Market Engagement and Supplier Selection: This pillar outlines the process of identifying and selecting the right partners. It emphasizes a fair, transparent, and rigorous supplier evaluation process.

• Contracting and Commercial Design: This focuses on creating contracts that are not just legally sound but also flexible and fair. It’s about building a commercial model that encourages collaboration and rewards value. This pillar is critical for outsourcing contracts.

• Transition and Knowledge Transfer: This is about smoothly handover of services and knowledge. It’s a critical phase that can make or break an outsourcing relationship. The GSA emphasizes a structured approach to transition and knowledge transfer in outsourcing.

• Governance and Relationship Management: This pillar covers managing the ongoing relationship. It’s the heart of effective outsourcing governance. It includes setting up clear governance structures, communication protocols, and performance management systems.

• Value and Innovation: This is about moving beyond simple cost savings to continuous improvement and innovation. It’s a key part of the GSA’s philosophy, promoting continuous improvement in outsourcing services.

• Exit and Renewal: This pillar addresses the end of the contract. It provides a framework for either renewing the relationship or exiting in an orderly and non-disruptive way.

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How to Map Your Current Operating Model to the Standard

To apply the Global Sourcing Standard, you should first assess your current operating model against its pillars. You can conduct a self-assessment or work with a GSA-certified advisor. The process involves:

• Gap Analysis: Identify where your current practices differ from the standard.

• Prioritization: Decide which gaps are most critical to address first.

• Action Plan: Develop a plan to close those gaps. This could involve updating your outsourcing framework, renegotiating outsourcing contracts, or improving your supplier relationship management.

Mapping your model to the standard helps you identify weaknesses and create a roadmap for improvement. It’s a proactive approach to ensuring your outsourcing initiatives are set up for success from the start.

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GSA Code of Conduct and Ethics in Outsourcing

Ethics are not just a nice-to-have in outsourcing; they are a fundamental requirement. The GSA has a comprehensive GSA Code of Conduct that sets the bar for ethical behavior in the industry.

This code applies to buyers, providers, and advisors. It promotes fairness, transparency, and integrity in all dealings. This is a critical component of responsible and ethical outsourcing.

Behavioural Expectations for Buyers, Providers and Advisors

The code of conduct sets specific behavioral expectations for each party.

• For Buyers: The code expects buyers to be transparent about their requirements and to engage with providers fairly. This includes a commitment to a fair supplier evaluation process and a clear procurement and outsourcing policy.

• For Providers: Providers are expected to be transparent about their capabilities and limitations. They must honor their commitments and act with integrity.

• For Advisors: Advisors must act in the best interest of their clients and avoid any conflicts of interest. They are expected to provide objective advice.

Turning Ethical Principles Into Contract and Governance Controls

The GSA emphasizes that ethical principles must be more than just words. They need to be embedded into the outsourcing relationship through formal controls. This includes:

• Contract Clauses: Include clauses in outsourcing contracts that require compliance with the code of conduct.

• Governance Structures: Build governance models that promote open communication and problem-solving.

• Reporting Mechanisms: Establish a process for reporting and addressing ethical breaches.

These measures help to ensure that both parties live up to their commitments and that the relationship is built on a foundation of trust. This is a key aspect of outsourcing compliance standards.

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Standard Terms and Model Contracts That Reduce Friction

One of the biggest sources of friction in outsourcing is the contract negotiation process. The GSA addresses this by promoting standard outsourcing terms and model contracts.

These templates provide a starting point for negotiations, reducing the time and cost associated with legal drafting. They are based on outsourcing best practices and are designed to be fair to both parties.

Service Level Design and Target Setting

The GSA provides guidance on how to design effective Service Level Agreements (SLAs). It moves beyond simple, binary metrics to a more holistic approach.

• Outcome-Based Metrics: Instead of just measuring inputs, the GSA recommends measuring outcomes. For example, instead of measuring “call handle time,” measure “customer satisfaction.”

• Joint Target Setting: The GSA encourages buyers and providers to set targets together. This fosters a sense of shared responsibility and collaboration.

• Service Level Agreements (SLAs): The GSA provides a library of Key Performance Indicators (KPIs) and a methodology for setting realistic and meaningful targets.

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Pricing Models That Reward Value

The GSA also advocates for pricing models that move beyond simple fixed-price or time-and-materials models. These models, which are a key part of outsourcing contracts, are designed to reward value and innovation. Examples include:

• Gain-Sharing: Both parties share in the financial benefits of improvements and innovations.

• Outcome-Based Pricing: The provider is paid based on the business outcomes they deliver, not just the services they perform.

This approach aligns the interests of the buyer and the provider and encourages long-term partnership. It’s a key part of outsourcing innovation and automation.

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The Outsourcing Lifecycle That the Global Sourcing Association Promotes

The GSA outlines a comprehensive outsourcing lifecycle that serves as a roadmap for any outsourcing initiative. Following this lifecycle helps organizations avoid common pitfalls and maximize their chances of success.

Strategy and Business Case

The first step is to develop a clear outsourcing strategy and business case. This is where you answer key questions: Why are we outsourcing? What are our goals? What are the risks and benefits? This phase is about setting a solid foundation for the entire project.

Market Engagement and Supplier Selection

This phase involves identifying potential providers and conducting a thorough supplier evaluation process. It’s about more than just finding the lowest price. The GSA emphasizes looking for a partner with the right cultural fit, a strong financial position, and a track record of success.

Contracting and Commercial Design

Once a partner is selected, the focus shifts to creating a fair and flexible contract. This is where you use the GSA’s guidance on outsourcing contracts, pricing models, and SLAs to build a robust legal and commercial framework.

Transition and Knowledge Transfer

This is a critical phase. It involves the smooth handover of tasks, processes, and knowledge from the internal team to the service provider. The GSA’s guidance on transition and knowledge transfer in outsourcing helps to minimize disruption and ensure a smooth start to the new relationship.

Operations and Continuous Improvement

This phase is about managing the day-to-day relationship. Effective outsourcing governance is key here. The GSA emphasizes the importance of continuous improvement in outsourcing services. The focus is on building a partnership that evolves over time to deliver increasing value.

Exit and Renewal

The final phase involves either renewing the contract or exiting the relationship. The GSA provides a framework for a planned and orderly exit, which helps to protect the business and minimize disruption. It’s a key part of a robust outsourcing framework.

Governance, Metrics and Assurance in Line with GSA Guidance

Effective outsourcing governance is the key to a successful long-term relationship. The GSA provides a detailed framework for governance, metrics, and assurance.

This is about building a system that allows both parties to manage the relationship effectively and ensure that the agreed-upon outcomes are being delivered.

KPI Library for Technology and Business Services

The GSA has developed a comprehensive library of Key Performance Indicators (KPIs). These KPIs cover a wide range of services, from technology to business processes. They are designed to be meaningful and to drive the right behaviors. This KPI library is a valuable resource for anyone involved in vendor performance monitoring.

Assurance Approaches Buyers Can Trust

The GSA also provides guidance on how buyers can get assurance that their providers are meeting their obligations. This includes:

• Audits and Certifications: Using third-party audits and certifications to verify compliance with standards.

• Regular Reporting: Establishing a clear and regular reporting schedule.

• Joint Reviews: Conducting regular joint reviews to discuss performance and address any issues.

This is a key part of vendor risk management.

Skills and Professional Accreditation From the NOA and GSA

The GSA, and formerly the National Outsourcing Association, recognizes the importance of skills and professional development. It offers a range of training and accreditation programs.

These programs are designed to equip sourcing professionals with the knowledge and skills they need to succeed.

Competencies for Sourcing Leaders

The GSA has defined a set of competencies for sourcing leaders. These competencies go beyond technical knowledge and include:

• Relationship Management: The ability to build and maintain strong relationships.
• Commercial Acumen: The ability to understand and manage the financial aspects of a deal.
• Negotiation Skills: The ability to negotiate fair and flexible outsourcing contracts.
• Leadership: The ability to lead a team and inspire confidence.

Earning a GSA accreditation is a mark of a professional committed to outsourcing best practices and outsourcing professional development.

Responsible and Sustainable Sourcing in Practice

In today’s world, organizations are expected to be good corporate citizens. The GSA recognizes this and has integrated responsible and sustainable sourcing into its standards.

Data Protection and Information Security

Data protection in outsourcing agreements is a critical area. The GSA provides guidance on how to ensure that sensitive data is protected. This includes guidance on:

• Compliance with Regulations: Ensuring compliance with regulations like GDPR.
• Security Controls: Implementing robust security controls.
• Risk Assessments: Conducting regular risk assessments to identify and mitigate security threats.

Social Value and Ethical Supply Chains

The GSA also provides guidance on ensuring that your supply chain is ethical. This includes addressing issues like modern slavery in supply chains. The GSA’s code of conduct and ethics promotes a commitment to social value and ethical sourcing.

How to Apply Global Sourcing Association Best Practices In Your Organisation Today

Applying GSA outsourcing best practices doesn’t have to be a monumental task. You can start with small, manageable steps.

• Self-Assessment: Use the GSA’s framework to assess your current outsourcing practices.
• Training: Invest in training for your sourcing professionals.
• Pilot Project: Apply the GSA’s framework to a new, small outsourcing project.

Downloadable Templates and Checklists To Include In Your Post

To help you get started, we’ve created a series of downloadable resources.

• Outsourcing Business Case Template: A template to help you build a solid business case for your project.

• Supplier Evaluation Checklist: A checklist to ensure you conduct a thorough supplier evaluation process.

• Governance Model Template: A template to help you set up an effective sourcing governance model.

Common Mistakes The Global Sourcing Association Warns Against And How To Avoid Them

The GSA has seen it all. It warns against several common mistakes that can derail an outsourcing project.

• Lack of a Clear Strategy: Outsourcing without a clear strategy is a recipe for disaster. You need a solid outsourcing strategy and business case from the start.

• Focusing Only on Price: The cheapest provider is rarely the best. You need to focus on value, not just cost.

• Poor Governance: A lack of effective outsourcing governance can lead to mismatched expectations and a breakdown in the relationship.

• Ignoring Risk: Failure to address risk and compliance in outsourcing contracts can lead to serious problems down the line.

By understanding these mistakes and following the GSA’s guidance, you can significantly increase your chances of success.

Conclusion And Next Steps

The Global Sourcing Association, formerly the National Outsourcing Association, provides an invaluable resource for anyone involved in outsourcing. Its frameworks, standards, and code of conduct provide a clear roadmap for success. By applying these outsourcing standards, you can move beyond a transactional relationship and build a true partnership that delivers long-term value.

Your next steps should be to explore the GSA’s resources, including their Global Sourcing Standard, and to download the templates we’ve provided. Start by assessing your current practices and identifying one area where you can apply a GSA outsourcing best practice. This will put you on the path to more successful and sustainable outsourcing relationships.

FAQs About The National Sourcing Association