Managing Outsourced Relationships

More and more companies are outsourcing everything from IT to call centers to facilities management.  Measuring the effectiveness of the outsourcer is crucial and can mitigate tons of downstream issues for both companies.  Consider the following to help you better measure outsourcer effectiveness:
Get crisp agreement on what will be measured - Be as quantitative as possible with measures and ensure that the measures matter.  It is easy to create scads of measures that no one really looks at, except for the poor analyst who has to spend hours putting the measures together.

Know what you're going to do if measures turn unfavorable - So you've got these great measures, and all of a sudden one of them starts turning south.  Knowing potential courses of action when measures turn unfavorable help you take better and more effective action as opposed to responding in crisis mode.
Amazon.com Widgets Be realistic - Just because you've outsourced a function doesn't mean there will be dramatic improvement right off the bat.  Develop realistic improvement benchmarks which both parties agree to.

Get examples from the outsourcer on measures from other clients - Ask the outsourcer for other client examples and what has worked well/not so well at that client.  If you can avoid completely re-creating the wheel, do it.

Agree on regular, standing meetings to review performance measures - Have a standing, periodic meeting where both parties review agreed-upon measures and discuss both successes and challenges.  It's super important that the program manager for the outsourcer drive the meeting; don't let the salespeople do it.