Outsourcing & The Engagement Phase

Outsourcing Engagement Phase

Table of Contents

The Deer Valley Ski Resort Experience

Years ago, I took a break from university and worked at Deer Valley Ski Resort for a season. That experience, specifically the new employee orientation, had a huge impact on my professional career. Key lessons I learned at Deer Valley and advice given to me by Bob Wheaton (Deer Valley’s former President/GM) have stayed with me over the years and served as the foundation for much of what I do.

Bob Wheaton stopped by early in the new employee orientation and offered some insights. Rather than talk about the resort’s history, our new jobs, etc., Bob went to great lengths to explain his view of customer service and why it is so important.

Bob explained two grand challenges with providing customers with the best experience possible.

  1. You need quickly create an “authentic connection” with each customer and understand their expectations.
  2. Once you know what the customer expects, you take the chaos out of the process and focus on delivery.

I kept Bob’s words in mind throughout my time at the resort and watched the overall experience Deer Valley provided to its customers. Unlike most resorts, Deer Valley had employees involved in many functions where other resorts did not. Guests noticed.

I remember riding the chair lift with a couple that came up to the resort from Salt Lake City for the day. I asked them about their experience so far and was proud of the story the couple told. This couple arrived in the parking lot early. Upon arriving, a Deer Valley employee met the couple at their car. After introductions, the Deer Valley representative asked the couple how they could help. The employee helped unload skis from this couple’s car and noticed that they only had two pairs of skis, although they had two children with them. The employee asked the couple if all four were skiing and if they needed rental skis. The couple responded that one child would be skiing that day (needing rental skis), and the other would be in daycare. The Deer Valley employee called the daycare team and let them know a child was coming their way. The employee also called the rental shop and passed along basic information about the child needing skis, allowing the shop to be ready. 

The service offered by the Deer Valley employee was not some grand gesture. The employee created an authentic connection with this family, asked them what they needed, and took basic steps to help this family have the best experience possible.

It was mid-morning when riding up the chairlift with this couple, and they were still gushing about the experience so far. The husband explained that their family loved to ski, but the entire process was a hassle with two younger children. The couple must wake up early to get their children ready. Even if they packed their car the night before, it takes a lot of time for them to get out of the house. Once they get to the ski resort, the real challenge begins. Corralling two kids while carrying all gear, getting rental skis, dressing in ski clothes, etc., is a tough and time-consuming task that they dreaded.

The couple did not describe their experience with Deer Valley employees as if they were artificially made to feel like royalty. The description was that Deer Valley took the hassle out of taking a family skiing. Deer Valley employees seemed sincere and eager to help and had an almost intuitive sense of what the couple needed to make the day as enjoyable as possible.

I think the Deer Valley experience speaks for itself. Although dealing with numerous challenges compared to other ski resorts nearby (a lack of the Utah powder found at Alta and Snowbird, the views at Sundance, etc.), Deer Valley is routinely rated as one of the world’s top ski resorts. They create an authentic connection with their customers better than any company I know and deliver to set expectations with a smile.

Outsourcing: The Race to Sign Contracts & Become Billable

Outsourcing Engagement Phase

Immediately after winning a deal, outsourcing vendors typically begin a highly aggressive press to sign contracts. Vendors know that the risk of losing the deal will increase each day while waiting for the client’s signature.

The account manager leading the sales cycle will get called by their management daily until the client signs the contract. Unfortunately, this race to sign contracts often comes at the expense of clarity.

Definitions of key engagement dynamics are frequently pushed out until after contracts are signed. Vendors often state that detailed planning needed to ensure successful delivery will be completed in a kickoff work session after contracts are signed. The punting in defining details until after contracts are signed is a critical mistake.  

Once contracts are signed, a second vendor dynamic further compounds the problem: Vendors pressure both their internal team and the customer to become billable as fast as possible.

The compounded effect from both the race to sign contracts and become billable as soon as possible put most outsourcing engagements at high risk of ongoing dysfunction from the very start. Tasks that are critically important to the long-term success of the engagement (such as staffing plans, knowledge transfer, information security, etc.) are not defined. Further, a cohesive team needed to resolve problems is never created.

You need an intentional phase in the outsourcing engagement between awarding the project to your chosen vendor and signing contracts. You need the “Deer Valley experience,” where you create an authentic connection, set expectations, and define what you both need to ensure success.

The Outsourcing Engagement Phase

Outsourcing Engagement Phase

All outsourcing engagements (even if just an additional Statement of Work within an existing Master Service Agreement) need to have a formal “Engagement Phase” between awarding the project to the vendor and signing contracts.

This expectation for this Engagement Phase needs to be communicated to all prospective vendors throughout the procurement process. Great outsourcing firms will mandate this phase before contracts without a prompt from the client. The best outsourcing firms will have a formal and highly templated methodology walking each client through this process.

If your chosen outsourcing firm seems to be pushing you to race past this process, I highly recommend you reconsider working with the vendor. Typically, this is a sign they view you as an annuity and are not committed to your success.

The actual Engagement Phase should be a series of formal work sessions with top representatives from both the client and vendor. Including:

Work Session 1: Define the Core Team

The first work session should define the cohesive customer-vendor team. Key roles that need to be defined include:

  1. Executive Sponsors: One top leader inside the customer and the outsourcing firm should be named as Executive Sponsors. The Executive Sponsors are the top oversight and control function of the outsourcing engagement.

  1. Stakeholders: Who are the key stakeholders inside the customer that need to be included in defining requirements, reviewing deliverables, etc.

  1. Engagement Managers: The Engagement Managers are the top managers inside the client and vendor that will manage the outsourcing engagement daily.

  1. Functional Managers: Functional managers are people inside the client and vendor that manage specific functions that may be used in an outsourcing engagement. Examples can be the head of QA inside the vendor, information security representatives, etc.

  1. Subject Matter Experts: The outsourcing engagement may use specific Subject Matter Experts (SMEs) inside the vendor’s greater team. These SMEs may be technical experts, industry experts, or others that can provide value to the outsourcing engagement. List the appropriate SMEs offered to the engagement by the vendor, and note their promised time commitment. My experience has been that SMEs may be difficult to find later in an engagement if they are not explicitly noted and agreed to by vendors.

Work Session 2: Risk Management, Issue Management, & Change Control

Immediately after defining the core team, complete a work session with the Executive Sponsors and Engagement Managers to define and implement risk management, issue resolution, and change control. The moment these are defined, use them ongoing throughout the engagement (including throughout the remaining Engagement Phase.)

Officially, use the newly defined change control mechanism for each defined deliverable throughout the Engagement Phase. Bottom out on a detail, lock it down to an appropriate level. Top outsourcing firms will likely be thankful for a more rigorous change control function. If done well, this reduces their delivery risk.

Work Session 3: Operations and Management

In a smaller group (the Engagement Managers at a minimum), define how the engagement will be managed daily. Many topics should be covered in this meeting. The primary topics include:

  1. Define key meetings, objectives for these meetings, and attendees.
  2. Define the management and communication infrastructure used (I.e., SharePoint, Microsoft Teams, Zoom, etc.)
  3. Define the project management methodology to be used.
  4. Define an engagement communication plan.
  5. Define key reports (status reports, etc.) that need to be produced, the cadence of publishing, the method of publishing, and the receiving audience.
  6. You will need to define performance standards, methods for measurement, and reporting performance- hold out on defining these until working through the SLA later in this engagement definition process.

Work Session 4: Program Technical & Physical Infrastructure

I estimate that 90% of the outsourcing engagements I have been involved with do not spend enough time working through an infrastructure plan. The vendor’s team will frequently show up at the client for the first day of work without access to the client’s facility or network. Laptops are often delayed, etc.

This work session will be lengthy. There is an enormous amount of information to cover, and it must be done in great detail. During the procurement process, ask prospective vendors for the checklist they use in defining infrastructure opens with each customer. Question the merit of any vendor that cannot provide you with a detailed checklist specific to this work session.

At a minimum, you will need to bottom out on topics such as:

  1. The work location for the vendor‘s team (complete with site and network access if the team will be located onsite with the client).
  2. Who will provide the necessary laptops, workstations, phones, etc., needed by the team?
  3. Who provides the additional tools, software, and other technologies?
  4. How will both the customer and vendor manage the versioning of all tools?
  5. What security tools will be used?
  6. How will physical access be controlled if the vendor’s team works remotely from a vendor facility? Digital ID cards? Etc.?

Work Session 5: Information Security

Although security should be a material component of the infrastructure work session (Work Session 4), hold a specific work session related to information security. Invite information security experts from both the client and vendor to this meeting and thoroughly review the topic.

This session must produce the following:

  1. Identification and material justification of the need for any confidential or controlled information.
  2. Validation that the use of the vendor, the vendor’s team, and the delivery location do not violate any applicable laws.
  3. All tools, technologies, policies, procedures, etc. needed to mitigate the risk of an information leak are well known, planned, and included in the engagement.
  4. The engagement will comply with any applicable privacy laws (I.e., HIPPA, etc.)
  5. No information or internal data deemed to be controlled and not needed by the outsourcing engagement will be accessible by the vendor and their greater team.
  6. A thorough and realistic Corrective Action Plan (CAP) or Emergency Response Plan (ERP) is defined and ready to be activated in the event of an information leak.


I have been called an alarmist when I talk about information security. My intent is not to dissuade you from pursuing an outsourcing engagement. I intend to help you understand how serious this topic can be. I have helped several outsourcing customers deal with the outfall from information security problems. Without preparation, the result can be highly damaging.

Work Session 6: Team Buildout

Outsourcing buyers need to accept that most outsourcing engagements will require the vendor to hire an entirely new team. There are scenarios where a team may roll out of an existing outsourcing engagement and be available to a new client. That said, it is rare.

You need to define a sound and realistic hiring plan with your vendor. As much as some of us may think we know how to hire talent in other countries, we rarely do. You will need to accept leadership from your chosen vendor in defining a sound hiring program.

Key points to consider:

  1. You need to be involved. The issue is not about ensuring you filter out bad talent. Your involvement is to help ensure you get commitment from the good talent. Competition is high to land the best talent in all major outsourcing hotspots. Top talent wants to see a face and know who they will be working with.
  2. Timing is critically important, and you (the customer) cannot be the time constraint. The competition for talent in many outsourcing hotspots is quite high. If you are going to review resumes before interviews, participate in interviews, etc., you should define work sessions with the vendor allowing you to do this in real-time.
  3. Please pay attention to the details and listen to your vendor when they tell you that you need to make a change.

If you have a large team to hire (anything over 50 people), I highly recommend you travel to the vendor’s delivery center and set up a production line to rapidly review resumes, arrange interviews, decide on extending an offer, etc. in quick progression.

Work Session 7: Knowledge Transfer

You need a specific work session to define how you and the outsourcing firm will complete the knowledge transfer process.

Each outsourcing engagement is different, and knowledge transfer practices will also need to be different. I recommend you consider the following:

  1. Documentation is made available electronically and centrally in some “wiki” style format.
  2. Creating formal classes on your company’s history, policies, procedures, corporate culture, performance standards, conventions, outsourced function, etc. Put these courses into an online learning management system and track the outsourcing firm’s completion of the classes. For top courses (key learning points), offer instructor lead training.
  3. Assign a mentor (client employee) to smaller outsourcing employee groups tasked with monitoring the team’s progress from the moment they are hired until the vendor begins billable services.
  4. Most importantly, implement a two-way shadow function. Bring the billable leaders (actual workers on your outsourcing engagement) to your office and allow them to shadow your team. While onsite at your facility, include additional education opportunities and team-building events. After the outsourcing team returns to their home office, send a representative team to the vendor’s facility to act as advisors as they begin providing services.

Work Session 8: Business Continuity

Depending on the nature of your outsourcing engagement, business continuity planning (BCP) may or may not be needed. If any level of BCP is needed, take the time to define your plan with the vendor and test it before you mark the task complete.

Some points:

  1. Never put yourself in a position where all IP, SMEs, tools, and capabilities specific to the project, product, or function being outsourced are 100% contained inside the outsourcing firm. You need to keep some level of internal capability operational if the outsourcing engagement stops. Measure the time to relaunch using internal teams, another outsourcing firm, etc. If the needed time and related costs are beyond your thresholds, scale back your outsourcing engagement.
  2. If something proposed by the vendor sounds fantastic, it is just that- fantasy. If a once in a thousand-year flood hits Bengaluru, the vendor’s employees will not be whisked away to safety by a fleet of helicopters as the city drowns.
  3. Unless you have tested your BCP to the point of achieving a successful result in a modeled scenario, you have nothing.

Work Session 9: Buildout Plan & Billable Criteria

You need a work session to capture details from all the above work sessions. You need to aggregate every deliverable (customer and vendor deliverables) in a detailed project plan. For each deliverable, you need to determine what constitutes “completed” and if the deliverable must be completed before the engagement becomes billable.

This buildout project plan can be lengthy and tedious for larger outsourcing engagements. The best advice I can offer is that you be thorough (mind the gap) and reasonable with your vendor.

Work Session 10: The Master Service Agreement, Statement of Work, and the SLA

The last formal work session that needs to be completed is the final negotiation, drafting, and signing of the appropriate contracts. Each agreement is critically important, and I will provide a future paper diving deep into specific considerations for these agreements.

I recommend waiting to finalize and sign these agreements until after all previous work sessions are done. Additional deliverables will be identified during the Engagement Phase that should be reflected in the Statement of Work and SLA. I also prefer to encapsulate the entire buildout plan defined in the Engagement Phase inside some form of an SOW (complete with any billing options agreed to with the vendor and final cutover to billing criteria defined.)

Final Words of Advice

Outsourcing Engagement Phase

The Engagement Phase can be tedious. I get it. I also admit that if I schedule back-to-back work sessions to hammer through each of the needed topics, I have difficulty operating at the depth needed without a significant flow of caffeine.

That said, take a look at the bigger picture. Go back to the Deer Valley story of the employee meeting the family in the parking lot. Like the Deer Valley story, this Engagement Phase is that moment you and the chosen vendor need to establish an authentic connection, set expectations, and methodically walk through every facet of the engagement needed to ensure success. This phase is the chance for both parties to explain who they are, what they want, and define how you can work effectively together.

Take the time to do this well. The best vendors will have this process packaged well in a highly-templated process. Ask your prospective vendors how they complete this phase and choose a vendor that does this phase well.

I promise that this phase will streamline your entire outsourcing engagement and help ensure you have a far more effective and cohesive relationship with your chosen vendor.