ISO 37500:2014 – Guidance on Outsourcing is the first international standard that provides organizations with the necessary foundation to establish and maintain successful outsourcing arrangements.
ISO 37500 was published on October 2014 by the International Organization for Standardization (ISO) because of a need to have a comprehensive international standard for outsourcing that could be applicable to all forms of outsourcing transactions. Thirteen countries participated in its development and inputs from buyers, service providers, outsourcing advisors and academics were taken into account.
This standard provides a comprehensive guide to organizations about the phases of an outsourcing, the processes that organizations need to implement and the governance that is required to be successful. These phases are:
- Outsourcing strategy analysis;
- Initiation and selection;
- Transition; and
- Deliver Value
The Standard describes each of the phases in detail, setting out the processes to be established or activities to be completed during the phase and for each process or activity, key success factors, inputs and outputs.
ISO 37500 also includes the terminology, concepts and procedures to improve the understanding of all parties involved in outsourcing.
Organizations of all types and sizes operating in any country can use ISO 37500 to effectively manage their outsourcing transactions, regardless of their size or nature. The standard is intended to relate to any outsourcing relationship, whether outsourcing for the first time or not, using a single-provider or multi-provider model, or draft agreements based on services or outcomes and it can also accommodate international, national and local laws and regulations.
Outsourcing offers organizations an opportunity to increase their efficiency and reduce costs by transferring work to external third-parties. However, these transactions involve challenges and hazards and if not managed correctly, they can be unsuccessful. ISO 37500 helps organizations effectively identifying and manage risks involved in outsourcing and also helps them by:
- Guiding organizations in developing and maintaining joint objectives.
- Helping organizations focus on relationship building, partner assimilation and dialogues.
- Gives guidance on good outsourcing governance for the mutual benefit of client and provider.
- Providing flexibility of outsourcing arrangements, accommodating changing business requirements.
- Enabling mutually beneficial collaborative relationships.
ISO 37500 is the first international standard on outsourcing to be developed, however, there are other models that are already in the market that can serve as guides to manage outsourcing transactions, and some of these are:
- Managing Outsourcing: The Lifecycle Imperative (London School of Economics working paper 139)
- Outsourcing Professional’s Body of Knowledge (IAOP)
- Vendor Sourcing and Management Model (International Data Corporation – IDC)
- The Outsourcing Lifecycle (National Outsourcing Association – NOA)
Organizations that decide to use ISO 37500 to manage their outsourcing arrangements will ensure positive relationships and improve communications. They will avoid misunderstandings and misleading expectations; this, in turn, will optimize costs and enhance business efficiency which will bring benefits to everyone involved.*
To the novice quality manager, ISO jargon can be extremely overwhelming. What is an NCR? What do you mean by OFI? Are we certified or accredited? But before you go and pull out your hair, let’s take a moment to go over some of the most frequently used terms and their definitions with regards to ISO and Management System Certification.