Outsourcing Standard

Outsourcing, the transfer of work to an external company, is nothing new. But recent years have seen a large increase in this practice and the trend is expected to continue.

Behind this pattern are companies choosing to focus on their core business areas and reduce costs. Although the premise of outsourcing can be beneficial, the introduction of an external third party can also backfire and result in lower quality, more complicated interactions, slower turnaround times, and unhappy customers and employees. However, a new ISO standard has been released that can help organizations reap the benefits and avoid common pitfalls.

ISO 37500:2014, Guidance on outsourcing

The ISO 37500 standard covers the main phases, processes, and governance aspects of outsourcing. It provides a good foundation to enable organizations to enter into, and continue to sustain, successful outsourcing arrangements throughout the contractual period.

ISO 37500 gives guidance on:

  • good outsourcing governance for the mutual benefit of client and provider;
  • flexibility of outsourcing arrangements;
  • accommodating changing business requirements;
  • identifying risks involved with outsourcing;
  • enabling mutually beneficial collaborative relationships.

ISO 37500 can be tailored and extended to industry-specific needs to accommodate international, national and local laws and regulations (including those related to the environment, labor, health, and safety), the size of the outsourcing arrangement, and the type of industry sector.

The standard recognizes that the various stakeholders act separately in some phases of the outsourcing life cycle and together in others. It is not possible to exclusively allocate processes within the outsourcing life cycle to either client or provider. For each outsourcing arrangement, process responsibility is intended to be interpreted accordingly and tailored by the user.

ISO 37500 is meant 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. The processes mentioned in ISO 37500 are intended to be tailored to fit the outsourcing strategy and maturity of the client and provider organizations.

Outsourcing exchanges often take place across national borders, which gives more flexibility and choice to companies, but also creates barriers when it comes to terminology, best practices, and understanding. ISO 37500 puts everyone on the same page by offering a common language and framework, saving time and improving business relations.

Organizations can use ISO 37500 to identify risks related to outsourcing so they can be better prepared and put in place practices to ensure successful outsourcing transactions. You can order ISO 37500 at this ANSI web page or this ISO web page.

This article was based on information at the ISO web site about ISO 37500:2014.