Client strategies in vendor transition: A threat balancing perspective

Many outsourcing contracts are expiring, and vendor transition is an increasing concern. This paper attempts to develop guidelines for vendor transition by applying balance of threat theory, which suggests a client organization should pursue either a “soft” or “hard” balancing strategy, depending on the outgoing vendor’s capability and aggressive intent to disrupt client operations. Balance of threat theory is explored across two contrasting case sites. In addition to demonstrating the relevance of balance of threat theory, the cases identify specific tactics associated with hard and soft balancing, as well as key areas of conflict in vendor transition.

► How should clients manage vendor transition (moving from one outsourcing vendor to another)? ► With a hostile outgoing vendor, the client should ally with the incoming vendor. ► With non-hostile vendors, the client should play the vendors against each other. ► Issues to consider are knowledge asset, and personnel transfer, work scope, and performance.