Success in relationship management with service providers in outsourcing

This study examines the relationship between outsourcing motives, supplier-customer relationship and perceived value in non-core services outsourcing. 1757 companies were randomly selected for the survey. 234 valid questionnaires were returned (13.4% response rate). The structural equation method was used to obtain the best fit model. The most significant contribution of this study is that, 'relationship interaction' has a greater impact on customer perceived value than 'relationship quality' in services outsourcing. That is, customer-supplier 'relationship interaction' that enhances communication, cooperation, coordination, collaboration, conflict resolution, and integration activities rather than 'relationship quality' such as loyalty and trust, would exert the greatest effect on perceived customer value. Furthermore, the perceived customer value is reflected in improved services quality, reliability and agility were obtained rather than the expected cost savings. Hence, management should focus their resources in establishing strong 'relationship interaction' and not just cost saving particularly in the initial phase of services outsourcing.