Vested outsourcing is a hybrid business model in which contracting parties create a formal relational contract using shared values, goals and outcome-based economics to create an agreement that is mutually beneficial for each party. The model was developed out of research by the University of Tennessee and was led by Kate Vitasek, who we are delighted to be interviewing later, from the US, this week.
It all sounds logical and rationale, so why has it taken so long to come to the fore? Advocates of the model argue that traditional outsourcing and businesses relationships are focused on win-lose arrangements where one party benefits at the other’s expense. Others argue that it has been too long about cost reduction and control. The one lesson that many have learnt in the past year is the need for collaboration and partnership. A Vested agreement creates a win-win relationship in which both parties are equally invested in one another’s success.
The Vested approach was originally developed in the United States by the legal scholars Ian Roderick Macneil and Stewart Macaulay. Relational contract theory is characterized by a view of contracts as relations rather than as discrete transactions.
Vested relationships depend on collaboration, transparency, flexibility and trust. Rather than traditional business relationships in which companies buy transactions or services from suppliers, vested relationships instead focus on buying results.
Nigel Forbes, Managing Partner Litmus, and Julian Fris, Founder Neller Davies have long been two of the leading food service consultants so what are their views and thoughts? Why is the Vested model coming to the fore now?