Through digital transformation initiatives, organizations rely more on external vendors to supply the necessary resources to achieve organizational objectives. In the multi-vendor environment, it is increasingly complex for enterprises to manage their vendors, especially in data-sensitive sectors such as insurance. Vendor management establishes and maintains relationships with an organization's vendors for the efficient delivery of goods and services essential to the organization's operations, and managing these relationships presents several challenges.

This thesis employs a mixed-methods research design, combining a literature review with qualitative data collected through interviews. The mixed-methods approach thoroughly explores existing knowledge and theories about managing external partners and vendor management in the insurance sector, complemented by in-depth insights from industry professionals.

The primary driver for engaging with external partners is the lack of specialized skills within the organization and the temporary nature of some project requirements. When partnering with vendors, it is important to conduct thorough due diligence, clearly document requirements, and build trust and transparency with detailed contracts to establish successful partnerships. External partners are effectively integrated through clear communication channels, setting expectations, and maintaining regular and proactive interactions. Weekly operational reviews, monthly governance meetings, and quarterly business reviews are part of the governance model used to manage performance, focusing on service delivery, adherence to SLAs and KPIs, and addressing any issues on time. The integration of external partners is enabled by clear interfaces, strategic alignment, and streamlined processes, ensuring that parties work towards the same goals and contribute effectively to the organization's success. This research provides insights and strategies for optimizing vendor relationships, ultimately contributing to the client's strategic objectives and operational excellence.