Vendors are supposed to be partners. They provide the systems, services, and expertise that keep your business running. The reality many leaders overlook is this: in many organisations, vendors often know more about the inner workings of the business than the leaders running it.

Yes I know it sounds dramatic, but it’s real. This isn’t just outsourcing. It’s outsourced intelligence, where the knowledge, insights, and leverage that should belong to you sit in the hands of a third party. If left unchecked, it can erode control, weaken decision-making, and leave your organisation exposed.

As research on commercially sourced intelligence notes, more organisations are relying on vendors to provide critical insights. But with that reliance comes a hidden cost: intelligence shaped and controlled by external providers.

How Vendors End Up Knowing More

• Data ownership and visibility: Vendors hold and analyse your operational data, from system usage patterns to customer behaviours. They often see trends before you do.
• Technology dependence: When critical systems are outsourced, your vendor understands the technical landscape, limitations, and risks better than your internal team.
• Cross-industry insights: Vendors work with multiple organisations. They compare, benchmark, and spot weaknesses you might not even recognise in your own operations.
• Shadow knowledge: Over time, staff may defer to vendors for answers. Institutional memory shifts outward, and suddenly your vendor is the one with the full picture.
• People and relationships: Vendors learn how your leadership team reacts to different situations. They observe which issues trigger urgency and which get pushed aside. Over time, they know when to push back, when to apply pressure, and when to let go. In some cases, vendors understand your leaders’ decision-making style better than their own teams do.

A case study called the Politics of Outsourcing shows how vendors can even set agendas in public IT projects, influencing outcomes more than the bureaucrats funding them.

Why This Is a Risk

• Strategic blind spots: If you don’t know what your vendor knows, you can’t make fully informed decisions.
• Dependence without leverage: The vendor has knowledge power, making negotiations and accountability harder.
• Compliance exposure: Vendors may hold sensitive data that you’re ultimately responsible for protecting.
• Erosion of expertise: If your internal teams lose touch with systems and processes, you weaken resilience and self-sufficiency.

This is a textbook case of information asymmetry, where one side in a business relationship holds significantly more knowledge than the other. Research into B2B negotiations shows this imbalance gives suppliers leverage that can undermine buyers’ ability to negotiate fair terms.

Knowledge asymmetry isn’t partnership, it’s dependency. And dependency hands power to the vendor.

Taking Back Control

So how can you rebalance the knowledge gap without damaging the relationship?

1. Demand transparency
   Require vendors to share usage data, performance metrics, and system insights in ways your teams can access and analyse independently.
2. Strengthen internal expertise
   Invest in training and upskilling. Ensure your teams understand the systems they rely on, not just how to operate them but how to challenge them.
3. Document everything
   Don’t let knowledge sit solely with vendor staff. Insist on process maps, system documentation, and clear escalation paths that live inside your organisation.
4. Establish governance
   Use steering committees, review boards, and audits to ensure vendors remain accountable and knowledge is shared, not hoarded. Established frameworks for third-party management highlight how operational, reputational, and compliance risks can only be mitigated through structured oversight.
5. Rotate perspectives
   Involve different internal stakeholders in vendor discussions. Broader engagement reduces dependence on one channel of communication and builds a shared knowledge base.

Vendors as Partners, Not Proprietors

The goal is not to shut vendors out. They bring valuable expertise and insights. But they should never hold more knowledge about your business than you do.

A strong vendor relationship is built on transparency, shared accountability, and mutual respect. It’s about ensuring that what they know becomes what you know, so you can lead with clarity and confidence.

Closing Thoughts

If your vendors know more about your business than you do, the balance of power has shifted. And when that happens, you’re no longer managing the vendor, the vendor is managing you.

Take back visibility, build internal capability, and treat knowledge sharing as a core condition of your vendor relationships.. Because at the end of the day, no one should understand your business better than you.