How to Evaluate Outsourcing Vendors
IT Outsourcing Vendor Selection Criteria
When choosing outsourcing vendors, it can be tempting to simply opt for the one which offers the biggest savings. However, if you take this approach, you might just get what you pay for- substandard work that leaves you having to pick up the pieces to fix things. Instead of just looking at outsourcing in terms of saving money, you should instead select a vendor that you can build a long-term partnership with. That way, you can both focus on driving business outcomes, and always achieve the very best results.
The actual process of selecting an outsourcing venue is a complicated, multi-stage process. Not only should you evaluate what services the provider offers, but you also need to consider how they go about those services. Should you entrust the project to the wrong provider, then it could prove to be a major setback to your business’s plans for growth. On the other hand, choose the right provider, and not only will you save money, but you will also see enhanced product value and a greater speed to market- giving your business the edge over the competition.
First things first, you should know that this process can- and in fact, should– take quite a bit of time. This can mean you spend months looking for the perfect outsourcing company for your needs and then finalizing the deal. A properly organized vendor selection process typically takes between 6-12 month to complete, and can add anywhere from 1% to 10% onto the total cost of the project. The costs involved with this process include analysing and documenting your requirements, creating formal RFPs (Request for Proposals), negotiating the contracts, and paying people like consultants and lawyers to help you through the process.
So, how do you go about finding the right BPO for you? You should begin by defining your objectives, clearly describing the service, process, or product that you want to outsource. You should also be clear about what your goals are in outsourcing, whether it is purely about saving money, or if you also want to improve efficiency or add new services to your business. At this stage, you should also start to put together a core team of negotiators from all the relevant parts of your company, so you can be sure that the outsourcing meets their real needs. That core team will then have to decide precisely which services are going to be outsourced. These services typically fall into two main categories: business process outsourcing and technology services outsourcing.
Once that’s done, it’s time to find a few vendors that offer what you are looking for, and then submit a Request For Information (RFI). This allows you to gauge their interest in the project, and evaluate the business climate in your industry. Unlike a more precise RFP, an RFI encourages vendors to respond in a more general manner. It also lists the business requirements defined by your core team, so that the vendor understands precisely what you are trying to accomplish through outsourcing. When you have a smaller shortlist of vendors that fit the bill, you can then prepare and send a detailed RFP to them, and then evaluate their offers to you.
Your RFP will lay out your specific requirements, including necessary skill sets, language skills, quality certifications, and so on. While ultimate responsibility for the RFP lies with project’s leader, it will require a significant amount of input from other experts, too. Once the vendors have sent their responses to your RFP, then it’s time to evaluate them. In most cases, vendors suggest multiple strategies when responding to an RFP. They might recommend a sole provider approach, co-sourcing, or even a multi-sourcing scenario, where multiple vendors deliver the service in question to your company. Regardless of the structure they propose, if a vendor meets your requirements, then perform a due diligence review of them, and then select which of the remaining candidates best meets your needs.
Lastly, it’s a good idea to propose a test project before you sign the final contract, to ensure that your chosen vendor can deliver the results that they promise.