Five aspects to consider while choosing an Outsourcing Partner
The decision to outsource non-core activities is a long drawn out process. It involves comprehensive due diligence processes in identifying core competence & activities which can be done in-house and those which can be outsourced. But the next stage of outsourcing is equally critical and much of the success of the outsourcing initiative depends on this phase - Choosing the right outsourcing partner. It is an equally arduous task and is incomplete without the involvement of the key stakeholders. The wrong outsourcing partner can cause more damage than good. Although the size of the partner can influence the experience the company has but it should not be given too much importance as fit, flexibility and responsiveness should be given more value. A smaller player, backed with solid process & industry knowledge, would be able to offer more flexibility, value, undivided management attention and commitment than a larger one.
There will be a lot of uncertainties and open issues with the partners as any organization's requirements will be unique and references & factors considered may not be from the same business context. In this scenario, the following checklist can be a good guideline in building the right partnership and minimizing the risks of being stuck with the wrong partner.
Before embarking on evaluating vendors, b uild up a consideration set of potential candidates (ideally this should include at least five companies) you would like to include and evaluate them with respect to the following:
1. Company Size and Flexibility offered
A mid-sized IT outsourcing partner is found to be ideal for most engagements. A large player may not be able to offer the level of attention, which is necessary to make an outsourcing partnership work. On the other hand, a smaller player may give undivided attention to the partnership but may not have the process strengths and delivery capabilities to meet and overachieve on the SLAs (Service Level Agreements - a standard way of defining scope of work and deliverables in the IT services industry). Another factor to be considered is that larger players often stick to the SLAs and may not be open to providing the much-needed flexibility to expand or rework on scope definitions. The idea is to be looking at achieving the best of both worlds - process strengths and stability of large firms and the flexibility and commitment shown by smaller players.
2. Reference Checks
Ask for references of companies with similar requirements. The degree of comfort the company has with giving references shows the extent of relationship they enjoy with their existing partners. Most companies may not be comfortable in giving the actual names of their customers because of client confidentiality requirements. But would be able to offer scope of work, solutions, and client details without mentioning the actual names. References can also be a good source of information on the quality of deliverables, schedule adherence and capabilities.
3. Business Knowledge
For faster resolution of issues and proactive support from the service provider, it is important that the partner has sufficient business knowledge and understands your industry and pain points. Collaterals, number and quality of domain experts in the company are a good measure of the comfort and understanding the partner has about your industry. Case studies detailing work done in the same domain can be good source of information about this.
4. Process Methodologies & Certifications
The various industry specific certifications and process methodologies are a good check of the quality adherence and dependability of the organization. This gains importance in determining the strength and quality of the deliverables and timeliness of solution provided. The credibility of the institution awarding the certifications and quality levels needs to be established before trusting them. Some of the IT industry specific certifications include SEI CMM, PCMM and ISO etc.
5. Risk Mitigation & Business Continuity Plans
This is very important because of the risk associated with a lot of unexpected events and catastrophes. BS:7799 is one of the certifications to be looked into to check the security processes followed by the company. Another measure in this case is the financial stability of the company.
Although the checklist mentioned above will cover most of the factors to be considered while objectively evaluating a potential partner, one of the non-objective factors is culture and value fit. This factor will be very difficult to evaluate objectively but can be evaluated using some of the factors mentioned above.
Finally, partnerships are about people and relationships and look for the involvement and the sincerity of senior management in your partnerships.
 Top
|