Selecting the Right Outsource Provider at the Right TimeMarch 3, 2010
Often times, when selecting an outsourcing provider, the list of candidate firms can look almost identical in terms of capability and ability to handle the scope of services clients seek. This can lead to a sub-optimal subjective decision based on the “marketing speak” of the provider versus a more comprehensive and objective analysis that will lead to a successful relationship.
What factors can you use to differentiate among providers beyond the classic request for proposal response and the “marketing and sales speak” typically relied on during the outsource selection process?
The ability to clearly understand the current situation of the prospective provider is a critical, objective element that can help one provider stand out from the rest in the decision-making process. You need to understand if the time is right for the provider in order to select a vendor for a potential three to10 year relationship.
After all, if timing is a critical factor for your decision to outsource, shouldn’t you think about if the timing is right for the provider to take on your work?
Here are a few criteria you should look at closely to help in this regard:
- Current financial condition of the provider – Is the provider investing in their processes, people and technology – or are they running with little to no investment, or even worse, are they reducing the investments being made to support clients?
- Current management situation – Is there high turnover in the management team that will support the sales process and ultimately the service delivery process, or are the teams that will support you in the process stable, and established, in the company?
- References – Every provider will give a few references. The question is which of their clients look most like you, and are they referable. If not, why not?
- Account/Sales Team – Is the collective experience, influence and competence of the team working through both the contracting process and the ultimate transition and account management process acceptable?
These criteria are not fixed, and change regularly depending on the situation the provider is in when you engage them in a selection process. The key is to understand your selection timing relative to the provider’s current situation.
If these criteria are equally as important as the details of the solution, pricing and other components of an outsourcing process, how can it be evaluated during a selection process?
Classically, providers will respond to an RFP, there will be a “yellow pad” where the solution is closely evaluated, a down-select process ensues with negotiations and finally a deal is made. Usually, the issue of price trumps everything else, and a partner is selected with varying results.
When the four situational components above are lightly looked at, or even overlooked, a tremendous amount of unnecessary risk is added to your deal.
To aid our clients relative to these key criteria for selecting the right vendor at the right time, Alsbridge has perfected a Sourcing Alignment System, a series of organized face-to-face interactions with the potential providers, that tend to ferret out these issues.
The result is always a clear understanding of not only the capabilities of the provider, but more importantly, a clear understanding of the current situation of the provider and what kind of service team we can expect going forward.
Whatever the stage you are at in a selection process for a potential outsourcing vendor, we strongly recommend you build in the opportunity to have an open and honest dialogue about the health and current situation of your potential vendors. Without it, you may find that the vendor you picked isn’t the one who shows up on the first day of work.