The principles for negotiations are the same as the things you need to keep in mind while choosing a vendor. Identify your priorities and make trade-offs accordingly. The service provider will obviously aim at making the maximum profits at the minimum of risk. Therefore the buyer needs to be clear about what you want and keep that in focus while negotiating terms with the vendor.
A successful outsourcing agreement has to create win-win solutions for both the buyer and vendor. However this is easier said than done. Some of the issues can get even emotional or contentious. However the smart buyer has to take the lead in the negotiating process, as only they can tell what they need.
Have a Deadline!
It helps to have a timeline and completion date for the negotiations. The discussions may never come to an end without these. However be willing to extend the due date if you feel that one or two issues need more time to be sorted out.
Transfer the work to the vendor only after the negotiation process is complete. Do not make any move till you are satisfied that you have worked out all the issues. Moving the work to the outsourcer before the contract is signed gives the vendor more power than you are comfortable with.
It is quite common these days for organizations to hire an outside consultant to help them sort out their outsourcing requirements. This can be useful, as the third party can bring in a lot of objectivity. However the organization needs to study the consultant well. Some consultants may work for their own vested interests rather than help you find what is good for you and what isn't.
A reliable outsourcing consultant can help an inexperienced buyer through several stages of the decision making process- right from spelling out the needs to making the final decision.
Buyers can also look for help from within the organization, from the IT department or the business. However the top management often refrains from this, as such decisions are generally not received well in the company's IT department or for that matter the larger organization. That said, it is always better to get the people involved in the decision making process. It helps to make better decisions and also makes people more receptive to the outsourcing arrangement.
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