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Choosing the Vendor, Outsourcing Choosing the Vendor

Choosing the Vendor

Introduction

There are several aspects to the decision making process about outsourcing. In this article we will look into the choice of vendors.

Plan in Advance

First of all, it is important to know that you are not likely to find an outsourcer who is an exact fit. You will often need to make trade-offs.

A brain-storming session about what you want from outsourcing the work is the first step to a well-rounded decision. Once you spell out the needs, sort them out in the order of priority and identify the most important criteria. This is important before meeting outsourcing vendors, as they are bound to have their own ideas of what your organization needs (which will be more a reflection of their own strong areas).

The Big Questions

The specifications will depend on your business situation, but here are a few general parameters that matter to everyone who's considering outsourcing.

Are you looking for specialists or vendors with broad capabilities?

The total savings versus how soon the vendor brings down costs- which is more important to you?

Fixed, low prices versus variable costs- which do you want?

Being clear about your priorities helps to make trade-offs that work in your best interests.

Specialists or Everything under a Single Roof?

Just a few years back, the trend was to outsource everything you need to a single vendor, making it an era of mega-deals worth billions. However many companies found it difficult to manage this kind of deal. Thus today many companies go for the multi-vendor, specialist approach however mega-deals are still common. Most of the major IT services vendors seem to be getting along well with this new trend.

But the specialist approach is not without challenges either. Companies who go for multi-sourcing have to set up arrangements for keeping track of each vendor. The companies also have to develop systems for evaluating vendor performance and also see to it that the outsourcing vendors work co-operatively.

Relationship Management

Choosing the right vendor is not the only factor that determines outsourcing success. It is important to get your contract right, but that is not all. Vendor management is another crucial part that makes or mars your outsourcing deal. Establishing mutual trust and a collaborative atmosphere add a lot of value, and the reverse can undermine the effectiveness of work equally well. Conflicts, delays and the need for constant monitoring are the usual outcomes of poor vendor relationship. The principle is no different than the truth about customer relationship management. Success depends on building relationships, and not just transactions.

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