A smart outsourcer knows whether he needs a Merc or a Chevrolet will do

December 1, 2008

Selecting an offshore vendor who best meets your business needs is perhaps the most difficult decision you make as an outsourcer. There are at least a hundred issues to be sorted out before a deal can be struck.

Obviously, you need someone who has credibility and trust, the ability to work at all levels in the organization, a special knack of dealing with cross-cultural teams, a love of innovation and new ways of doing things.
Security is another major concern. Since a buyer-vendor partnership gives the vendor access to a broad array of your functional competencies and other classified information, it’s important that you chose your vendor with care. There have been several unfortunate incidents in the past that underscore the need for extreme prudence in this regard.

Outsource Vendor Selection
Remember also that if your main rationale for outsourcing is cost-saving, there could be several hidden costs involved in the process such as train-the-trainer cost, licensing fee or custom tailoring cost, update cost (if it’s a software), the offshore team’s travel and stay expenses etc. You may also have to bear a portion of the salaries and benefits for the offshore team, besides material production and media costs etc.
Given all these considerations, a search for a vendor who specializes in your domain may yield better dividends than zeroing in on someone who is still on a shallow learning curve and may take a long lead-time to deliver, even if he charges less in the present. In this particular sense, finding the cheapest or the most inexpensive vendor is no guarantee of securing the best deal.

Therefore, when you interview a vendor, begin by asking him/her:

• How long have you been in this business?
• What industry specific experience does your team possess?
• How many ‘active’ clients do you have? May we have their references?
• What specific, measurable results have you produced for these clients? Do you have case studies that outline what you did, how you did it and what were the results?
• What is your account management process? How do you ensure quality?
• What is the average annual client budget that you deal with?
• How many people will be working on my account and what would be their specific contribution?
• What value can you bring to my business?
• How do you measure the success of your team?
• What would be your pricing structure? Will it be project-based, monthly retainership, hourly rate, or a mix of all these?

All said and done, outsourcing should be viewed as an investment in both time and cost saving. Beware of the glitz and the marketing hype. Do a thorough cost-benefit analysis. Focus on the end results. And finally, if you do end up selecting a rookie vendor, don’t hesitate at asking for a learning insurance. Above all, observe the team in action. No matter what the garnishing, the proof of the pudding lies in eating!

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