The two categories that need to be dutifully reviewed in any negotiation are business terms and legal terms. Business terms cover the terms of service, including payment and the set deliverables agreed upon. Legal terms discuss regulations like liabilities, warranties, termination of the agreement and service definitions. More often than not, both business and legal terms are stipulated in the Services Agreement.
Patrick Garrett and John Kitchen of Alsbridge Inc. shared 7 commandments that will be very helpful in any negotiation. Keeping these commandments will help in speeding up the process and coming out of it with pleasing results. Now, the 7 commandments:
1. DO maintain open communication at every step of the process - It is highly probable that you will be dealing with your provider for quite a long period of time after the agreement is signed and made official. It will be helpful to remain transparent about your issues and concerns during the negotiation process. You will find that most providers will be willing to go the extra mile to accommodate your needs.
2. DO relay your budget - The initial bid is essential when shopping around for a provider. It is precisely for this reason that you should relay your budget before anything else. That way, providers will be able to offer the most suitable set-up for your requirements, given your resources.
3. DO NOT share deadlines - Providers can stall and manipulate the situation to their advantage if you share your deadline. You can set target dates and on the occasion that you really have a tight deadline to meet, communicate an earlier date to your provider. Alsbridge advises on allocating a 4-6 week allowance.
4. DO share expectations - You should have expectations on service levels that you picked up from your research. Also communicate expectations with pricing because these terms are settled during the negotiation process.
5. DO share the Market Services Agreement - Legal firms provide a standard Market Services Agreement and providers should be able to agree on working with this document. Adjust terms to make the services agreement specific to your requirements and send a copy to your provider for their review. You can then negotiate on terms that should be aligned and arrive at a compromise.
6. DO seek third party counsel - Outside help from parties with strong sourcing credentials can be helpful; though this has remained to be a widely debated opinion. The answer varies on a case-to-case basis, depending on the industry you’re working on and the current situation. It’s good to note that sourcing advisors have a good scope of the market and their knowledge can offer you some leverage.
7. DO avoid gaming - Gaming is defined as controlling the situation to benefit your position through deceit. It can also mean suddenly changing your preferred terms after the agreement has been finalized. It is always best to keep communication lines open. Be transparent and honest to the service provider that you are working with because they are technically considered your partners in delivering your core competencies.
The risks and disadvantages of an offshoring platform are critical factors that must be accounted for during the development and implementation of the operation. A wide range of delivery models, varying in terms of risk, control, and cost, have been developed by service providers all over the globe. The different outsourcing strategies in the industry landscape today, alongside different kinds of data security needs, increase a company’s exposure to risk when it comes to operational failure. As such, organizations must exercise due diligence in evaluating the downside of multiple delivery channels.
Indy Banerjee, Partner, TPI Cloud Computing Business Solutions, lists the top 5 risks that organizations should prepare for in order to ensure the success of an offshore operation:
Organizational. It is important to look into a company’s internal processes because it may be the case that these are not flexible enough to adapt efficiently in the business climate in other geographical locations. This can pose a threat since conflicts and procedural issues may arise if a company’s internal processes are not customized for global operations.
Programmatic. Can you maintain current enterprise and customer servicing requirements in a dynamic and global environment? Services, people, supplies, and other requirements that allow any business to run smoothly can be sourced from different channels. In this environment, it is essential to the financial viability of the firm that programmatic details are ironed out.
Domain. This area of concern deals with a firm’s dependence on outsourcing and its detrimental effects on technological capabilities, operations knowledge, and intellectual property.
Delivery model. Is the delivery model utilized for business processes strictly in place? Is it well-faceted and reliable to endure the risk of outsourcing to a single geographical area? Over reliance on a single service provider and delivery model can potentially burden you with 100% of the business risk.
Operational. Are contingency plans and business continuity plans in place to make sure operations run smoothly in the event that unexpected pandemics or destructive natural phenomena occur? Operational plans have to include the occurrence of unplanned events because of the current ever-changing environment.
Preparation to safeguard your business against these risks entails a constant and consistent effort to adapt. A complete model that takes different global sourcing options into consideration including a risk management program can make a difference in securing the success of a globally operating offshoring model.
by: Karen Cayamanda
Wednesday, November 03, 2010 | Comments (0)
Category: Outsourcing Events
Global Market Leaders Addressing Global Issues: Last October 26-27, CEOs and business leaders of the outsourcing industry gathered at Sofitel Philippine Plaza for the International Outsourcing Summit 2010. This was organized by the Business Processing Association of the Philippines or BPAP, the umbrella organization for the industry that the Philippines considers as the "sunshine industry".
In this two-day summit, senior executives were able to tackle the issues concerning the global outsourcing industry, and the challenges they have to overcome. As the industry faces more complex challenges, the time has come to converge and talk about the things that need to be done so the industry will continue to succeed and flourish.
Challenges in the Global Outsourcing Industry
Major global issues in different areas such as health services, business development, banking and finance, marketing, and talent acquisition were discussed in the summit.
On the first day of the summit, I was able to attend the CEO panel on addressing the challenges of growth and I got these insights from the CEOs and senior executives from major outsourcing firms Genpact, Infosys, JP Morgan Chase & Co., and McTranz:
* Growing complexity of work needs innovation.
* Be more nimble, global, and agile to meet the global challenges.
* A major cause of stress? Expecting results out of people not rightly skilled
* Key areas of strategic focus include: talent management and development, improvement of the regulatory environment, united focus industry-side to remove challenges and roadblocks, and break stereotypes.
Another noteworthy session is the academe panel on specialized talent and language acquisition. Based from the presentations of notable speakers, it all comes down to one thing: having a huge pool of available talent will not suffice. What is more important is to make sure that the workers have the knowledge/expertise and skills which are suitable for BPO work.
As BPAP's Executive Director for Talent Development Atty. Jamea Garcia said, talent is what drives the global outsourcing industry, but there are many things to be done to ensure that the available talent can meet the demands of the industry.