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Creating Better Deals out of Ending Contracts

by: Ronald Escanlar

Tuesday, February 1, 2011 |

Most outsourcing service providers see the upcoming end of a contract as the perfect time to adjust and improve existing rates and service offerings. More often than not, renegotiations become difficult meetings due to lack of preparation on the part of both parties. A vital meeting can become a waste of time and resources, and problems that are supposed to be solved are waylaid. Instead of reinforcing the client-service provider relationship, the ensuing confusion leads to a strained negotiation.

Tips to get the most out of end-of-contract reviews

Leading consultancy firm TPI offers five tips that can help client-companies and outsourcing service providers get the most out of end-of-contract reviews.

Measure existing operations. Quantify all the data that can be gathered from existing operations to measure the impact of the outsourcing deal. Compare the operation’s existing expenses and service levels to market standards - this will help in identifying problems and improve operations.

Focus on the specifics. Armed with the important numbers, you can now safely formulate objectives and expectations that can be derived from improving operations. A framework upon which both parties can work is much better than having a client-company dictate how the service provider works. 

Rally support from the upper management. The support of senior management is vital in any outsourcing endeavor. Convince your colleagues that the strategy addresses the problems and delivers on the requirements.

Practice what you preach. Make sure that when you create the RFP, the playing field is level enough for all service providers to bid. Focus on your business strategy, not on how much you can save with a cheaper service provider.

Look inside. Evaluate your internal processes - this enables you to leverage what you already have against services from your outsourcing provider. An internal evaluation can help you identify the services that are truly needed, instead of having customized services from your incumbent provider.

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