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Six Guide Questions in an Outsourcing Deal

by: Ronald Escanlar

Monday, August 22, 2011 |

What to Ask in Outsourcing Deals

A company may find itself in a bind if it shortlists two outsourcing service providers that have equal skill, knowledge and experience in the outsourcing industry. Outsourcing advisory firm Alsbridge has drawn a set of six guide questions that can help a company decide and select a provider that will help them move forward into a successful outsourcing partnership.

Alsbridge has formulated the six guide questions from a recent interaction with a client:

Has the service provider created a comprehensive transition plan? Transition from the present operation to the outsourcing service provider’s delivery group should be as smooth as possible, taking into account the issues and challenges that can hinder an efficient transfer. Seek advice from those experienced with transition processes – the information gained can provide an insight into the time involved in managing the transfer. A service provider’s transition plan must include a timeline of six to eight weeks of knowledge transfer.

This transfer may involve staffing and recruitment, hierarchy, workflow, metrics, service level agreements, and finally, a certification for an “all systems go” from the provider. Be wary of plans that are either too exacting or too vague – ambiguity may be a sign of inadequate information on the part of the provider.

Did the provider behave well before and during contract discussions? Profit is undeniably a motivation in any outsourcing deal, but there should be a more valuable motivation in pursuing an outsourcing relationship rather than focusing on cost efficiency. First impressions last, and these may also define the outsourcing relationship. Long-term outsourcing deals are based on equitable arrangements - a win-win situation between client-company and service provider.

Is the provider experienced enough to reliably deliver? In making reference calls, it will be helpful to write a common script. Through a common set of questions, answers can be quantified and compared, profiling the service provider’s relationships with other clients. Visual aids, such as tables and graphs, can be used in evaluating the reference calls.

Are the right people assigned to your account? Issues and challenges in the outsourcing relationship must be resolved in a timely manner. The Client Manager and Delivery Manager are the people to focus on – are they capable enough to ensure that the outsourced operation runs efficiently? Interactions with the provider’s management team and its operations staff during due diligence and site visits are invaluable, since these situations provide an insight into the service provider’s internal management processes.

Is the contract price too competitive to resist? A service provider with a lower contract price may spring surprises during transition. They may claim additional charges for items not covered by the agreement, and may even offer additional services for additional fees. Some service providers still use this bait and switch approach in signing up clients.

Is the service provider a cultural match for your company? An honest relationship will drive more than cost efficiency in an outsourcing relationship. If the service provider ensures a sincere atmosphere in your communications, chances are, they will be able to pull through a difficult situation and help beyond what is expected. As much as possible, ensure that the service provider’s corporate values and culture are parallel to your own.

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