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Things to Consider Before your Outsourcing Contract Expires

by: Sarah Joson

Wednesday, October 31, 2012 | Outsourcing News |

Review your Existing Outsourcing Contract

Every outsourcing relationship is bound to be renewed, if not terminated. Several things can happen during a renewal of an outsourcing contract. This could mean new providers, ones that are not familiar with the operation, will be undertaking what has been left by their predecessors. Another is miscommunication with old management and having new providers will result to failure and additional costs as the transition will take a toll on the budget and time of the internal management.

An article at info.ISG-One.com tackles five ways companies can circumvent problems in case the current provider is not inclined to renew the contract.

Get a head start.
Reinforce your internal competency before a contract expires, so in case something goes wrong, your organization is already built around finance and legal experts, as well as important clients. This is especially significant to companies with several delivery centers across the globe. In other words, formulate a contingency plan.

Closely observe evolution of the industry.
Create a list of critical factors that you would like to be covered in your new service level agreement. Observe if your previous business model still complies with the updates and current industry standards in terms of technological capacity, delivery models that are available, and rates. Focusing too much on the price might derail the main goal of the pending operation.

Review your sourcing policies.
Service providers are known to have several supplier contacts. Do some research if it’s more affordable and convenient to go straight to the supplier or if it is better to have the provider handle the sourcing processes.
 
See what is out there.
Businesses can typically learn from new providers by issuing a request for proposal (RFP). You will be able to see outsourcing in a new perspective as the providers with whom you haven’t worked before will bring new ideas to the table.

Show your company’s worth.
Large contracts that are well above the US$100 million bracket can be more valuable if properly presented to your account executive’s organization. This can help you retain certain strengths as well as keep business continuity if the provider decides to stay.

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