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Ways to Minimize Risk in Outsourcing Pricing Models

by: Sarah Joson

Tuesday, April 30, 2013 | Outsourcing News |

The pricing models of outsourcing contracts are often based on either a fixed pricing prototype or the scope and duration of a project. Some things such as risks are often overlooked, which in turn can affect the total cost of a contract.

How to rule out risks in outsourcing

In an article posted at info.ISG-One.com, risks in outsourcing deals are highlighted to help business owners who are looking to outsource clearly identify uncertain aspects in contracts especially with today’s rapidly moving market, and with a bit of luck, rule out risks altogether.

Always check if there’s a basic pricing model. Most providers offer their services in packages at a fixed rate. This type of outsourcing pricing is usually less risky but often results to overhead costs so before signing a deal, make sure that it will be maximized and every function will be useful and effective.

Build trust to pave the way for a clear process. Knowing the background of the provider you’ve selected will help you in creating the contract. Clients should communicate their concerns properlyand share more information about their background to help the provider perform due diligence as well.

Explain what you want in a nutshell.
To save time and money, clients need to tell the provider what they want to get out of the process and let the professionals come up with the proper solution before signing the proposal or the contract. If the client doesn’t want the proposed solution, he/she can always forward his/her suggestions and provide direction to help the provider design a better solution.

Know the requirements of your business.
Since technology is always evolving, business executives should analyze and anticipate trends that can change the landscape of the way business is done and how technology is used. By documenting the internal process of the company, they will be able to map out the events and needs of the company, which can affect operations and budget in the future.

Create a team of leaders. It will be assigned to spearhead the operation and manage each crucial business unit. Select a service provider with the most compelling proposal and pristine track record. Your business, on the other hand, should be an institution worth-serving.

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