Selecting an Outsourcing Provider: A Step-by-Step Guide

Choosing the best-fit outsourcing vendor is a crucial part of your outsourcing process. If your project ends up in the wrong hands, it could put a damper on all your grand plans for business growth. With a well-selected provider, you will see savings, enhanced product value and greater speed to market, thus giving your business a competitive edge.

Planning an outsourcing strategy is the only way to start. Following time-tested procedures for service procurement will ensure that your goals and those implemented by the provider match.

Here's a step-by-step guide to select an outsourcing service provider who best matches your requirements.

Step 1 : Define your objectives and goals.

This step is the basis for all future outsourcing activities.

Describe the process, service or product that you want outsourced clearly. You should also indicate what your goals are through outsourcing.

Make sure that your objectives formulation answer the following questions:-

What do you want to outsource?

What type of an outsourcing agreement are you looking for?

What are the offshore outsourcing locations that you are interested in?

What are your goals in outsourcing?

What services do you expect a vendor to provide?

How much do you plan to spend?

What are the risks associated with such an outsourcing agreement?

Step 2: Develop Request For Information (RFI) document

After defining your objectives and goals, you need to announce it to the vendors! This is achieved by the RFI or EOI document, which invites providers to respond to your outsourcing needs. Vendors respond with information about their company, their expertise as well as suggested solutions.

A typical RFI can contain the following:

About your business

Your objectives and goals

RFI submission guidelines

RFI vendor response form

You can distribute the RFI to known vendors or post it on your company website, newspapers etc.

You can shortlist providers based on their response to the RFI. At this stage, you can even decide if you do not want to go ahead with the project.

Step 3: Develop Request For Proposal (RFP) document

The RFP is developed based on the RFI and the vendor response to the RFI. This is a very detailed document, which apart from the work, also describes legal and regulatory issues.

An RFP can contain the following information:

About your company

State of Work (SOW) - detailed project description

Cost

Legal requirements

RFP submission guidelines

RFP vendor response

The RFP is distributed to those companies shortlisted from the RFI stage. Vendors respond with proposals, which you can evaluate.

Do check out sample RFP templates at http://www.rfp-templates.com/RFP-Template.html

Step 4: Verify Vendor information

Also known as 'due diligence', in this stage, you can check whether the details supplied by the vendor matches the ground reality. Does the vendor really have certifications? Are the customer referrals genuine?

Meeting the vendors in their office is a very important as you will get to see how they actually work - do they really have the infrastructure and processes that they have claimed.

You can also ask them to conduct a short test project to see how comfortable you are with their delivery standards.

Step 5: Select vendor and sign the contract

Compare short listed candidate vendors and see how they differ from their competitors. After evaluating all the deliverables and metrics, select the vendor who can best achieve your goals and fulfil your requirements.

The content in the RFP and proposals will form a part of the contract. Negotiate the contract thoroughly, taking the help of experts if needed.

Now you are ready to outsource!

Planning is the Key

Rushing headlong into an outsourcing arrangement is a recipe for disaster. Planning and following standard business practices is the best way to avoid any unpleasant services. Following guidelines will ensure that your outsourcing venture brings you maximum value for your investment.

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