Dec

16

2009 is peering out of the corner and perhaps now is the time, more than any other time, one or a company must review and prepare for the new challenges that the new year would bring to avoid risks and reap the possible rewards.


Beginnings are, as Frank Herbert wrote, delicate things. One must be precise, one must practice care and caution.

By following some of these tips, one can ensure lesser risk in the outsourcing contract:

  1. Always ask for a fixed monthly cost. This to be able to budget more effectively. Inevitably, there will be an hourly rate in addition to this fixed cost. One must be flexible, should a problem arise.
  2. Check the level, expertise and experience of the consultant. By doing your homework on who will be handling the business account before signing up, you can avoid the implications of a bad decision further down the line.
  3. Request client references. Inquire with your potential vendor’s other clients and probe for information find out exactly the type of company the provider is. Ascertain the quality of the service offer through questions such as, did they deliver what was promised? How do they handle problems? Would you recommend their services?
  4. Choose a plan that suits the business needs and budget. Do not choose an expensive plan that isn’t required. Look at what each plan provides.
  5. Ensure everything in writing. From payment terms through to the work schedule and pace, avoid “surprises” down the line. By having everything in writing, the vendor can be held accountable for the promises made.

However, a successful beginning is only HALF the battle. What if somewhere, somehow, SOMETHING goes wrong (It is bound to, if one believes Murphy’s Law).

There are two common scenarios where outsourcing deals generally go wrong:

  1. The contract was badly structured from the outset. The buyer and vendor negotiated a bad contract, always struggling to deliver any form of business benefit, regardless of how well-intentioned they were.
  2. The contract was well-architected but both parties failed to deliver the expected business benefits. Here, the existence of a fit-for-purpose contract has been undermined by poor governance of the contract.

In either scenario, the costs incurred are likely to cancel out any financial benefits of outsourcing.
If things go wrong, there are really only two effective ways of addressing the problem:

  1. Start over. Cancel the contract (for cause or for convenience) and re-start the process over again (possibly with a new supplier)
  2. Get help. Alternatively, commission an independent review by a third party to objectively assess the root causes of the problems in the customer-supplier relationship and to agree a mutually beneficial way forward for both parties.
Outsourcing Solutions, Inc. – your outsourcing partner!

References:

  1. Kralevich, John. “Tips for safely outsourcing IT.” 17 December 2008. The Evening Telegraph. Accessed 17 December 2008. Link here
  2. McDermott, Harry. “Before you negotiate an outsourcing deal–” 16 December 2008. Computer Weekly. Accessed 17 December 2008. Link here

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