As indicated by Plunkett Research, the global outsourcing market is currently valued at $US611 billion. This figure is a clear illustration that outsourcing will continue to affect the way organizations conduct their operations.
As an organization seeking to develop further but constrained by resources or expertise, outsourcing could be the solution. Outsourcing is very significant to any company as it allows businesses to pass tasks they cannot successfully accomplish to third-party service providers.
Choosing the right outsourcing provider is a critical decision for any organization that gives no room for errors. Some of the key benefits of following a proven process to hire your outsourcing service provider are; it improves customer satisfaction, minimizes costs and guarantees increased strategic competitiveness of the organization.
Checklist for Hiring the Right Outsourcing Service Provider
To whom should you outsource to?
Hiring the right outsourcing service provider is among the complex tasks that businesses encounter today. The following are a few tips that have proven to be effective in hiring the right outsourcing service provider.
1) Define your Organization Needs
Before you commence the outsourcing process, it is important to define your objectives for outsourcing and the criteria to measure success. Some of the objectives for outsourcing may include;
To Cut-Down Costs– Cost reduction is the primary reason for outsourcing. Uncertain economic times demand well-crafted mitigation strategies; hence outsourcing is a great way to control business risk exposure.
However, although cost reduction counts, it does not mean that a business should settle for a cheap service provider that may deliver substandard services. A service provider’s quality should precede lower rates at all times.
Improve Productivity and Work Quality– Outsourcing allows an organization to pass administrative tasks to third parties. Email filtering, customer support, SEO, web development, digital marketing, and graphic design are some of the tasks that can be performed effectively by a third party. Therefore as a manager, you will have more time to concentrate on tasks that directly impact the organization profitability. -But these benefits can only be realized if you hire the right outsourcing service provider!
Over the years, clients have contacted C9 Digital for outsourcing services such as web development and digital marketing. Our clients are able to save money, improve productivity and create value for their customers.
Defining your outsourcing scope and objectives helps to create a mission statement that summarizes the outsourcing purpose, thereby maintaining focus on the goals to be achieved through outsourcing.
2) Conduct a Feasibility Study
Once the outsourcing goals have been defined, it is important to familiarize yourselves with vendors and the outsourcing process. Conduct thorough internet research and compile a list of potential vendors. Consider approaching businesses that have already outsourced for recommendations.
Currently, top destinations for outsourcing partners are the Philippines and India. The Philippines is a reputable business process outsourcing (BPO) market. Some of the quality services you can get in this market include SEO, virtual staffing solutions, rent marketing, and call centers.
Comprehensive research should help you to;
- Acquire detailed information on outsourcing –Find reliable sources of information on outsourcing to acquire a greater picture of the industry and how outsourcing can benefit your business.
- Estimate the costs-Determine the average costs for your project. Conduct a benefit-cost analysis. Identify the risk factors and how they can be mitigated.
- Identify the trends in the outsourcing industry– Get to know the highly outsourced services and the success stories including the most preferred vendors.
3) Identify Potential Outsourcing Service Providers
After conducting a feasibility study, you can now start detailed research on potential outsourcing service providers. Identify the track record of the providers. In this step, you can look for aspects such as the level of expertise, customer satisfaction levels, costs, existing customers, scope and how the outsourcing service providers handle customer complaints.
You can confirm the expertise of the provider through;
- Reviews-The decision of hiring an outsourcing provider should not be impulse or cost-based. Online testimonials and reviews from previous customers should count as opposed to the costs of the service. The reviews can guide you in identifying the right outsourcing service provider based on reputation, previous tasks, and client satisfaction.
- Referrals– Outsourcing focus groups can help you identify the right outsourcing service provider. You can find and join the focus groups on various social media platforms such as LinkedIn. It is possible to get referrals to reputable vendors on these platforms.
- Consulting legal agencies-Depending on the country you want to outsource your services to, contact agencies can connect you with already vetted outsourcing service providers.
- Conducting due diligence– This will help you to avoid abuse from unscrupulous people. Conducting a simple Google search of the outsourcing service providers can help you to point out red flags. Besides, consider sending your team to approach the potential vendors to pinpoint those that have the experience, infrastructure, and expertise to meet your defined goals.
4) Approach the Providers by Sending a Request
After shortlisting the outsourcing service providers capable of meeting your needs, develop a request for proposal (RFP) and send it to the potential vendors. An RFP serves as a formal procedure of collecting data from outsourcing service providers. The form contains detailed information about the company. A good RFP should address your concerns. Vendors may also attach business registration papers as proof of legitimacy.
Some of the red flags that can aid in narrowing down your list include;
- The decline of an RFP
- A company that lacks a website
- Inactivity in social media platforms
- Suspicious documents
- Lack of quality certification
Point out these red flags and use the criterion to slash out the unqualified outsourcing service providers from the list.
5) Hiring the Qualified Candidate
At this point, you have your top three or five candidates. This step entails picking the candidate that is qualified based on a predetermined qualifying process.
Schedule a detailed interview with the potential vendors and ask the right questions. The questions should be well-researched to give you a deep understanding of the vendor. The questions should touch on issues like;
- The contract details
- The security measures
- How the provider will handle the project
- The size of the team and expertise
- Availability and flexibility
- Ways to mitigate risks
- Project timeline
Interview the candidates to identify whether they meet your requirements and hire the best provider.
6) Sign the Necessary Contracts
Lastly, initiate contract negotiations with the most preferred outsourcing service vendor. Every agreement should outline the specific metrics to evaluate performance and ensure seamless service delivery throughout the contract. The contracts should be brief and simple to interpret.
These are some of the contracts that you may consider.
- Service level agreement (SLA)-This is the most important agreement as it defines the situations that may lead to premature termination of the partnership. It also describes the penalties in case either party breaches the contract.
- Confidential agreement (CA) – It protects the information or data shared with the right outsourcing service provider.
- Memorandum of agreement (MOA) – The contract defines the obligations for both parties.
Every organization desires to make profits and minimize costs. Task delegation to third parties can prove to be beneficial to both small, medium-size and large businesses. The best way to reap desirable profits is by increasing operations efficiency.
Luckily, with advancements in technology, businesses can easily streamline their business operations through outsourcing.
The right outsourcing service provider is the one that meets your goals by offering quality expertise in a cost-effective manner. Hire qualified and reputable providers.