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Jun 3 2010   11:22AM GMT

Five Key Points In Vendor Selection For Outsourcing A Service



Posted by: Jaideep Khanduja
outsourcing, project management, Software Project

Non Standard processes are prone to risk. So is the service. Service is more based on the people than the deliverables. Even the set standards will vary the level of sam service being delivered by different set of persons. Product is easy to judege in regard to quality. It is instantly demonstrable also in case of a product with the help of measurable parameters of testing.

In service it is difficult to set or establish process standards. Even if they are set, if is difficult to measure them to instantly declare if the service is of high quality, or low quality. With the same quality of service it is not possible to make each customer satisfied. The level of satisfaction will depend on lot of non-measurable parameters.

To outsource a vendor for a specific service, there has to be a checklist with parameters defined to ensure the right selection of vendor for that service. The selection cannot merely be based on gut feeling or the verbal commitments of the vendor. Some of the important parameters for selecting a vendor for a service could be:

  • 1. Market Reputation: Check with the existing customers of your prospective vendor about their experience and satisfaction level. Select these customers with a right mix of old and new ones. Both types will have a different set of pros and cons stories to tell you. Also be careful in selecting those customers who are availing similar sort of service from the vendor what you are planning to outsource for.

    2. Customer’s Turnover: Check out the vendor’s record (though he will not be easily disclosing it) how many customers have left him during last three years and try finding out the reasons for it.

    3. Certifications: There are world class certifications available these days geographically everywhere. Checkout the relevant certifications your prospective vendor has obtained. Check out how old are these certifications, have all recertifications been done, when was the last audit done and see the audit report to find out the observations or non conformitites pointed out by the auditors. Also check out the reputation of the auditing agency.

    4. Employee Turnover: Check out his employee turnover. Beware to outsource him for a service if his employee turnover is high.

    5. Growth: Check out the financials to find out the rate of growth. If growth is turbulent or incosnsitent, it could be a point of worry. A consistent or atleast sustained growth is good.

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    RobinGoldsmith  |   Jun 8, 2010  4:15 PM (GMT)

    This well-intentioned conventional advice is still likely to lead to many of the common difficulties outsourcing encounters, because it falls into the same traps that create those difficulties.

    One engages an outsourcer to provide and manage suitable staffing to enable consistently delivering sufficient services, which includes dealing with staff turnover. Trouble arises when the buyer gets wrapped up in trying to micromanage the vendor’s staffing practices. Similar problems arise when buyers try to specify the product to be delivered. Neither is the buyer’s role; and attention to staffing and product design distract from adequately defining appropriate REAL business requirements the customer is engaging the vendor’s skills and knowledge to meet, regardless whether the vendor provides a product and/or service.

    REAL business requirements include relevant volume and performance measures. Unfortunately, most SLAs turn out to miss the measures that customer satisfaction ultimately hinge upon. For examples, SLAs typically cover things like response time but don’t deal adequately with response adequacy, which is where customers get disappointed.

    A vendor’s reputation, certifications, and customer references are helpful inputs to the evaluation process but by themselves are not bases for legal action if the vendor seems to fail to perform in accordance with their reputation, certifications, or references.

    Every story has two sides, and while vendors are not perfect, many apparent poor vendor performances generally have more to do with customer failings, which the complaining customers seldom appreciate or even recognize, than with the vendor. That is, poor buying practices invariably lead to many of the issues blamed on the vendor. Capable vendors are between the proverbial rock and hard place; and few will comment negatively on the customer behaviors that led to the problems the customers are so vocal about. You must objectively consider the source when soliciting opinions about vendors; and that’s hard because it’s often easy to identify with the ill-informed complaining customer.

    The keys to successful outsourcing are to structure and manage the selection and contracting appropriately, which means having the vendor explicitly commit to satisfying the customer’s REAL business requirements deliverable _whats_.


     

    ISummation  |   Jun 14, 2010  7:55 AM (GMT)

    There is no real quantifiable formula for making outsourcing a success story. Despite all background checks and vendor qualification benchmarks, the project may fail after all.

    The success of an outsourcing assignment depends on the synergy that the outsourcing company and the vendor can establish. This depends highly on the people involved, their commitment to success and in a lot of cases the incentives of the success of the assignment.

    While the credibility of the vendor may act as a qualifier, the journey thereafter depends on the intentions and in the wisdom of the stakeholders. We are a [A href="http://www.isummation.com"]custom application development and outsourcing company[/A] in business for about a decade now. Despite all our efforts only those projects saw the light of the day where the team on the other side really wanted them to.