Selecting and engaging the right vendor is not the most straight-forward task, & you need a plan, that will allow you to make a good choice for business. This can be a difficult and time-consuming task. Many companies report that they spend anywhere from 2 - 6 months in selecting the vendor company. Justification for this is simple! – There are thousands of confusing options and so many risky unknowns. One wrong decision of vendor selection and all efforts can go in vain.
“It’s one thing to decide that outsourcing is good for your company, but another to find the right partner to get the job done! ’’
Could I make a mistake and risk my software and its profitability by outsourcing to the wrong developers? Questions like this will always be on your mind. You should be aware that there are many software companies operating with no hiring or training standards, no oversight or support, no guaranteed retention or, continuity. As per 'The Deloitte Global Outsourcing Survey of 2016 and 2018', 42% of the respondents stated that they would spend more time in RFP or service provider selection. This was their reply when asked what they would do differently when launching their next outsourcing initiative based on their past experiences. Also, you would want to consider these issues faced by many organizations in the past:
A. TRUST - How can you be assured that your trade secrets and software IP are safe with a company abroad?
B. QUALITY - Most vendors have more or less the same website!
C. SPEED & TIMELINES - Often vendors are incapable of meeting up with increased demand, resulting in deliverables pushed back beyond deadlines : (
So how can you solve this issue of engaging the right vendor? We will try to list an appropriate procedure to follow as a possible solution and reduce the probability of making the wrong decision :
1. Building a scoring systemBegin by realizing that no one outsourcer is going to be an exact fit for your needs. Trade-offs will be necessary. You would need to have to build a scoring system for evaluating responses.
2. Defining the most important criteriaKnow which criteria have to be given most weightage. These criteria should be linked to the benefits you want to achieve from outsourcing.
3. Location of Vendor and cultural similarityOutsourcing destinations are usually grouped by the location of the vendors. Every vendor company from a particular location will have an almost similar working culture. You would want to consider the following points while deciding on the location :
- Language Requirements - Fluency in English
- Time zone and cultural similarity
- Education system and number of IT professionals
- Service costs (i.e. outsourcing rates)
- Infrastructure facilities
A cultural clash between clients and vendors is quite common. The client and vendor may have different norms in terms of speed, style, decision making and organizational structure. Problems can arise due to language and the understanding of verbal, non-verbal and written communications.
To overcome this, ask your peers or outsourcing experts about their experience of working with vendors of different locations. While interviewing potential vendors, understand their corporate culture, management processes, flexibility in carrying out operations, acknowledgment of mistakes and language understandability. Choose the location/ vendor which can fit perfectly with your own organization’s cultural environment.
4. Request for bids and screening vendorsOnce you have selected the appropriate location for your requirement, issue an RFP, and receive bids from potential vendors. To ensure you get relevant vendors responding to your RFP, elaborately describe what you are looking for i.e. well-defined requirements criteria. The level of detail that you include in your RFP will dictate the range and quality of applicants you receive. Be specific enough so that applicants think twice before wasting your valuable time with an inquiry. Think of this as hiring an employee and how you list all the qualifications and experience you are looking for. While narrowing down options or interviewing vendors, consider these :
A. Most Important Criteria - Whether the vendor possesses the ability to meet/match your most important criteria?
B. Experience & Clientele - Have they been working with clients from your industry? Who have been their major clients in the past? What is their
expertise area of service/ core strength and how long have they been in business?
C. Ask Right Questions - Prepare a proper questionnaire. By asking the appropriate questions you can understand the business vision of vendors,
their ability to recognize your problems and come out with innovative solutions, technical expertise and communication skills of the team.
D. Ask for Work Portfolio or Sample Codes - It is okay for you to ask them for sample codes/ screenshots of software they would have developed in
the past. It gives you the confidence that you will be working with a genuine organization that can back its claims with high-quality work.
E. Cost & Project Timelines - This is probably the most important factor in the minds of Management. Remember, companies who quote a lower price
are not necessarily the best ones to test with. Similarly, companies that boast of a higher price and quality are not necessarily the best ones either.
Determine the price internally at which you wish to get the task done. Do not over negotiate else you may miss out on a super vendor. Also, consider
the timelines for deliverables as you need your project to be completed within a certain timeframe. Lower turnaround times are always appreciated!
F. Run a Pilot - Nothing can be more substantive than the ability to deliver actual results. Though this may seem an unnecessary expense, giving the
vendor a trial project to perform can cost $200 to $1000 depending on various factors but it can save you from loss of 1000's of dollars.
G. Ask for References - You want to select the best vendor for your business and that’s why you need to do proper due-diligence from all possible sides
before proceeding to the next step. There’s nothing wrong about it and so go ahead and ask the vendor freely for references. Reference checking is
a fine art. A reference should be evaluated based on who the reference is rather than what they say. A recent client is much better reference than
client who engaged the vendor years ago. You can ask whether the project was successful, whether they knew the vendor prior to project, what
was their role in ensuring project success, would they hire the vendor again in future, their feedback and suggestions. References will help you big
time and give you confidence while taking the final call.
To conclude, you would have realized by now that there’s no magic formula to select the right IT outsourcing vendor. It will require you to take many right decisions at every step of the process. Common sense, a structured approach and learning from others’ experiences will go a long way. I hope you consider all these points when finding your outsourcing project vendor in the future!