Keys to a Successful Partnership with an Outsourcing Vendor

Global economy today requires that, in order to remain competitive, organizations carry strategies to monitor cost very closely. Among several alternatives, one of the most acceptable today is outsourcing activities to third-party Professional Service providers, with an end-goal of reducing cost and maintaining gross margins. Varying from short-term, task-oriented engagement to high-profile, long-term engagements, these providers can support strategies in many different disciplines. Organizations may also decide that providers will focus mostly on operational activities and non-core competencies, while product development and strategic activities, for example, would still remain internal.

Partnering with Professional Service providers can have significant impacts on cost; organizations can have fixed cost substantially reduced in exchange to low variable cost. Additionally, benefits may come in different ways such as easier access to talent and expertise, specialization of personnel, increase in scalability, quality and productivity, etc. Successful outsourcing strategies require that organizations are well prepared, have a solid business plan in place and have relevant information that has been captured ahead and added to it. Make a good use of lessons learned from previous experiences, data from competitors on mistakes and correct approaches, and ensure that key performance indicators are very well-defined.

In regards to partner selection process, several criteria would need to be considered. In general, organizations tend to make selections based on cost. Let’s not diminish its importance, since cost reduction is the main goal, but it must NOT be the only focus. It must consider areas such as a potential partner’s subject-matter expertise, resources and training available to their staff, their philosophy and culture, values/ mission and proven procedure and processes.

Last, when partnering with Professional Service providers, organizations should not focus much on short-term capital gains but, instead, on a long-term strategy. Building win-win situations with the provider that you select is a requirement. This is the recipe for long-term success of any outsourcing strategy.