When it comes to outsourcing, the client-provider relationship is important to ensure success. And this can be achieved if a contract is in place to ensure that the expectations of both parties are realized. However, negotiating an outsourcing contract is no easy undertaking.
As opposed to a one-time vendor contract, an outsourcing contract should be carefully planned out since the third-party firm and its staff will be integrated into the client company for a specified period during which they could have access to the client company’s important information and, in some cases, trade secrets. The contract should be favorable to both client and provider given that outsourcing should be treated as a strategic partnership.
Managing Outsourced Service Providers
If you have decided to outsource some of your office functions, you must pay great attention to the contract before signing on the dotted line. So to ensure the relationship will work between you and the provider and the set up will address your real needs, here are some strategies you can employ to have a win-win contract in place according to workforce.com.
1. Institute a Detailed Request for Proposal (Bidding)
Successful outsourcing always begins with the right provider. So rather than just picking the first third-party outsourcing firm you saw online, consider instituting an aggressive bidding process where providers can give their proposals. Through this stage, you will be able to know which companies will muster their resources to provide the needs of your organization and identify the most compatible candidates based on your objectives, goals, and requirements. While the procedure will certainly take time, it will pay off in the end because you will be able to avoid fly-by-night outsourcers.
2. Ditch provider contract
All too often, outsourcers will push their standard contracts to their clients. The problem with this is that such contracts are usually one-sided and require providers to perform services at their own pace or at the same level as the client’s designated department is already doing. With this in mind, it is your best bet to have a site-specific contract. That means the contract should consider your company’s profile and should specify your requirements.
3. Signing a fragmentary outsourcing contract is a big no-no
Some clients and providers tend to be anxious when the early stages of a business deal take too long. For this reason, they are tempted to close the negotiation in haste. On the part of the outsourcing provider, some tend to pressure the client company to sign the contract before all the details are completely specified. However, because they are not legally bound to modify the contract, later on, they may never agree to change the original one should the client request for it. This, in turn, could cause significant damage to the business relationship if things do not work out according to the client’s expectations. So apart from specifying requested services, it is equally important that the contract includes:
- Specific designation of individuals who will be working on the projects
- Performance benchmarks
- System of reporting
- The course of action if problems arise
- Working arrangement and penalties
- Contract duration
- Schedule of payment
- Provisions for cancellation
- Special clauses concerning risk sharing, confidentiality, arbitration and renegotiation
Apart from the nitty-gritty specified in the contract, a successful outsourcing arrangement can also be achieved if there are flexibility and open communication between your organization and the service provider. At the end of the day, a solid professional relationship must be able to adapt to changes, which would require give and take on both sides.
Why Do Companies Outsource?
There are some other business owners who are quite hesitant whether they should or not outsource some of their tasks. As a business owner, take note that there are various reasons for outsourcing, and it is not just limited to cutting down all your overhead costs. In fact, outsourcing is generally seen as the strategic use of outside resources to grow their business. More so, these companies make use of this business process for the following reasons:
- Outsourcing helps companies lessen risks since they will be passing on certain tasks to experts on the field. Aside from saving costs, this is also one of the primary reasons why companies choose to outsource.
- Companies are able to focus more on the core of their business by outsourcing their mundane daily tasks to their outsourcing partners.
- Another perk of outsourcing is that companies are given the privilege to hire relevant and skilled international talents at a much lesser cost. Geographical boundaries are no restrictions on outsourcing. Professionals at any part of the globe who are a perfect fit for your business needs are accessible through outsourcing.
- There are also companies that outsource to help them widen their reach and have access to newer market areas.
- Outsourcing also enables leaders to free-up some on their plates. These may include business functions that are quite hard to manage.
- Companies are enabled to free-up some of their internal resources that can be used in a different business process is something that can be very beneficial to a growing business.
There may be pros and cons to outsourcing just like in any other venture. However, there are overpowering perks that can be achieved by an organization. No matter what type of industry, no matter what size, or how low a specific organization has been in the business, outsourcing can be used. Furthermore, this practice has been and is still remaining to be on-trend even after decades. As perceived by experts, this type of industry is not going anywhere anytime soon, in fact, it is greatly seen to even boom in the coming years.
PrimeOutsourcing Services
Save up some of your business precious time, money and productivity with PrimeOutsourcing. We have an array of services that will perfectly suit your business’ needs. Get to know more about our featured Services and request a quote today. You also have the option to speak to us via our Contact Us page. You may also visit our FAQs page if you have further questions.
