Original content provided by BDO South Africa.
In tough economic times where financial health and performance are more critical than ever, outsourcing has an increasingly important role to play. There are benefits to both operational as well as financial management strategy. That makes finding the right outsourcing partner potentially become one of the most important decisions you make for your business future.
The right partner can help grow your business, save time and money, and provide you with the tools and resources needed to succeed. Resources including advice on systems, processes and best practice that is often beyond your existing capability. But is outsourcing the way to go? How do you choose the right outsourcing partner?
This article will provide you with the information you need to make an informed decision and find the right partner to help your business reach its goals. Here you will get insights and understanding into the different types of outsourcing partners, evaluating their skills and resources and how negotiate a contract properly
In this series we intend to provide a roadmap to finding the right outsourcing partner for your business.
Understanding the business of outsourcing
Business service outsourcing providers (also known as third-party vendors) are individuals or companies that provide services to businesses that can be more cost-effectively and efficiently outsourced than when done in-house.
As you build your relationship, these providers should become more than suppliers; they effectively become part of your business. You should be able to rely on them as business partners. Part of your team that enable you to take advantage of the expertise and value for money that comes with outsourcing the physical work and implementation involved in processes, and receiving advice about setup and best practice .
Steps for choosing the right partner:
When selecting a business service outsourcing partner, it’s important to understand the capabilities of the partner and how they will be able to help your business.
Define the services you need. Where are the potential weaknesses or high cost/high maintenance areas in your business and what kind of expertise you might require to improve them. Where potentially can value be added? It is also good practice to assess the risk areas in your finance and admin.
Outsource these types of areas to service providers with good reputation, and solid understanding of the controls required to mitigate the risks.
NB: Look for service providers with proven track record/good reputation.
Once you have identified the services you need, you can begin to look for potential outsourcing partners. You should research their background and experience and determine whether they appear to be able to provide the expertise and the value you are searching for. Will they be able to do a better job at a cost that will meet or exceed your requirements?
Now it’s time to meet up with your preferred choice, or a shortlist of potential candidates.
In these exploratory meetings ask lots of questions. As many as you need so that you feel confident in their ability and can picture them as part of your business:
- Make sure you understand their business and how it will enhance yours.
- How will they communicate with you, how they will deliver the service, and how they will measure and report on project and ongoing performance and success?
- Discuss the financial aspects. Be clear about your expectations and what you have in mind to pay. Talk about the areas where they can unlock value and how they will deliver the return. Ask them for a detailed proposal for review and to ensure the cost/benefit aligns with your budget.
- Determine if you can outsource multiple tasks to one provider. This means that there is shared information within the outsourced service provider team so they become more knowledgeable about your business and can add value by becoming trusted advisors over and above providing specific tasks.
You should also consider beforehand the payment structure and payment terms. It’s important that both parties understand the work-scopes, and the terms and conditions of the prospective agreement.
Shortlisting and decision making.
When reviewing proposals prior to selecting an outsourcing partner, you must know what kind of additional support and assistance you can expect from them.
- Is there anything special that differentiates them from the other proposals? Where will they add value?
- Consider the level of customer service a provider offers. Look for providers that offer flexible packages, timely project delivery, and ongoing support and maintenance within budget.
- Be clear about the roles and responsibilities of each party. Where their work-scope starts and where yours finishes
- Depending on the nature of the contract and the scope, you might like to include a 3 month probation window. During that time make sure you allocate a lot of time to bedding down the relationship. Lots of communication so that both parties get to know and understand how to optimise the relationship
Following these steps will help ensure that you find a reliable partner to provide the value for money you are looking for.
At BSO we provide a one-stop services offering. Our teams are trained to optimise efficiency and accuracy to help you with identifying and supplying services that are fit for purpose and meet/exceed requirements.
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