How to Choose the Outsourcing Partner

This is in continuation of last article on 'When should We Outsource the Work'. After deciding that we need to outsource the work, next big question is, where we should outsource the work. In this article, we are discussing few key points for selecting the outsourcing partner.

Selecting a right outsourcing partner is very important to justify your decision to outsource. A good choice can help you achieve your strategic goals and operational planning, however a bad choice can ruin all the planning and sometime the scope to outsource in future. So companies should spend good quality time on researching, and selecting the right partner. Here are few points which can help in deciding the approach to find the outsource partner.

  1. Matching Skills - Look for a company which has good experience in the technology and domain required for your project. Here technology and domain both are important. You will find many companies which can claim to do any kind of project. However experience in particular skills and domain always matter. Moreover management also grow stronger as it gets experience in same kind of projects. So always check the portfolio of company to sort out the matching projects. Have an interview with company representative, especially with the managers who have managed those projects, to understand the work done, approach of work, quantity of work, and some general questions like what kind of challenges company faced while executing these projects. This will give you a good insight about existing technical and management skills in executing same kind of projects.
  2. Client References - It is always a good idea to ask for the references of existing clients. You can then interact with existing clients and can have an idea of the quality of services rendered by the company to client. It is recommended to ask for the references from same region, where you are located, so that you can get the feel of problems faced in execution due to time zone gap, and cultural differences. Even if existing clients have got the services for same kind of domain or technology projects, that is even better to understand the level of skill set in those area. You can also try to have references of same size of company as of yours. That will give you an idea that how outsourcing partner is dealing the company of your size. And always ask for more than one references. One reference may not reveal all required information. So in brief, you should have at least three or more references. One of those should be in your region, other should have been in relation for same kind of technology and domain. One company of same size is good to have in this list. 
  3. Size of the company - It does matter depending upon your scenario. If you project demands to build a large team quickly in very small duration, prefer a mid size to big company. Because a small company may not be having those many resources and if they need to hire quickly from outside, it won't be that easy. Quick hiring gives you unfit resources which is not good. Keep in mind that even if you are giving the project on fixed price, having unfit resources on board is always bad for project. It might be monetary loss for the vendor, however it would be a strategic loss for you which is much bigger. If you want a process oriented environment with a lot of documentation for everything, go for big companies as small companies generally won't have that kind of resources to meet these requirements. However if you want an agile team which can deliver quickly, can adopt to new changes quickly, and the team size will be limited for a defined duration, then a small to mid size company can be a good option. Another benefit in small size companies is that even top management can give attention to your project, and hence would be adding experience to your project. 
  4. Infrastructure - It has its own place in the list. It is something which can not be filled with human skills. If your partner is not having a good band width or stable internet, all hard work will not give you desire result as you wont be able to get the things done when these are required. It will disconnect you from the team. If the environment is not secure, there is always a risk to loose your hard earned IP. If their internal servers and backup system is not strong, you may end up loosing a lot of time in restoring the things. Again monetary loss will be for your partner, but you would be loosing much more than that in term of missing targets. So always check for the desired level of infrastructure with your outsourcing partner. Make a check list, share it with outsourcing partner along with contract documents. It is good for both parties to set the expectations in beginning.
  5. Estimate your Assignment - Always estimate your assignment yourself so that you can have idea of cost and efforts both. Now if the outsourcing partner is having matching skill set, the estimates would be around your expectations, otherwise there can be a big gap. However don't turn down the proposal just by seeing the gap in estimates. Try to find out that there can be some gap in understanding the requirements. So give all valid chances to the exercise, otherwise it will be a waste of time and you will end up loosing some good partner. Consider that their strength may not be same as of yours, and they might be having something else good which is more important to your assignment. Also keep in consideration that it has been observed that first assignment in a new relation can always be less efficient. However if other factors are good, then efficiency will increase with time. 
  6. Quality of Proposal - Quality of proposal for your request itself gives you good idea about the level of services and experience (however it is not always true, so this should not be the prime factor). To see the actual quality of proposal, leave some gaps in your requirements and then wait for the questions and inputs from your outsourcing partner to fill that gap. Quality of questions will itself give you an idea about attention put in while making the proposal and even about domain and technical knowledge. Analyze the proposal carefully, and have a good discussions over all the doubts you find there. This exercise will give you good insight about the processes, and will give you good chances to interact with various key stakeholders in your project. 
  7. Big point is Quality of Human Resources - Ultimately it is the skills and quality output from human resources employed on your project, which will add to most of the output and give your strategy a right direction. So those are the most important factor to scrutinize. Now the big questions is, how to judge the quality of resources who will work on your project. So here is a check list for that, however relevance of points may vary depending upon your scenario, for example number of resources, size of project and so on. 
    1. Ask for resumes of the candidates and short list them based on your requirement. 
    2. Once you have the list of preferred candidates, next step is to interview them. Never leave this decision on outsourcing partner, till you are working with them for a long time and confidence building exercises are already over. Still having this decision in your hand is always good, however utilize knowledge and understanding of your partner for specific candidate as input. A small investment of time initially can save you a lot of time and money later. Interviews can be done on phone, or skype. A face to face interview is most preferred way of selecting the resources for your team. It won't be a bad thing to book a return ticket with 2-3 days on your schedule and have a personalize feeling of candidates as well as of company. That is the best thing you can do to build a good offshore team for you. If anyhow, you can not visit there personally, having a video conference can be a the next option. This is highly recommended even once you get into relations, to have a video conference with whole team once in a week. This will help you and team to be connected with each other and hence will create the interest level in project. Moreover it will also give you idea that who is doing what, and are skills utilized in best manner.
    3. It can give you quite good insight about the resource environment of the Organization, if you can talk to the Human Resource Manager. Ask for the HR policies and few figures like iteration rate, plans for resource management, grooming and talent management. Second visit should be to Project Manager who is going to manage your resources from offshore. Have a discussion with her for past few projects, how these were executed and what were the challenges and achievements in these projects. Asking some unreasonable questions is not at all bad to verify the things, like, how you manage the work if any resource is sick and want leave for the day or two at the time of delivery. Third visit should be to Account Manager, who is going to be the SPOC for all business relations and commercial decisions. Discuss over the past projects. Again, asking unreasonable question can give you good points, like my project is of 12 months with 4 resources however I want to get it done in 2.5 months. Or estimate is of 12 months, however I can not pay for more than 6 months. Answers for these kind of questions can give you a good insight about the internal working of an Organization, and their approaches. Always try to judge that who will be decision maker in business relations, and have a good discussion with her to fine tune your expectations inline with requirements.
Above list does  not contains everything, however these points can do good addition in decision making process. Also relevance and implementation of these points will vary as per your context. But one point, which is very important is, to understand that choosing an Outsourcing partner is really like building a sub-unit to achieve your strategic goals. So it should be given proper time and attention.

Further, we shall discuss about "How to Manage the Outsourced Projects and Teams" in coming articles.

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