Tips for Outsourcing

Simply sending out requests for proposals (RFPs) may no longer be useful for evaluating an outsourcing vendor. This is particularly true for administration and IT outsourcing. In these cases, organizations are often not in a position to determine the applicability of a solution until they are well into the assessment process. In addition, an RFP too rigidly limits the "box" into which solutions are going to fit and can eliminate the right options for the customer.

Organizations can obtain better results by using the "reverse RFP" approach of collaborating with vendors to determine the best avenue to pursue. The Reverse-RFP process involves simultaneous steps:

Step 1: Internal feasibility study:

The customer (as part of a project team) develops a blueprint of its existing environment and infrastructure by:

  • Determining the specific services and activities that can be displaced
  • Quantifying the costs associated with these services and activities (this is also crucial to measuring the return on investment)
  • Securing the required budget and time frames to make the outsourcing project successful

Step 2: Cooperation with vendors:

While an organization analyzes its internal feasibility study, outsourcing vendors can and should offer:

  • Front-end information exchange and help in determining process improvements
  • Long-term relationship commitment, as measured by their years in the industry and financial stability

Key Metrics:

    • What can they deliver in what time frame?
    • Demonstrable capabilities, such as answering calls within four rings, their maximum turnaround time, and so on
    • Price

Single-Vendor or Best-of-Breed Outsourcing

Generally speaking, organizations benefit more from outsourcing to one or a few vendors.

Advantages

  1. Better integration

  2. Fewer vendors to manage

  3. Less risk the vendor will disappear - larger, broadly scoped vendors tend to be more mature and financially stable organizations

Disadvantages

  1. Not all providers equally specialize in HR, benefits, and payroll solutions in terms of methodology, technology, staff expertise, and proven results

  2. Less Choice