OFFSHORE OUTSOURCING- VENDOR
Vendor evaluation is the most important stage for successful outsourcing
initiative. Before an organization decides to outsource it has to be absolutely clear on what
to outsource? How to outsource? And more significantly, why to outsource? Resource allocation to
an outsourcing decision process can be decided based on the contribution of the business processes
in the overall business subsistence and organizational growth.
Ideally a vendor evaluation process includes these steps: looking for an
offshore vendor, contacting the vendor, extracting and interpreting information from the
short-listed vendor, interacting with offshore vendorís clients, detailed analysis of vendor
processes & infrastructure, requesting a quote and deciding the final vendor.
But, taking a decision for outsourcing to an offshore vendor demands
extra caution, and the outsourcing decision process is different from normal processes.
Following are the essential steps you can include in your offshore vendor evaluation process:
- Evaluate vendor country:
Scrutinize the political and economic climate of the vendor country. Understand the political
inclination, economic policies, and IT policy. Clarity on the judicial system is also imperative
to hedge your offshore outsourcing risk. Look at the future of offshore outsourcing in the nation
where the offshore unit is located. One could refer to the sovereign ratings offered by various
independent organizations, as macro environment created by economic and political policies will
largely affect the feasibility and financial viability of offshore outsourcing.
- Know the vendor better:
Understand the goals, objectives, mission and vision of the offshore vendor. Be convinced of
the vendorís short-term, medium-term and long term business philosophy; after all you do not want to change vendors
frequently. It is always a good idea to be convinced about the leadership. Synergy in goals is an
absolute must for sustainable offshore relationship. Evaluate their willingness to adopt your
standards and processes.
- SWOT analysis:
Conduct a detailed analysis of personnel skill sets, technology infrastructure,
privacy protection, quality control processes, confidentiality measures and other systems as per
your requirements. Factors like crisis management strategy and redundancy plans of the vendor are
critical for your business continuity. At this stage do visit the potential vendor, and verify the
- Financial Analysis:
Every offshore outsourcing decision process revolves around cost savings without compromising on
the quality. Financial analysis should be done based on the total costs to you vis-ŗ-vis the
expected goals. Calculate financial risk depending upon the back up strategy adopted by
the offshore vendor.
- Selecting the offshore vendor:
A contractual binding completes the vendor evaluation process. For effective offshore
vendor management, a contract should clearly define the roles and responsibilities, timelines,
financial details, payment modes, quality standards and other details necessary for better
offshore vendor management. Clearly defined SLA (Service Level Agreement) and a termination
clause are also an integral part of the contract.
Successful offshore outsourcing relationships facilitates harnessing
the vendorís strengths to deliver results in line with the offshore outsourcing companyís business needs.
One time tested model, which ensures the benefits of offshore outsourcing, whilst minimizing the risks
associated, is the Global Delivery Model.