5 Steps to Sole Sourcing Success for Small Businesses

While multi-sourcing has become a popular deal for enterprises today, there is still value in finding a sole outsourcing partner. Not all businesses are looking for a multi-layered outsourcing deal. Small businesses, especially those who don't have much experience in outsourcing, just want to find a match to grow their business with. Here are five steps to ensure a successful sole sourced outsourcing deal.

Start and get approvals early.

The requirements for outsourcing can be simple for a small business. It could just be hiring a virtual assistant or offshore data entry worker. However, once you negotiate a deal, the details become much more complex than that.

A good way to find out if offshore outsourcing would be beneficial is to build a business case. This will bring to light important points such as strategic benefits, projection for contract duration, scope of work, accounting of direct costs, and desired outcomes. If you're a manager, it’s ideal to pitch outsourcing early on to prevent delays and build momentum.

Compare and ensure value.

Ultimately, benchmarking and external validation to find out if pricing is market-competitive and value is reasonable will depend on you. After comparing potential outsourcing partners in detail, you can work with your chosen partner to set quantifiable solutions. 

Take ownership of the negotiation process.

If negotiations take too long, it may lead to nowhere. If negotiation periods are too short, the contract may not get enough attention to sort out the kinks of the deal. You have to take control of the engagement process to make sure that there would be no ambiguities in the outsourcing relationship. Ultimately, it boils down to who is responsible for what, what outcomes should be achieved, how it will be delivered, and how long it should be done.

Deepen the relationship.

This is common sense but trust issues and misaligned goals are totally plausible if both parties don't make an effort to collaborate with each other. The ‘us vs. them’ mindset is common, which has led to alternatives such as vested outsourcing.

The outsourcing client and service provider should have mutual respect, aligned interests, and same level of commitment. During the negotiation, both must build an outsourcing deal that is focused on business outcomes and value. The outsourcing relationship should be maintained through the duration of the deal.

Engage top management.

The problem starts with the outsourcing client assuming that the service provider will take care of everything and don't need any guidance. The service provider then is left to assume that they're doing their job. So when problems arise, blame gets pointed around.

Senior leadership from both sides should drive the outsourcing relationship towards the desired goal. Desired outcomes must be continuously reinforced to ensure that both parties are on the same page throughout the deal. Implement spot coaching to realign team members who are veering off the plan.

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