We live in a world today where there has been an increasing emphasis on digital technologies and outsourcing across the business model. Most companies today realize the fact that all business services cannot be handled internally. Business process outsourcing has become a common norm these days. The companies can choose to outsource most of their functions or just a handful of their tasks to external service providers. This ensures that they can focus on the core aspects of the business.

Outsourcing has emerged as a vital element of the business, but this also involves a bit of risk as it consists of data exchange. Again, if the incorrect process is outsourced or if the functions are outsourced too early, it can hurt your business. Indeed, you can avoid such pitfalls with proper vigilance and careful assessment during the process of selection.

You can always ask your vendors the right questions and specify your business requirements. A careful analysis of the pros and cons of each vendor can help you create a seamless working relationship. This will help in optimizing the vendor performance in the long run and also augment the operations of your company. In both these cases, you will have to consider certain essential factors. These will undoubtedly help them to make the right decision.


Factors that you should consider when you are outsourcing services to your Vendors

To know about these factors in details, you will have to go through the discussion below:

1. The Management Team

The vendor management team is the one responsible for managing the vendor relationship with the organization. It is the one that ensures the partnership is financially rewarding for both the parties involved. The management team serves as a link between the vendors and other essential business processes and the human resources team. 

It is imperative to find out who will be the leader of the Managed Services team. It is essential to check and find out if they have the required expertise, industry exposure, and experience to fulfill them. If you get an experienced management staff leading your managed service team, they will guarantee a seamless work transition and a successful outcome.

2. Service Level Agreement

A Service Level Agreement or an SLA lays down the level of service provided by the service provider to the customer. It describes the products or services that the service provider or the vendor will deliver to the organization. The SLA is an essential document in any service outsourcing partnership. It is vital to ensure that you have everything written out. 

It is also essential to ensure that there is no room for any confusion. You will also have to check that the quality parameters for the services or the products that are being offered should be clearly defined. The SLA should clearly mention the expectations, responsibilities, timing and frequency, and the related metrics for the service provided by the vendor.

3. Pricing

Pricing is an essential factor when outsourcing your services. Therefore, it is crucial to avail of the best price. You will first have to check the vendor’s pricing structure and then compare it with the pricing structure of the other vendors. Price is indeed a significant factor, although not the only one.

The pricing philosophy of the vendor should be such that you pay only for those services that you need. Your Vendor Risk cost should be based on the number of services you choose. This ensures that the price remains as low as possible, and you don’t land up paying for unused features.

4. Level of Flexibility

It is critical to evaluate if the vendor that you have selected is flexible or rigid. It is essential for the vendor to be flexible to accommodate your concerns and offer relevant solutions. Your vendors should be able to keep pace with the regulatory or service changes and adapt quickly to any new norms whenever required. Similarly, if the organization makes changes in the delivery and volumes of its services as per business needs, the vendor should be able to accommodate those changes without upheavals.

5. Effective Communication

Partnering with the right vendors is vital for your organizational success. Your vendors should understand your company and its brand image. The service provider should be able to understand your requirements. They should be able to address your queries promptly. The vendors need to understand your requirements clearly and promptly. This will ensure no delays in project completion.

At the same time, your communication with the vendors should be clear and concise, and done regularly. You should be able to set expectations clearly and address issues without asking for the impossible.

6. Trained Employee Resources

You need to find out if the vendor you are selecting will provide you with experienced and qualified resources. Only then, they can handle the daily operations of your project smoothly and also efficiently. Also, your vendor team should be appropriately skilled for the assigned role and process. Your vendor managers will be responsible for the performance of the employees in their squad and provide necessary feedback. They need to ensure if they are working as per the terms of the vendor contract or if any improvement is required.



If you consider the factors mentioned above during the selection process, a reliable vendor of your requirements can be found. You can also establish long-lasting and trustworthy relationships with your vendors.