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Vendor Selection Criterion

 

The success of any outsource project depends upon the right choice of outsourcing partner. Success of outsourcing projects depends upon long term engagement focus and ability to establish good relationship with the outsourcing partner. If you are able to seed it with the trust then your probability of success is ensured.

 

Vendor selection criterion has dramatically changed in last decade. The following diagram shows the roadmap on how outsourcing partner selection criterion has evolved over the period of time.

 

 

Y2K bug was the launch pad to kick off the global outsourcing phenomena recognizing offshore as destination for IT services. The focus on vendor selection was just the availability of right resources at right time.

 

Tracking back to 2001 – 2002, when IT markets tumbled all across globe, big corporations were looking to find destinations for cheap labor, and cost differentiation was the major criterion for vendor selection. 

 

Around year 2004 companies realized the biggest investment is time and not the direct cost, corporations start looking for mature outsourcing vendors who can self manage with mature processes so as to achieve “right at first time”  delivery approach. 

 

Now outsourcing being inevitable to survive global completion, it has become a strategic and long term initiative. It is imperative to have an outsourcing partner who can understand, participate and can become the integral part of the business value chain.

 

Now the business stake is too high with outsourcing decisions which prohibits you to get in wrong foot on selecting an outsourcing vendor. Few of the essentials of selection criterion are:   

  1. Acquire essential knowledge about vendors in your domain: There are millions of offshore outsourcing vendors with good experience within your domain and core technologies. You need to find these vendors based on the countries you are looking to outsource your projects.

  2. Vendor Profile Review: Gather the information about the size of the company & its financial status. Find information about their clientele. The size should map according to your project requirements and your company size. You should have simultaneous access to top, middle level management and the project team.

  3. Domain expertise and technical Assessment: To test their true capabilities the best way is to send RFI/RFP to each vendor explaining them your business problem. Don’t mention your idea about solving the problem. Let them come up with something on there own. Read each response cautiously and select those who approached to the solution in a mature way. Take in person interviews if, necessary. Find out what ever their sales team has said is matching or not.

  4. Pilot Project: The best way to assess their capabilities, expertise and professionalism is a test project. If possible then ask them to send you a trial project possibly solving a small portion of your problem. The length of this project could vary from 3 months to 6 months.

Once you’re done with the pilot project select the best vendor for outsourcing your project.