9 Smart Tips for Evaluating Your Outsourcing Partner

Tips for evaluating an outsourcing provider 

When evaluating your outsourcing partner, look for a vendor that is experienced, competent and knowledgeable in their field, as well as reliable and affordable. Here are some criteria that can help you gauge a vendor’s ability to meet your requirements.

1. Establish an outsourcing partner’s industry experience.

Your outsourcing partner should have extensive knowledge and experience in your industry to effectively handle the tasks and processes you plan to outsource. Consider the following tips for establishing an outsourcing partner’s industry experience.

• Ask the outsourcing partner about its project history. Ask the company how many projects it has completed and how complex they were. Be wary of vendors who promise seemingly impossible results — they may be making commitments they can’t fulfill. “We receive daily offers from outsourcing partners.… Often the offers are too good to be true,” said Joanneke Schuurman, COO and marketing manager at Custom-Lanyards.net. “Contact persons promise a lot, but when delivery actually has to be made, there is a lack of communication and payments.”
• Ask about the management team’s qualifications. The management team, project managers and other staff should have outstanding qualifications and extensive experience implementing projects similar to yours.
• Contact previous clients. Just as you would ask for job references when hiring employees, request references from the outsourcing vendor. Ask for feedback from past and current clients regarding the scope and quality of services they received. Find out about any challenges they faced in the partnership. If possible, ask for work samples or marketing prototypes to get an idea of the quality you can expect once you sign a service contract.

2. Assess a potential outsourcing partner’s technical expertise.

Your future outsourcing service provider should be able to explain its methodology for managing projects, tracking KPIs and results, and resolving issues so you understand how it will handle your projects. Ask about the following:

• What are its accreditations? Ideally, your outsourcing partner should hold certifications in critical areas such as project management and quality control. You want to ensure service and product quality and smooth operations.
• Does it have a business continuity plan? A business continuity plan will ensure that the vendor can deliver uninterrupted services or support to your company. Business continuity is a key element of disaster preparedness.
• Can it provide case studies? Ask the company to provide case studies that show how it has solved problems for clients in your industry.

3. Inspect an outsourcing vendor’s communication and client management systems.

To facilitate communication with your partner, discuss your expectations. Some tips include: 

• Ensure communication availability. Everyone on the outsourcing team should be available by email, phone or messaging applications such as Slack during your regular operating hours. “The more communication, the better when dealing with outsourced teams,” said Zoriy Birenboym, CEO of eAutoLease.com and eAutoCollision.com.
• Ensure time zone compatibility. If you’re operating in a different time zone, your outsourcing vendor must be willing to work with you to minimize communication gaps.
• Engage a primary contact person. Agree on a primary point of contact for all queries, feedback or concerns to ensure a smooth exchange of information between you and your outsourcing team. Some businesses go a step further by creating centralized systems that all parties can access. “[We designed] our own … CRM/production planning [system] to which our supplier, production and customers have access,” Schuurman said. “This ensures that we can easily streamline communication and also easily adjust. No different mailboxes, tasks, etc. — one central point with all product data.”

4. Check an outsourcing partner’s infrastructure and technologies.

A technologically ready service provider will better support your company’s needs and demands. Your outsourcing partner’s IT infrastructure should include the following:

• The latest hardware and software components
• A reliable network of phone and internet lines
• Integration with your technology

Your vendor may also need to invest in acquiring and applying additional technologies specific to your business.

5. Calculate the outsourcing vendor’s costs.

Consider the following when evaluating an outsourcing partner’s costs: 

• Ask if fixed-project costs are available. Fixed-project costs can yield huge savings, so ask your potential partner if that option is available. Otherwise, it’s your responsibility to investigate and question any hidden project implementation, staff training or other costs that could add unnecessary expenses to your operations.
• Ensure that your contract details all costs. Ensure that all costs are detailed in your contract. The agreement should also define the procedure for approving any additional costs outside the initial scope, so you don’t get hit with unpleasant surprise bills. “In the preliminary phase, everything [seems] possible without extra costs,” Schuurman said. “As the deadline approaches, more has to be paid, there is no one to respond and you are often left to your own devices.”

6. Evaluate the outsourcing vendor’s workforce.

Your outsourcing partnership’s success will largely depend on the vendor’s workforce. You don’t have much control over that, but you can take the following steps:

• Examine the vendor’s hiring policies. Consider reviewing your vendor’s hiring process and policies to ensure that team members are vetted for the knowledge, discipline, technical skills and soft skills your business requires.
• If possible, view the call center. For outsourced customer service or inbound and outbound call centers, ask to see the call center. Determine how many dedicated or shared representatives you’ll have, and ask about their training and language proficiency if the center is overseas.
• Share your company culture with the vendor. It can be beneficial if your partner understands your company culture. Impart your values, beliefs, vision or mission statement, as well as your preferred communication methods. See if the partner can incorporate those elements into the outsourcing environment.

7. Gauge the outsourcing partner’s financial stability. 

When choosing a partner, ensure that the company is stable and solvent. You want your outsourcing partner to remain available and reliable for as long as you need its services. 

“When you start getting hesitant answers to your questions or when something is taking longer than expected, [these are potential red flags],” Birenboym said. “Go with your gut feeling. Before moving forward, always do your due diligence.”

8. Do a test run with your potential outsourcing partner.

Instead of committing to a contract solely based on initial promises and proposals, take a staggered approach and begin your partnership slowly with a test run.

“Start with a few small orders, make a test order and request samples,” Schuurman said. “How quickly do you have the samples in your possession? This gives a good indication of the delivery time when you actually have an order.”

Once you’ve completed the test run, analyze the results and determine if you’re interested in moving forward with the partner. Offer actionable feedback to help them improve and better support your needs.

“Follow through to make sure everything is being done,” Schuurman said. “Rinse and repeat the process. Don’t procrastinate — get things done in order.”

9. Expect some trial and error with your outsourcing partners.

Even if your partner checks all the boxes — a solid history, efficient communication and high-quality deliverables — the fit won’t always be right for your business. As Birenboym notes, you may have to work with multiple vendors to find a suitable partner.

“You’re going to have to experiment with some companies before understanding and knowing what’s best for you,” Birenboym said.

Benefits of having an outsourcing partner

The right outsourcing partner can bring multiple benefits to your organization.

• Outsourcing partners increase efficiency. The right partner can help you complete the job for less money and with higher-quality output. Many partners bring a wealth of knowledge and experience to complex work, leading to a higher production rate over a shorter period. 
• Outsourcing partners let you focus on core competencies. When you outsource some of your work, you can focus time and energy on areas that can better serve your business, such as marketing or research. A consulting company, for example, may outsource payroll functions to one of the best online payroll services but keep its hiring process internal.
• Outsourcing partners can save money. When you outsource, you also eliminate the need for infrastructure and can invest your money in other places. You won’t have to invest in employee training as much because the outsourced resources already have the necessary knowledge and experience. You may even be able to afford more services with an outsourcing partner, such as expanding your customer-service hours.
• Outsourcing partners can make the company more agile. Outsourcing partners typically focus on a specific aspect of business operations. They’ll pay stringent attention to new laws, regulations, technologies and trends in that area. They’ll automatically implement necessary changes to keep up with industry trends without your needing to research or invest. 

Miranda Fraraccio contributed to this article.