How to Negotiate with an IT Outsourcing Company

Posted by rbts.in on Thursday, October 1st, 2009
Negotiate-IT Outsourcing-Company

Negotiate-IT Outsourcing-Company

Outsourcing IT has become a growing solution for business and technology consulting, web portal development, application services, custom software development, testing and validation services for larger corporations or a smaller company.

Larger corporations often use an end-to-end solution approach, where all of their IT needs- ranging from ERP business solutions across all business locations, maintenance and support applications or IT infrastructure. A smaller company may outsource IT services for their corporate website design, web content writing, Internet Marketing, Blog content, web development, e-commerce application, and SEO friendly web for inbound marketing.

Knowing the exact services you ‘really’ need is the “starting point” of negotiation an outsourcing deal. Very first step to start negotiation process for outsourcing IT project is the preparation of a perfect RFP (Request for proposals). For drafting the best RFP, involve the associated professionals. RFP should contain all the necessary and reference documents required to finalize a deal. Here are a few negotiation points you can use when looking for an Outsourcing IT company:

Security - The outsourced IT firm will have access to all of your project details, so security is of utmost importance. Your assets that is intellectual property and information need to be secure

Team - Am I really going to be provided with qualified professionals? Ensure that you really get the quality hours for which you’re paying for.

Project Manager – Will the software development team have someone full time who is experienced in managing Outsourcing projects?

Cost Savings – Costs fluctuates based on the Team profile, services provided, geographical location, overheads and profit margin of the company. Compare team profiles, services offered by individual vendor and asked for discounted services.

Location – do you really need on-site support? If not, it does not matter where the Outsource IT firm is located.

Outsourcing Contract - The outsourcing contract is the logical last task of the negotiation process, and as such is of fundamental importance. A well-crafted contract will guarantee that both parties are in agreement. In order to take full advantage of outsourcing and minimize risks all involved parties should carefully consider a few guidelines on Scope of Work, Pricing, Service Level Agreement, Intellectual property, Outsource Governance, Contract Termination, Transition, and Dispute Resolution.

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5 Facts About Outsourcing That Will Possibly Surprise Small Business

Posted by rbts.in on Monday, September 28th, 2009

One of my friends Mr. Lawrence Joe has a small business setup. Inspite of getting best output from his employees, he quite often used to fail in competing. He discussed the problem with me as he was worried – how his business will survive and grow in the environment of throat cut competition? So, I made a thorough research to get the solution of his problem. This write up is intended to share the findings of those studies.

The simple solution of such problem is ‘outsourcing solutions’. The outcome of outsourcing depends upon ‘why, what, and how’ you outsource. Outsourcing work is not meant only for the big business houses but it can help small business too in many ways. Following analysis of the generally ignored benefits of outsourcing will make you confident to outsource solutions.

1. Control capital costs

Outsourcing converts various fixed expenditures into variable expenditures, so you get enough capital spared that can be invested for more valuable activities. Many times, you don’t bid for the projects because of the fear of bulk investment in one go at initial stage. Outsourcing work helps you here because you pay in various stages as per project progress.

2. Increase efficiency

You can’t use your existing talent pool for all the business needs like research, development, planning, marketing and execution etc as the nature of these requirements change quickly. So to maintain maximum efficiency level, you need an outside support. The perfection and cost structure of a service provider provide an extra edge to your business.

3. Reduce labor costs

HR practices to meet the specific requirements of short-term projects prove very expensive. By outsourcing project, you reduce your involvement in HR practices and save considerable money, time and efforts.

4. Start new projects quickly

Most outsourcing companies ask for quick delivery so you don’t get enough time for recruitment, training and arranging necessary support. Outsourcing helps you to act like “big” by offering same price, efficiency and expertise. Outsourcing shortens the completion period and you get enough time to recheck the quality. By outsourcing project as a whole or in part, you can shift your focus from low value activities towards customer interaction and support.

5. Reduce risk

Every business investment involves a certain amount of risk. Various aspects related to market, regulations, financial conditions, technologies and competition change very quickly. Service providers help you to manage such risk. So, you always remain among the front runners feeling more confident to match the changed requirements of project owners.

So, no doubt outsourcing is a boon for the small businesses also, the only thing you need is a right approach for outsourcing solutions. My friend Mr. Lawrence Joe has changed his way of doing business and is reaping good profit now by focusing more upon efficiency and perfection.

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How a small business can secure Software Development Outsourcing?

Posted by rbts.in on Saturday, September 26th, 2009

How a small business can secure Software Development Outsourcing- rbts.in

Toady, Software development outsourcing seems the most feasible business solution to make the organizational functions smooth running, to cut down production cost and to increase productivity. Many of my friends tell me the adverse effects of outsourcing, they experienced while more than them said they are earning better by outsourcing. Simply, the problem is not with outsourcing trend instead it is with outsourcing process. The contradictory experiences of my friends made me more interested to identify the errors we commit unkowingly while outsourcing Software solutions.

Selection of appropriate service provider:

This is one of the most frequent mistakes, we commit while outsourcing solutions. Being influenced by the references or good profiles, we delegate the work to a company that lacks the imperative infrastructure, talent and expertise. Matured outsourcers have good data base of service providers and try to select the one out of that, without inviting new service providers. Though this practice simplifies the outsourcing work but we miss more competent new service providers. I too committed the same mistake many times and suffered every time. So, never rely only upon the existing data base, keep it expanding with every requirement. Invite, shortlist, interview, compare, cross check the provided info, test and hire should be action line. Do you follow this?

Negligence of importance of Schedules:

When we go for Software development outsourcing, we focus more upon the quality and rates. But very few of us, discuss with vendors about the probability of delay in project or tasks completion. I suggest, never keep the time frame flexible. The selected vendor should be capable to meet out your emergency requirements without affecting the production schedule of in-hand tasks. So, always design and follow a fixed time frame, having at least 10-15 % flexibility with you. This spare time can be used to check the quality of delivered services or to make necessary changes. Do you keep 10-15 % flexibility of time frame with you?

Paying more than estimated:

Many of my friends regret, they suffer loss in IT projects because they pay more than estimated for outsourcing project. You too would have been faced same problem. The reason is simple; we underestimate or neglect the cost of selecting the vendors, training, follow up, checking, redesigning as per clients new recommendations and switching over the vendors if needed etc. Prior to go straight for complete software development outsourcing, it is must to analyze your exact requirements on the thought line- ‘what, why and how to outsource’. Check, which aspect you don’t consider while finalizing the bid.

Just selecting the highest bid for software development outsourcing is not guarantee of getting secured and profitable outsourcing. So, evaluate your existing talent hub and select the best suitable out of Staff Augmentation, Out-Tasking, Project Based or Managed Services etc like outsourcing models. To know about these solutions outsourcing models, you may visit http://bit.ly/17X5j4

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4 options Your Outsourcing IT May have

Posted by admin on Tuesday, September 22nd, 2009

Today, outsourcing has become the necessity for every kind of business because of its unchallenged benefits. The prime aim of outsourcing is to increase the profit without compromising with defined parameters of clients. When outsourcing companies decide for sourcing the services, they see many outsourcing solutions and it seems a child’s play to hire an agency to accomplish our task. But, prior to go for outsourcing, self-assessment is must. When self-assessment exercise of ‘what and how to outsource’ is done professionally, following 4 options your outsourcing IT may have seem more favorable than others.

1. Staff Augmentation:

Staff Augmentation is the very basic model for outsourcing that doesn’t affect the existing ownership and control over the business. Under this option, outsourcer asks the service provider to provide specific skilled supporting staff as a low cost supplement skill option. Here, service providers can’t be held responsible for the end results because the provided professionals work as per the directions of the outsourcer. This option is the first choice of the companies that are less experienced in outsourcing tasks. Lack of responsibility for outcomes limits the utility of this option but the overall outcome can be improved by narrowing the gap with service providers.

2. Out-Tasking:

Out-Tasking option of outsourcing makes the service provider responsible for specific tasks. Under this option, outsourcer keeps overall control of the project unshared while service providers are asked to perform some specific tasks. Out-tasking is preferred for short term needs especially when client identifies existing talent pool incapable to perform as per requirements.

3. Project Based:

This is one step advanced Out-Tasking option for outsourcing projects. Service providers are given complete responsibility for a project operation. The accountability for the project level but not for business level outcomes lies with service provider. The company closely monitors the project progress. Specific Service Level Agreements (SLAs) and vivid parameters are fixed during the agreement and progress is evaluated periodically.

4. Managed Services:

Matured outsourcers prefer give more accountability to the hired service provider under Managed Services option of outsourcing. Under this kind of pact, service provider is held completely responsible for on time delivery of outsourced services. Service provider may get involved in drawing up SLAs with client or Operational Level Agreements with other service providers, if allowed by the outsourcer.

Every organization has different environment and infrastructure, so, the parameters of outsourcing a project vary at large. Selection of outsourcing option depends on out sourcing maturity level, existing infrastructure and the nature of project. Following a road map to migrate from one project outsourcing model to another is also a good option but every step should be taken with utmost care. To know, ‘how to proceed for successful outsourcing’, just visit http://fersht.typepad.com/.

That’s all I’ve got for now.  For those of you that have built early-stage outsourcing teams, what are your ideas and insights?

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