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Top 5

Ways to Contract for New Services Amid an Existing Outsourcing Portfolio

by ISG

by Henry Howard, Director – CIO Services, TPI

When adding work to an existing "already sourced" portfolio, there are several considerations one should consider each time. While it is often an easy decision to choose a quick solution or the incumbent service provider, something important typically gets overlooked in these scenarios.

Here are the TPI Top 5 things to work through when expanding the portfolio of services to be sourced:

1. Understand how big it is. Before you bid something out, do your homework and understand what level of effort is required to do the work you are bidding out. If you were to do the project, how many people and what skill would be required, and how long would it take? Is it a simple project with few interfaces, or does the project have tentacles throughout the organization? 

2. Verify the service provider’s ability to do the work. Once you know the size of the project, you must make sure that the service provider’s team has the same order of magnitude size perspective that you do.

3. If it seems too good to be true, it probably is. If the service provider underestimates the magnitude of the project, the duration, the complexity or the risk, it may offer a very attractive price. If the price doesn’t look right (too low or too high) given your understanding of the size of the project, verify scope and expectations with the service provider before proceeding. 

4. Contract for risk and incentives. Some risk is inherent in any contract arrangement, but minimize risk by being clear on your responsibilities, the service provider’s responsibilities and the required deliverables. 

5. Manage the results of the contract. Don’t "fire and forget." Designate someone responsible to you as the client project manager, even for small projects. 

A project gone wrong is not good for either organization. In addition to taking an inordinate amount of management time, derailed projects can be detrimental to the relationship between the parties and to the bottom line results for all parties to the contract.

Read this entire TPI Top 5 here . . .

TPI’s CIO Services experts can help your company define the optimal sourcing strategy through our experience, objective advice, industry knowledge and depth in all aspects of information technology and business process services. To learn more, e-mail Henry Howard, Director ― CIO Services, TPI, or phone him at +1 214 663 0482 to learn more.