Some things a provider needs to know

Experience suggests that outsourcing service providers often fail to understand what potential clients are looking for when they originally begin a search for a provider. In particular, they fail to understand that the client will probably be looking for different things at different times in the negotiations. For example, when first creating a short list of potential providers, the client will probably consider the following factors in descending order of priority.

  1. Credibility – how much experience does the provider have, i.e. how many existing clients?

  2. Reliability – does the provider satisfy its clients’ needs?

  3. Flexibility – does the provider work to only one set work pattern, or is it flexible enough to match our needs in the short term and adjust further if our business grows substantially, or declines?

  4. Skill base – does the provider have the IT and other skills that we may not need now but probably will later?

  5. Potential savings – will this provider be able to offer greater or lesser savings than others?

  6. Service – how will this provider’s service compare with what we currently enjoy or what others might provide?

  7. Management skills – if our business grows or contracts, does the provider have the management time, skills and desire to support our needs?

  8. Personnel policy – what is the provider’s personnel policy and how will this affect our people?

  9. Transition skills – how effective have they been in bringing about past transitions: have they met the required timescales and what has been the effect on previously transferred staff?

  10. Contract questions – will the provider want to use its greater experience and tie us down under a tight contract, or will it allow us a ’get out clause’ or partnership arrangement?

  11. In-house expertise and control – will the provider make sure that we do not lose the expertise and control necessary to maintain and develop the business?


It could be argued that the above list is in the wrong order, i.e. that the service is the most important issue, followed by the potential savings, etc. Indeed, in the final stages of most negotiations these are the issues on which the decision is normally based. However, in the very early stages of choosing potential providers it is usually only the first four ’concerns’ that are important. In other words, it is only the client’s perceived impression of the potential provider’s credibility, reliability, flexibility and skill base that decides whether that provider gets to the negotiating table. Once the short-list stage is reached, though, these four factors are usually taken for granted and consequently play a less important part in the final decision.

Credibility, reliability and the skill base are factors that the service provider either has or does not have in the required amounts. It is normally sufficient, therefore, for the service provider to understand their special importance in the early stages of negotiations and to adjust its marketing accordingly. The flexibility factor is worth expanding a little further. The short-term flexibility concerns for most clients are based on issues such as:

  • we are not sure whether it is in our best interest for the work to be done in the existing premises or for it to be done elsewhere;

  • we are not sure whether we will ask the service provider to keep at the end of the transition, 100, 50 or 0 per cent of the staff currently employed;

  • we will probably want to retain the existing systems, but then again, we might ask the provider to transfer them to its own systems or create new systems.

It is not unusual for potential clients to request this level of flexibility in the early stages. In one case, a provider refused very early on to say that it would retain all the staff who wanted to be transferred for at least six months after the transition. This refusal was a factor in the provider being dropped from the short list, but the remaining provider managed, without too much trouble, to make 20 per cent of the client’s staff redundant by the end of the transition.

Naturally, the more flexible you are, the less profit you make. However, the point I am trying to make here is that flexibility is usually very important to the client during the initial discussions and very often the provider fails to pick up the emotional signals being generated. It is wise to state that ’all these solutions are possible’ unless, of course, they are not. One major supplier claims total flexibility but usually all their clients get offered more or less the same package in the early stages. If a service provider is prepared to be as flexible as possible then it would be wise to raise this issue with the potential client at a very early stage.

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