The success of any outsourcing venture depends on one make-or-break decision - selection of a 'right-fit' service provider. Your first instinct may be to follow the herd and select the Big-Five or Big-Ten of outsourcing providers, but you may then miss out on the smaller, niche service providers who may promise service delivery at more competitive rates and may be more compatible with your outsourcing objectives in terms of 'cultural-fit', a factor rated alongside cost in outsourcing success.

If you have zeroed in on a list of potential service providers, a systematic vendor evaluation is the best way to decide on which provider to choose for your outsourcing project.

While each business has unique outsourcing requirements, you can get some standard information from vendors to start the evaluation. Your additional requirements can then be added to this information sheet. The information should be sought as a response to the Request For Information (RFI) or Request For Proposal (RFP) document. For more information on RFI and RFP,
read "Selecting an Outsourcing Provider: A Step-by-Step Guide".

A comprehensive evaluation can be performed by giving weight to certain factors, which are more relevant to your project.

Information for Vendor Evaluation

Some information you may collect from each of the vendors for evaluation purposes include:

General profile
This section would give an introductory summary about the service provider. Details included can be: Name of Service Provider Location Established year Domain expertise Years of experience in domain Management organisation chart Global spread Membership - organisations such as National Association of software and Service Companies (NASSCOM), Software Technology Park of India (STPI) etc. Annual revenue In the General Profile section, the location and domain expertise would be important valuation factors. Some experts believe that an expertise in restricted domains would ensure better service as their core-competency is focussed. This is why niche service providers thrive in the outsourcing market, in spite of the presence of big players.

Clients
Client details are an indication of the service maturity and reputation of the vendor, while case studies give an insight into the solutions provided for the client problem. Some details regarding previous and current clients of the service provider that can be included here are:
Client-base in regions Previous and current clients of service provider Client referrals/testimonials Some case-studies

Technology and Processes
This section would include details such as:
Software, Integrated Suites Database systems Standardised, well-documented development processes Secure development environment Standardised project management system Standardised delivery mechanism Agreed mode of communication between client and provider. Communication technologies such as email, chat, video-conferencing software Flexibility and scalability of technology solutions and processes

If you are opting for multisourcing solutions, then you must ensure that software systems are compatible throughout your project service providers. Flexible operations are also an advantage as processes can be modified to your changing needs.

Human Capital The managers and employees information relevant to the project will be evaluated according to information in this section. Some details needed include:
Profile of managers including qualification and experience Number of employees Qualifications and skill-set of employees Experience of employees Communication and language skills of employees Pay and benefits of employees Attrition rate Training initiatives for employees If you are considering a Virtual Captive model, you can participate in the recruitment process of the candidates via your own online assessment tests, and conducting interviews through web cameras, teleconferencing or video-conferencing. In Virtual office models, employees hired must be strong communicators to function effectively in virtual teams.
Infrastructure Depending on whether you are opting for a third-party outsourcing model or a virtual captive model, evaluate the physical infrastructure of the provider. If your requirements are scalable, the infrastructure should support it. Some aspects you should look into are: Office space Hardware requirements including servers, workstations, peripherals Telecommunication links such as broadband internet and phone links.
Quality Some aspects regarding Quality Assurance provided by the vendor that should be looked into are: Quality certifications such as CMM, Six Sigma etc. Clear and well-documented Quality Assurance (QA ) process.
Pricing Cost-cutting is the prime driver of outsourcing. Financials can include information such as: Cost of solution Terms of payment
Cultural Fit Cultural compatibility is ranked only next to cost in outsourcing arrangements. 'Cultural Fit' between companies can include: Workplace ethics Responsiveness to client needs Cultural differences including language The more the client and the vendor complement each other 'culturally', the greater is the success rate of the outsourcing venture.
Value Proposition The value proposition would include the key differentiators that would make this vendor a better choice than others, apart from the costing. Value propositions can include: Flexibility and willingness to go the extra mile for the client. Rapid development environment Orientation towards long-term partnerships Cutting-edge technology Ability to create long-term intellectual capital for the client. A partner-player for the client, helping it to grow its business. The above set of information, in addition to other unique requirements of the client, should be evaluated objectively for each short-listed vendor. A quantified rating system may be developed to make the evaluation more transparent. Of course, the information submitted by the vendors must be corroborated by personal visits to the vendor's office. Remember, the decision to select a particular vendor is a critical one. Make it wisely, or you may just 'Marry in haste, and repent at leisure!'