Questions you should ask before hiring an outsourcing partner

Outsourcing is a cost-effective, and often feasible, means of doing business. As competition in various markets increase, businesses need to put a focus on their core competencies. As a result, some of the more mundane tasks may become overwhelming, prompting companies to look to hire out these tasks. Or, a company may outsource a process because another company has a stronger specialization or expertise that would be costly to construct within their own organization.

Image credit: Pixabay

While there are many benefits associated with outsourcing, there are also some risks to think about too. However, going into an agreement with open eyes and having done research will go a long way towards mitigating risks and increasing benefits. Be sure to ask pointed questions before signing on the dotted line.

Before entering into any outsourcing agreement it is important to do the research and find a good vendor to partner with.

What are your rates?

Being a primary motivator to outsources is to see cost savings, it is vital to know the rates included in your agreement terms. Will there be a static fee or will it fluctuate? Ensuring your vendors' fees are in accordance with your goal to add savings to your bottom line is a must, or else the partnership will be a costly and/or wasted effort.

What types of contracts do you offer?

In any business arrangement, it is essential to know the terms and conditions of all contracts. When interviewing vendors it is a wise move to specifically ask direct questions. This way there are no surprises or misunderstandings after a legal agreement has been signed. Get to know your potential partner's approach, this way you can make an educated decision in regards to which vendor you should hire.

What are your security and privacy practices?

Security and privacy continue to increasingly become a serious consideration for companies considering taking the outsourced route. Since trust is such an important factor in any business relationship, these two values are critical when it comes to outsourcing. It is essential to choose a vendor who's security/privacy philosophies and practices align with your own.

When choosing a partner, it's also important any vendor you're considering is able to comply with data-related laws in your home country (i.e. in the U.S., examples would be Sarbanes-Oxley, HIPAA, and Graham-Bliley mandates). Whatever processes you outsource, you should know you're ultimately liable for how your vendor handles your data. Not to mention it's your reputation on the line, not your vendor's.

There are some ways you can shift some of the responsibility back on the vendor but it needs to be worded carefully in your contract. Security and privacy practices must support your compliance requirements or you could eventually find yourself facing a financial disaster if a breach occurs.

Do you have a disaster recovery plan? If so, what is entailed?

If a natural disaster, network outage or other serious interruption were to occur, this too could be catastrophic. A vendor's disaster plan should be thorough and provide the continuity level you need so your organization doesn't suffer any significant loss. Another important facet is communication. If a serious disruption were to occur, you need to have a way to be in contact with your hired partner and kept apprised as to what's going on. Additionally, valuable data could be lost. How are they safeguarding data? What backup plans do they have in place? Having a firm idea of how your potential partner plans to backup and/or preserve technology resources is critical.

Do you have client references?

References are always important in any aspect of doing business. A company can pitch itself, but results are what really sell. By talking to your potential partner's other customers, you can get some reassurance the company is a good fit for you and is able to deliver what they promise.

The fundamental cornerstone of any relationship is trust. Outsourcing is no exception, especially since it entails a high level of trust with a partner. It is not easy to relinquish important business processes to another company, however, many companies do it successfully and are happy with their outsourcing arrangements.

Making the decision to outsource can be a difficult process because there are a lot of unknowns. When exploring the idea, be sure to ask questions and learn as much information as you can before you sign. In the long run, this will make your agreement a mutually beneficial one. Knowing what your vendor's about and how they operate is very useful information to use in the decision-making process; this way the partner you choose will be one that most aligns with your own philosophies and practices.