Waverley Blog

Let’s face it, hiring an outsourcing vendor is hard. You have to be methodical, disciplined, and focused with your selection process. It’s a task that must involve several people so that your final selection will have broad support in the company. You can have a long list of criteria, include multiple people on the selection committee, use good negotiating tactics, and it’s still a challenge to select the right company for you and your project.Although you will be examining a broad range of capabilities in your evaluation and using your company’s method for making outsourcing decisions, here are five key questions to ask. Asking these questions will help you to evaluate an outsourcing vendor’s capabilities and will give you some insight into how they will behave once you become a customer. They are questions you can ask not only potential vendors, but also their references.

Do they have the right experience for your project?

After you’ve verified that a company has the right industry, domain, technical, and management experience, it’s time to dig a little deeper. First, a larger company may have all the elements of the experience you need, but have all these elements worked together to complete a project like the one you have defined? It’s like the difference between a general contractor who has a rolodex of subcontractors that he can call on and a one who has a tight-knit group of sub-contractors that he has used on many projects that know each other and how to work together. You want a company whose strategy includes a commitment to your type of company and project.Second, are you looking for a full-service vendor or specific functionality? If you are planning to have your staff focus on core competencies and turn over day-to-day operations to an outsourcer, then a full-service vendor is likely to be appropriate. If you need a vendor for specific engineering projects, then a smaller, best-of-breed company (that is focused on your domain needs) is a better choice.Finally, no matter how much experience the outsourcing vendor has, they still need to learn how to work with your company. How do they go about learning a new client’s business, organization, and way of doing things?

What tools and processes do they use?

Before you can commit to a vendor you need to know how they invest in the tools they use to do their job. This can include their equipment and infrastructure, the training they provide their staff, and the internal development they do to stay on the cutting edge of their engineering specialty. If the company can show that it continues to invest in itself and its people, then it will likely also be able to show how the company continuously improves both its productivity and the quality of its work.

Do they leverage their experience across several projects?

An advantage that an outsourcing group has over your team is that the outsourcer is exposed to many other companies and their practices. The outsourcer can pick the best of these practices and apply them to their own methods. If you work with one of these outsourcers then you can get the benefit of their exposure. They will bring fresh ideas to your organization and can pass on industry trends and new techniques. This only works of course if the outsourcer leverages their exposure and experiences. Talk to them about how they (formally and informally) leverage their experience across many companies and incorporate this experience into their general methods.

Who will you be working with?

Common problems on any outsourced project are that the senior person who sold you the project disappears once the project starts and that the project team has too much turnover. It’s not surprising that the person who sold you the project is not the person who will manage the project. That doesn’t mean you shouldn’t be able to meet the person who will manage the project if you decide to go forward. This person of course should be someone you develop complete confidence in.Regarding turnover, total turnover numbers don’t tell the whole story. Double-digit turnover among employees at outsourcing companies has become all too common as these companies race to meet their customer demands and hire each other’s employees. Look for vendors where turnover is low—not only will engineers at these companies be used to working with each other, they are also more likely to keep the same engineers for the duration of your project.Finally, there is another aspect of turnover to consider. The most critical members of the outsourcing team are the key senior engineers, the ones with experience in your domain and industry. The project can withstand some turnover of junior staff as long as the senior engineers are on the team for the duration of the project.

How do they manage the project and their communication with you?

Outsourcing projects that don’t succeed most often have some communication problem as the cause. Ask the outsourcing company not only how they communicate day-to-day, but also how they initiate the project and lay a good foundation for productive relationships. One way to understand how an outsourcing vendor will communicate with you on the project is to watch how they negotiate. If the negotiations are clear and focus on everyone “getting to yes,” then that is an indicator of how the project will be managed. If the negotiations are less transparent and the negotiators view the end as a zero-sum outcome, that can indicate another way that the project will be managed.Finally, here is the most important characteristic we look for in a potential new client—the potential for a long-term relationship. Even if they are planning to start us on something small, we ask ourselves whether this is a company that we could picture doing business with for many years. That’s a question you could ask about your potential new outsourcing vendor, is this a company with whom we have the potential of a long-term relationship?