The Do’s and Don’ts of Working with 3rd Party Service Providers

The trend of hiring third-party service providers a.k.a. outsourcing is growing more and more popular in the business world and those who are neglecting this as a business process are only hindering their own business progress in the long run.

Why outsourcing even make sense?

Well, outsourcing not only offers access to specialized skills and expertise but is a cost-effective form of delegation that relieves busy association employees to focus on more important value-generating initiatives.

As the competition for the most talented resources remains ever high, large and medium-sized enterprises with access to the most advanced in-house resources, use latest tools and technology to attract the best employees available in the market. Outsourcing, therefore, gives the remaining small enterprises a weapon to compete with the more established brands.

However, for beginners who aren’t aware of the ins and outs of working with third parties, outsourcing can actually turn out to be more harmful than beneficial for their business (if carried out in a poor manner). To avoid that, let’s learn a few do’s and don’ts to keep in mind while outsourcing your projects as start-ups or as a well-established business.

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The Do’s

Do Explore Your Options Carefully

When you start looking for firms to outsource a particular project, you will realize though there are tons of options available in the market, finding the one that best suits your needs is actually a much tougher nut to crack. Do research well the ones you’re considering. You can begin by asking for the portfolios of their previous work.

Do Communicate Your Outsourcing Plans

While planning the outsourcing process, do involve your team members as well, esp. those who are skeptical of working with contractors. Once your staff realizes how outsourcing will streamline their workloads beside taking rote work and inefficient systems off their plates, they will be more than happy to support this process.

Do Pay Attention to Outsourced Projects as well

Regardless of whether you have chosen the best contracting firm to outsource your less desirable works, it is highly recommended that you do pay the required attention to your outsourced projects too. No matter how professional they seem at handling those particular projects, chances are they might still surprise you with end results.

Do Understand Misclassification Repercussions

Worker misclassification happens when a government entity considers the independent contractor as an employee (therefore entitled to all the benefits provided by the employment law) in order to draw more income from his/her share of taxes. So, it’s always safer to seek the advice of an attorney regarding any worker classification doubts.

Do Consider the Legalities Involved with Outsourcing

It is always advisable to consider the risk of information loss or issues related to intellectual property while outsourcing. To avoid these, do make the hired firms sign a non-compete and/or non-disclosure agreement. Also, consider including the documentation of any work as a work-for-hire to provide you with the ownership of the work (not the contractor).

The Don’ts

Don’t Rush into Hiring

Never go with the first outsourcing company you come in contact with. Take your time to research the options you are considering by evaluating your outsourcing candidates in terms of everything from quality to proven track record to positive testimonials to guaranteed service levels etc. And of course, do not forget to compare prices as well.

Don’t Consider Multiple Supplier Relationships

In business, it always pays off to consider your entire ecosystem besides anticipating potential growing pains rather than tackling operational challenges on an individual level. But with outsourcing, working with a single outsourcing partner proves a far better choice as it not only ensures a more integrated approach but also an easy management on your part.

Don’t Consider Outsourcing as a Short-Term Activity

Earlier, companies used to hire 3rd party firms for a short time span only till their projects get completed but those days are long gone. Currently, the market competition that is growing at an exponential rate, outsourcing is more of an inevitable choice. So, instead of running away from it, embrace the new business world that considers outsourcing its inseparable part.

Don’t Outsource Everything

A few entrepreneurs, in order to take the most off their own plate, try to outsource as much portion of their business as possible. They do this as a means to cut major costs but what they fail to understand is that this can actually lead to overstretching while trying to cover every agency that you hire. Stick to the tasks that really need to be outsourced and you will be fine.

Don’t Expect Immediate Cost Savings

For a time being, you might witness higher expenditures going toward support departments, membership management or human resources but be assured that these are only temporary and with the passing time you will see improvements in your ROI. For better results, ask contractors to provide realistic cost containment metrics associated with outsourcing.

Parting Thoughts:

In the end, it all boils down to the dynamic environment competitiveness and its effectiveness which is paramount in today’s times. Organisations often look forward to outsourcing abilities and functions which are not at the core of their business in order to produce greater effectiveness and advantages to scale.

That’s why it is highly recommended to focus on what you do best while leaving your inefficiencies for third party service contractors and remember, outsourcing may sound like a lucrative offer but it is not completely risk-free.

Author Bio: Neha Gupta is a professional writer cum blogger in the field of call center services. She has worked for outsourcing services, call centers, and Telecom department.