Offshore Vendor Selection: Basics

Nothing is as critical for the success of your outsourcing initiative as finding a right vendor. Right vendor doesn’t have to the biggest, most prominent, etc. It just needs to be the right vendor for you, somewhat similar to a partner in a personal life – it’s all about a match. But that’s where the similarity ends, chances are you won’t run into a perfect vendor at a friend’s wedding and unlike in personal life by no means when you meet the right vendor “you just know”.

In order to zero in onto a right partner in reasonable time you need to go through many steps; here is the backer’s dozen of the most important:

  1. Identify and engage selection process stakeholders.
  2. Verify executive sponsorship / commitment / support.
  3. Define and agree upon the communication plan.
  4. Define and confirm / get approved the scope and budget of the initiative.
  5. Identify and confirm the budget for the selection process.
  6. Define selection criteria.
  7. Decide on items you won’t compromise on.
  8. Define selection process details / procedures.
  9. Define success and exit criteria for the selection process.
  10. Identify the team charged with the process of selection.
  11. Identify the team charged with decision making.
  12. Go through the selection process and results analysis.
  13. Finalize vendor selection and move into next stage of the engagement.

That might look like a long list, well, let me tell you – it’s a short version. All the items on the list are mandatory and price for missing any one of them is quite hefty, mainly paid in frustration, lost cycles, ruined relationships and lost credibility.

Approach to process design (item 8 on the list above) depends in a large degree on your budget and timeline, scope of the outsourcing, and the organization’s culture. It could vary from a swift selection from a handful of companies to a multi-step RFP process performed by a third party. For example here is a high level breakdown of the process I recommend for midsized software organizations:

  1. Identify / finalize your target outsourcing model.
  2. Formalize list of selection criteria.
  3. Define weight for each of criteria. Multidimensional weigh tables could be helpful.
  4. Narrow the scope of outsourcing on several dimensions – geography, vendor size, years in business, etc.
  5. Develop an RFP around your selection criteria.
  6. Develop initial list of vendor – recipients of RFP.
  7. Issue RFP and manage Q&A and proposal process.
  8. Select an initial short list of vendors based on results of proposal analysis.
  9. Create a final short list by going through vendor interviews / proposal presentations.
  10. Go through on-site visits and zero in on 2-3 semi-finalists.

One of the ingredients critical for success in vendor selection is the search criteria list. There is no one-fit-all template I could share. Creating such a list is not overly complicated and I will cover it in separate post.

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