7 Ways an Outsourcing Advisor Can Save You Money
From ensuring you don't get snookered on prices to helping you transition your IT services to your new vendor, outsourcing advisors can save customers' money on the front- and back-ends of outsourcing deals.
Tue, November 24, 2009
CIO — When it comes to the outsourcing process, going it alone is one way to cut costs. But working with an experienced outsourcing advisor may save you money during the procurement process and down the road.
It doesn't have to be a huge investment. While the biggest outsourcing advisors still charge a pretty penny, you don't have to sign up for traditional soup-to-nuts service. Although some of the bigger firms will only work on end-to-end engagements, many advisors offer à la carte menus of targeted services to reduce the upfront investment for customers with beleaguered budgets.
"Good consultants pay for themselves—often many times over, whether the customer engages consultants throughout or selectively," says George Kimball, an outsourcing attorney in the San Diego office of Baker & McKenzie. "The best consultants' principal value is not so much their forms and methods as their judgment, experience and knowledge of the marketplace."
Hiring the right sourcing advisor "virtually guarantees that you get the job done in a fraction of the time that it would normally take," to select and sign on an outsourcing partner, says Paul Pinto, co-founder of niche sourcing consultancy Sylvan VI. "In an environment where time is money, there are clear cost savings associated with implementing your outsourcing strategy sooner rather than later."
Here are seven ways an advisor can save you money during the outsourcing selection process and down the road:
1. Rigorous and relevant RFPs. There's nothing more costly in the sourcing procurement process than an incomplete or impractical RFP. "Creating a thorough RFP that encourages complete and relevant responses is what these guys do best," says Adam Strichman, an independent sourcing consultant based in Mechanicsville, Va.
It's not the outsourcing of RFP writing that saves you money; it will cost you considerably more to have an advisor draft these documents than it will to do it yourself. It's the reduction in cycle time that comes from getting an accurate RFP out the door and expert evaluation of responses that reaps big benefits. "Customers have limited time to sort through an avalanche of information, evaluate competing proposals, then make decisions with lasting consequences," says Kimball.
2. Pricing intelligence. Outsourcing advisors' pricing professionals should have access to up-to-date benchmarking data. Not only can they perform a "sanity check on fees," they also "understand the connection between the fees and services schedules," says Edward J. Hansen, a partner in the New York office of Morgan, Lewis & Brockius, who represents clients in outsourcing transactions.
A professional benchmarker can pinpoint pricing that's out of line with the market. "This doesn't just mean 'high prices,' but rather a price that is [ir]relevant for the services being requested," says Strichman. "Pricing can be off by more than 200 percent, and this is usually caused by a gap in service expectations or misunderstood requirements."
Thus, the sourcing advisor can save clients money by getting the right price and insuring that the bids are relevant, Strichman adds.