Tips for Successful Re-sourcing of IT Deals (Part I)
Re-sourcing might seem a complicated process at first sight for most IT services customers, although it is not, unless you follow the expert advice provided by the best outsourcing consultants and outsourcing experts that we highlight in today’s post.
Re-sourcing – the process also known as “recompeting” a deal – means switching outsourcing providers or bringing work back in-house, and it’s quite a usual practice in business world, and businesses shouldn’t be afraid to switch providers if they feel unsatisfied with their current services.
A successful transition from one vendor to another requires cooperation between the two, and both sides should consider the following tips in order to succeed at the recompete:
- Go Back In Time. “Remember why you outsourced in the first place,” says Edward J. Hansen, partner in law firm Baker & McKenzie. “If the reasons to outsource are still relevant, then you should consider changing providers rather than abandoning the strategy.”
- Consider The Deal Lifecycle. “Contractually it is often easier – though not easy – to shift work from one provider to another at the end of a contract term rather than in mid-term when various penalties may be incurred,” says Stan Lepeak, Director of Research in KPMG’s Shared Services and Outsourcing Advisory group.
- Consult Your Contract. “Your contract could include exclusivity provisions, minimum spend commitments, or rights of first offer or first refusal for the provider that contractually limit or prohibit resourcing,” says Steve Martin, partner in outsourcing consultancy Pace Harmon.
- Question Your Motivations. “I recommend spending the time to determine what is motivating the customer to pursue this path, and whether it may be possible to make the current relationship work,” says Hansen of Baker & McKenzie. “It may be possible to reset the relationship, renegotiate the contract and avoid the operational risk of moving.”
- Question Your Outsourcer’s Motivations. “If the service is bad, it may be an indication of an unprofitable deal for the supplier and they may be motivated to move away from it,” Hansen says. “On the other hand, if you can have a good honest conversation about this, you may be able to renegotiate the deal and leave the services where they currently sit.”
To be continued…