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How to hire a firm for outsourcing

By Sudhi Seshachala
January 03, 2006 14:34 IST
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The author has been working in the IT industry in various capacities and is currently working for a Houston, Texas-based company.

The biggest challenge for any organisation's management team while deciding on outsourcing -- or offshoring or consulting key functions -- is how to hire a company for the initiative. There are many companies who are certified in SEI/CMM levels. SEI/CMM level is a good metric to judge the value add services offered to its clients by a company.

Many Indian companies are certified in various levels of SEI/CMM; at the same time there are lots of small players in the field too, which are willing to travel that extra mile to deliver more than what customers ask for.

Organisations looking to outsource/offshore key functions as part of their macro-management strategy should also look at small- and medium-sized companies. Of course, one of the key quality differentiators here is that with smaller companies, an SEI/CMM level certification might not be available to select from.

With smaller companies, it is a huge investment, effort and requires experience to build upon over the years to get SEI/CMM certification. The purpose of this article is to provide an insight on thekey parameters to evaluate a S-M sized company and still realise high ROI and optimum benefits. At the end of the day, it is all about 'Level Playing Field.'

Key evaluation parameters

In evaluating small and medium companies offering outsourcing/offshore/consulting capabilities, organisations need to ask a few fundamental questions before hiring. Finding an S-M company is not difficult today. However, finding the right one is often challenging and difficult.

Due to a boom for the IT-enabled service sector and for IT workers alike, there are many S-M companies in the United States and in India offering staffing services. Some companies, as they grow along with the economy, would like to transition to a more stable solution-based model or consulting model from a pure play so-called body shoppers.

Better still they would like to participate in the buzzing activity of outsourcing of IT-enabled services. I would consider them as the S-M companies because they have the experience, zeal, knowledge and the business acumen to deliver more than what customer expects.

It is the inherent capability of these company's staff to consistently deliver the highest value service, and this is what differentiates them from the others in this cutthroat business.

The companies are smaller and hence the company as a whole needs to be evaluated. The areas which need to be evaluated, are listed below:

  • The management's credibility and accomplishments.
  • Collective experience of the employees working for the company.
  • Top 5-10 customers who are served, and feedback from key customers.
  • Supervision process and organisational structure for escalations after awarding the project.
  • Service-level agreement.
  • Costs incurred in evaluation and ongoing fee for the project.
  • Company culture, work ethics, and personality.

Advice to organisations interested in hiring S-M company

Although all the above are important, special emphasis should be made on 'Company culture, work ethics and personality.' No matter how qualified a company is or how glorious the company brochure, the sales presentation, the Web site, etc. appear, if you cannot work closely with them and feel comfortable relying upon their judgment and services, you will not receive the maximum benefits for you're the money you spend.

Key to finding the right firm

The Web site is a good place to start. Often times the Web site's appearance is a direct reflection of the firm's personality, professionalism and approach to a client's needs. If it is easy to use, simple to follow, and 'feels' good, you may want to pursue that company.

If the site seems too flashy or too difficult to follow, then you may want to concentrate on other firms who make you feel more comfortable.

Setting the expectations

Call the company for a sales presentation, brochures and solution offerings: the goal is to get the right message across. Before you decide to hire the company, prepare a list of questions (Request for Proposal or RFP in big organisations). The approach is to ask the company to respond to the preset list of questions, in writing or verbally. This allows you to compare potential firms on a more objective basis. Your list of questions will vary depending upon your needs and your industry.

If questions are framed in the following areas, you can construct an RFP of your own. Your questions should be direct, but not offending. Again, the following are only a guide, but can be used until you have time to frame your own questions.

  • Remember you are the client and the one who needs to feel comfortable.
  • Skim, read and understand the background information and methods of the company.
  • Why should an organisation go with a firm?
  • Key differentiators, process model, project development, management and delivery methodologies and SLAs. Note: S-M companies are not SEI/CMM certified with no project management office, hence no structured process or project management methodologies exist. But with collective experience, do well than most companies. This is my personal opinion, based on experience over the years.
  • How does the approach differ from the competition?
  • Escalation levels, organisational structure, and ownership for key deliverables.
  • Maintaining timelines, cost and budget.
  • Kind of support services and duration of the service provided aftermath and during the execution of the project.
  • Does the company offer a guarantee or warranty of the services?
  • Key resource personnel involved in the project, profiles of key resources, supervisor credentials, background and experience.
  • Evaluate the company's domain and technical expertise in its entirety.
  • In addition, there are questions you should be asking yourself. Does this organisation's value match up those of an S-M company?
  • Do you feel comfortable accepting advice from the company?
  • Is there a collaboration, coordination and communication protocol set up and are you comfortable with that?
  • How will my staff react to the initiative from the management
  • Were the verbal answers in line with their brochures, sales presentations, Web site, etc.


In essence, to encourage healthy competition and level playing field, organisations can evaluate small and medium companies adopting some of the question areas listed in the article above

It is my personal opinion that the question areas listed above could be adopted to evaluate any company for outsource, offshore/near shore abilities or even to hire individual contractors, consultants or staffing services.

The author thanks Uma Chidambaram from ObjectWin Technology, who provided him with a real world case study and food for thought to develop this article in its entirety.

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