Vendor Selection Contracting

I learned that it is a need to know how to identify and select the right vendor for a BPO project. It is crucial to choose the best BPO company for a certain project so that there will be lessening of unnecessary costs and dilemmas. To do so, we need to develop a list of potential vendors. There is a proper way of selecting the right vendor and these are:

1. Appoint a vendor selection team
2. Establish qualifications
3. Develop a long list
4. Distribute the request for information [RFI]
5. Distribute the request for proposals [RFP]
6. Evaluate Proposals
7. Select a short list
8. Select a vendor

For the Vendor Selection Team (VST), it is important to have the essential members or key staff members. Like Senior Management, Legal staff with contract expertise, Technical staff and Information  Systems Analyst, End Users, and Financial staff. In a VST, there should be a VST charter. A VST charter helps the project to be on track because it properly states what is needed and has specific details (sets out goals and objectives).

In finding the right vendor, it is a need to establish qualifications to what is needed by the project. Here are what is mostly needed:

- Quality
- Performance History
- Warranties and claims policies

- Facilities and capacity

- Geographic location

- Technical capability

In customer service, at first, BPO buyers should maintain a "customer" mindset to able to see the most value of the BPO's services to avoid making concessions on provisions it has established as necessary for the project. And the mindset of "partnership" comes after if the vendor is selected. In this stage, mutual cooperation is expected.

Gathering many potential BPO vendors and determining which is better than which is a great technique to evaluate and to be certain of what kind of vendor is needed with the project. A common technique is to send a scope of work or SOW outline specification and request for information or RFI. The SOW should contain the broad of intention of the outsourcing proposal and the time frame of responding. The RFI is a questionnaire type survey intended to establish the level of vendor competence and interest.

Request of Proposals

The objective of developing an RFP is to create a document that details the services, activities, and performance targets required for the BPO project. But the RFP is also a sales document designed to interest vendors who can add value to the BPO buyer organization. 

Cost Management

               I learned that cost is one  of the three primary elements of the decision to outsource along with productivity and mission identify. Project cost management is traditionally a weak area of IT projects. IT project managers must acknowledge the importance of cost management and take responsibility for understanding basic cost concepts, cost estimating, budgeting, and cost control. The various costs associated with outsourcing are not always easy to forecast or identify. I also learned the two types of cost which are the Financial cost and Strategic cost. Financial cost is about Assessment of the outsourcing initiative, launching  the initiative, maintaining the initiative. While Strategic cost are associated with BPO talk about the potential loss of organizational learning that results when an in-house process is moved to an external service provider. The major strategic component of a BPO relationship is the relationship between the buyer and vendor. The costs that are involved in establishing and maintaining such a relationship are relationship cost.

                There is also this "Total Cost Management" which means the process of identification, forecasting and development of mitigating tactics for the costs associated with any project.

I learned that the BPO life cycle consists of the following phases:

- Analysis of the opportunity
- Vendor Selection
- Contract development
- Transition
- Operation

Note that the life cycle doesn't only limit to five, but could be more depending on the situation.

Selecting a vendor:
After the BPO opportunity has been identified, the organization needs to decide whether to hire a third party to assist with the vendor selection. And the developmental of contracts whereas the primary cost of this phase are to do with the negotiating a contract with the vendor. It is not advisable to cut costs in this area where there is too much at stake because services, deliverable and remedies have to be specified.

It was also mentioned that the following are the common people involved in a Business Process Outsourcing company:

- BPO Analysis Team (BAT)
- BPO Consultants
- Market Research Specialist
- Change Management Consultant
- Project Manager
- Vendor (Third Party)
- Buyer (The Company)

Identification and Selection of BPO

Identification and Selection of BPO

                I have learned that identification and selecting a BPO has a risk to handle. Finding the right BPO vendor is a critical step in an organization's outsourcing initiative and one of the most difficult to manage.  When an organization enters into a BPO relationship, it is assigning a third party the responsibility of managing part of its business. When such a a decision is made, the organization is assuming additional risk. 

I have also learned that there is actually an eight-step process for properly selecting the right outsourcing partner. Here are the steps:

- Appoint a vendor selection team (VST)
- Establish qualifications
- Develop a long list
- Distribute the request for information (RFI)
- Distribute the request for proposals (RFP)
- Evaluate proposals
- Select a short list
- Select a vendor

This is the systematic process for identifying a BPO vendor. I learned that BPO vendor relationship can be strategically important to the BPO buyer over the long term. Getting the right vendor from the start can accelerate the realization of strategic benefits associated with an effective BPO relationship. For example, the decision about which vendor to select will ultimately be based in part on how well the buyer and vendor firms relate to one another. It would be unwise to select a BPO vendor that is offensive or whose organizational culture is a clear mismatch with the BPO buyer's culture.

What I learned

I have learned different things. I learned what is outsourcing and what are the advantages and disadvantages of Outsourcing. Outsourcing involves the contracting out of a business process to another party or organization. Making the right decision is one key to achieve success. I also learned that services are one of the common processes that are outsourced. I may not have noticed that sales/marketing is actually one of the outsourced processes. Connecting one organization from another to reduce cost and maximizing human resources by letting the other firm do the work for you according to their specialization. But outsourcing also has its risks. Like having inexperienced managers, and unmotivated labor can create problems.Not clearly defining goals and objectives before starting the outsourcing process. Here are some advantages and disadvantages of outsourcing:

Advantages

- Swiftness and Expertise. Most of the times tasks are outsourced to vendors who specialize in their field. The outsourced vendors also have specific equipment and technical expertise, most of the times better than the ones at the outsourcing organization. Effectively the tasks can be completed faster and with better quality output

- Reduced Operational and Recruitment costs: Outsourcing eludes the need to hire individuals in-house; hence recruitment and operational costs can be minimized to a great extent. This is one of the prime advantages of offshore outsourcing

Disadvantages

- Hidden costs: Although outsourcing most of the times is cost-effective at times the hidden costs involved in signing a contract while signing a contract across international boundaries may pose a serious threat.

- Lack of customer focus: An outsourced vendor may be catering to the expertise-needs of multiple organizations at a time. In such situations vendors may lack complete focus on your organization’s tasks.

And lastly, I also learned that there are ethical issues in outsourcing. Here are some examples:

- Do no harm to indigenous cultures

- Do no harm to the ecological systems

- Uphold universal labor standards

- Uphold basic human rights

- Pursue long-term involvement

- Share knowledge and technology