Tracey Richardson, VP-Recruitment Outsourcing Practice Leader, Agile-1
Agile-1 designs and develops global workforce and procurement solutions by combining innovative talent procurement technologies and programs.
Outsourcing has become a part of everyday business. Whether it is to save time, money, add expertise or all three, these solutions have a place. As outsourcing has emerged to be a part of an overall strategy, so have the aggressive pricing strategies that often leave a gap between the business requirements and service delivery. These gaps can create both large and small holes that diminish the reputation, satisfaction and resourcing associated with an engagement. They also chip away at job security for those senior leaders that have put their names on the line to “engage” such a provider as part of their overall strategy. Without the right pricing strategy, outsourcers are limited in their ability to deliver and customer expectations are left unmet. This article will provide three simple checks to ensure pricing is aligned with the desired delivery experience so your programs have the ability to thrive in an environment of change.
1. Determine if your organization is READY for the next BEST PRACTICE. It is not uncommon to hear that an outsourcer is being brought in to deploy an ERP or centralize a delivery model in a culture of decentralization and non-mandate. These types of initiatives create a level of force on the organization that cannot be ignored. However, these programs that require a high degree of “change management” often require additional headcount and time, equating to more cost. Readiness assessments, understanding your company culture and identifying risks up front, will help with the success of almost every outsourcing engagement. They also support a more realistic internal and outsourced scope of work with an aligned budget. Conducting the readiness assessment after the award will make thepath towards change a bumpy journey for the partnership.
2. Define the END USER EXPERIENCE in the budget. We all have our favorite store where we like to shop. If you ask someone what makes that store so great, their reasons are often associated with an emotional experience related to your service or product. As an organization determines what to outsource and business requirements are defined, I recommend adding to the functional requirements, the desired emotional experience and its cost. If cost must be cut, then what “noise” are you willing to digest until the change has become normalized?
"Without the right pricing strategy, outsourcers are limited in their ability to deliver and customer expectations are left unmet"
3. Align the payment plan with the services requested.The RFP comes out; all of the competing organizations present their solution with the associated pricing. The top vendors are invited in to present, and from here, the “promise” and the pricing negotiations begin. Often, the business and the sourcing organization are incentivized very differently and the solution gets ignored as pricing gets challenged. To complicate things further, the outsourcer wants the business, knowing the pricing is now placing delivery at risk; however they will later seek to make adjustments. This is where issues begin. Pricing and outsourcing may never fully align. In fact, they shouldn’t as crucial conversations sometimes spawn better collective problem solving. However, the determining the right contractual language will allow both parties to deliver the desired experience that was purchased during the RFP process.