Outsourcing services to a third-party company is such a crucial decision that should be approved by the company s business owners, the board and its management. This process usually takes weeks or even months to accomplish, starting with the identification of what services are to be outsourced. After that, there is a need to build a business case to justify this decision. Once everything was put on paper and signed by the key people in the organization, then the search for the outsourcing partner will take place. The company (client) then will be issuing Request for Proposal (RFP) to shortlist suppliers and determine their proposal plus price.
The next step is the process of elimination, with the client evaluating the proposal of each supplier. This also involves a lot of face-to-face board meetings to clarify certain terms and conditions while getting the supplier s response. The client will then cut the list and only the ones qualified will remain. This process is also known as down select . Eventually, this will lead to the due diligence stage wherein two suppliers remain to maintain the competition. The supplier that submits the best and final offer will obviously be the one selected. The client and the chosen supplier will then go into competitive negotiations and convert these into contractual agreement.
The contractual agreement is considered the heart of the outsourcing deal, defining how the client and supplier will work together. This document contains the terms and conditions of the contract among other particulars that are necessary before the actual signing occurs. Once everything is settled, transition of services will then take place. This marks the end of the outsourcing process and the start of a client-supplier relationship.