7 Smart Tips for Evaluating Your Outsourcing Partner

Choose the right company to boost efficiency, save money and help your business grow.

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You’ve already done the math and discovered that outsourcing can save your business money and boost efficiency. However, with so many options – some overseas – how can you be sure you’re trusting the right outsourcing partner with your critical business functions?

You need an outsourcing partner that can be up and running within weeks, not months. It must be experienced, competent and knowledgeable, in addition to being reliable, affordable and honest.

We’ll share seven tips to help you evaluate and choose the right outsourcing partner to help your business grow.

Outsourcing for business growth shows no signs of slowing down. According to Clutch, 83 percent of small businesses will maintain or increase their spending on outsourced business services in 2023.

Tips for evaluating an outsourcing provider

When evaluating your outsourcing partner, your primary focus is the vendor’s ability to meet your requirements. Below are some of the criteria you should consider.

1. Establish an outsourcing partner’s industry experience.

Your outsourcing partner should have deep knowledge and experience in your industry to effectively handle the tasks and processes you plan to outsource. Consider the following tips for establishing an outsourcing partner’s industry experience:

• Ask the outsource partner about its project history. To gauge an outsourcing vendor’s experience, ask the company how many projects it has completed and how intensive they were.
• Ask about the management team’s qualifications. The management team, project managers and other staff should display outstanding qualifications and extensive experience in implementing projects similar to yours.
• Contact previous clients. Just as you’d ask for job references for potential hires, ask for an outsourcing vendor’s references. Request customer feedback from past and present clients regarding the scope and quality of services they received. Ask about the challenges they experienced in the partnership. If applicable, ask for work samples from completed projects or marketing prototypes to give you an idea of the output you’ll receive once you sign the service contract.

2. Assess a potential outsourcing partner’s technical expertise.

Your future outsourcing service provider should be able to explain its methodology for managing projects, tracking KPIs and results, and resolving issues so you understand how it will handle your projects. Ask about the following:

• What are its accreditations? Ideally, your outsourcing partner should be accredited in critical areas like project management and quality control. You want to ensure service and product quality and smooth operations.
• Does it have a business continuity plan? A business continuity plan will ensure it can deliver uninterrupted services or support to your company. Business continuity is a key element of disaster preparedness.
• Can it provide case studies? Ask the company to provide case studies showing how it solved problems for clients in your industry.

Many businesses outsource IT services to an IT partner, including help desk management, data storage services and cybersecurity.

3. Inspect an outsourcing vendor’s communication and client management systems.

To facilitate communication with your partner, discuss your expectations. Some tips include the following:

• Ensure communication availability. Ideally, everyone on the outsourcing team will be available by email, phone or other messaging applications or software, such as Slack, at designated times.
• Ensure time zone compatibility. If you’re operating in a different time zone, your outsourcing vendor must ensure your working hours align to a certain degree to minimize communication gaps.
• Engage a primary contact person. You must also agree on a primary point of contact for all queries, feedback or concerns to ensure a smooth exchange of information between you and your outsourcing team.

4. Check an outsourcing partner’s infrastructure and technologies.

A technologically ready service provider will better support your company’s needs and demands. Your outsourcing partner’s IT infrastructure should include the following:

• The latest hardware and software components
• A reliable network of phone and internet lines
• Integration with your technology

Your vendor may also have to invest in acquiring and applying other technologies specific to your business.

5. Calculate the outsourcing vendor’s costs.

Consider the following when evaluating an outsourcing partner’s costs:

• Ask if fixed-project costs are available. Fixed-project costs can yield huge savings, so as much as possible, ask your potential partner if this option is available. Otherwise, it’s your responsibility to look into and question any hidden project implementation, staff training and other costs that might add unnecessary expenses to your operations.
• Ensure your contract details all costs. Ensure all costs are detailed in your contract. The contract should also include the procedure for approving additional costs outside the initial agreement’s scope so you don’t get any unpleasant surprise bills.

6. Evaluate the outsourcing vendor’s workforce.

Your outsourcing partnership’s success will largely depend on the vendor’s workforce. While you don’t have much control over that, you can do the following:

• Examine the vendor’s hiring policies. Consider reviewing your vendor’s hiring process and policies to ensure team members are vetted for the knowledge, discipline, technical skills and soft skills your business requires.
• View the call center if possible. For outsourced customer service or inbound or outbound call centers, ask to see the call center. Determine how many dedicated or shared reps you’ll have, and ask about their training (and language proficiency if overseas).
• Share your company culture with the vendor. It can be healthy if your partner understands your company culture. Impart your values, beliefs, vision or mission statement, and preferred communication methods. See if the partner can incorporate these elements into the outsourcing environment.

If you're evaluating an HR outsourcing partner, look for a vendor that does more than answer phones. The best call center services offer live chat, monitor social media platforms and respond to emails.

7. Gauge the outsourcing partner’s financial stability.

When choosing a partner, ensure the company is stable and solvent. You want this company to be available as long as you need it as a valued outsourcing partner.

According to NAPEO, using a PEO service provider as an HR outsourcing partner can result in an ROI of 27.3 percent in cost savings.

Benefits of having an outsourcing partner

The right outsourcing partner can bring multiple benefits to your organization, including the following:

• Outsourcing partners increase efficiency. The right partner can help you complete the job for less money and with higher-quality output. Many partners bring a wealth of knowledge and experience to complex work, leading to a higher production rate over a shorter period.
• Outsourcing partners let you focus on core competencies. When you outsource some of your work, you can focus time and energy on areas that can better serve your business, such as marketing or research. For example, a consulting company may outsource payroll functions to one of the best online payroll services but keep its hiring process internal.
• Outsourcing partners can save money. When you outsource, you also eliminate the need for infrastructure and can invest your money in other places. You won’t have to invest in employee training as much because the outsourced resources already have the necessary knowledge and experience. You may even be able to afford more services with an outsourcing partner, like expanding your customer service hours.
• Outsourcing partners can make the company more agile. Outsourcing partners typically focus on a specific aspect of business operations. They’ll pay stringent attention to new laws, regulations, technologies and trends in that area. They’ll automatically implement necessary changes to keep up with industry trends without your needing to research or invest.

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Jennifer Dublino is an experienced entrepreneur and astute marketing strategist. With over three decades of industry experience, she has been a guiding force for many businesses, offering invaluable expertise in market research, strategic planning, budget allocation, lead generation and beyond. Earlier in her career, Dublino established, nurtured and successfully sold her own marketing firm. At business.com, Dublino covers customer retention and relationships, pricing strategies and business growth. Dublino, who has a bachelor's degree in business administration and an MBA in marketing and finance, also served as the chief operating officer of the Scent Marketing Institute, showcasing her ability to navigate diverse sectors within the marketing landscape. Over the years, Dublino has amassed a comprehensive understanding of business operations across a wide array of areas, ranging from credit card processing to compensation management. Her insights and expertise have earned her recognition, with her contributions quoted in reputable publications such as Reuters, Adweek, AdAge and others.