10 Keys to OutsourcingRyan Mortland

President, MB Consulting Group, Inc.

1. Define your core

Don't hand over the core functions of your business. Consider outsourcing other operations that are not as strategic.

2. Evaluate a service provider like you would a full-time employee

Ask questions, check references and ask for feedback from other clients who have

used the provider's services.

3. Clearly define the scope and schedule for your project

Be up front about your project requirements so that service providers. Review

schedules and deliverables.Understand what is IN and OUT of Scope.

Get it in writing.

4. Don't choose a vendor based solely on price

Discard the highest-priced and lowest-priced bid. You want a balance of good

value and quality results. Consider management costs and watch out for hidden costs, consider everything from

layoff-related expenses and telecommunications costs for remote

workers.

5. Review portfolios and samples

Consider asking the provider to do a quick mock-up or provide a basic outline of a work plan. You want a company with

industry specific experience or a project that is similar to the one you are

undertaking.

6. Tie compensation to clearly defined project milestones

Having scheduled checkpoints where you review the status of the project is an easy way to ensure

you meet your deadline and the final product meets your standards. Tie the vendor’s payment

to these milestones.

A good guideline for IT and software development projects is to pay no more than 20% to 30% of the total project price up front, with the rest of based on the completion of 3 or 4 milestones.

7. Negotiate ownership of the work up front and after

You must be clear who owns the resulting work product and any important components of

that product.

The service provider must understand how you intend to use the deliverables they are

agreeing to provide. Don’t forget to draft a support clause that ensures you'll get

continuing support from the vendor after the project is complete.

8. Get it in writing

Keep a written record of project goals, pay schedules and any changes.

Get Change Orders in writing.

9. Start Small

Start with a project that is relatively small and simple in scope to give you a better

idea of the provider's style and capabilities.

Don't sign a five-year contract before testing performance and the relationship.

Move slowly and commit gradually.

10. Consider having a staff employee(s) act as a liaison

Consider entrusting an in-house manager to oversee the outsourced help.