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In an international expansion, if you have decided to outsource certain functions to an external provider, the problem of finding the right vendor arises. If things go wrong, mission critical IT systems, intellectual property, customer operations, and possibly millions of dollars in project reallocation can be at stake.

Below are a few tips that will help choose the right outsourcing partner.

Is the service provider(s) financially stable?

You do not want your provider going out of business half way through a project. Check how many years they have been in business, whether they have ever declared a group company bankrupt or put it into receivership. This is especially important if the provider may be handling your money.

Do they have the quality standards you require?

If your company is required to abide by quality standards such as the AICPA’s Statement of Auditing Standards 70 (SAS70) for accounting, then it is advisable for your provider to be similarly certified. If they are not, you may wish to make it a requirement of the contract that they obtain the certification
at their own cost.

How transparent are their operations?

The provider should be sufficiently confident of their expertise and processes to allow you to transfer pricing audit their work on their premises whenever you want. They should be able to furnish the details of the different kinds of customers that they have provided services for and the number of projects that they have completed. Find out if your offshore partner has experience in delivering the required services at the scale of your business needs. This can help you analyze if the particular outsourcing service provider is best suited for your business.

What contingency or disaster recovery plans do they have?

This is especially important if there are time-critical jobs you are outsourcing. For example, if you are outsourcing contract testing, they should have provisions for situations like failure of back up equipment. And if there is a staffing or other problem in one office, they should have another office(s) to which they can immediately allocate work.

Are you getting the intangible extras?

A quality service provider does not simply stick to the letter of the contract and offers many extras. For example, a quality organization with an internal audit department, could share the results of the internal audit compliance on your account free of charge. They could offer data easily integrated into your own IT system. Alternatively, if they are sufficiently experienced in different systems, they could use your systems.

Choosing the right outsourcing partner can be one of the most difficult tasks that organizations face today. When your organization has to select a sourcing partner for IT, ITES or BPO services, first define the final result and your expectations of the outsourcing relationship. In an international business expansion, it is necessary to clearly define what you want, as it can go a long way in helping you choose the right outsourcing partner.