Partner analysis You have interviewed an executive of a company that provides outsourced services.

What key insights can you get from the following excerpt of your interview about selecting outsourcing partners from the provider’s perspective?

You must understand the client’s business model enough so that the value proposition and business case that you agree on initially are things that are actually achievable. The way you define the relationship, the contract and the service. Some of our competition is saying we will to save you 20% and will exhibit it out later. Sometimes it works; sometimes it doesn’t.
We try to manage that particular risk very proactively during the due diligence and contract development, but that’s a key one: do you understand the vagaries of the client’s business model well enough to know how you really are going to achieve the things that you agree initially with the client are your joint results. That’s probably the critical one for us. As a business, the other issues would be mostly around scale. For example, what happens if this contract shrinks down to its minimum scale? Do we still provide this service effectively? Do we still have enough staffing at that point to do it well? And will we still make any money at it?
Similarly in the other direction, if the client turns out to be a lot bigger than we think, are we ready for that? Do we have a way to ramp up and be able to take care of additional callers, if we’re talking about a call centre? Similarly, if it is application maintenance or service creation, do we have the capability to ramp up and respond when they have an immediate business need? So the client just acquired a new business and they want to develop a whole bunch of applications to bring the new employees up to speed on some aspects of how the business is supposed to operate now. Can we staff the team and crank out a bunch of new courseware and get some instructors trained in 90 days, or is it going to take six or eight months? Doing that kind of advance planning on both the good news and bad news sides is critical to being prepared to be successful.