Most business and IT leaders learned to negotiate with outsourcers 15 or 20 years ago, when the virtual corporation was seen as the organization to emulate. Although virtual organizations have faded, they provided valuable lessons regarding how to structure outsourcing contracts. Unfortunately, those lessons are being lost. Over the last few years, I have encountered multiple organizations making “first-time buyer” mistakes when negotiating with outsourcers.
During outsourcing contract negotiations, remember the basic tenets:
- Begin with asking why.
- Be thorough.
- Build your own financial model.
- Anticipate the future.
- Get a prenup.
- Get promises in writing.
- Acknowledge that the outsourcer is not your BFF.
- Implement a negotiation strategy.