If it were just a question of finding cheap labor, the outsourcing contract would always go to the lowest bidder. But choosing a BPO vendor is a complex process that involves more than a cursory 
glance at the provider’s price list. Carefully scrutinizing your options of BPO vendors follows a systematic approach that can help your organization choose the ideal outsourcing partner, 
thereby managing the risks associated with turning over your business processes to an external service provider.

Ideally, your search is informed by a thoughtful assessment of the unique requirements of your business. This entails that your organization has ascertained the BPO opportunity as a strategic action. A case for outsourcing should be well-justified prior to shopping around for a vendor.

Outlined below is a systematic approach to contracting a BPO vendor. Simply put, this process is comparable to finding the ideal person for a key position in your company. First, you appoint the personnel to undertake the process of headhunting. Next, you create a criteria of selection based on the job’s minimum requirements. Then comes the posting of the job vacancy, shortlisting of candidates, interviews, and finally selecting the person that fits best with your given qualifications.

BPO Vendor Selection Process

  1. Appoint a Vendor Selection Team (VST)
  2. Clearly define your vendor qualifications and requirements
  3. Create a long list of potential vendors
  4. Request for Information (RFI) and Request for Proposals (RFP)
  5. Evaluate the proposals
  6. Shortlist your candidates
  7. Contract to hire

Appoint a Vendor Selection Team (VST)

The VST will primarily work to ensure that the following tasks are handled properly: 1) Develop a list of minimum requirements from the vendor-candidates, 2) Evaluate the RFP and proposals from potential vendors, and 3) Shortlist and contract to hire the vendor. With potential sources of delay properly managed, it should take a maximum of 6 months from appointing the VST to contracting a BPO partner.

Alternatively, you can hire a consulting firm to manage the selection process for your organization. Consulting firms can draw on their expertise to define your organization’s internal needs, tap onto their network of BPOs, shortlist choices for you, negotiate with the vendor on the terms of engagement, and finalize the contract with your chosen BPO partner. Hiring a firm is ideal for small- to medium-sized enterprises as it streamlines the process of vendor selection, curbs the added costs of managing the process, and generally reduces confusion and delays by gaining access to experienced professionals whose main job is to bridge organizations to external specialists.

Clearly define your BPO vendor qualifications and requirements

There are five highly sought-after qualifications from BPO partners:

  1. Quality of service provided
  2. History of performance
  3. Policies covering warranties and claims
  4. Geographic location
  5. Technical capability

An important consideration during the selection phase is the quality of the vendor’s customer service. Throughout the process of finding an external specialist, your company is a client, not a partner. This mindset will help your organization get as much value from the vendor where it can. A partner mindset should only emerge once the contracting process begins.

Other considerations include process expertise in your outsourced project, compatibility of technology platform between the vendor and your organization, and industry specialization. At the very least, the BPO vendor’s strategic fit with your organization and its performance levels are your nonnegotiable.

Create a long list of potential vendors

Organizations have limited options in terms of launching a BPO vendor search. The common route is to search the Internet for candidates, although it is not uncommon for organizations to outsource through their existing suppliers who are qualified to provide BPO services.

Online portals and magazines specializing in providing unbiased roster of BPO providers are plenty. A targeted search online can help with building your long list and allow for preliminary fact finding using the information provided in their respective websites. The goal at this point is to screen potential providers based on general qualifications and create a selection of 15-20 possible candidates.

Request for Information (RFI) and Request for Proposals (RFP)

Further screening is accomplished by sending out Scope of Work (SOW) and Request for Information (RFI) to the shortlisted candidates. The SOW provides a broad intention for the outsourcing proposal along with the time-frame provided to respond. The RFI is typically a questionnaire-type survey that aims to paint a picture of the level of competence and interest of the candidates in the proposed project.

The job of the VST is to directly contact the candidates and track their level of interest in the project. In the initial screening, typically conducted via call or call conference, the VST should be able to assess the capabilities of the vendor in terms of skills, personnel, and technology. Further screening may necessitate a site visit, which would allow for interaction with the management and personnel, inspection of the workplace and work processes, and to get a general feel of a possible working relationship with the vendor.

Typically, about half of shortlisted candidates will be contacted for a Request for Proposal (RFP). RFP differs from one organization to another, but generally this document explicitly lays out the services, performance targets, and activities required by the BPO project. Apart from the details of the business process to be outsourced, the RFP also covers a background on the BPO buyer, information about the expectations and requirements of the BPO project, pricing requirements, and the legalities covering the contract.

Evaluate the proposals

Expect to receive proposals with extremely extensive coverage and some interesting details about the contending BPO vendors. It is not uncommon to find copy-and-pasted materials in the proposals. This is an acceptable, albeit off-putting, practice. Look out for details that are directly relevant to your organization’s needs as this indicates that the vendor carefully considered how their services could fit with your company’s needs.

A second round of calls is necessary at this point. Those with acceptable proposals need to be further screened by discussing over the phone or in-person the details of their proposals. The following issues should be addressed:

  • Company background
  • Extent of experience in the business process to be outsourced
  • Certifications
  • Availability
  • Personnel
  • Approach to business

After a careful evaluation of the proposals, vendors should make a submission of tender. This is a document that specifies the details of fees and invoice schedules. The tender comes with a request for case studies, copies of resumes of personnel who will be assigned to the BPO project, copies of certifications, list of references, and proof of financial stability which should detail the vendor’s number of years in business, number of employees, and maturity of facilities.

Shortlist your candidates

The initial 15 or so candidates should be reduced to three to five reasonably qualified vendors at this stage. Each of these candidates should be provided a venue for presentation which should highlight the following information:

  • Importance placed on logical architecture (depth of knowledge in the business process to be outsourced; another nonnegotiable)
  • Contingency plans at vendor’s disposal
  • Performance metrics and performance data to be provided to your organization
  • Vendor’s client list
  • Technologies accessible to vendor
  • Other issues unique to your organization or business process for outsourcing

This face-to-face presentation typically lasts about 4 hours and should address concerns from both your organization and the vendors.

Contract to hire

There would be two outcomes at this point: a highly qualified vendor will emerge or none of the candidates are able to meet your project requirements. In which case, you will have to start the process from square one or cut losses and abandon the BPO project all together. In the absence of a highly qualified BPO vendor, it is sometimes a more sound business decision to maintain status quo than force the BPO approach to fit.

This is rarely the case though. After this highly selective process, the members of the VST should be able to meet their consensus regarding the vendor that has developed the most qualified proposal. The contracting process is then initiated.

BPO vendors are far from perfect. But through negotiation and establishment of excellent inter-organizational communications, a long-term functional relationship that will allow your organization to develop your core functions and leave the rest in the hands of an external expert will be possible.