This is a question that has been at the center of many discussions between many CFOs and COO. Outsourcing has historically been a reasonable option for cutting expenses while receiving the same service. Assuming, of course, you are actually getting the same service. From a strictly financial perspective, its clearly the way to go. However, many argue that private corporations are notorious for paying lower wages and offering diminished benefits to their staff as compared to their university counterparts. This can all impact performance, which is at the end of the day, really what’s important. There are a few things you can do to ensure the best possible choice when considering outsourced services.
The bidding process can be a crutch
Bidding is just a numbers game, so make sure its not your primary focus. Sometimes the cheaper option actually is better, but most of the time you get what you pay for. Companies that offer their employees better wages, benefits, and incentives are going to be a little more expensive, but their staffs will likely be happier and more productive. Texas State has worked out a deal with a local building maintenance company whose salary and benefit structure is substantially less than that of Texas State. For this reason the university is now reconsidering those plans for outsourcing services claiming that “it takes two to three times as many (outsourced) custodians to complete the work of one Texas State employee.”
Would you hire new staff without an interview?
Interview your options like you would a potential new employee. This is an under-utilized technique, but can prove fruitful, giving you a better understanding of the company’s culture. Even a multiple interview process may be worth your while, since this may be a longterm arrangement. Come up with some important questions that relate to your needs, as well as as some scenarios that you have experienced. This part of the process should give you lots of information, before you move forward with this vendor.
Who the heck hired this nightmare vendor?
Check references. Check references. Check references. With the ability to communicate so easily across multiple platforms, why anyone wouldn’t check the references of a significant 3rd party service provider is baffling. A simple email should be enough to inquire about a client’s experience. Ask an assistant or intern to do it, just find a way to check at least 2-3 references. If the vendor is great, no worries, but if they are a nightmare, this will at least relinquish you from sole responsibility of hiring them having checked their references. Be wary of any company giving you a hard time with this very necessary practice.
Outsourcing services away from your operations is a big deal and the greatest of care should be taken when contracting a company to provide services. Standard pay and benefits for their employees, company culture, and how they run business is either going to be a benefit or a burden, so make sure it really is a win-win all around. Its supposed to cost less and not be a headache, so if neither are true, then you need to reconsider that relationship.
If you have anything you would like to add or an experience you would like to share, please comment below.
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