Common Mistakes IT Buyers Make When Choosing Service Providers

A lot has changed in recent years when it comes to IT outsourcing. Much of what is outsourced is taking place in the cloud and cloud computing has emerged as the future of IT outsourcing. While that is the technical aspect of it, many companies and buyers continue to hire IT agencies without a lot of forethought. And when forethought exists, they often do not do it in a step-by-step and detailed approach.

Micro-management often gets a bad reputation but in the case of hiring IT providers, every little detail has to be scrutinized properly. There are chances that even a small error while choosing could cause much hardship later during IT development and operations. What we have noticed is, most IT buyers commit similar mistakes. They usually end up hiring IT agencies in a haphazard manner without having a well-defined written-down policy in place.

Moreover, shockingly, many companies depend on verbal contracts and informal agreements which do not have legally binding value, when it comes to issues related to quality and costs. In this article, let us take a look at these common mistakes that IT buyers make and try to understand what the situation today is like.

1. Lack of a well-defined strategy
Before hiring IT agencies, companies must ensure that they have a well-defined strategy in place. This includes understanding what one expects out of an IT agency, what are the minimum requirements expected from the agency and how progress and development can be tracked and measured. It is during this stage that a client must brainstorm and list down all the requirements that they might have. More the expectations, the better it would be.

This eliminates the possibilities of unpleasant surprises later on, when the contract has been signed and outsourced projects begin to evolve in due course of time. Ideally, strategies to choose and outsourcing agency must be a thoroughly-checked and agreed-upon document, which has been approved by senior management.

2. Lack of well-defined standards
Lack of well-defined standards for service providers is another issue. Companies often take it for granted that IT vendors will be able to bring the outsourced project to life themselves. By assuming so, clients often just give a broad overview of what they want and what they expect. The deliverables and quality standards are not explicitly stated or even understood.

Clients must always speak to consultants and formulate well-defined standards for quality, cost and measurement of IT projects. These well-defined standards for deliverables must be transformed into a binding document that is mutually agreed upon by both the clients and the vendors. This will eliminate confusions that may arise later on, when standards are not met by the vendors or when too much is expected from the clients.

3. Lack of protection policies
A number of times, companies make mutual agreements verbally or informally. Though legal contacts may be in place, they may not explicitly state the deliverables and quality standards. Also, payment related information is often ignored or not clearly communicated. Often, vendors in certain countries find it difficult to talk about money. Always remember to be extra-cautious and explicit when talking about money matters.

Payment related terms and conditions must be clearly communicated and protections against non-fulfillment of standards or quality deliverables must be explored. This will ensure that you do not end up paying for something that you are not happy with. Most of the times, IT projects fail due to a lack of clear understanding regarding payment and quality issues.

4. Lack of attorney reviews for written contracts
Clients often find write excellent policies and documents that seem to have legal biding on both the parties. Only, these documents are just written-documents with no legally binding clauses. Some other times, these documents may be rife with legal loopholes. It is in the interest of both the clients and the vendors to have outsourcing documents and contracts reviewed and approved by attorneys specializing in IT outsourcing.

If you are unable to find an attorney who specializes in IT outsourcing, IT consultants should usually be able to help you find one. A well-drafted and well-written contract must always be reviewed and approved by attorneys to avoid unpleasant surprises in the future.

Final thoughts
These steps may seem very commonplace and one may be tempted to believe that all these will be ‘taken care of’ by whoever is responsible. However, only you, as a client, or as a manager in charge, are responsible for making sure that all the lacking is fulfilled and loopholes are addressed.

Each and every mistake we have listed above must be rectified before finalizing contracts with service providers. This will help IT buyers to choose the right IT agencies and achieve goals that are in the best interest of client companies.