IT outsourcing vendor selection is all about clear SLAs

Experienced outsourcer Radhakrishnan G, the general manager for systems at Bangalore-based integrated healthcare company Biocon Ltd., gives best practices for evaluation, selection and management of an IT outsourcing contract.

What is the importance of referral checks and vendor reputation when conducting the IT outsourcing vendor's evaluation?

We do call some of their customers, maybe at random or through our contacts to discuss the vendor's capabilities. Apart from that, we also do vendor evaluation as a project. We also go to the vendor's site to study their processes to [ensure they] meet Biocon's internal quality and regulatory requirements.

What's your opinion about the capability of Indian vendors when it comes to providing IT outsourcing services?

There are many capable vendors, but one needs to be careful when awarding the IT outsourcing contract. In many cases, some outsourcing vendors might show that they have a set of very capable people. However, at the end of the day it is critical that you get the right people at the right time. What happens in the outsourcing era is that many IT outsourcing service providers will show you the big picture in the beginning. However, once the work starts, they may resort to unwanted practices such as allocating trainees or less competent people for your IT project. So you cannot select a vendor just by the company's name because many times the big companies subcontract the work after getting the order. You have to evaluate the people as well as the company. It is better to evaluate the people who are involved in the process to avoid unwanted surprises after signing the contract.

Hence, you have to be very careful when you sign outsourcing SLAs. Every SLA has to be clear about the objectives, scope of work, final deliverables and the right kind of people. In our case, sometimes we interview the people concerned and assess their capabilities to determine whether they are capable of taking up the job. If someone does not fit into what we are looking for, we inform the IT outsourcing service provider and change the person.

Can you tell us about the procedures followed at Biocon for evaluating an IT outsourcing service provider?

First of all, we assess the IT outsourcing service provider's technical capacities, knowledge levels and their market share when it comes to that technology. Then we also check with their clients to determine the vendor's credibility. The selection parameters are based on the vendor's capabilities. There are different partners available with similar capabilities, and some of them might be very good at specific skill sets. For example, IBM is very good for Lotus Notes implementation, but I will not ask a core IBM partner to come and implement Microsoft Exchange. Or, if I ask a security consulting company to do an implementation of an ERP application or something similar, it may not be possible. Their expertise lies in whatever domain they belong to.

If you take a company like Wipro, there are different verticals within their team. Someone will be looking at SAP implementation, while another will be looking at Oracle implementation. So it does not mean that for an ERP implementation, anyone from Wipro can handle it. That way we identify a vendor's core domain knowledge. For example, when we went for Microsoft Exchange migration, we had a few vendor discussions, and we finally decided on Wipro. This was decided based on their competencies and expertise.

One of the issues that we had in mind when taking the decision was migration of Lotus Notes users to Microsoft Exchange. Now there is Quest, which is a tool available for user migration. So if the vendor doing the implementation is not familiar with Quest, then we may not get good results. Exchange configuration might be done properly, but other related activities and after-implementation support are also important. So it's a focused approach depending on the requirement, based on which we take the call.

Before you sign a partnership, who are the people from Biocon involved in the evaluation process? Do you also call in outside consultants?

IT outsourcing service providers first show you the big picture. Once the work starts, they may resort to unwanted practices such as allocating trainees or less competent people for your IT project
Radhakrishnan G
GM - SystemsBiocon Ltd.

Biocon has an IT committee headed by the CMD (chairman and managing director). So we meet and discuss options before we take the call. The IT committee comprises of our CMD, vice chairman, COOs of different entities, presidents of each function and a couple of staff members from IT. In certain cases, we do call in outside consultants. For example, when we went in for an ERP application, we did involve outside consultants to evaluate the right solutions for our business requirements. On the other hand, when it comes to Microsoft Exchange migration, we asked the principal to suggest vendors to meet our requirements. Then we evaluated the suggested IT outsourcing partners' capabilities.

What about evaluating the performance of vendors over time?

At the IT department we perform our analysis and present options to the IT committee. We assess the performance and update the committee on what has been done during the course of evaluation. We also have feedback mechanisms for assessments.

Do you also renegotiate contracts if needed?

So far we have not had such an instance. But if an outsourcing partner is not performing up to the mark and unable to deliver, we would definitely look at changing the partner in consultation with the principals.

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