Competition: The Key To A Better Deal

Originally published in CIO Canada, July 2007.

Perhaps the most significant new and evolving development in outsourcing is competitive procurement. More and more customers are approaching the process of choosing an outsourcing service provider through a competitive bidding process with the use of more effective RFPs and a more disciplined process governing responses.

There are many factors which motivate this approach. Perhaps most importantly, there is a general awareness that better deals can be obtained when suppliers know that there is real competition for your business.

The traditional approach ten to fifteen years ago involved the selection of a single vendor on the basis of high-level RFPs and responses defining high-level prices, subject always to numerous assumptions. This selection process was then followed by a one on one negotiation of a contract carried out in parallel with a due diligence effort by the supplier. The result was a refinement of the original prices,