Cheap Deals Are Never a Bargain in Outsourcing

February 20, 2007

All business people know that in the early sales process sometimes you have to give a little at the beginning so you can win more from the client down the road. You give a new client a taste of your expertise and service at discounted prices to start and very quickly they will be ready to pay more as they understand the value you deliver.

Most sales professionals have also at one time or another cut their prices so low in order to nail a client that the profit margin is barely visible. While this is never a good business or sales practice, in the world of offshoring it is a death sentence. Widespread nervousness about outsourcing in the marketplace ensures that customers are keeping their terms and requirements very tight and demanding cut-rate prices. Sales professionals, eager to close deals, are often allowing pushing down rates.
All together, this adds up to what Addleshaw Goddard calls on “a relationship that is almost destined to fail.” In the article titled, “How to resolve outsourcing feuds,” Addleshaw explains how outsourcing providers and their clients often build agreements from the start that could and would never succeed.
I agree with Addleshaw that sales over-zealousness is a true danger to successful outsourcing. By cutting prices too low, outsourcing providers also cutout incentives to achieve and maintain top relations with the client. Instead of focusing on price discounts, these are the three critical factors that I believe today’s offshore sales professionals need to focus on:
Solution Constructs
In outsourcing a sales team must build a rock solid scope of work. They must know backwards and forwards what they are committing to delivering in order to ensure that it is worthwhile opportunity for all parties involved.
Technical Talent
The sales team also needs to take the time to find out if the company has the breadth and depth of the technical skills that the client is asking for.

Resource Availability

It’s one thing to have the right talent. It’s another to have the right talent available. Before any deal is sold, the sales team needs to be certain that the resources the client requires are in house and are available for the project.
Notice that pricing is not a factor at all in this sales rigorousness check list. If a deal is judged on price alone, you are not properly selling the value of the service. When your find your outsourcing sales approach focused on pricing, it’s time to ask an important question: Is your outsourcing service offering based on price or value?