It is a common practice to perform due-diligence to validate the outsourcing service offering by understanding/accommodating the risks and cost-to-serve parameters for a deal. The outcome for a due-diligence can be widely varying depending on the scope and defined objective. The due-diligence, usually, is a vital link between the proposed RFP response and the revised final offer from a service provider. Most often the clients take decision on outsourcing based on the revised final offer from the service provider. Given the importance of the outcomes from the due-diligence exercise, one needs to understand the key dimensions around which one performs due-diligence. The key dimensions around which one performs the assessment of risks and costs are:
1. Strategic
2. Financials
3. Legal/Contractual
4. Organizational (HR, Structure, Governance, etc.) and
5. Service portfolio
In each of the above dimension a detailed assessment of the risks and cost-to-serve parameters are reviewed to ensure that the proposed solution is validated and revised. The entire process requires high-touch interactions with clients and the incumbent service providers so that the required information is secured for the revision. Most often the due-diligence exercise almost always results in revising the offer made by service provider to the client and there is tremendous pressure for the participants to improve the offering to client. Seldom does one see a service provider backing out of the deal considering the uncertainty, complexity and the increased cost-to-serve for the service provider. What are the frameworks available out there in the market that one can use consistently for all due-diligence exercise to determine whether to continue bid for the deal or withdraw from it? It would be interesting to understand the existing frameworks or developing one if there isn’t one in the market already?
Any thoughts/ideas?
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