Negotiating Strategies for Outsourcing

March 17, 1999
As companies continue to outsource many of their HR functions, it's important to know how to negotiate contracts with the right vendor. Keep the following in mind:

  • Know your needs and goals.

  • Institute a detailed RFP (request for proposal) process.

  • Specify company/vendor responsibilities.

  • Set detailed performance standards.

  • Determine growth rates.

  • Don't use a vendor's standard contract.

  • Don't sign incomplete contracts.

  • Don't set a reporting system for convenience.

  • Don't neglect your employees.

  • Don't ignore the vendor's motives.

SOURCE: Winning Strategies for Outsourcing Contracts, Personnel Journal (now Workforce), Jennifer J. Laabs and Brenda Paik Sunoo, March 1994.