Business negotiation
Business negotiation

The information technology market is believed to exceed $1 trillion dollars in the next few years. Outsourcing IT has become a growing solution for web hosting, programming, data backup, and server problems for businesses of all sizes. Businesses of all sizes can negotiate with IT outsourcing companies for the specific services they require. Larger corporations often use a “turnkey” approach, where all of their IT needs- ranging from internet security to the training of personnel-are done by the IT company. A smaller company may outsource IT services for specific projects only or as a temporary solution. Outsourcing can provide a more cost-effective alternative to an onsite IT department as well as stability during inconsistent times.

Negotiating the best deal on IT consulting starts with an assessment of company requirements. Aside from the more common IT services such as virus protection, hardware support and data backups, outsourced IT firms can provide additional services, including:

  • Strategic Planning and Asset Management – Outsourced IT companies can become the Chief Information Officer (CIO) by archiving data and provide consulting services related to purchases and strategic decisions.
  • On-site Support – Outsourced IT can still provide the same hands on support as an on-site IT department by completing tasks such as routine equipment maintenance, computer settings and routers. (This may require scheduled appointments.)
  • Managed Hosting – Outsourced IT firms can provide this service as well as offer off-site servers to manage shared computer servers, and provide software updates.
  • Software as a Service (SaaS) – If you provide software to your clients, SaaS is a way to outsource software support and infrastructure maintenance. This is an efficient form of customer for your clients.
  • Data Center Outsourcing – IT firms can alleviate problems associated with data storage such as computer power and space while providing data processing and storage support.

Getting an idea of the services you need is one of the best ways to figure out a “starting point” for your negotiations. Many companies offer service packages that include some of the above, and offer additional options at an increased cost. Know what you need, what you can do without, and what you’d like to have if it’s thrown in as an “extra” by a company sales representative.

Once you’ve evaluated your requirements, you can narrow your search to a few companies. It’s helpful to have a “checklist” to evaluate each company with beyond just the services they provide. Here are a few negotiation points you can use when looking for an IT firm:

  • Services Provided – What do you need done? For example, do you need on-site support? If not, it does not matter where the IT firm is located.
  • Cost – Costs fluctuate based on services provided. Really review what the total cost of outsourcing IT will become- on-site support, basic services, data backup, etc., can quickly add up. Ask for discounted services, a “bundled” service package, or anything else that might help you save on costs.
  • Security – The outsourced IT firm will have access to all of your vital information, so security is of utmost importance. Checking references is sometimes not enough. You can ask about upgraded encryption capabilities, and what programs they will use encrypt the data transfers.

Drafting the Contract

Drafting the contract is the final step of the negotiation process. It is also necessary to have a service level agreement (SLA) contract for most IT projects.There are many ways to employ an IT company: project based, on retainer, or for a specific amount of time. A well-crafted contract will guarantee that both parties are in agreement. Your contract should include

  • Cost and Scope of Work – This is a detailed explanation of what work will be completed and how much you are paying for it. Costs will change based on technological advances, for this reason it is good to include a “benchmark” provision which indicates a third parties costs to make sure you pay the current going rate.
  • Work monitoring and governance – This relates to making sure the IT firm meets the service level agreements. Utilizing governance software can assess the work as it is being done to guarantee quality.
  • Disengagement Plan – In the event of a breach of contract, you want a plan that minimizes your liability and addresses ownership rights, transfers, and other issues involving vital information.
  • Service Level Agreements – This is detail the specifics of the project that may not be included in the contract such as help desk hours and service call resolutions. A lawyer’s review of the SLA and contract will be beneficial especially if you are using an international IT firm.

About the author: Monique Myers is a writer, surf instructor and an art enthusiast based in San Diego, California. She writes extensively for Resource Nation, an online resource that provides expert advice on purchasing and outsourcing decisions for small business owners and entrepreneurs

Image by Dwonderwall.