Why outsourcing services is easier than you think

Have you ever wanted so badly to have someone else take care of certain business problems but didn’t know who to turn to?

Have you ever outsourced work to a third-party vendor only to deeply regret it?

Over the last year, Beaze interviewed hundreds of businesses who failed to successfully outsource specialized managed services over the long-term. We discovered that the average amount of time to find and secure a vendor is 43 days; it’s akin to flushing $12K down the drain. It’s no wonder people just stick with who and what they know.

Keep reading to find out the 5 main reasons why firms aren’t able to achieve the kind of successful, long-term relationships with the service vendors they hope for and 4 ways on how you can avoid these traps.

Why outsourcing services can be easier than you might think | Beaze, a B2B vendor procurement marketplace
Photo Credit: Lauris Rozentals & GLK Creative Studio

1. Finding appropriate service providers worth considering. When business owners are finally willing to consider outsider help, over 68% don’t even know where to start looking for specialized help outside of their personal network. Businesses frequently rely on word-of-mouth to find experts in the appropriate fields and would often fall back on search engine results hoping to at least get contact information of service providers. Unfortunately, the recommended vendors they contact are often way out of their price range, don’t have the capacity to take on new work or are a poor cultural fit. Many customers emphasize the uniqueness of their corporate culture and complain about how incumbent vendors often disregard internal processes and pre-existing tools. It often takes at least 1 week or more just to find a starter set of vendors to consider.

2. Vetting providers for their alleged core competencies: While 93% of businesses would opt for word-of-mouth, they would still want to kick the tires on these vendors by comparing at least 2 or 3 in tandem just to be sure that the niche expertise is indeed there. These customers often rely on Google or LinkedIn searches to find alternative service providers. Over 72% of customers admit they lack either the necessary subject matter expertise to make an informed decision or bandwidth to determine whether the solution pitched is going to get the job done. Often, they cannot determine whether the price quoted is reasonable for the value to be extracted and so they are often sticker-shocked. If this happens to be their first search, they would not have any appropriate baseline by which to compare the quote received. Waiting for numerous quotes could take weeks, simply due to the amount of coordination and back-and-forth required to get to an official bid from repetitive questioning. Customers don’t know what questions to ask to even begin a meaningful screening process. As well, onboarding providers in a quick and efficient way. When service providers were engaged, 68% encountered a steep learning curve related to the internal corporate culture. This internal baggage was not really perceived during the bidding process and so would often blindside service providers.

3. Vetting providers for their ability to provide high-quality customer service. Communication responsiveness is the #2 concern with customers; any company failing to communicate within 48 hours is generally disqualified from consideration. After all, the customer could be hiring the vendor on behalf of a secondary customer. Reputation is everything and so the hiring party has much to lose. Having valid use cases is another key requirement for customers. They need to know you can do the job. Many SMB service providers do not have communication service-level agreements, i.e. deadlines by which they need to respond or resolve issues. 

4. Maintaining a productive and cordial relationship: A remarkable 42% of customers listed cultural sensitivity as being a major concern. Many found their vendors to be eventually disrespectful of the work being done by the customer’s company which led to significant strains in the relationship. 

5. Avoiding spam: In 2019 alone, US businesses spent over $20B in overhead costs caused by unwanted solicitation. This comes in the form of automated calls, email spam, cold outreach and physical mailers tossed in the recycling bin. Firms spend 11% of their work time trying to avoid these forms of communication from outside vendors and wish they could do away with them altogether.

As you can see, searching for and vetting vendors fatigues the best of us; the above challenges boil down to the following five reasons we’re all very familiar with:

  • Customers don’t know who to ask;
  • Customers don’t know where to find the right vendors;
  • Contacted vendors are too busy to respond;
  • Contacted vendors turn out to be way out of budget;
  • Contacted vendors turn out to be less than honest about their capabilities;

Fortunately, Beaze changes the service landscape in a multitude of time and cost-saving ways that benefit both customers and service providers:

1. Queuing up worthy providers who are ready to respond: Beaze requires that prospective vendors respond within 24 hours of being invited to a lead. Those that fail to meet that requirement are kicked out of consideration and immediately backfilled with another set who is ready and primed to go.

2. Having a panel of subject matter expert vendors figure out the problem space: Beaze experts narrow down the problem space in layman terms that are verifiable and comparable using suggested discussion topics collected through machine learning. Vendors are able to submit key use cases to demonstrate their capabilities in driving true return-on-investment (ROI). These use cases illustrate communication style, competency and cultural sensitivities.

3. Automatically replenishing the prospective vendor pool whenever they prove themselves unworthy: Beaze has a broad network of vendors who are ready and able jump into a conversation mid-stream and keep the conversation on track towards the conclusion; so, even when previous vendors drop out (either of their own volition or forcibly by the customer), ready and eager providers can be introduced getting themselves easily caught up.

4. Providing comparable bids with clear value propositions and price: Beaze enables providers to submit meaningful bids to address your specific project concerns in quantifiable terms so you know what you’ll receive as an outcome.

Customers on Beaze are able to find, vet and hire vendors in under 7 days (an 83% improvement). Imagine what you could do with that extra time and energy.

How do you tackle vendor procurement? We’d love to hear your comments below.

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