Service providers often ask us, “What do end users really expect when receiving outsourcing proposals?” Most of the possible answers to that question seem to be obvious, but in fact only seem so as end users still complain about the quality of the proposals they receive.

We might expect willingness to pay to completely disappear in the highly competitive and industrialized outsourcing market, in particular given contracting IT budgets and much evidence to support broadening price sensitivity among even the largest customers. However, some industries are under more pricing pressure than others. In fact end users are often less price sensitive when a desired level of quality is guaranteed. Service providers succeed in convincing end users of the added value of their offerings and therefore in driving willingness to pay. Of course, the belief in real added value not only depends on the objective demonstration of it but also of the end user trusting a service provider.

Pricing of course is the most obvious aspect of a proposal to cause concern for clients, but low prices are not always decisive. However often overlooked are two other critical aspects of the proposal process, the quality of the written proposal and the oral presentation.

Surprisingly (or not!) respecting the written proposal format is another important factor that can influence willingness to pay among end-users. This is not so much for the sake of the principal itself but it rather allows the client to judge the coherence between the theoretical approach to a given project and the concrete implementation of it. Indeed most end users think that a structured, well-written proposal reflects the capacity to roll out a project in a smooth way. The non-respect of the format can even be sufficient to eliminate a service provider from consideration.

The final and most underestimated hurdle is the oral presentation. This is the stage in the process when the decision is really made. End users often tell us that providers ranked first based on a written proposal lost the contract because of an underwhelming oral presentation. The same is true the other way around. End users decided to work with third ranked providers, their decision being based on an excellent oral presentation. Despite the oral presentation skills of the team presenting, it is important that the project is clearly presented and that the presenters are able to answer to both the proposal related questions and to the operational aspects of the project. This means that the presentation team should consist of both sales and operational teams which is surely a substantial investment for the service provider. But given the value of most of the outsourcing contracts, it is worth the investment.

Post by Katharina Dalka