Nearshore Americas

Why Due Diligence Never Ends

Last year I wrote several articles for Nearshore Americas on how to better manage outsourced relationships. These pieces covered all facets of becoming a successful outsourcer and included vendor selection, managing multiple vendors, incentives, brand management and how to utilize agents to increase sales and grow revenues through outbound calls.

The articles were written from a practical, operational point of view. Additionally, I have discussed the benefits of using boutique contact centers to launch new annuity programs and applications. I have seen successful conversions in industries stretching from financial services to real estate, travel and automobile windshield repair that have benefited from the nurturing environment better offered by a boutique center.

The reason a boutique call center tends to be beneficial is that they can start smaller, better understand the entrepreneurial aspects of certain businesses and appreciate more how they grow and can become foundation clients (ultimately utilizing the initial agents as future subject matter experts to manage the growing business – it is a great transition process). A thorough due diligence can protect the outsourcer from the risks of using a smaller provider.

Recently I have been involved in a couple of engagements where clients have left call center selection to the end of the roll-out process, thinking they could rely on an outsourcer to understand the business and decide the process issues, or have taken over a call center as part of an acquisition and assumed all was well (ignorance is bliss).

One client made a point of saying, “don’t upset the applecart, we have been with them for a while and are pretty happy but the pricing seems high.”

The devil is in the details. Word to the wise: if you have been in a relationship for a while with a vendor it is always good to check the tires. Expectations change and, just like a tune-up, existing relationships should be reviewed mid-stream through a mini due diligence.

A third-party review mid-stream may eliminate the need to have a lengthy review just prior to term and can also eliminate complacency or risks that might not have been caught or understood previously.

Due Diligence Overview 101:

The basic process is that a Request for Information (RFI) is sent to an initial set of vendors, with the general rule being to err on the side of a larger pool of candidates. The same RFI will be used so this does not really entail more work. Additionally, there may be some input from non-selected RFIs that can be used in augmenting the final Request for Proposal (RFP). Always identify the best in class.

The project team will then review the results and select a final slate of potential vendors. RFPs are formalized and sent to the prospective vendors, which are reviewed, leading to site visits and the final decision.

Formal due diligence is critical and needs to be comprehensive. If call centers aren’t your main line of work then don’t do the work yourself. For startups or new programs, understand inbound customer-care programs are not turnkey.

Company Risk:

– Pay close attention to whether or not the company has more then one location. Smaller companies may not have multiple sites, which makes location and contingency more important. Stay abreast of emerging trends such as the use of at-home agents etc.

– Check overall occupancy and the number of clients. It is critical that there is transparency around large client dependencies. If you’re new and growing, stability is key.

– Look for the company’s measures of success and how they are performing, especially around growth.

– Make sure you understand their overall strategy and how you fit in (inbound, outbound, scripted, non scripted etc.) it is good to have your characteristics in their sweet spot.

– Ensure their client base is diverse; that will help ensure you can leverage the larger base from a technology and management perspective. It is better not to be the largest.


The contract must include the following:

– Provisions for tested contingency that are done annually. Changes to the contingency plan need to be approved in writing. Contingency is not negotiable.

– Contract term should not renew automatically. The contract should include triggers to prompt an annual review. There has to be a mechanism to ensure quality indicators are being met.

– When negotiating termination clauses include change-of-control protection and dispute/breach terms. It is important to protect the business. Most programs are complex and moving the business can be extremely disruptive especially if done quickly. The potential impact to revenue and reputation can be difficult/impossible to overcome.


As with contingency, ensure that your vendor goes through financial and operational audits annually. This should include transparency around audited financials. This is less important in publicly traded companies because of SEC requirements but it is critical in privately held firms.

Included in the audit section is the company right to be on site at will and to conduct spot audits and reviews with consent of the vendor.

Vendor Management Program (VMP):

The VMP needs to be formal and a sub-section of the contract. The VMP is critical and represents the rules of the road outside of the contract. It must include mechanisms for accountability or Key Performance Indicators (KPIs).

– KPIs don’t have to be voluminous but must have teeth. Indicators should have a starting and ending goal with interim targets. Plans should be developed with penalties and incentives and earn-back provisions.

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– Benchmark call center indices.

– Daily, weekly and monthly reporting formalized.

– Meeting schedule memorialized. There is no reason in any size operation that small meetings should be held weekly building up to a quarterly review.

– Quality Assurance (QA) should be clearly delineated. QA includes monitoring, training and curriculum, coaching, expedited processing, escalation, front office interaction and BPR activities.

– The VMP should also specifically state what resources are dedicated to the account and which are shared.


Most likely inbound pricing will be done on an hourly basis. It is very important to understand what the hourly rate includes. The call center can be “running well” and the hourly rate reasonable but still high if the service included is not robust.

Pricing should be a fully bundled, all-inclusive fee including all aspects of project management. Project management includes all topics reviewed in the article.

There are additional areas I haven’t touched on that will be reviewed later such as reward and recognition, branding, transparency to end clients, multiple vendors and sites among others.

These rules of the road apply to near, on or offshore locations and large and small providers alike.

If there are any questions or comments please contact me at

Michael Blankman

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