The negotiation of outsourcing service/contract is often a complex process considering the financial, technical, performance and legal issues. As a result of the complex nature of outsourcing negotiation, many clients make lots of mistake during the negotiation process. However, this post seeks to explore the most common mistakes in negotiating outsourcing contracts and equip negotiators with the right information to spot those negotiating mistakes of outsourcing.

Ignoring Leverage

Leverage is perhaps the most vital fact in the negotiation of an outsourcing service. In fact, leverage has to capacity gain extremely important points in most outsourcing negotiations. However, many outsourcing negotiators waste entire or fail to build their leverage into an outsourcing contract. Thus, ignoring leverage in an outsourcing contract negotiation is a big mistake because a negotiator can put the organization into a long-term loss in business.

Assuming the Best

Another grave outsourcing negotiation mistake is having the assumption that the other party of the outsourcing contract will always act in your best interest. Impossible. They will only act in their own best interests and their own best interests can either be exact opposite or just the same as yours. However, a good outsourcing contract must align interests. For instance, making provisions that share the benefits of projects that the outsourcing vendor implements for the client give both parties incentives to make the project successful.

Assuming the best in outsourcing negotiations can lead you to either a bad negotiation or away from requesting contract provisions that align the vendor’s incentives with yours. Thus, a good negotiation occurs when you focus on both enlarging the resources and dividing the resources. When you are enlarging the resources, the vendor’s interests are similar to the customer’s interests. When you are dividing the resources, the vendor’s interests are close to being the opposite of that of the customer. The assumption of the best prevents you from pushing hard enough for your fair share of the resource.

Overconfidence

Research has proved it over the years that most people have too much confidence in their opinions. That is to say, many people have the mentality of ‘I know it all’ in most of the things they do. This makes them been overconfident. However, overconfidence blinds negotiators, as such they hardly have the patience to listen to the details of the contract negotiations, much less asking the right questions to find evidence that goes against their view of the negotiation. Overconfidence often keeps negotiators a step backward because they usually do what worked previously rather than what will work in the present moment or future, forgetting the fact that every negotiation is unique that requires fresh strategy based on its own facts.