To get the most out of outsourcing, your startup company needs to make the right preparations for it. That includes doing all the paperwork to get the thing going. But what documents do you need to prepare exactly? Let’s look at some of the most important ones and find out how you can effectively draft these.
Outsourcing Document no. 1: Request For Proposal
The first document you need to prepare is a request for proposal (RFP). This one is the official document announcing to outsourcing providers that your startup company is requesting potential bids in the work you offer. It contains all the details of the work and the requirements that providers need to fulfill.
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The main goal of the RFP is for you to get multiple proposals that you can then compare and contrast. With it, you can determine the best solutions for your work. Additionally, it can help you get the most cost-effective solution by encouraging competition
Additionally, RFPs provide transparency for the bidding process. That is especially the case if the soliciting party is working with a government organization. These parties would often want to see how your startup company hands over some of the work to ensure that everything is within specifications. They also ensure fair competition in the awarding of the bids.
How Your Startup Company Should Develop Your RFP
The RFP writing process starts with you creating the first draft. Bidders can then review this draft to determine the general overview of the project and provide some suggestions. You might release this first draft informally or hold a pre-bid conference to engage interested providers. In the latter, they can ask more about the project.
Using the information from bidders, you can refine the RFP to reflect better what the project needs. Once you complete the final draft, you can send it out to bidders to help refine their proposals. After shortlisting the best bidders, you can request a final proposal from them.
The RFP can be of any format, depending on the nature of your business and project. However, there are specific elements that you should always include.
- Project background: A detailed introduction of the project.
- Project goals and scope of services: Be specific as possible to give bidders a better picture of what you are looking for.
- Selection schedule: Provide bidders with the date and place for proposal submission so they can determine whether they can make it.
- Timeline: You can also give a possible timeframe for the project’s completion to help bidders assess their capabilities.
- Elements of the proposal: Specify what exact information bidders should include for their proposals to be considered valid.
- Evaluation criteria: Provide a clear set of criteria to give bidders an idea of your expectations.
Outside of these, you can include more specific information about the project. Make sure that the format of the proposal is clear so you can easily compare entries.
Outsourcing Document no. 2: Non-Disclosure Agreements
Data security concerns are a common issue when it comes to outsourcing. As such, you will need to install safeguards to ensure that your data is protected. One of these is the non-disclosure agreement. (NDA).
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The NDA is a document stating that the contracting parties should not share any information they get from the project. Beyond confidential information, your startup company can use it to protect patent rights on the products that they might be handling.
There are two types of NDA that you might want to consider preparing. The mutual one is an NDA where both parties commit to the confidentiality clause. Meanwhile, the one-sided agreement has only one party committing. The latter is the more commonly used type for outsourcing agreements.
Some of the essential elements that your NDA should include are:
- The parties to the agreement: Beyond your startup company and the outsourcing provider, you need to consider which other companies might also be privy to the information.
- Definition of what is confidential: Be clear on what you consider confidential in the project context. Take into account potential loopholes in your definition.
- Scope of confidentiality obligations: This obligation consists of two parts. The first is that the information receiver will not share it with others. The second is that they will not use it outside of the agreement.
- Exclusions: These are the special cases where the other party might find it hard to keep the information confidential. You can state these as exclusions, but be clear about how they work.
- Terms of the agreement: Specify for how long the NDA will last. Consider how reasonable the time frame would be for both parties.
Aside from these main provisions, you can also include terms specific to the project. Here, it would help to consult a lawyer to see if the NDA is within legal bounds before having it signed by the other party.
Startup Company Document No. 3: Statement Of Work
Once your startup company has signed up a provider, the next important document you should prepare is a statement of work or SOW. It provides all the details about the project. Thus, it serves as a primary reference for things like task management and performance assessment.
Image from The Project Management Institute.
Typical items that you would find in a statement of work includes:
- Project information: This provides a detailed introduction to the project.
- Project process: Here, you need to provide a concise yet detailed summary of all the processes included in the work.
- Milestones: These outline the significant achievements the provider should reach in each stage of the work.
- Project budget: Note that this might change depending on the project needs. But a specific amount will help your partner better gauge the outcome of the work.
- Deliverables: You need to provide a detailed description of the deliverables expected from the outsourced team.
- Governance: Provide a clear overview of the hierarchy that will handle work checking and approval, including the specific people the outsourced team should coordinate with.
- Closure: Give the outsourced teams a clear overview of how the deliverables will be assessed and approved.
Outside of these, you may also provide instructions specific to the project. These might be within the SOW body or as a separate attachment to it.
One thing worth noting is that you should not confuse the SOW with other documents that contain similar information. For instance, the statement of work is different from the project charter. The former is merely a section of the latter. As such, its issuance does not initiate the project. Nevertheless, it is still a needed guide for your startup company and its outsourcing partner.
Make Sure Your Startup Company Has These Outsourcing Documents Ready
These are just some essential paperwork that your startup company needs to prepare before starting the outsourced work. And along with a well-written contract, these will provide you with a strong start for it. So take your time crafting each piece before handing them over to your outsourcing partner for signing. This will help you get more out of the partnership.