How to Avoid Unexpected Increases in Your Outsourcing Contract

There is no doubt that compensation is an important factor in hiring and retaining employees, but it is not the only factor nor is it the most important one.

Here are some things to do before you enter an outsourcing contract to make sure you avoid these unexpected increases.

  • Make sure the salaries your outsourcing service provider is offering to candidates is competitive with the current market and considers all related aspects such as required skillsets and any specific geographic market differences.
  • As part of any outsourcing Request for Proposal (RFP) or negotiation, make sure you get a list of the salaries service providers are offering for a position. This should be updated each time a position is added or reduced.  Ensure you have a benchmark to validate these salaries are competitive for each position in your contract.    
  • As part of the same process, make sure the increases that your outsourcing service provider are allowed in their contracts are being applied to employee compensation.   

The reasons employees leave other than compensation

  • Trustworthy leadership team
  • Connection
  • Healthcare
  • Wellness
  • Empowerment
  • Creativity and Innovation
  • Learning
  • Quality of life

Depending upon the article you read, compensation is always listed in the top five (5) reasons for an employee leaving a position.  Nevertheless, if not coupled with other, non-monetary motivators, the motivating effects can be short-lived. Further, monetary incentives can prove counterproductive if not made available to all members of the organization. 

To take this analysis a step further, when analyzing one of the accounts we manage, they experienced on average 36% turnover (which is average for the outsourcing industry) but only one of those positions turned over for compensation reasons.  

You never say never, and every situation is different but before agreeing to absorb any type of increase, make sure your service provider is doing their job in managing their employees.  Chances are if they are, you won’t be getting these requests.