Outsourcing is becoming increasingly prevalent in industries from pharmaceuticals to mechanical manufacturing to information technology (IT). There are three basic elements of most businesses that can be outsourced:
1. Development in CROs (Contract Research Organizations)
2. Manufacturing in CMOs (Contract Manufacturing Organizations)
3. Distribution in Co-marketing & CSOs (Contract Sales Organizations) (Srivastava, 2009)
What is being dealt with here is vendor partnering or a contract sales organization that replaces all or a significant part of the marketing arm of the subject company. The objective of outsourcing is to permit the company to focus its efforts in the disciplines where it has the greatest expertise. A company that chooses to employ vendor partnering is outsourcing at least a portion of the sales functions of the marketing department. This will allow the IT company to utilize its resources in creating the products and then possibly interfacing with clients on a technical level as opposed to conventional sales.
Vendor partnering can also include offers of the companies services in conjunction with a partner that sells hardware or services that employ the products or services the company produces. (Mathews, 2009) Perhaps the classic example of vendor partnering is the personal computer hardware manufacturers and Microsoft. Virtually every PC sold in the world, except for MACs, employs a Windows operating system. Few computer users or buyers have ever met a Microsoft representative. Microsoft sells the product to the computer companies, but the computer manufacturers are the actual vendors of the product. The vendor partner can be a consulting firm, software vendor, hardware vendor or a vendor of other service.
What are the criteria of a good vendor partner?
In identifying a suitable vendor partner the IT firm should assess financials, backers, ongoing viab...