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The outsourcing three-step is a dance performed by a number of potential customers of outsourcing services. It is performed mainly by central government departments, but is common amongst corporate and local bodies.

All major providers of outsourced services need to be aware of it, because it may limit their opportunities and waste their marketing time, energy and budget.

Other providers of "niche" services need to be aware of it, they may be deterred from seizing opportunities that appear to be only available to the major players.

Also, customers should be aware of it, because it may prevent them from doing it. If they do start doing it, they should know about it and able to take action.

Let's look at the three steps.

First step: registration of interest

A "Registration of Interest" (ROI) is a process through which potential service providers can register their interest in providing their services to the customer.

The most common form of ROI is a newspaper advertisement. Whatever the intentions of the customer are, their advertisement is a public statement of intent. The advertisement has two major aims.

1. It invites potential service providers to register their interest.
2. It demonstrates that the organization placing the advertisement has a positive management style, understands the services available to it, makes major strategic decisions, and is prepared to make radical changes in order to achieve success.

As a result of this second aim, advertisements for services are likely to state that the organization is "seeking a service provider who can provide outcome-driven outsourcing to agreed service levels", or something similar. The organization imagines that it will be seen to be aiming for full outsourcing, with the service provider owning the assets, employing the people, performing the tasks and producing the outputs that will enable the organization to meet its strategic objectives.

There are two main results of such an advertisement appearing.

1. It attracts the major outsourcers, whose prime business is outsourcing.
2. It deters small contractors and "one man bands", since the advertisement seems too "high-powered" for them.

Second step: Request for Information

The "Request for Information" (RFI) stage involves the customer contacting the service providers who registered an interest and asking them for information. The intention is to gather enough information about each provider to enable the organization to determine whether they are a serious enough contender to be asked to submit a proposal.

It is logical to assume therefore that the questions posed by the RFI would be about the providers' ability to do the full outsourcing described in the ROI stage.

Two things may have happened as a result of the ROI stage.

1. The organization may have received responses only from major service providers. This can be daunting for some organizations, when they imagine doing business with a large international company which specializes in outsourcing. Especially if they know little about it themselves.
2. The person in charge may have been told "horror stories" about other attempts at outsourcing that failed. To someone with an entrepreneurial spirit, being told of the previous failures would be a spur to doing it successfully this time. Often, however, it causes them to shrink from bold initiatives.

Having publicly declared its desire for a full, outcome-driven outsourcing service, the organization can now perform the second step, which is moving back to a limited, output-based management service. This step has an audience limited only to the respondents to the ROI, so the public perception of the organization and the individual will be undiminished.

In this way, a ROI for, say, complete outsourcing of the organization's IT, can be succeeded by a RFI for limited outsourcing, based on the organization retaining management control over the outputs produced by the service provider. A RFI of this kind may often be fragmented into a number of these limited services, such as help desk provision, hardware maintenance and replacement, and software supply and support. At this stage, the major service providers should start to become wary. They have seen a step backwards from the original position, and they should realize that the customer organization may take another step back. Increasingly, the major providers should become wary of eventually doing business with the customer. The customer may actually need smaller, "niche" service providers.

Third step: Request for Proposals

Finally, when the full Request for Proposals (RFP) is issued, the third backward step may operate. This step takes the customer back to asking for support for its PCs, for a standard "client profile" for each PC, for maintenance of servers and printers, and for a help-desk. To many service providers (even relatively small ones), these services are standard: they offer them to every customer. But the major characteristic of this third step is that the services no longer need to be integrated under a single manager. In fact, the PC purchase, leasing and support deal could be separated from the help-desk deal entirely in many cases. There will still be management of the various services, but it will now be "in-house": retained by the customer.

This, then, is the outsourcing three step: beginning with a fully outsourced vision and ending with a set of contracts for standard services. Between the first step and third step, much time and energy and money are wasted. So, the first piece of common-sense advice is (as always): check what it is that you really want before you approach the market. The second is: keep that approach to the market pitched at a level with which you and the organization can cope.