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When it comes to support services, it’s a buyer’s market. Remember these tips when revisiting your outsourcing contracts and save money for your firm.
Support services outsourcing can take on many different shapes and sizes, ranging from having your payroll, overflow copying or supplies procurement handled outside, to contracting out your entire copy and mail operation. A vendor may provide service on-site or off-site. Usually, contracts for these types of services include equipment, labor and supplies, all in one bundled price. Bundling has advantages, but it can also make it harder to tell when you are overpaying. Here’s how to reduce costs on these contracts.
1. Pay only for what you get. Your contracts should include a mechanism for paying only for the volume you actually use. For example, if your copier contract includes 10,000 impressions per month and you don’t use 10,000, make sure you get a credit on the volume or cost of the unmade copies.
2. Get competitive with RFPs. Uncontested contract renewals are perfect for firms with too much money. Consider that the average renewal offers a discount of 4 to 6 percent while a competitive process can mean a savings of 12 to 22 percent—often with much improved terms, even if you stay with the same vendor. Be sure to write RFPs that do a good job of outlining all your requirements.
3. Say no to yearly price increases . Labor, paper and service are the only components of a typical contract that will rise throughout the term. So why pay a yearly escalation on the entire contract amount? Instead, tie yearly increases to the Consumer Price Index or cap them at a nominal 2 to 3 percent.
4. Watch your head counts. Do you have too much support services staff? Centralized copy volume is decreasing, along with centralized record storage, and facsimile is nearly non-existent. Ask your vendor for a head count justification plan, or hire an unbiased third party to do so. If these services are not outsourced, make sure in-house staff maintains detailed time sheets and accurate logs to track volumes of the completed work. Analyzing these documents will point to how head count should be adjusted.
5. Check hours and service levels. Do you really need your vendor to provide Saturday or around-the-clock hours? Are the centralized services used during these periods? Ask your vendor to justify extended hours of operation, or to staff on an as-needed basis. Review service levels as well. Do you need multiple mail runs or hand-delivery for incoming faxes? Next time you see a mail cart, look at what is actually being delivered—most of it can wait until the next day. Review materials being mailed overnight—do they truly have to be there the next morning?
6. Make sure your contract mirrors how people really work. It’s no longer a copy/fax/mail world. If your contract for support services is not based on the print/scan model, you need to take a fresh look at your operation. You’ll be surprised at what you discover, and it may mean major savings. For example, the cost for scanning a document is minimal compared to faxing or overnight mail. On the print side, documents sent to a multi-functional device instead of a local laser or inkjet printer can save up to 50 percent of the cost of that output. And, if your color volume exceeds 1,000 impressions per month, a multi-functional device with color output capabilities may be more economical. Scanning records into digital format instead of storing hard copies is a huge area for cost savings as well.
7. Stop capturing cost recovery items you aren’t getting reimbursed for. Look at your net realizations—the amount left over after internal write-offs on pre-bills and external write-offs by clients. You may be wasting labor dollars by capturing and charging back for services clients aren’t paying for in the end. Explore alternative strategies for cost recovery instead.
Rob Mattern is President of Mattern & Associates, LLC support services analysts and cost recovery experts that assist law firms and corporations in developing strategies to reduce costs and increase efficiencies for their support services.