Downsizing. Divestiture. Mergers. Restructuring. These are the decisions that dot the landscape as many companies strive to cut costs in a volatile economy, and it’s no wonder they’re turning to outsourcing to help drive the change.

But organizations are approaching outsourcing in different ways. Some companies – such as automakers, airlines and those seeing lower demand in general – have already started the long process of selecting an outsourcing provider and working on the contract.

Then there are those that are desperate, the ones that need outsourcing to help them save money now. These companies, including some financial services organizations, are trying to reduce costs, monetize assets and otherwise create liquidity – immediately. Indeed, in a recent EquaTerra survey on economic impact, 73 percent of financial services companies said they planned to cut back on hiring, compared with 61 percent of organizations across all sectors. And 54 percent of financial services companies – along with 37 percent of companies in general – had started the process of layoffs.

But how can these troubled companies get immediate savings when just preparing for outsourcing is a long, complex process? The reality is that if organizations take the usual nine to 12 months just to do the deal, they won’t get any savings for 2009. Instead, desperate times require desperate measures, and that’s why some companies are jumpstarting their outsourcing through “speed sourcing.” It’s an approach for quickly choosing a service provider and getting to a contract in just two to three months.

If you’ve outsourced before, you know it takes time to vet a vendor and sign a contract – up to a year for a large, complex deal and six to eight months for a medium-sized agreement. Speed sourcing, on the other hand, is a way to significantly compress that time. It doesn’t mean shirking all due diligence. It means deferring some of it until after the contract is signed. Speed sourcing has two basic phases:

First 30 days:

Choose a provider. Instead of conducting an exhaustive review of the IT outsourcing marketplace, limit your search to Tier 1 providers, or providers with whom you have an existing relationship. If you already have a desktop contract with IBM, for example, maybe you can expand that relationship for a larger outsourcing need. In addition, consider whether there’s anything unique about your organization’s environment that points you toward a certain provider. Maybe you need a provider that specializes in healthcare services, for example, or one that can support your global business. Asking these kinds of questions can help narrow the field.

Once you’ve identified a few prospective providers, run a mini-selection process. Instead of a traditional request for proposals (RFP), which can take months for soliciting and reviewing the detailed proposals of providers, consider a streamlined “request for services” (RFS). You might tell candidates that your organization is a financial institution in 14 countries with eight data centers, and you need an outsourcing solution for reducing costs and capital expenditures.

In response, you’ll get a few high-level pitches. A provider might propose, for example, to consolidate your IT operations over a period of two years for estimated savings of 30 to 40 percent. Based on these proposals, decide the best fit and choose a partner.

Next 30-60 days: Get to a signed contract.
Once you’ve made a selection, collaborate with the provider on a contract that focuses on what matters most, including must-haves like pricing, statements of work, key terms and conditions, a default service level agreement, and a high-level transition timeline. Some of the other time-consuming detail, meanwhile, can be handled as part of cleanup after the contract. These post-contract activities might include detailed service level agreements; detailed transition plans; and ancillary schedules such as lists of your individual locations, key personnel and competitors.

In outsourcing, the contract process is like taking a piece of granite and carving a horse. But in speed sourcing, you’re just going to carve out some big chunks to form the semblance of an animal; the actual horse will shape up later. Importantly, this “later” must be defined in the contract, and the post-contract processes must be executed in the prescribed time frame. If these activities go undone, their absence will threaten the performance of the deal.