Selecting international service providers – avoid typical mistakes

Why mistakes in selecting international outsourcing providers are so critical

Many multinational companies invest considerable resources to find a suitable service provider for their international financial processes. Yet in practice, collaboration often fails not because providers lack the professional competence but due to avoidable mistakes in the selection process. These poor decisions can often only be corrected later with high organisational and financial cost.

The root cause lies in the high complexity of international outsourcing projects. Different legal, tax and regulatory requirements must be met, and even isolated violations can result in considerable financial and reputational damage. This is compounded by hidden follow-up costs, such as from delays, repairs after delivery and increased coordination, which quickly cancel out any presumed price benefits.

To avoid these risks, it is crucial to select international service providers in a well-structured and forward-looking way. Besides the price, criteria like international presence, governance structures, technological competence and the ability to transform should be considered. Those who assess these aspects early on will lay a firm foundation for successful and long-term collaboration.

Common mistakes and how to avoid them

Mistake 1: Inadequately checking local expertise

A common mistake is underestimating local legal, tax and regulatory particularities. For international activities in particular, in-depth knowledge of national regulations – such as on VAT or reporting obligations – is especially important. At the same time, global compliance standards must be met, e.g. data protection, money laundering prevention or combating corruption.

Non-compliance with international standards or local documentation requirements can also result in significant financial and reputational risks. Companies should therefore ensure that the selected service provider has reliable local knowledge and can safeguard it in their organisation and their personnel.

Mistake 2: Imprecise requirements in the selection process 

Unclearly defined requirements are one of the most frequent causes of problems later. If the scope of services, quality requirements and responsibilities have not been clearly set, misunderstandings may arise that often only become apparent in the implementation phase.

This not only leads to more need for coordination but can also cause problems with quality, compliance risks, and additional costs. The remedy to this is formulating requirements precisely as part of a well-structured RfP process that clearly defines the scope, goals and priorities.

Mistake 3: Underestimating internal efforts

Coordination and managing international service providers typically requires more internal work that initially anticipated. Without clearly defined responsibilities, realistic timelines, or sufficient internal resources, even the most capable service provider won’t be able to implement projects successfully.

For complex projects, like service transitions or ongoing international service coordination, careful internal planning is essential. Unclear processes and inadequate documentation caused by internal bottlenecks in capacity, also make tax and legal clarity more difficult and increase the risk of non-compliance.

Mistake 4: Cheap can turn into expensive

A classic mistake is focussing on the lowest price offered. Cheaper offers are not necessarily an indicator of quality or efficiency. In many cases, poor performance leads to additional costs, for example for rework, delays, or mitigating legal risks. 

Hidden costs, such as services not included in the initial RfP scope or a lack of expertise, can quickly eliminate the anticipated savings potential. A holistic assessment of the total costs across the entire project lifecycle is therefore essential.

Conclusion: Consciously avoid typical mistakes

Selecting international service providers is a key success factor for global projects. Companies that assess regulatory risks realistically, define requirements clearly, budget internal resources early, and avoid focusing solely on price, can considerably reduce typical pitfalls. This creates the foundation for stable, efficient, and long-term collaboration with international service providers.