Make Sure Your Outsourcing Contract Has the Protection You Need
Friday, May 15th, 2009If your company is currently outsourcing or considering offshoring for the first time, you may be concerned about recent events, such as reported terrorist attacks, that could impact your outsourcing relationship. You may be wondering if your outsourcing contract has the protection you need in this uncertain environment.
The current world economy and geographic instability has forced many companies to rethink the way they approach outsourcing. It is possible to establish practices that will help you anticipate possible threats and create an alternative plan. One of the ways you can protect your company when global sourcing is to negotiate or re-negotiate your outsourcing contract. CIO.com gave several tips for negotiating outsourcing contracts, some of which are summarized below:
1. Revise clauses, such as force majeure to include other threats. Force majeure usually releases both the buyer and vendor from liability when there is an event out of their control. Typically the focus is on natural disasters.
2. Review termination provisions. Termination provisions should take into account the possibility of an unforeseeable threat to the vendor’s viability. The buyer should make sure that the provision allows them to respond to changing vendor conditions.
3. Modify change of ownership provision. This provision should address an event where there is a breakup of the supplier. The change of ownership provision should include acquisitions, as well as breakups.
4. Decide who owns the assets. It should be clearly stated in the contract which entity owns software, documentation and other intellectual property.
5. Include terms and conditions that focus on emergent concerns. CIO.com advises suppliers to use clauses addressing transition-out requirements, audit provisions and termination costs.
6. Seek advice from a professional. It is advisable to contact a professional, such as an outsourcing consultant, who can help you get the contract right.
The outsourcing consultants at A&E Consulting have the experience and knowledge to help you succeed with your outsourced IT projects. We offer support throughout the entire process and we will provide you with flexible solutions to meet your IT outsourcing needs. Call (661) 200-3612 or email info@aandeconsulting.com today.


















