The biggest problems with
outsourcing are usually around termination of contracts, but
this is the area which is often most neglected, warn outsurcing
experts.
"It is often too difficult to unravel business processes from an
outsourcing company 10 years down the line, so many companies renew
contracts because it is easier to do," said IT contracts lawyer Dai
Davis, partner at law firm Brooke North.
Davis said many people who negotiate
outsourcing contracts concentrate only on setting up the
relationship and not on how to end it, with the average contract
saying termination "to be agreed", which can often cause problems
when the contract ends or things go wrong.
"This problem is not insurmountable, but many people do not
think about it or are not concerned because when the difficulties
arise in five to 10 years, it will not be their problem," said
Davis.
He advises that all companies negotiating outsourcing contracts
should agree on how the contract will be terminated as early on in
the process as possible.
Martyn Hart, chairman of the NOA, said another way around the
problem was draw up contracts in terms of business oriented metrics
and not be too specific about tasks and services, because it is
often difficult to predict how things will change at the
outset.
"This builds more flexibility into the contract to allow for
changing business conditions and requirements, which is more likely
to keep both parties happy for longer," he said.
Hart also suggests making outsourcing part of business
continuity plans. "This will enable organisations to understand
exactly how dependent they are on outsourcers so they can plan
alternatives and check that these work during routine business
continuity testing," he said.
Firms causing problems for themselves by outsourcing on cost
alone
Know who you are dealing with when outsourcing