Get it in writing on outsourcing

Pre-nuptial agreements should not just be the prerogative of Hollywood stars

Pre-nuptial agreements should not just be the prerogative of Hollywood stars. But while Catherine Zeta-Jones and Michael Douglas have the nous to acknowledge that even the most loving partnership can go through hard times or terminate, formerly hard-nosed business types have taken to talking about "trust" and "partnership" where once the emphasis was on contracts and lawyers.

The growth of outsourcing has accelerated this trend. With companies now ready to pass vital business activities over to third parties, it is somehow more comforting to talk of "partners" rather than "suppliers", but too often this disguises the fact that nothing has really changed in the age-old relationship of customer to supplier.

An outsourcing supplier is paid to provide a service and it needs to be held to a satisfactory level of quality and value for money. And that means clear intentions and responsibilities from the outset. And that means a contract. And lawyers.

In his article on outsourcing contracts on page 22, Arif Mohamed looks at the contractual essentials and the best approaches to negotiation, including clarifying mutual liabilities, possibly renegotiating at a later date and making provision for the chance that it may all end in tears.

Recent well-publicised cases of major enterprises such as JP Morgan bringing outsourced operations back in house, together with the Deloitte Consulting report on a possible outsourcing "backlash" have shown that even major corporations can fail to think far enough ahead.

But in the public sector too, outsourcing agreements have not always been given the attention to detail that is vital for success, as is made clear by Lindsay Clark's analysis on page 12. And it is not just the suppliers that are to blame.

"A lot of deals are hyped up before they are signed," one public sector expert told Clark. "This creates the impression the service will be much better. In reality it may be worse or not have changed, but expectations rise."

Huge corporations with the money to pay for top lawyers, often in-house, can afford to play an expensive legal game further down the line. The mass of smaller organisations or hard-pressed local authorities accountable to taxpayers do not have that luxury.

Getting a strong contract in place from the start provides the bedrock for client and outsourcing supplier to build that sense of trust and partnership that makes for a profitable relationship for both sides. Call your lawyer now.

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