Background on Economic Pricing Adjustments Outsourcing contracts often include mechanisms to adjust prices for inflation. Among the factors of production, the cost of labor is the most critical and is often subject to these adjustments. To account for rising production costs in a particular market,** service providers will typically ask…
Making the decision to terminate an outsourcing agreement is often very difficult and is usually only pursued if enforcing existing rights is not sufficient to address a customer’s major concerns or renegotiating the agreement can’t achieve the desired outcome. If a customer begins to think about terminating an agreement, it…
In the wake of some extreme weather during 2011 (earthquakes, tsunamis, tornadoes, hurricanes, and mudslides), what better time to review your disaster recovery and business continuity (DR/BC) solution and planning processes? In some cases, DR/BC planning is a legal or regulatory requirement, but even where it is not, common sense…
A group of health clinics representing dozens of health care providers recently decided to migrate to an electronic health record (EHR) solution. The clinics selected a system that others in the area had recently adopted and negotiated a software license and hosting agreement with the vendor. When the negotiations were…
Current economic conditions require companies to realize cost savings quickly, and existing outsourcing relationships are a popular target. In most cases it should be faster and cheaper to re-negotiate an existing deal than it is to engage in a traditional competitive procurement. This approach allows a company to leverage the…
In Part 1, addressed managing and mitigating risks during the supplier selection process and in Part 2, I addressed the risks associated with contract negotiations. In this Part 3, I will discuss relationship management as a key component of successful outsourcings. Successful outsourcing requires effective contract management. While you can…
In Part 1 of Managing Risks in Outsourcing, I focused on managing and mitigating risks during the supplier selection process. I will now look at the risks associated with contract negotiations. If poorly planned and executed, the negotiation of an outsourcing contract can be a long, tiring and frustrating affair.…
Outsourcings can offer organizations significant commercial benefits but they also present challenges and risks throughout the outsourcing life-cycle for the outsourcing organization whether during the supplier selection process, in the course of contract negotiations, during the implementation and day to day operation of the outsourced services, and on exit from…
Suppliers of IT outsourcing services limit their responsibility for paying damages arising from the loss of customers’ sensitive data (whether or not intentionally lost by the supplier). Only a few years ago, it was commonplace in an IT outsourcing agreement for a supplier to agree to be responsible for any…
Once the ink is dry on a signed outsourcing contract, the real work begins for the customer and the service provider. Before the customer can start to realize any savings, efficiencies or service improvements, the parties must first complete the critical task of transitioning from the customer to the service…