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Are Your Outsourcing Contracts Secure Enough?
In the present economic conditions, offshore outsourcing has recently got a fresh lease of life. More businesses across are the world are trying to cut their budgets and find more cost effective solutions, and outsourcing work to offshore service providers can offer significant cost cuttings.
Offshore outsourcing is an efficient business model that can provide immense benefits for both clients and service providers. Because both the parties get to have a fair share of profit, it's a win-win situation at both ends.
However, in order to make sure your outsourcing endeavor is successful, you need to be extra careful in maintaining proper security throughout the project. Apart from market conditions, social and political conditions of offshore countries can have an effect on the outsourcing project as well. You need to be prepared for any unforeseen circumstances, and be able to handle any kind of potential threat. This is why it is important to have an outsourcing contract with proper protection.
Here are some points that your outsourcing contract needs to address so that you can ensure a secure and seamless outsourcing relationship:
Revision of Clauses
The outsourcing contract should enable you to revise the clauses. For example, the "Force Majeure" is the prime clause that protects the outsourcing deal against any unforeseen mishap or disaster. This clause releases both the client and the service provider from all liabilities in case of any unforeseen and uncontrollable event, such as natural disasters, or situations like terrorist attacks, etc. Having this clause means that you as a client need not worry about damage that may occur by natural disaster.
Review the Termination Policies
Even though you may have a very sound relationship with your service provider, it's important to be prepared for the worst. In case you need to end the contract, the process should be easy and seamless. This means that the right termination provisions need to be included in the contract. These should enable you as a client to respond to any changing conditions of the service provider.You'll also be able to address the issue of any unforeseen threats that may occur.
Provisions for Change of Ownership
This provision should deal with all the events of acquisitions and break-ups, and also address the change of ownership in these sort of situations.
Ownership of Deliverables
The outsourcing contract should clearly state the ownership of the product, or deliverables. For example, some service providers still retain the ownership of their products (website designs, software, etc.) while the clients are free to use it. Make sure you mention the ownership rights in the contract if you need to claim the product.
Terms & Conditions
The terms and conditions should be addressed in detail in the outsourcing contract, with a prime focus on your concerns in this area. It's important to address clauses like transition out requirements, audit provisions, and termination costs.
Get Professional Advice
You're best to take the advice of an experienced professional or legal executive to draft your outsourcing contract. This ensures that you've addressed all the crucial points relevant to your business and the kind of processes that you need to outsource.
Maneet Puri is the owner-director of LeXolution IT Services, a reputed IT outsourcing firm in India. He has been involved with outsourcing Knowledge Process Outsourcing services for over 10 years of his career and understands client requirement very well. He also help clients draft efficient outsourcing contracts that deliver the best results.
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