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Outsourcing Contracts and Negotiations Getting More Complex


According to this article from CIO.com, 41% of outsourcing attorneys surveyed in 2012 indicated that the complexity of contracts has increased for outsourcing. As outsourcing becomes more reliable and expansive, the buyers send more complex processes out the door. Balancing the increased sophistication of outsourced work with legal documentation is explained by Stan LePeak, KPMG's director of research for advisory services:

The key is to make sure that the level of complexity in the legal documents is commensurate with the nature and goals of the outsourcing arrangement and not just the result of a once-burned buyer or overzealous counsel.

Typically, as services markets mature, best practices in contracting tend to cement themselves in the way of standardized pricing, performance assurance and””particularly””defined terms. However, 27 percent of the attorneys polled reported little or no standardization in defined terms, which LePeak says also points to the fact that while outsourcing is maturing, it's also been expanding into uncharted territory in terms of scope, objectives, and geography.

A major point mentioned in the article is making sure the complexity is up-front. Recognizing the complexity of the contract and the work being performed helps both sides understand what's expected and what's at stake.

About Richard Wood

Richard Wood has been the publisher of CAI's Accelerating IT Success newsletter since its inception in 2011. A Marketing Major at Cal Poly Pomona he has been working with Computer Aid since 2001. He can be reached at richard_wood@compaid.com

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