Outsourcing deals are often long-term arrangements that span over periods of 10-15 years. It is not unusual to see personnel changes on both sides of the contract during the term of the deal, right up to the point where there is no-one left from the original deal team on either side. For many this might not sound like an issue – after all, knowledge transfer tends to be an ongoing exercise for both parties (including knowledge transfer on how to manage and interpret the contract). Unfortunately, when the original deal team has left, and this does happen, something valuable could . . . [more]

It is commonplace these days for parties to an IT contract to consider alternative dispute resolution (mediation or arbitration) as a means for resolving disputes. I have written on the topic of mediation in outsourcings, and concluded that it was useful in some outsourcings, but not all. At an engaging lunchtime seminar I attended the other day on ethics and professionalism issues arising in IT law, I had my thinking on this topic jolted by a turn in the discussion towards the use of subject matter experts by the court. One of the speakers, Don Johnston, pointed out that . . . [more]

Regardless of the function being outsourced (whether it is data centre networking services, business process outsourcing, call centre services, application development and programming), performing a detailed and thorough due diligence is the first step in cementing a successful and healthy relationship for both supplier and customer. The objectives of performing due diligence are to allow both parties to understand customer’s business requirements and objectives, to evaluate the supplier’s capabilities, to understand the cost components, to ascertain the risks to both parties, and to establish the level of cultural fit of both organizations. The extent to which the parties can minimize . . . [more]

My last column focussed on customer and service provider concerns that arise with various aspects of long term outsourcing relationships. I now want to discuss structuring specific provisions to take those concerns into account. This week’s posting will look at price adjustment provisions and the one to follow will discuss change management.

The price adjustment provisions of long term outsourcing arrangements need to respond to the concerns of the customer and the service provider. For the customer, these concerns are based on the worry that, after a few years, the customer will be paying too much for its outsourcing services: . . . [more]

The number of law firms to engage in legal process outsourcing (LPO) is still relatively low but is growing. In a recent survey by Legal Week, 15% of law firms said they use LPO services, with half believing that number would grow over the next year.

But while law firms weigh up their options, numerous corporations (including some of the largest global corporations) have clearly moved ahead by entering into their own LPO arrangements.

UK construction giant Carillion, employing 50,000 staff and with an annual revenue of around £5bn, has entered into a relationship with a UK LPO provider to . . . [more]

Cloud Computing

Cloud computing has grown significantly in the last few years. A Gartner Executive Program survey of more than 2,000 Chief Information Officers (CIOs), representing 50 countries and 38 industries, found that cloud computing is the number one technology priority for 2011. Fully 43% of the CIOs expected that a majority of their IT will be running “in the cloud” within four years.¹ In its updated June 2011 forecast of Information Technology spending, Gartner stated that cloud computing expenditures are likely to rise by 16-20% per year through 2015, representing 4% of global IT spending by the end . . . [more]

Imagine the 20/20 vision of hindsight, and consider the following:

1. The Importance of Innovation.

Key value propositions of any BPO are, put simply, better, faster and cheaper. However, there is an often overlooked, long term value proposition of a BPO – the ongoing strategic business improvements that vendors ought to provide throughout the term.

Outsourcing service providers typically focus on business solutions as they are challenged by clients to solve problems. Reaching the end of the long road of transition and transformation, navigating the many potholes along the way, service providers, and indeed clients, are content and even relieved . . . [more]

Gain-sharing, as a concept, appears to be falling out of favour in recent outsourcing transactions. Once considered an innovative concept for sharing saving made by the supplier of outsourcing services, it has proved unworkable, or forgettable, over the years. Gain-sharing clauses started appearing in outsourcing contracts at least as early as a decade ago. The principle is simple: if the supplier finds a way to save costs while providing the same service, it will share those savings with the customer.

Gain-sharing has a fundamental problem: the interests of the supplier and customer are not aligned. The customer is trying to . . . [more]

The Clock for the Long Now, a project of the Long Now Foundation, is intended to keep time accurately for 10,000 years. It was conceived by Danny Hillis in 1986 as a way of connecting us with future generations. Unable to predict what the world would look like in 10,000 years, but faced with the challenge of developing an object that would last that long, keep time accurately over the duration and be useful, the designers were forced to abandon short term thinking in favour of the long term. They had to deal with the most fundamental issues such as . . . [more]

[With special contribution by Jim Eckler]

In this article, I follow up on the statement made in my last column in which I said “I’d seek to bust the myth that what’s good for a vendor must be bad for a customer and vice versa.” In writing those words, what I had in mind was to explore a newly developing genre of outsourcing known as “Vested Outsourcing”^fn. To help with this undertaking, I’ve turned to the colleague who first introduced me to this outsourcing model – Jim Eckler, President of Eckler Associates and a leading expert in outsourcing . . . [more]

According to a survey conducted by the Outsourcing Centre, almost 50 percent of the ITO and HRO deals were renewed. Companies often instinctively renew outsourcing contracts, especially if the existing relationship has no major issues. While it may be tempting to renew the deal because negotiating a new deal requires both parties to invest significant energy, time and money, customer must decide whether or not renewal is the best option. Renewal is not always the right choice. 

The survey conducted by the Outsourcing Centre also shows that about 30 percent of the customers renewed the deals for a better pricing . . . [more]

Legal Process Outsourcing (LPO) continues to be the buzzword, in Canada, US and the UK. 

This month’s edition of The Canadian Bar Association’s National Magazine features LPO on its cover page and a six page article on the topic. The article is titled “Bangalore Calling” and showcases a Canadian perspective on LPO.

Legal Week announced last month that Balfour Beatty, the construction giant, is planning to press its law firms on the topic of legal process outsourcing. According to the global general counsel and company secretary Chris Vaughan:

We are at the start of a process to review