There are different forms of outsourcing agreements but generally the term outsourcing refers to a situation where a business service or function is outsourced by a customer to a supplier who performs the service for the customer using the supplier’s staff.
Some of the very many Issues to be considered when entering into an outsoucing agreement include: identifying the service to be outsourced; the intended objective; the nature, level and quality of the service required; responsibility for provision of the equipment and resources required; arrangements in relation to any intellectual property rights involved; provisions for making changes to the service; the duration of the agreement and exit arrangements.
Arrangements in relation to staffing and the provisions for termination are very important and the effects of TUPE in particular will need to be considered and addressed.
The methods of pricing the service and for adjusting the price are also key issues. Cost reduction mechanisms, profit sharing and value for money benchmarking may also be involved.
Customers will want to protect themselves against a number of risks but the supplier will also be concerned about risk allocation and likely to want to ensure that all risks it is required to bear are covered in the price of the service.
Outsourcing agreements require close collaboration and involve a long term working relationship so often it can be in the interests of the parties and their advisors to have realistic expectations when negotiating the many points which need to be balanced in agreements of this nature.
If you are considering setting up or enterington into an outsourcing agreement, please contact our commercial lawyers on 08081668827.
Disclaimer:
Information on this website is provided for general information purposes only. It is not intended to constitute and should not be relied upon as legal advice. There are a number of factors and circumstances which may be relevant to legal advice. The law may also have changed before we are able to update the information on this website. If legal advice is required, please contact us on 08081668827.
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