Outsourcing is a key strategic decision for businesses which allows the principal business to focus on its core business activities while benefitting from the cost efficiencies of the outsourcer.
Here at Reilly & Co, Solicitors we have dealt with many outsourcing agreements and are familiar with the challenges that present themselves from the sensitivity of dealing with employees, to achieving the most from technology, from cultural teething problems and to drafting and dealing with the contractual agreement that binds it all together.
Once the decision has been taken to outsource and a suitable provider has been chosen the focus should be on the contract that will represent the living relationship between the parties. In our experience one of the key factors in choosing an outsourcing partner is cost, and we would advise not making a choice of provider based on cost along. There has to be the understanding and an appreciation on both sides that that outsourcing is usually a long term decision (normally at least 3 to 5 years) and if the client is constantly seeking to drive down costs then the outsourcer will normally provide the savings but reduce the level of the service in return! In our experience the outsourcer cannot be made to feel that they are not getting anything from the relationship or are being valued and equally, the client cannot be made to feel that they are paying too much for not enough! In in order to avoid this downward spiral the right fit must be found between the client and the outsourcer so that each side can quickly learn to work with each other in order to cause the least disruption to the work of the client.
The contract itself must have the obligations of each side set out simply and clearly and there must be flexibility built into it to deal with change within the provision of the services and to also deal with technology and other efficiencies being used to do the work more efficiently but to then also reward the outsourcer for the same – after all, and in reality, why would the outsourcer bother finding savings otherwise? One of the challenges is to get the right balance between the amount of money being paid and the level of the services being provided (stick and carrot) whilst still keeping a wary eye on what might happen two or three years down the road when different or further services may (or may not) be required and to have a proper exit plan in mind when it is time to part company.
We have acted many times for both the client and the outsourcer in both the private and the public sector and appreciate the concerns on both sides and know how to help you get the agreement across the line whilst preserving and indeed, improving the business relationship between the parties – if you wish to discuss any of the above please call us for a no obligation chat on 023 99 21919 or on 086 252 9483.