Let’s agree on success

Obviously a brief review such as this cannot do justice to all the issues which arise with outsourcing contracts. Instead, we’ll be concentrating on two key aspects: the objectives of the contract, and supervising their implementation. Not included here are areas such as methods of agreeing remuneration, contractual liabilities and ensuring confidentiality.

 A real partner

It is exceptionally difficult to compile the list of tasks required. In particular when these services were initially performed in-house and there was no need for a detailed itemization of the activities involved. That is why this job should be given to people intimately acquainted with the process in question and capable of writing out the steps in painstaking detail. You may also wish to use historical data and research into client expectations for the purpose, documenting and specifying the required quality and level of services to be rendered – this would then constitute the basis for defining the expectations. Often, the service provider will itself propose the scope of services required, but such a proposal must be subjected to critical analyses by the client, since client requirements frequently go beyond the standard specified by the contractor.

and in a year’s time

One of the characteristic features of outsourcing is that it tends to lead to a long-term relationship, but the parties involved are often unable to foresee at the time of signing the contract the need to make future modifications to the services. Consequently, it is worthwhile inserting clauses which facilitate a flexible approach to making essential changes later on. This will help avoid situations arising in which contractors could try to exploit their monopolistic-style position of power. For example, the owner of a shopping mall which has signed a contract with a refurbishment firm may want at a later stage to increase the frequency with which the property is repainted, due to escalating pressure from his lessees, and the outsourcing company demands an unreasonably high price. The appropriate contractual provisions Trust plus control

Outsourcing means letting go of direct control over the performance of a given service. That is why an outsourcing contract should anticipate control and monitoring methods. Moreover, for the client it is exceptionally important to measure the effects of outsourcing since this will allow for a true assessment of the entire outsourcing process as a strategic decision.  Measurement will facilitate analyses of the restructuring steps taken up to that date, which are frequently of key significance to the activities of the business. Typically, contractors have to submit regular reports and the client makes control visits. Another useful tool (though less popular) is that of periodic client response surveys (‘clients’ meaning the recipients of allotted services) or benchmarking, which compares the effects of cooperation against similar services rendered to similar firms. With regard to reporting methods, the contract should specify the scope and essential content of the reports, the frequency of submission, and the base data and documents for preparing the reports. With the inspection method (or audit), in addition to the scope and timetable of control, the type of documents and information that should be made available to the auditor on demand should be set out in the contract. Only rarely do contracts include clauses allowing for ad hoc ‘covert’ control visits, though they may occur with contracts of greater significance and most often when the parties find themselves on an unequal footing in terms of economic power. Controls of this type, for obvious reasons, undermine mutual trust, which never has beneficial effects on relations between partners. Additionally a guarantee of a kind (e.g. with advisory services) could be secured by an obligation to allocate professionals – specified by name – whose very participation in a given project would assure the proper performance of a given task.

      z Agata Jurek-Zbrojska

Attorney

Kancelaria Prawnicza Sp. k.