Outsourcing Contracts document the Terms and Conditions usually between a Customer and an external Vendor. Often a Contract or Agreement is also required when a Shared Service function is established within an organization. An Outsourcing Contract can also been called a Managed Services Contract, Managed Services Agreement, Outsourcing Agreement, Master Services Agreement, MSA, or a Services Agreement.
There can be many styles to Vendor contracts in particular. The style of contract usually depends very heavily on the type of Vendor you are dealing with. Broadly speaking, our view is that there are two profiles for Outsourcing Vendors - those that use a Vendor orientated Contract where services are strictly governed by the contract and - those Vendors that are reasonably flexible and see the Contract as a partnership between the 2 organizations. These two types of Vendor will have different ways of structuring their Outsourcing Contracts. In this Outsourcing Contract category Consulting Cloud offers samples of a number of different types of Outsourcing Contract. The category also contains sample Contracts for Shared Service functions. These contracts can be used for either comparison against a vendor contract or can be the basis for a customer contract. Where you are dealing with a Vendor orientated Contract you must ensure that everything is clearly understood, in particular you need to understand the cost of change e.g. when there is a need to do something quicker than is stated in the Contract or you need some extra work performed that is not in the Contract. This is often where people get caught out. This type of Vendor is usually more suited to large multi-national organizations. If however you are dealing with a more flexible Outsourcing Vendor, the Contract would typically be put in the bottom draw only to be accessed when an extension or major change to the Outsourcing service is required. If you use one of the Outsourcing Contracts on Consulting Cloud's website it will give you something to compare to. Also don't be afraid to say to the Vendor that you want to use your own Contract.
An excerpt from CIO Search
Never use a vendor template when you draw up an IT outsourcing contract. "They're inherently slanted toward the vendor, and it's going to take a lot to modify it," said Helen Huntley, a research vice president and IT outsourcing analyst at Gartner Inc., a Stamford, Conn.-based consultancy. Instead, look to your own legal team, and don't be afraid to turn to a third-party firm for direction. "[IT organizations] are going head to head with masters of negotiation," she said. "If they don't have a team with the same capability [in] understanding maturity about negotiations, they are not going to be as strong at the table."
Take a hard look at your own procurement department before you entrust them with your IT outsourcing negotiations. Some procurement departments are very focused on cost, but that's not necessarily the most important aspect of an IT outsourcing deal. "In outsourcing, you could be buying something more service-related and relationship-driven -- it's different than buying printers," Huntley said.
Enterprises should consider a few main factors from the get-go, said Tom Lang, a partner and managing director at TPI, a global sourcing advisory firm based in Houston.
"We always say, there are three legs on a stool: price, productivity factor and SLAs," Lang said, calling pricing "the most complicated area of these deals." Pricing algorithms
, for example, are quite complex, and can be based on the number of quality, full-time employees devoted to a deal; the workload output; or other factors. As for productivity, it's important to measure your own organization's productivity levels before both parties can agree on the service levels the outsourcer is expected to maintain.
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