Executive Briefings

Watch Out for 'Gotchas' in Outsourcing Contracts Because They Are About More Than Price

Negotiating a good outsourcing agreement involves much more than just achieving the pricing you desire. As you go through the process, you will go through the normal "give and take" discussions as you work with your potential provider(s). However, it is important that you do not focus solely on pricing.

While reducing cost is typically the primary value proposition for outsourcing, you also want an outsourcing agreement that allows you to realize your immediate and long-term delivery needs, provides contract flexibility and ensures that you receive maximum value for the money you will be spending.  To meet those objectives, pay careful attention to the five so-called "gotchas."  These areas of the agreement, if not carefully structured, can drain value from your business case and decrease the probability of having a successful and sustainable outsourcing agreement.

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Keywords: Business Strategy Alignment, Legal, Govt. & Regulatory Issues, Supply Chain Security & Risk Mgmt, Supply Chain Analysis & Consulting, Global Supply Chain Management, dangers of outsourcing contracts, structuring outsourcing services contracts

While reducing cost is typically the primary value proposition for outsourcing, you also want an outsourcing agreement that allows you to realize your immediate and long-term delivery needs, provides contract flexibility and ensures that you receive maximum value for the money you will be spending.  To meet those objectives, pay careful attention to the five so-called "gotchas."  These areas of the agreement, if not carefully structured, can drain value from your business case and decrease the probability of having a successful and sustainable outsourcing agreement.

Read Full Article


Keywords: Business Strategy Alignment, Legal, Govt. & Regulatory Issues, Supply Chain Security & Risk Mgmt, Supply Chain Analysis & Consulting, Global Supply Chain Management, dangers of outsourcing contracts, structuring outsourcing services contracts