The Dilemma of an Outsourced Service Provider

The Dilemma of an Outsourced Service Provider

Outsourced service providers have mushroomed all throughout the world to serve client companies mostly from the UK and the US who are likely to prefer outsourcing to Philippines for many and varied reasons. Outsourcing Philippines however is not spared from several issues confronting it.

Outsourced service providers are also known as managed service providers who tackles services fro another company. Tasks and services rendered here include IT services, remote data backups, desktop and security monitoring, and technical assistance and are provided via the internet. Outsource service providers also manage client company's web hosting and maintenance of their websites.

 Most companies choose an outsource service provider that can best cater to the needs of the company. Client companies have the option to select manage services provider. And as a business itself, these service providers need to answer several issues and considerations. This is to ensure that as an outsourced service provider, they are able to thrive sufficiently and keep themselves secure of a good and bright future.

Below are the issues and considerations outsourced service provider must take into account:

Issue:

Outsource agreements that are flexible to change its technology platform over time.

 
Consideration:

Ensure that you're able to change your technology as your business grows. Otherwise, a customer could require one set of technology even as you provide separate technology for other customers. This doesn't mean that you have to disappoint customers' requirements for service levels and technology refresh over time. But it should allow you to meet these requirements in flexible fashion.

Issue:

Freedom to use services offshore or use subcontractors as a cost-savings approach.

 Consideration:

To reduce costs, your outsourcing contract should provide that you may relocate services and work with subcontractors of your choosing. The customer will require you to negotiate appropriate confidentiality provisions and may attempt to assert other limitations on these rights. The key to securing this right is to guarantee clients seamless, high-quality service.

Issue:

Other measures service provider needs to have to keep costs under control.

 Consideration:

If a "cost-plus" deal isn't an option, alternatives include per-service fee increases. In this event, the contract should also let you process change requests through an orderly change-control procedure. If there are increased costs, you should have the right to come to agreement with the customer on additional charges. Also consider attempting to get the customer to agree to shoulder some of the burden of unanticipated cost spikes caused by the customer not following agreed-upon procedures.

To the extent that the customer's delays require you to sideline valuable resources, you should consider putting appropriate cost-containment provisions in the agreement. For example, if a customer delay forces your personnel to work overtime, the customer should pay for any increased wages. In addition, the contract can allow for cost-of-living increases if appropriate.

Issue:
Ownership/ proprietorship of the work service provider did or has developed on customer engagement.

Consideration:
Your outsourcing contract should clarify which party owns work performed rather than leave this matter open to question or later negotiation. Vagueness could lead to conflict later on. You and the client should clearly define ownership of the contracted work, whether it's software, business processes or other intellectual property developed over the course of the contract.

Issue:
Service provider's protection against piracy of its best employees.

 
Consideration:
Good talent is always in demand. Your outsourcing contract should reduce the likelihood that the customer will try to recruit your employees by having an appropriate nonsolicitation and nonhire clause.

Issue:
Modular outsourcing contract to be provided by the outsource service provider to its customers.

Consideration:
A master document that references concepts or attachments is suited to the ever-changing reality of an outsourcing. For example, the term of your contract should be a stated number of years or a month after any transition period is completed rather than a specific begin and end date. If your transition effort runs late, the length of time for service delivery is effectively pushed back so that a provider won't find his term shrinking. Contrast this with a more limited, specific date-driven contract that isn't flexible enough to recognize the manner in which project plans may change.