Tag Archives: Outsourcing Contract

5 Tips for Rewriting Your Outsourcing Contract

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If the workers assigned to your project are not at the level you originally requested both verbally and in writing, or if your Service Level Agreement is not being fulfilled as agreed upon in terms of time and quality, it may be time to renegotiate your contract. Such factors should have been part of an initial verbal agreement and contract, but since only hindsight is perfect — renegotiate your contract now!

1) Are you getting the level of experience you asked for? If you discover, for example, a few weeks or months into an IT project, that you originally asked for a senior programmer (5+ years) and are being billed for such–but that the programmer you have been working with has only 3 years of experience and is extremely slow and inflexible, you want to obtain some kind of credit and better accountability going forward. Write it into the contract in more definitive language, and include what the penalty will be for such an oversight. You as a consumer have the right to get what you originally contracted for and were promised. Is a required training period being adhered to (in a call center campaign, for example)? Ask that a specific level of skill and work experience be documented as part of the contract. Since this request was not adhered to from the very beginning–although it was agreed upon–see if the company is willing to give you a credit or substantial discount, particularly if there have been problems that might not have occurred had you been assigned a more experienced programmer or worker. And–write that penalty or discount into the terms of the new contract.

2) Are you getting your money’s worth per hour? If the company is giving you less effort per hour than you know to be indicative of an hour’s work, find a way to put that in writing: build in an incentive for certain quality delivered on a certain schedule, and for work done in much fewer hours than you think is necessary–with good results, of course. Money (a bonus) is the best incentive, but a few companies have succeeded in creating effective incentives such as trips, restaurant dinners, or shopping sprees (see www.anyperk.com for ideas on how to do this in the U.S.; in a foreign country, ask managers what employees would like). By the way, incentives are better than penalties, but they work hand in hand as we discuss in “Motivating workers with bonuses or shortages

3) Forgot to include checkpoints and reviews? Add them this time: include periodic virtual (Skype or phone) meetings to let everyone know what is going well and what needs to improve. If you include in your contract this simple review process– and how often such checkpoints or reviews will occur– your needs and intentions will be clearer. Be sure to include wording that lists exactly what you will be looking for–for example, number of hours spent, specific tasks accomplished, concrete suggestions made by the project manager and workers, improvements made since the last checkpoint, and what procedures are yet to be perfected. Put it in writing. Then, the outsourcing company and its employees will know your expectations and respect your standards.

4) Are there liability issues not covered by a contract that is essentially unfavorable to you? For example, if code is broken (IT), or the query system does not work (IT), or certain calls made by a call center on your behalf cause problems and actually cause you to lose business, be sure the rewritten contract states all terms in your favor as well as the outsourcing company’s. The standard contract may limit the company’s liability. Make sure the final contract asks the company to take a good look at what its negligence might cost if your business suffers. If the company is not willing to take responsibility for certain errors…you pretty much know what will happen if the contract-makers do not change their attitude.

5) Last but not least…your contract should include what party will mediate the contract if things do not improve. Again, this should have been part of the original contract. With a professional mediation organization such as mediate.com with mediators in every country, you may do better than with an international law firm such as perkinscoie.com with offices in both the U.S. and the outsourcer’s country. Remember: You do not want to get to the point of litigation…but you do need to consider how the contract will be mediated or brought to suit if needed. Otherwise, your company looks foolish and lacks the power needed to control the level of work you are getting from the company in the first place. If they realize you are savvy about litigation with a company in their country and have laid out all the possibilities, many issues will be solved in a professional manner from the very beginning. By the way: one tip so obvious you are likely to overlook it is to make sure the contract is bilingual. That way, no one can claim that certain points were not clear. Get someone to check the foreign language contract against yours (English) and make sure the agreements are the same in both languages. How did we think of this? We know of a case where the contract was substantially different in Chinese than in English. The company’s written contract, created and signed by them, was actually in several ways a different contract than the English version a U.S. company signed.

Good luck making your contract perfect the second time around. If at first you don’t succeed– do it again–or prepare to find another company to outsource to.

You might also like:

International contracts to watch out for

Precontracts for outsourcing: before the real contract!

Pre-contracts for outsourcing: before the real contract!

Categories: Outsourcing Articles | Tagged , , , , | Leave a comment

Talking on the phone is a great way to find out what your new business associate is really concerned about (money? time? the level of skill of his workers? whether you are a good fit for his company?) If the other person won’t talk about the proposed terms of the contract or the person wants to talk only through an attorney or legal department, you already know you are on shaky ground. Ditto if you are not willing to talk on the phone!

1) Write down the details while you are talking with the representative from the other company, and ask him or her if you may send an email that summarizes your conversation. The other person will respond, and the two of you will already have gathered some of the details for the written contract. Remember, any understanding between parties must be written down in order to be enforceable … so when you have an understanding, write it down!

2) People tend to show their true colors in a second interview or a second meeting [http://bpo.123outsource.net/2013/09/02/the-2nd-interview-why-is-it-so-important/ ] Have a second conversation to hammer out more details you want in the outsourcing contract or call center contract. If you hear something that is a deal-breaker, tell the person you will get back to him. If all goes well, again, make notes and exchange emails. After two or three conversations, you should have the entire contract pretty much figured out.

3) If the written outsourcing contract comes back without these details, or with significant additions that ignore the meaning of your conversations…it’s not going to get better. The final written contract must reflect the spoken, agreed- upon details. Otherwise, you already have a problem.

IN SUM: If the other person is not willing to exchange a few emails with you–and if, after the first conversations, you simply get a reply with an attached contract drafted by a company attorney or legal department–your relationship is already questionable or meaningless. Sending a standard contract at this juncture is rude, and renders pointless the pleasant conversations that took place. The other person has just been humoring you–or, the legal department has more control over the company than the person you have been conversing with. These are sure signs that your relationship will be short-lived.

Better you find out now than after paying for services for an extended period of time! In sum, don’t continue in a relationship that is obviously not based on a real meeting of the minds and some effort on both sides. If someone is not listening or communicating at the beginning, signing a contract will not make the situation work. Walk away.