Niyamath Parveez

One of the hardest issues when it comes to outsourcing is the length of contracts and the way that markets can change over the length of a contract. What may have seemed a fantastic deal when the ink dried on the initial contract may be a terrible deal over the length of the deal. Few predicted that the market would suffer in such a manner that has occurred in recent years and it has led many firms to count the cost of the contracts that they thought was going to provide fortune and long term security. Even aspects like the fluctuating exchange rates have dramatically altered the end value of many deals and as more and more businesses are going under due to the financial stress they are under, a number of companies are looking to alter their deals.

Of course, when one firm is unhappy with a deal, it is likely that the other partner may be extremely happy and therefore have no great desire to alter the deal. This makes it tricky to reach an amicable solution for both parties and this is behind the major problems and areas of conflict between firms who are supposed to be in partnership with each other.

Many firms are now entering break clauses into their outsourcing contracts to ensure that if a change has to occur, the issues that will allow a breaking of the contract are laid out in black and white. This is fine for contracts going forward from now but if the outsourcing contract already exists, it is not easy to insert a break clause in the contract. Again, this can be it may be more beneficial for one partner to break from the other and there needs to be a balance for both parties.
Whenever there is a contractual dispute and parties are unable to reach an amicable agreement, it quite often follows that litigation is the answer that firms turn to. This can be very costly and timely, which will drain even further resources from both parties and will have a bigger chance of grounding an organization than the original contract probably did. This is why it should always be recommended for all parties to try to negotiate their way out of problems as much as possible before heading for lawyers and costly answers to their problems. In the heat of the moment, litigation may seem like the perfect solution to break you free from a damaging contract but if you consider the long term negative effects of doing so, not always related to finance, and there will be a good argument for looking at alternative solutions.

A firm can pick up a damaged reputation amongst other firms and in their overall industry if they are seen as one that regularly relies on lawyers to negotiate settlements and deals, which may result in fewer firms being willing to work with them. Therefore, being able to negotiate your way out of a contract may allow a greater opportunity to work with other firms at a later date.

Obtaining any contract or agreement to take over the outsourcing work for a firm is an important boost for any company. With the recession kicking in and new firms entering the outsourcing market every week, it can be tough to maintain a healthy business level. This should not be an issue for a number of firms who very recently announced new agreements that should see them operating successfully for a period of time to come. No one can genuinely say when the recession will end and long-term deals may eventually look to be of poor value if the market recovers strongly but with the future so uncertain, who can blame companies for grabbing any deal that comes their way.

One company who is definitely celebrating the opportunities afforded by outsourcing is CSC, who secured an outsourcing contract for the infrastructure work of the Xerox Corporation. The deal is said to last for seven years and will be worth a sum in excess of $100million. This is a fantastic deal and one that should see CSC is in a great financial position for the foreseeable future. Not only that but the kudos and respect that will come to them for working with a company like the Xerox Corporation will make them a far more attractive proposition for other firms looking for outsourcing firms. If you are a firm and you have a choice of outsourcing companies to choose from, having the pick of one who is viewed as a safe bet by the Xerox Corporation is likely to be very attractive. Therefore, CSC have not only benefited by grabbing this new contract, they have also managed to greatly improve their profile which could see them obtain a lot of work from other firms in the future.

Another firm who are experiencing some joy at the moment is Logica, who have secured a deal with the Finnish airline Finnair. This deal is reported to be a three year deal and will see Logica take control of the desktop and end-user capabilities for the airline. Logica have worked with the Finnish firm for a number of years already and this deal sees them tie up the partnership for another few years. The average age of desktop computers, especially in business, is a period of around three years so the length of this deal should tie in neatly with the expected lifetime of the computers that Logica will be servicing. If Logica provide a successful service, there is every opportunity they will get the chance to extend their service but at least this deal offers both firms the chance to review the agreement at an opportune moment. It is hoped that the market will be buoyant again in three years time and a more attractive deal may be brokered by the two companies.

It appears that on a weekly basis, outsourcing news is announced that shows many firms are reaping the benefits of outsourcing their work and the future of many companies are being guaranteed by this type of work. The lesson of the story is surely that if you want to safeguard your future, utilizing outsourcing is a commendable way to go.