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.