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What Makes a Good Outsourcing Contract

Jan 20, 2008
You made a deal with someone to complete a project for you. When you were talking, the requirements of the job were clear and the contractor said he understands fully what you wanted from him. However, after several weeks into the project, the kinds of job that the contractor gives you, as it turns out, is substandard and falls short of the requirements that you have agreed upon.

There are a lot of contractors in the IT outsourcing field that are like this. They say yes to every requirement you demand yet, they do not deliver. Even though, ideally, outsourcing can help you generate savings in your production, if it is not managed well, they can give you difficulties and might even shatter the whole project you have dreamed of.

To avoid this kind of scenario, you simply need to keep in mind that outsourcing is no different in providing and receiving service from different service providers. Hence, expectations need to be managed well and the deliverables from each party should be clear at the outset. Clear expectations before undertaking any kind of work related to the outsourcing contract is a crucial part of ensuring that the relationship will succeed.

In the first place, the organization outsourcing the services should be able to concretely establish the requirements of the job, the budget and the timeframe of its completion.

When such information is presented to the contractor, they should be able to make an assessment as to the duration of the project and how they are going to complete the project. This process of negotiation and talking back and forth should be coupled with information sharing and careful data gathering.

With such an investigation, the nitty-gritty details will be established leading to an understanding on the part of both parties regarding the details of the job.
There are several tips that should be followed in order for this process to succeed. For one, the result of the outsourcing and its value to the organization should be described fully. It would be much better if it were written down.

The goals and aims of outsourcing should also be described fully. Indicators of success for each goal and aim should be written down as well. The scope of the project should also be established. Through these parameters, both the organization and the contractor will learn whether the project is fully or partially outsourced.

The full impact of the outsourcing should be analyzed. Its impacts on the employees on the organization and their morale, their relationship with the outside provider and the communication between and among them and should be analyzed so that contingencies will be established. The resources available at the outset of the project should also be stipulated.

Furthermore, channels of communication should be established, together with an effective change management process. Without which, the organization will be dealing with a come-and-go approach to problems as they come.

Procedures for addressing grievances and complaints should also be in place. This will enable effective conflict resolution and management of the misunderstandings between the contractor and the organization. Finally, there should be effective documentation for the whole duration of the relationship.

Ensuring that contracts are followed may appear to be tough. However, this may be the only to ensure that contractors are responsible and accountable to the organization that they are providing services to.
About the Author
James Stinson is Owner and Founder of Global Sky Inc. He employs a team of 50 in a high quality call center facility based in the Philippines. For more info on outsourcing your project visit: http://www.global-sky.com
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