Worldwide: An Overview Of The ISO Guidance On Outsourcing

Last Updated: 5 May 2015
Article by Pearse Ryan
Most Read Contributor in Ireland, December 2017


On 31 October 2014, the International Organization for Standardization ("ISO") published the first international standard for outsourcing, ISO: 375000: Guidance on Outsourcing (the "Standard").1 The Standard seeks to provide a comprehensive guide to the outsourcing process, regardless of the size of the transaction, the industry sector or the activities to be outsourced. The Standard provides guidance on the phases of an outsourcing project, the processes that organisations need to implement and the governance that is required for an outsourcing transaction to be successful.

The Standard is the final product of a process instigated by a request from the national standards authorities of the Netherlands and Switzerland in 2010. In 2011, an ISO Technical Committee was formed and received input from the standards bodies of 13 countries.2 The Technical Committee also received input from buyers, service providers, outsourcing advisors and academics over the four years of the Standard's development. A draft standard was published in 2013 and a final version was agreed in October 2014.

ISO standards are not legally binding but are important statements of industry specific best practice, which suppliers and customers alike are likely to make reference to, both in their general business conduct and in their contractual arrangements with customers and suppliers.


The Standard covers the main phases, processes and governance aspects of outsourcing as a proposed potential 'one size fits all' reference model across all industry sectors. In addition, the processes are intended to be tailored to fit the specific outsourcing strategy and maturity of the particular customer and provider. The Standard starts with the precondition that a customer organisation has already established a sourcing strategy and concluded that there is a beneficial business case for outsourcing. The decision to continue or terminate outsourcing as a strategy option is outside the scope of the Standard and is based on the continuing validity of the particular business case at hand.

The Standard aims to provide a common vocabulary for stakeholders with which to interact and plan the outsourcing process and represents a useful toolkit for the governance of outsourcing throughout its life cycle.

Intended for transnational and horizontal application across industry, the Standard is principles-based and therefore does not enumerate specific legal or regulatory compliance issues that may arise during the outsourcing process. It nevertheless provides an effective business planning framework that should help stakeholders and their advisors to anticipate the compliance issues likely to arise on a case-by-case basis.


The Standard is structured around the four phases of the "outsourcing life cycle" with an emphasis on effective governance practices throughout. These four phases are:

  • outsourcing strategy analysis,
  • initiation and selection,
  • transition, and
  • value delivery.

The Standard focuses primarily on general principles of governance and supplements them with arrangements intended to facilitate the identification of risk at each phase, while preserving the flexibility required for outsourcing material arrangements. The main steps of each process of the Standard focus on the building and maintenance of relationships between the customer and the provider through, for example, the establishment of a joint mission statement and elaborating an outsourcing roadmap with key milestones and success criteria. Each phase contains processes to address its purpose, the main activities to be performed, key success factors and the main inputs and outputs.

The Standard includes a number of useful checklists of issues to illustrate the topics the customer and provider should consider in dealing with specific processes or steps. We discuss the four phases of the outsourcing life cycle below.


The first phase of the outsourcing life cycle is outsourcing strategy analysis. According to the Standard, the purpose of this phase is to "initiate and evaluate outsourcing opportunities and establish and maintain an outsourcing strategy that meets business goals and requirements." This phase is, by nature, predominantly customer-based and aims to enable a customer to assess the value and feasibility of available outsourcing options.

In terms of governance, the Standard suggests that a customer-based governance committee should be established to oversee the entire strategy analysis on the basis of agreed terms of reference and in accordance with a project timetable. Such terms of reference should include consultation with internal and external stakeholders, together with consideration to the integrity of the business case for sourcing and mechanisms for protecting investments made in sourcing options.

Matters to be assessed at this stage include checking whether outsourcing prerequisites are in place, such as up to date business strategies and appropriate approval by senior management. The services eligible for outsourcing are assessed in terms of their scope and strategic importance, underlying service elements (and whether these can feasibly be detached from the organisation) and identifying relevant resources and assets, including personnel, intellectual property, data, hardware, etc. Organisational impact is also considered at this stage, resulting in a detailed impact analysis report addressing benefits, risks, costs, constraints and other impacted factors, with expected best, worst and most likely cases.

An outsourcing strategy is then shaped around the outcomes of these steps, enumerating the chosen goals, model and approach to be taken by the organisation, including the type of relationship it wishes to have with its chosen provider. Selection criteria and high level execution plans can also be prepared at this stage. The crux of the first phase is a decision on whether to proceed with outsourcing by way of the mandated strategy and, where relevant, setting up an outsourcing project.


The purpose of the second phase is to specify the exact requirements for outsourcing, select adequate providers and successfully set up outsourcing agreements. This phase involves drawing up the required services in detail to include the forecasting of future service levels. The outsourcing model to be adopted is also fleshed out in more detail, including governance, performance management, commercial arrangements, transitional issues and business continuity.

Draft outline agreements are also to be produced at this stage, including consultation with legal, tax and other advisors. Potential providers are to be identified based on defined selection criteria and in accordance with any relevant procurement regulations, culminating in a shortlist of providers with whom the outline agreements may be discussed. The final step in the second phase is to negotiate and establish an agreement with one or more preferred providers.

In terms of governance, the Standard suggests that a governing committee internal to the customer should oversee the entire phase, end to end. Internal to the provider, a governance committee should ensure compliance with customer selection processes and incorporating appropriate internal expertise to ensure the value of its proposition is clear. The Standard recommends that, where possible, the customer and provider should collaborate directly during this phase to maximise the effectiveness of later phases for both parties.


The third phase enables the migration of service delivery from the customer or an incumbent provider to the new provider. The Standard recommends that the active participation of the customer in collaborative planning is essential for the success of this phase.

The Standard focuses on governance during this phase in particular. It emphasises the importance of robust management of all projects and programmes during this critical period in order to mitigate against service disruption and to ensure the adequate resourcing of services for the duration of the transfer. The Standard suggests that this phase should be governed by a formal transition management committee jointly staffed by customer and provider and recommends that changes in key resources are kept to a minimum, at least across phases 3 and 4, to ensure that the necessary knowledge and experience is continuously available.

Aside from the governance aspects, the phase comprises refining a delivery framework and executing the transition of knowledge, people and technology as necessary. Risk, audit and compliance functions are allocated and service delivery is tested and finally handed over. The phase comes to an end when delivery capability is confirmed according to agreed specifications, with the official transfer of responsibilities to the provider initiated after key stakeholders have reviewed performance test results and given final sign-off. The Standard recommends that the business case should be updated at this stage and the performance level obtained used as a baseline for evaluation purposes.


The purpose of this final phase is to realise the benefits of the outsourcing arrangement for both parties and to ensure consistent performance and adherence to commitments. This phase is ongoing and ends only when the relationship between the customer and provider is terminated. It consists of service delivery, monitoring and review of service performance, the management of finances and relationships, and the ability to resolve any issues arising. It also incorporates preparation for the continuation or end of an agreement, an aspect of the outsourcing relationship, which the Standard states, is frequently underestimated, imposing risks for both customer and provider.

The Standard states that jointly staffed committees continue to play a key role in providing supervision and control through formal and regular management mechanisms. These facilitate the making of effective service related decisions and development of a trust-based relationship between customer and provider. Depending on the scope of the outsourcing project and relevant compliance requirements, it is expected that a joint committee would feed into the work of specific internal governance committees such as audit, risk and strategy.


The Standard is designed to function as a guide for any organisation either considering its sourcing arrangements for the first time or seeking to improve on previous experience and current practices. This is a lofty goal and, as a 'one size fits all' document for organisations of all sizes, shapes and colours, the Standard generally fulfils its purpose as an adaptable step-by-step guide to best practice. A document with as wide an audience as envisioned by the Standard will naturally have its limitations, speaking no doubt in too much or too little detail for certain organisations. There are a wealth of factors that may be crucial in the outsourcing relationship, such as public procurement issues, which will need to be addressed at the very outset of the "outsourcing lifecycle" and may not be immediately apparent from the Standard itself, given its horizontal application. Advice should be sought at an early stage before significant resources are invested in the outsourcing process. Nevertheless, the Standard certainly provides a roadmap that, if managed from the outset, should help to flag avoidable pitfalls and provide a common language on the basis of which customers and providers can engage, particularly when the international nature of many outsourcing relationships is taken into account.


1 Available for purchase at

2 Bulgaria, Canada, Denmark, Finland, France, Germany, India, Malaysia, Netherlands, Russian Federation, South Korea, Spain and the United Kingdom

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions