ARTICLE
21 December 2020

Think Twice Before Signing An Outsourcing Agreement!

FL
Foley & Lardner

Contributor

Foley & Lardner LLP looks beyond the law to focus on the constantly evolving demands facing our clients and their industries. With over 1,100 lawyers in 24 offices across the United States, Mexico, Europe and Asia, Foley approaches client service by first understanding our clients’ priorities, objectives and challenges. We work hard to understand our clients’ issues and forge long-term relationships with them to help achieve successful outcomes and solve their legal issues through practical business advice and cutting-edge legal insight. Our clients view us as trusted business advisors because we understand that great legal service is only valuable if it is relevant, practical and beneficial to their businesses.
CIO.com reported that "One of the biggest mistakes an IT organization can make when outsourcing is failing to consider the total cost of the relationship
United States Technology

CIO.com reported that "One of the biggest mistakes an IT organization can make when outsourcing is failing to consider the total cost of the relationship - including all the hidden costs that are likely to accrue."  The September 30, 2020 article entitled "The hidden costs of outsourcing" included these comments from Daniel Masur (at Mayer Brown) about #15 Regulatory requirements:

The global proliferation of privacy and cybersecurity legislation creates challenges for all companies,..., but an outsourcing provider's service delivery solution can exacerbate a company's compliance challenges when the provider processes or stores its data in new or different geographies.

An outsourcing customer must pay close attention to whether the proposed service delivery solution will require it to incur the cost of complying with privacy or cybersecurity requirements it would not otherwise be subject to or expose it to potential liability in such jurisdictions,...

Here are all 16 issues that may lead to increased costs:

  1. Unanticipated disruption
  2. Organizational change management
  3. Unnecessary change orders
  4. Lax demand management
  5. Consulting creep
  6. Insufficient governance
  7. Third-party risk
  8. Failure to innovate
  9. Aspirational services
  10. Retooling for intelligent automation
  11. Knowledge loss
  12. Duplication of work
  13. Employee disengagement
  14. Provider integration
  15. Regulatory requirements
  16. Bubble costs

What has your experience been in outsourcing?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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