How to Renegotiate Outsourcing Contracts
Supply Chain Management Review staff -- Supply Chain Management Review, 1/11/2007
Outsourcing engagements are complex, and many companies are finding that the outsourcing contracts that they created 5-10 years ago are no longer appropriate. Furthermore these older contracts are frequently too rigid to accommodate constantly changing market conditions.
Renegotiating your outsourcing contract does not need to be painful, insists EquaTerra Sourcing Advisors. As part of its "Insource, outsource or offshore. Be sure" resource pack, the consultancy has a brochure that walks companies through the first key considerations of the process. According to "Renegotiating Your Outsourcing Contract: Executive Point of View" by Mark H. Robinson and Stan Lepeak, the renegotiation should be presented as an opportunity to create a more flexible agreement that is better aligned with both the service provider’s and the customer’s best interests.
The authors recommend being proactive, fully understanding the organization’s needs for the new contract, and creating a team with a broad enterprise perspective. They also walk readers through questions to consider in preparation for the renegotiation, such as:
· What are the organization’s current and future business requirements?
· How does the current contract meet those requirements?
· What current and emerging market practices affect the contract’s services, and how effective is the current contract at adapting to them?
The firm is also holding a complimentary roundtable discussion on "Is Your Outsourcing Contract Ready for a Tune-up?" in New York City on Feb. 28.
View All Blogs
