The customer
can’t contract
out of its
responsibilities.
Outsourcing
involves both
parties having
different but
interrelated
obligations and
responsibilities.
—David Skinner, Morrison & Foerster, London, England
Chile and Hungary—as well as a recently
established center in Morocco.
“It changes the game,” he explains.
“You’re no longer looking at supplier
risk, but at country risk. The supplier
straddles national boundaries.”
Having the ability to move work
around doesn’t necessarily ensure the
transition will be seamless, though. So
it’s best to negotiate the specifics of fallback arrangements well in advance, says
Chris Tiernan, managing partner of
Grosvenor Consultancy Services,
Twickenham, Middlesex, England.
One recent contract he consulted on,
for example, stipulated that in the event
of disruption, the Bangalore, India-based supplier would either move work
to another Indian location or temporarily relocate its developers to the United
Kingdom, where its customer was
based.
“Best practice is to get the rules and
prices for this into the original contract,
well in advance of any emergency happening,” Mr. Tiernan stresses. “That
way, you can’t be [held responsible] if
disruption occurs and there’s a need to
invoke the relocation clause.”
SEE FOR YOURSELF
Project managers can’t rely too heavily
on contracts as a form of risk mitigation.
The traditional approach of writing
tough contracts full of service-level
agreements and warranties—and then
suing in the event of a breach—has
given way to a new reality. Managing the
relationship and the contract is more
effective in rectifying poor performance
or missed business objectives, says David
Skinner, a London-based partner in the
outsourcing practice at international law
firm Morrison & Foerster.
“The customer can’t contract out of
its responsibilities. Outsourcing involves
both parties having different but interrelated obligations and responsibilities,”
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