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7 Ways to Resolve IT Outsourcing Disputes Before They Happen

Contractual ambiguity, missed service levels, and changes in objectives, technology, or market conditions are just some of the ways that outsourcing disagreements can arise. No matter how meticulous you are about drafting your contracts, points of conflict are going to arise. But an article at CIO Asia provides seven ways to ensure these conflicts are as quick and painless as possible.

Alleviation in Advance

  1. Negotiate a clear, comprehensive outsourcing contract.
  2. Define a customized dispute resolution process.
  3. Create leverage.
  4. Put it all in writing.
  5. Collect and redeem IOUs.
  6. Maintain clear delegation of authority.
  7. Include an accelerated dispute resolution clause.

The importance of explicitly writing out a comprehensive contract requires little elaboration. But one thing you might do in haste is yield to using “cookie cutter” resolution processes offered by others during disputes, when what you should do is customize the process to the business with whom you are dealing. Creating leverage meanwhile has to do with building options for yourself in the event of a dispute, such as reserving the right to use other providers on existing and new services, or even having the right to terminate personnel.

About IOUs, this is said:

An outsourcing deal isn’t done when the ink is dry; negotiations are ongoing. Concessions are bound to occur, but such cooperation needs to be a two-way street. “Think of the outsourcing relationship as ongoing barter,” [Daniel Masur of law firm Mayer Brown] recommends. “There are things the customer needs or wants that aren’t built into the contract, and things the supplier wants or needs.” Masur suggests creating nonbinding IOUs when granting concessions. When you have a need, cash one in. [source]

For building an accelerated dispute resolution clause, customers can agree to pay a specified percentage of the provider’s bill when a defined period of time has passed without customer and provider agreeing on a new scope of work. The rest of the payment can then be made once a resolution on scope has finally been achieved.

Read the original article summary in AITS here>>

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