BPO / Outsourcing legal tips

Outsourcing involves a transfer of ownership of a function that may, in and of itself, cripple the Client if it is not executed properly, if the Vendor is lax in its delivery of the service or if the Vendor simply walks off the job.

This is very different from buying a service (i.e. “contracting out”) where the company retains control and ownership of the assets used to perform that function. If things don’t work out, the Client can usually substitute a new contractor quickly without great damage to the company. Consider the situation where the Client has outsourced its data centre from an on-site location using proprietary assets to an off-site facility (sometimes very far away) using Vendor-owned assets and Vendor-licensed software.

If the Client has made a mistake in its choice of Vendor, it will be very expensive to unwind the transaction – assuming the best case scenario of a solvent Vendor.