Declarations of Indepedence: 4 Tips for the 4th on How to Wind Down an Outsourcing--Without a Revolution

by Pillsbury Global Sourcing Practice
Contact

When in the course of commercial events, it becomes necessary for one client to dissolve the operational bonds that have connected it with its supplier, and to assume a new service delivery model. . .

As the outsourcing industry has matured, we have seen a greater incidence of clients looking to dissolve their outsourcing relationships. For some, this is the natural end of the relationship, for some, there is a change in strategy, and increasingly for some, there is dissatisfaction with the service being provided. Against this backdrop, we present four tips for a peaceful move to independence.

I. Read Your Agreement
A well-crafted outsourcing agreement will typically have contemplated the disengagement process for an outsourcing. To the extent each party understands the timelines and the rights (in particular rights to extend the expiration date and to receive transition assistance), much dispute can be avoided. If you understand what your contract provides and are able to develop your exit based on the rights provided in the contract, you will eliminate numerous battles and be able to focus on the path forward.

And while we are focused on exit rights, let this be a reminder that the negotiation of exit rights is often overlooked on the way in to an agreement. Ensuring continuity at the end is one of the most important contract elements you can be sure you will need. Unlike a marriage, one should not enter any outsourcing relationship without understanding and having confidence in an exit strategy. As you plan for the exit from your current relationship, it is a good time to focus on what is working and what is not so that you can use those learnings to optimize your successor relationship.

II. Plan (Ahead)
Once you understand your rights under your agreement, develop a plan that works within those rights. And always leave extra time--you will need it. Most transitions take longer than anticipated, and if you have a Damocles Sword of service disruption hanging, you will be forced to cut corners on both the transition activities and on establishing the new service delivery model.

III. Communicate with your Supplier
While a supplier may be disappointed to lose a client, most suppliers are generally trying to do the right thing by their clients. If you give your supplier ample notice, it can develop a plan with you to minimize stranded costs and optimize the transition. Even in a situation in which the supplier is financially responsible for stranded costs, if you help your supplier minimize those costs and align the exit to your timeline, your supplier will be much more inclined to work with you and will not be looking for other opportunities to slug you.

IV. Reputation Matters
Speaking of doing the right thing, suppliers operate in an environment where every action they take with you could affect their prospects for the next deal. This becomes a source of leverage for the customer trying to exit the relationship. No matter how disappointed the supplier is to lose a client, they also will not want a public display of bad behavior so that can be to the customer's benefit.

Of course, this also cuts both ways. If a customer behaves badly, it will develop a reputation in the industry and may have difficulty finding future partners and obtaining the best terms for its future initiatives.

Essentially, reputational risk can have a chilling effect on bad behavior for both parties. A savvy party can use this effectively to help keep the revolution down.

While ending an outsourcing relationship is never easy, regardless of the reason for the end, with understanding of each party's rights, proper planning, fair treatment, and a dose of reputational risk, it is possible to exit gracefully - with no fireworks!

Happy Fourth of July from SourcingSpeak.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Pillsbury Global Sourcing Practice | Attorney Advertising

Written by:

Pillsbury Global Sourcing Practice
Contact
more
less

Pillsbury Global Sourcing Practice on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.