Step-in to the Real World? (How to Ensure That Your Outsourcing Step-in Rights are Effective and Enforceable)

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Outsourcing service providers frequently complain that customers demand rights and remedies which are simply unrealistic given the nature of the services. A prime example is when a customer insists that its outsourcing contract include broad “step-in” rights that allow the customer to take over service delivery if there is a service failure (or even an imminent risk of a service failure). In our experience, step-in rights are an area where a healthy dose of realism would benefit negotiations and result in a better contract.

Over recent years, step-in rights have become a standard remedy in outsourcing deals (particularly, in regulated industries such as financial services). However, all too often, step-in rights are treated as boilerplate or included in contracts as part of a box-checking exercise, with little consideration of what is actually practical. Meanwhile, technology solutions and service delivery models have changed dramatically, leaving traditional step-in approaches out-of-date.

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