Outsourcing of technology-related services continues to grow. Many service engagements now include an offshore component. These overseas arrangements can reduce the cost of the business activity but they also present different issues for both parties, which need to be addressed in the agreement. Further, there is intense competition among service providers which leads to considerable pressure on pricing and on negotiating the other business and legal terms of the transaction. Many service providers may promise anything to get the deal. You need to try to avoid every deal being a “bet the company” deal. There will always be some risk-taking but the challenge is to balance risk allocation among the parties with the need to stand behind the quality of services. A provider’s credibility and business acumen is visible in its agreements and negotiation positions. A welldrafted and negotiated agreement can lead to a stronger long-term business relationship.

This paper addresses the key agreement provisions from the service provider’s vantage point and identifies the risks and consequences of such provisions. It highlights areas that a service provider should include in its standard agreements to speed up revenue generation and avoid problem situations.

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