Setting up the outsource deal

  • A2 will work with you to manage effective procurement, evaluation and selection processes to choose the right partner(s).
  • A2 will work with you to support effective negotiations with the chosen supplier and provide independent contract legal advice to design the right service on the right terms.
  • A2 will work with you to ensure the objectives of the client and outsourcer are aligned and help design incentives to support this alignment.
  • A2 will work with you to manage a smooth transition to the outsourced service including effective management of HR issues such as transfer of staff and their employment terms.

Choosing the right supplier

Rigorous processes are needed to assess potential partners’ strategic fit, financial strength and ability to deliver. This works both ways. Prospective customers of outsourced services need to assess potential suppliers and select the one that offers the best fit with the requirements. But equally, outsourced service providers need to carry out thorough due diligence work to understand the full needs and aspirations of the customer and the scale of investment likely to be needed to make the deal a success.

Designing the right service and deal

Both customer and outsource provider need a thorough understanding of the service requirements and benefits to be derived from the arrangement. The service specification needs to be clearly set out, understood and agreed by both parties. Effective negotiation on terms and charges is important at this stage. A fair and enforceable contract also needs to be put together and this requires sound legal advice, although the contract is only part of the picture – building the relationship and aligning interests are equally important.

Alignment of interests and incentives

For an outsourcing deal to be successful the objectives and interests of the client and the outsourcer must be aligned. Incentives and performance measures must be designed to support this alignment. Relationship governance is a key factor in maintaining alignment between outsourcing client and provider. This means setting up the right structures, relationships and communication channels between the two organisations, for example, representation on board and executive committees, or joint working on strategy, programmes and risk management.

Managing the transition

The transition to the outsourced service, or from one provider to another, is a key stage and requires careful planning and management. Outsourcing frequently involves the transfer of large numbers of both permanent and temporary staff from employment in the customer organisation to that of the outsourced service provider. Sound legal and HR advice, as well as current legislation knowledge, are needed to manage the total transfer effectively and smoothly. Effective communications with staff are also essential as such change is often highly emotive and issues such as standardisation of employment terms can be contentious.

Here our expertise, including specialist HR, and legal advice, can help you succeed.