New Contract Terms For Outsourcing Deals

A number of recent events involving vendor instability and geopolitical risk are underscoring requirements for tight contractual protections on the part of outsourcing clients. In the wake of events such as the admission of fraud by Satyam's CEO and recent terrorist attacks, clients have been forced to consider whether they really enjoy the protections they thought they had already established contractually with their providers. In revisiting the suitability of contractual protections, sourcing teams also should revisit existing approaches — as one sourcing and vendor management professional put it, "reaffirm what we should have been doing all along" — as well as adopt new strategies for emerging threats. Forestalling every conceivable threat is an impossible goal. Rather, the purpose should be to adopt prudent practices that anticipate as much as possible and protect the enterprise against unforeseen events.