Morrison & Foerster White Paper: Outsourcing in 2008

The October 2007 Outsourcing Institute Roadshow in New York, was hosted by the law firm, Morrison & Foerster. During a panel discussion on cross-border and global sourcing transactions, "Going from Good to Great on Cross-Border Deals," a panel of Morrison & Foerster attorneys from the United States, Europe, and Asia (including John Delaney, Vivian Hanson, David Skinner, and Nigel Stamp) described a trend toward an expansion of offshoring to Asia, and predicted that Europe is becoming an engine for outsourcing growth. For the most part, these trends have developed over the course of 2007 and, in our view, will continue to develop in 2008, implicating a number of key issues requiring intelligent and informed legal decision-making. Continue reading...

Business Transformation Outsourcing: Lessons Learned

Over the past several years, a number of prominent vendors have been encouraging businesses to consider a new form of outsourcing known as Business Transformation Outsourcing ("BTO"). In a BTO project, the customer retains the business unit (e.g., the IT or Human Resources Department) and its employees and engages a vendor to improve the subject business unit ("SBU") by leveraging the knowledge, experience and capabilities of the vendor. BTO is a response to the recognition that not all operations can be outsourced successfully; instead, a company must retain and improve certain functions to remain competitive. Continue reading...

When Your IP Is Far Away

Intellectual property and offshoring are two great things that go great together. The portability and repeatability of intellectual property assets—think, especially, computer software—make them practical for outsourcing arrangements, either domestically or abroad. But portability and repeatability also create some unique risks to preserving intellectual property’s value. IP assets are all too easy to “share” with unauthorized users. And that’s why so many people these days are concerned about sending or creating IP assets “away from home.” Often, the savings of outsourcing are worth the IP risks. (Originally published in the Legal Times). Continue reading...

Alternatives to "Scorched Earth"

The ritual has become all too familiar - like a weird mating dance.
A major company decides to outsource. It engages seasoned consultants and attorneys, armed with forms, templates and processes galore. They conduct an assessment, construct a “base case” budget, then issue a request for proposals, complete with the latest, most stringent terms known to the attorneys. After bidders’ conferences, sales presentations and other rituals, proposals are submitted, scrutinized and discussed; until one or two finalists are selected for the final “death march” toward signature documents. Few prisoners are taken (although some participants taken from their day jobs for months at a time may think they have been held hostage). Continue reading...

Remediation and Relaunch: Putting an Outsourcing Deal Back on Track

You've read the many and varied statistics about the numbers of outsourcing deals that fail, have to be renegotiated, or simply leave the customers dissatisfied and the providers losing money. We won’t repeat them here, but suffice it to say that while it is not all bad news and outsourcing will continue to be a standard tool in management’s repertoire, there are enough problems with these relationships and it is hard enough to get them back on track when they run into trouble, that senior management must take notice and must take action to remediate damaged relationships as early as possible. Continue reading...

Outsourcing Work Facing New Frontiers

IF YOU ARE a history buff, little about the concept of "outsourcing" is actually new. Some of us recall the timesharing companies and service bureaus of the late 1960s and 1970s. Payroll, security and other functions were commonly operated and managed by an outside company tied to service and price criteria to suit the times and function. In the relative infancy of widespread commercial use of technology, the large mainframe computer providers or purchasers, with trained personnel and excess capacity, wisely reasoned they could provide the data processing needs of a wide variety of customers and make money at it. (Originally published in the New York Law Journal). Continue reading...

Privacy and Security Law Issues in Off-shore Outsourcing Transactions

Outsourcing arrangements often involve the processing of large volumes of personal information about a company’s customers or employees. In many cases, this information includes sensitive information, such as financial data, medical data, payroll and benefits information, social security numbers and purchasing histories. This paper outlines the general issues that companies must consider when they permit outsourcing partners to transfer personal data across national boundaries. In particular, it examines issues that may arise under U.S. law, and also considers the regimes in three popular outsourcing destinations, the Philippines, India and Canada. Continue reading...

CONTRACTUAL FRAMEWORK: THE BUSINESS PROCESS OUTSOURCING AGREEMENT

As is the case with respect to any material agreement, the structure of the business process outsourcing agreement is a key issue because it embodies the rights, remedies, duties and obligations of the parties and provides a blueprint for the parties’ relationship. These considerations are magnified in an outsourcing arrangement because (i) the functions to be performed are typically mission-critical or strategically important, and (ii) the relationship between the service provider and the customer is typically of a longer duration and greater intimacy than the relationship created in other commercial contexts. Accordingly, both parties bear greater short- and long-term risks in such a relationship that they need to address to the greatest extent possible in the outsourcing agreement. Continue reading...

Negotiating Key Terms Of The Outsourcing Deal

In essence, an IT outsourcing transaction consists of two distinct parts. First there is the acquisition by the service provider of all or part of the IT assets of the customer. Second there is a long-term service contract where the supplier uses those assets and others that it contributes to provide the service that the customer formerly provided internally. The first part of an outsourcing transaction, namely, the acquisition of the customer’s IT assets, is similar to the purchase and sale of a division of a company. The same legal issues arise with respect to transfer of title in IT assets as arise in any such IT acquisition. Continue reading...

Outsourcing Legal Briefs

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Innovations In Outsourcing

RFP alternatives, mistakes to avoid, improving relationships with vendors, and more. What is the most significant development facing outsourcers? Continue reading...

The Rise of BPO

Under What Conditions Should A Client Not Outsource Due Solely To Intellectual Property Concerns? Continue reading...