Commitment Matters: Outsourcing Contracts Are Worthy of More Thought

Tim Cummins’ blog, Commitment Matters is full of fascinating ideas.  What else could one expect from the founder of the International Association for Contract and Commercial Management and someone who has been in the trenches.

Tim’s article on the complexity of contracting exactly relates to what I’ve seen in outsourcing: a basic legal framework with innumerable details memorialized in hundreds of pages of schedules.  The schedules are drafted by technical experts who generally lack any understanding of contracting.  Consequently, Tim argues,

In IT, outsourcers often bid low initially in the belief that they will later be able to improve margins by exploiting the contract’s or customer’s deficiencies. The obvious point to make is that once the contract is signed, it’s set in stone unless both parties agree its variation. So, if contract development or negotiation is rushed, it’s guaranteed that many unpleasant and costly issues will arise after the paperwork has been signed.

Tim is dead-on accurate.  Many schedules, like service level and pricing schedules, are drafted by authors with very limited contracting experience and very often rushed.  These areas then turn into change orders (aka “death by a thousand cuts).

Tim’s article is a very worthy read.

Related posts:

1. Another Tale from “When You Don’t Have Vendor Management Governance”
2. Offshore Outsourcing Vendors, Customers, and Advisors: They Should Know Better
3. The Black Book of Outsourcing – Invaluable Resource or Red Herring?
4. Offshore Outsourcing RFPs: Are They Encouraging Copy and Paste?
5. The Business of Outsourcing Certifications