No Contracts When Outsourcing

Filed in archive Outsourcing Issues on June 18, 2007

Some companies assume that when outsourcing, contracts are not that important because they think that drafting a letter of intent would be enough for their outsourcing deals. This kind of idea in outsourcing would only lead to failure if continuously practiced.

Let me be clear that when I mentioned that outsourcing contracts should be lenient, it does not mean abolishing the whole concept of contracts when outsourcing. The Wall Street Journal describes contracts as

"Documents which are useful in setting the joint vision of the relationship, but they are not substitutes for contracts. Since they are usually vague on critical operational details, they may be hard to enforce in court, lead to different interpretations by different managers and ultimately undermine trust in the client-vendor relationship."

Contracts should be carefully though of before implementing so that future problems would be considered when outsourcing.