Business IT Outsourcing Contracts

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Contracts aren’t fool-proof – nothing is – but they can help you gain some control over things. Let’s go over the basics of what every business IT outsourcing contract worth its salt should address: (NOTE: Depending on which online service you choose to work through, your contract may address more or less of these issues.)

• The Working Relationship – differentiates the outsourcing relationship from the employment relationship.
• Services Rendered – describes what’s being outsourced in detail. See our Independent Software Developer Agreement for an example.
• Agreement Terms – specifies (1) the length of the agreement, and (2) how the agreement ends.
• Payment Terms – describes how and when a service will be compensated.
• Confidentiality – describes what can and cannot be shared with parties outside of an agreement.
• The Non-Compete Clause – prevents a provider from securing a similar job from the competition. See our Sample Non-Compete Agreement for an example.
• Dispute Resolutions – addresses how conflicts are resolved, where they’re solved, and who solves them.
• Contact Information – identifies each contracted party, and how each can be contacted.

The Worst Thing You Could Do…

Specific contract requirements and samples can be found in our Outsourcing Contract Requirements section.

Some outsourcing services might leave you hanging and expect you to drum up your own contract, while others generate the whole document for you and include provisions that you might not have even thought of. I strongly recommend using a service that offers the latter. Unless you’re a lawyer, have access to a lawyer, or pretend to be one on TV, you won’t know how to format a business IT outsourcing contract that protects your investment and offers some sort of guarantee that you’ll get what you paid for.

The worst thing you could do is outsource without a contract. Sure, contracts are just pieces of paper (online, they’re just ones and zeros), but without one of your own, you won’t have a leg to stand on should you decide to legally reinforce an agreement.

Outsourcing Contracts Work For You

Never, ever, ever work without a contract. Contracts legally obligate service providers to deliver on their promises. They also do a couple of other equally important things:

1. They ward off the IRS. A properly worded contract differentiates the outsourcer-contractor relationship from the traditional employer-employee relationship. Without this documentation, the IRS may demand that you start treating your contractor like an employee.

2. They create a blueprint for action. A scope details required services, limitations, locations, provisions, and exclusions. It also goes into a business IT outsourcing contract, and it serves as a great reminder, or task list, of what’s supposed to get accomplished.

I’m not an elephant. You’re not an elephant. And elephants don’t outsource. So leave nothing to memory. But what if you have secrets? Can you protect those while outsourcing online?

Current events can be found in our Business IT Outsourcing Contracts News section.

There may come a time when you need a contract booster that describes the conditions in which confidential~information may be accessed, used, and shared. Some outsourcing contracts include that type of information inside of them while others require a separate document that addresses it exclusively. That’s called a non-disclosure agreement, or NDA. And as you may have already guessed, some online services offer them, and others don’t. The good ones, at the very least, give you the means to append your own NDA to an existing site-generated agreement.

External Resources:

1. The Black Book of Outsourcing
2. Business Process Outsourcing
3. Outsourcing Agreements Line by Line