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The service level agreement why its needed in an outsource

The service level agreement why its needed in an outsource

In this article I outline some of the key aspects that have to be specifically articulated within the SLA. As I have in my other articles many companies are beginning outsourcing for the first time, sometimes with an inexperienced team who face a band of canny outsource vendors who do this every day for a living.
As a general rule, particularly for large-scale outsourcing, involving many millions of pounds over the life-cycle – get professional help. This can be in the form of consultants or lawyers well versed in the detail of outsource contracting – at least it will level the playing field. This is particularly important in spotting omissions made during the contracting and negotiation process. As senior managers we all think we know the detail of our business; however, whilst we may be good at checking what is written down before us, but we are not good at spotting significant issues that are missing
In terms of the agreements what is in the agreement that is usually not the problem but what has been left out. In an IT context the chief information officer (CIO) reviewing the agreement may easily spot errors in a service description, say, for the local area network (LAN) availability targets. However, it is rare to see spelt out how the intellectual property rights (IPR) issues of any software developed during a contract are handled; what is said about the transfer of technology back to the buyer should the agreement be terminated – for example how is the technology upgrade accounted for in the final liquidation of the contract? Will all personnel records be handed over? How will the supplier cooperate fully with a new service provider should the contract need to be terminated?
All these types of questions need to be considered and included in the discussions up-front – which makes some of the clauses in the contract look very similar to a prenuptial agreement. Negotiate all the points, agree them, then write them down in the contract. If it is not in the actual signed agreement it will be difficult to return to unclear or missing points, and many buyers will be confronted with the need to raise a request for change to get any missed points into the agreement at a later stage. At times the negotiation will be difficult – avoid the temptation to fall back on a ‘partnership’ discourse and assume you can ‘sort it out later’. Without a process in place to sort out any outstanding issues the agreement will fail before the ink has dried – so clarify, negotiate and specify in the contract.


Stress From Outsourcing can kill – we need to manage those staying as well

Stress From Outsourcing can Kill

I was struck by the similarity in the situation when people are laid off during redundancies and the stress caused by the move from one company to another during outsourcing – it strikes me that this is an under researched area and something we as managers should pay more attention to.

Pioneering studies in Scandinavia that took place some years ago, where centralized health care allows researchers access to vast databases of medical conditions and treatment, showed a strong link between downsizing, layoffs and illness. A study by Finnish researchers published in February (2004) in the British Medical Journal, found the risk of dying from a heart attack doubled among permanent employees after a major round of downsizing, with the risk growing to five times normal after four years. What was surprising about this study was that ‘surviving’ employees – those left behind – suffered as much stress as those who left. Those hit hardest by layoffs in this study – losing more than 18 per cent of their colleagues during the worst years of recession – suffered the highest risk of death from cardiovascular disease.

Two other studies in the same vein suggested that other forms of strain in the workplace can also affect health. An analysis of medical records for 24,036 Swedish workers from 1991 to 1996 found that in workplaces that underwent large-scale expansions, the workers were 7 percent more likely to take sick leave of 90 days or more and 9 percent more likely to enter a hospital for some reason.

What these studies showed was there is a relationship between work related stress and real physical outcomes – for those remaining as well as the obvious strains to those leaving. Outsourcing shares many of the factors that were shown to lead to this heightened risk and we should be aware that an over cavalier approach to managing people in this major change process could possibly lead to people dying before their time. It is not enough that we have to act carefully and ethically as other Blog writers on this forum have said we have to act with responsibility and care for people – in the final analysis if it could be shown we acted in an unfair and reckless manner in dealing with people during an outsource we also might find ourselves liable in law. More research is clearly called for in this area.