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Points to Check in Your IT Outsourcing Service Agreement

Points to Check in Your IT Outsourcing Service Agreement
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by Sanjeev Kapoor 31 Dec 2014

IT outsourcing agreement is an important document that you need to sign before the actual work starts. In fact, it is the most crucial thing that you need to take care of while you outsource your IT projects to any offshore outsourcing company. After all, it states yours as well as your outsourcing partner’s business rights, expectations and obligations. Prepared by managers or lawyers of the outsourcing companies, such contracts generally include milestones and details about the possible risks, which might emerge in the course of service delivery.

Now, once the agreement is ready to be signed, following are the points that you must check consciously in order to avoid any hurdles related to IT outsourcing:

Service Level Agreement – Abbreviated as SLA, this agreement should reflect the milestones that your IT outsourcing services provider needs to reach within specified time frames. Apart from this, an agreement must explicate the ways of reporting, time specifications for different reports and measuring metrics for identifying status of the outsourced work. To be precise, you need to check whether the agreement clearly states the deliverables and deadlines within which the work will be delivered.

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IP Protection – Intellectual Property like the copyrights, patents of your company need to be highly protected while you outsource your IT projects to any of the offshore outsourcing companies. Hence, it is advisable that you check whether your agreement shows the IP you want your outsourcing partner to protect, and the policies as well as procedures for IP protection in details. If required, you can even seek help from your legal department or a lawyer in order to have a better understanding of all the policies.

Jurisdiction Clauses – All agreements that regulate multi-jurisdictional ITO (IT outsourcing) transactions must include jurisdiction clauses and laws, which will govern the entire course of work. However, ensure that the laws and clauses mentioned in your IT outsourcing service agreement are as per the jurisdiction of your company’s location. In addition to this, make sure whether the penalty and termination policies stated in the agreement matches your country’s jurisdiction.

Besides these key points, there are certain other points that you need to check in an IT outsourcing agreement. To mention a few are contract duration, pricing and payment terms, etc. Negligence to any of these points is more likely to bring in business risks. In fact, taking any spontaneous decision might be quite costly for your company, both in terms of money and intellectual assets. Hence, take ample time and study the contract in details before agreeing to the mentioned clauses.

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