BPO and IT outsourcing contracts are complex and are typically hundreds of pages long.
The business and legal teams from both sides try to think of the myriad of eventualities that may occur in the contract lifespan to the best of their ability.
They then draft the contract clauses to cover those eventualities as much as possible.
The teams frequently fail as outsourcing reality is often too complicated to be fully captured in a contract.
Furthermore, they tend to be (too) creative, e.g., in incentive and control mechanisms.
After contract signature, contract managers “inherit” this work of art (or science project?) 😊.
They are then on point to successfully implement and execute the contract.
Here the challenges start.
The picture below (Morgan Chambers ©) shows three main areas of potential misalignment. For example:
1. Contracted Services: the contract is based on assumptions that turn out to be incorrect
2. Delivered Services: the delivery teams have their own interpretation of what has been agreed and deliver accordingly (and against client expectations)
3. Expected Services: the client has implicit expectations that they failed to express during the contracting phase
These challenges cause dissatisfaction on both sides early on in the contract execution phase.
Here are some suggestions to reduce or avoid dissatisfaction:
1. Involve contract managers in the contracting process. They have a good handle of what works and doesn’t work in the execution phase
2. Organize joint contract awareness sessions with as many project members as (financially) possible. These sessions ensure a common understanding of what has been contractually agreed.
3. Perform regular checks on relationship satisfaction and misalignments through governance. You can use the picture below as talking points
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