Outsource Magazine Issue 24 - (Page 64)

Ten Ways To shake your World The team behind Vested Outsourcing have been making big waves in the outsourcing space over the last year. Now, in advance of the publication of her latest book on the subject - The Vested Outsourcing Manual - Kate Vitasek explains the ten elements of a Vested Outsourcing agreement for anyone looking for a truly win-win partnership… Kate Vitasek Kate Vitasek is a faculty member at the University of Tennessee’s Center for Executive Education, the author of Vested Outsourcing: Five Rules That Will Transform Outsourcing and the upcoming The Vested Outsourcing Manual (set to be released June 21st by Palgrave Macmillan), and an Outsource columnist. I t’s long past time for a change in the way outsourcing contracts are negotiated and managed. In 1968 the legal scholar Ian R. Macneil observed that most contracts are ill-equipped to address the reality of business needs. In Contracts: Instruments for Social Cooperation, Macneil wrote, “Somewhere along the line of increasing duration and complexity [the contract] escapes the traditional legal model.” He argued that contracts are rooted in the classical approach to contract law, and thus crafted to address transactions and legal protections such as pricing and price changes, service levels, limitation of liability, indemnification and liquidated damages. Those classical approaches to contract law are still mostly with us. An April 2010 study by the International Association for Contract & Commercial Management (IACCM) concluded that contract terms remain mired in the classical legal approach of contract law, which focuses almost exclusively and hierarchically on pricing, limiting liability, indemnification, service and transaction levels, risk mitigation and liquidated damages. For example, a common mistake companies make in outsourcing today is that they create detailed statements of work (SOWs) and then try to define too tightly the work to be done. They handcuff their service providers’ innovation and flexibility in this way. A flexible approach and a flexible agreement framework is needed, one that the Nobel laureate Oliver E. Williamson suggests is highly adjustable or adaptable, rather than one that prescriptively outlines detailed transactions, rigid terms and conditions, SOWs and working relations. This is because business happens constantly and unpredictably. The University of Tennessee holds collections of the papers of all three American presidents from the state: Andrew Jackson, James K. Polk, and Andrew Johnson. 64 ● www.outsourcemagazine.co.uk http://www.outsourcemagazine.co.uk

Table of Contents for the Digital Edition of Outsource Magazine Issue 24

Editor's letter
News & comments
Seeing through the cloud
Steve Forbes
Embracing a lean culture in recruitment
The roar of the crowd
Andrew De Cleyn
Greening the chain
Private properties
NOA round-up
PR Chandrasekar
Ten ways to shake your world
Matt Barrie
Roundtable: an excellent process
The talent question
Transition and change
Never the twain
Setting the standard
Touching base
Top ten
The legal view
HfS research
Online round-up
Inside source
The last word

Outsource Magazine Issue 24