Governance and reporting in outsourcing
Governance and reporting in outsourcing

The following Commercial guidance note provides comprehensive and up to date legal information covering:

  • Governance and reporting in outsourcing
  • Introduction to outsourcing governance
  • Drafting the governance provisions
  • Legal issues
  • Reporting

Outsourcing agreements usually last for a number of years and require close collaboration between the supplier and the customer throughout the term. Robust governance and reporting provisions form the foundation of this collaboration and ensure that the parties begin their relationship with a clear expectation of how much involvement the customer will have in the day-to-day operations of the outsourced services, how often and in what form the supplier needs to report to the customer, and how potential problems will be resolved.

This Practice Note looks at the following issues:

  1. Introduction to outsourcing governance

  2. Drafting the governance provisions

  3. Legal issues and risks

  4. Reporting

For precedent governance and reporting provisions, see clause 9 and schedule 9 of Precedent: Outsourcing agreement—long form.

Introduction to outsourcing governance

Governance in outsourcing is the way in which a customer and supplier oversee the contract services during the life of the agreement, manage its delivery and resolve any problems that arise. Governance can be contractual, where the rules are prescribed in the outsourcing agreement, or relational, which is the way in which the customer and supplier work together informally. There is research which suggests that the most positive outcomes result from situations where both contractual and relational governance are operating effectively together. See: Outsourcing Business and I.T. Services: the Evidence of Success, Robust Practices and Contractual Challenges: Legal