Outsourcing exit strategies
Produced in partnership with Bristows

The following TMT practice note produced in partnership with Bristows provides comprehensive and up to date legal information covering:

  • Outsourcing exit strategies
  • Key risks on exit
  • Continuation services
  • Continuation services compared with exit services
  • Define the term and the exit period
  • Exit services
  • Co-operation and re-tenders
  • Staff transfer
  • Knowledge transfer
  • Intellectual property rights
  • More...

Outsourcing exit strategies

One certainty of any outsourcing deal is that it will end. So while not planning for failure, outsourcing contracts should be structured so that they address the need for an orderly move to the next stage after their termination (whether for convenience or due to a default) or on their planned expiry date.

Addressing the exit process in the outsourcing contract is essential.

Furthermore it is vital that the customer holds the supplier to its contractual obligations to plan for exit during the term of the contract such that it can be quickly invoked in the event of termination or expiry.

Doing so should mean that:

  1. both parties (and any new or successor supplier) find themselves in a better position following the exit or service transfer than if these matters are not addressed, and

  2. even if the exit process does become contentious (as it often does), a well laid out set of exit obligations, and a clear understanding as to the costs, ought to assist the parties in resolving issues

Key risks on exit

The key concern that needs to be addressed at the end of an outsourcing contract is the danger of failing to ensure a smooth transfer from an incumbent supplier to either a new supplier (a re-tendering or second-generation deal) or back in-house to the customer (so-called in-sourcing).

Failing to address this issue exposes the

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