Irreconcilable Differences: When to End an Outsourcing Deal

In this byline article about how to handle a deteriorated outsourcing deal, Senior Associate David Borowski offers real-world advice and explains the various courses of action in attempting to salvage an outsourcing relationship or ultimately disentangling from it if needed. Sample excerpt: “Studies of outsourcing buyer sentiment commonly find that over 50% of outsourcing relationships are considered unsuccessful. At best, this results in non-renewal of an expiring agreement; at worst, early termination and, in some cases, litigation. In any case, disentanglement results in high costs and significant business continuity risks – whether transitioning services to an alternative provider or bringing them back in-house – and is a decision that should be made only after all mitigation and reconciliation options have been exhausted…A thorough diagnostic is essential for identifying the true root causes of any performance issues; replacing a provider won’t necessarily improve the situation if that provider didn’t cause the problems. In many cases, buyer behavior contributes to outsourcing failure through poor oversight, changing priorities, ineffective communication and inconsistent support...”

Forbes.com